GST Issues and Problems Faced by Indians – Get Professional Help to Solve Your GST Problems

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India’s Goods and Services Tax (GST) was touted as a revolutionary reform that would simplify the tax system and transform the economy. However, over five years since its implementation, GST still poses major challenges for businesses across the country.

Despite the government’s efforts, tax evasion and fraud remain rampant. Honest taxpayers struggle with complex compliance requirements, mismatched input tax credits, refund delays, and frequent changes in rules and interpretations.

The issues are so pervasive that India is losing billions of rupees in revenue each year to GST evasion. Solving these problems is crucial, not just for businesses’ bottom lines, but for the nation’s fiscal health.

Fortunately, there is a solution – working with a professional GST consultancy like Filingwala.com. By partnering with experienced experts, you can navigate the GST minefield, rectify past issues, and future-proof your compliance. Not only will this give you peace of mind, but it will also help stem the tide of tax evasion and strengthen India’s economy.

The Staggering Cost of GST Evasion in India

The numbers are shocking. According to government estimates, India lost a staggering ₹70,000 crores ($9.1 billion) in potential GST revenue in the 2020-21 fiscal year alone due to tax evasion. That’s almost 10% of the total GST collection!

Tax evasion comes in many forms – under-reporting of sales, issuance of fake invoices, wrongful ITC claims, non-payment of taxes collected, and more. While a small percentage of willful fraud accounts for the biggest losses, a much larger number of businesses make mistakes due to ignorance, lack of resources, or overly complex compliance requirements.

This rampant evasion has hit government revenues hard. Several states face soaring deficits, largely due to shortfalls in GST collections versus targets. At the national level, the tax gap is becoming an impediment to funding critical priorities like infrastructure, healthcare, and education.

There are also broader economic costs. Honest businesses that dutifully comply with GST face higher costs, reduced competitiveness, and cash flow crunches. This hampers growth and investment. Tax evasion creates an uneven playing field and rewards unscrupulous practices. If left unchecked, it can taint India’s reputation as an attractive investment destination.

The government is well aware of the problem and has taken steps to tighten enforcement, upgrade IT systems, and simplify GST. But clearly, more needs to be done. Bridging the massive tax gap requires a multi-pronged approach – smarter policies, better technology, stricter action against fraud, and crucially, handholding of businesses to improve voluntary compliance.

Common GST Issues Faced by Businesses

To solve the GST evasion crisis, it’s important to understand its root causes. Here are some of the biggest pain points that businesses of all sizes grapple with:

Reconciliation Errors & ITC Mismatches

Under GST, businesses can claim input tax credit (ITC) for taxes paid on purchases to offset against their output GST liabilities. However, claiming the correct ITC requires reconciliation of purchase invoices with suppliers’ sales figures in GST returns.

This can be an accounting nightmare due to factors like delayed filing of returns by suppliers, cancelation or revision of invoices, mismatch in HSN/SAC codes, different GSTIN branches, and more. Even a small mistake can lead to huge demand notices and interest liabilities from tax authorities.

E-Invoicing and Compliance Burdens

With a bewildering array of returns (GSTR-1, GSTR-3B, GSTR-9, GSTR-9C, etc.), e-way bills, e-invoicing, and frequent requirement changes, GST compliance has become a hugely time-consuming and expensive exercise. For smaller businesses, arranging the necessary infrastructure, software, and skilled manpower is an uphill task.

Refund Delays and Liquidity Crunches

Due process for GST refunds is often painfully slow. Businesses, especially exporters and those who have reversed excess ITC claims, can face extended delays in getting their funds reimbursed. This creates working capital issues, hampers operations, and hurts competitiveness.

Lack of Clarity and Frequent Changes

The GST law is still evolving, and tax authorities frequently issue new notifications, circulars, and rule changes. This deluge of information can be difficult for businesses to keep up with, leading to confusion, contradictory interpretations, and unintentional non-compliance.

Why You Need a GST Expert

Given the numerous complexities involved, managing GST in-house can be an uphill battle for most businesses. Even organizations with dedicated tax teams can struggle to stay on top of all the nuances.

That’s why an increasing number of companies are turning to professional GST consultants. By partnering with the right experts, you can enjoy several key benefits:

  • Comprehensive guidance on all aspects of GST from registration to returns to audits
  • Prevention of costly errors through proactive reconciliation and compliance checks
  • Customized solutions tailored to your specific needs and challenges
  • Peace of mind knowing your GST affairs are in order and liability risk is minimized
  • Access to up-to-date information on regulatory changes and judicial precedents
  • Relief from operational hassles so you can focus on your core business
  • Potential for major cost savings through efficient ITC management and refund assistance

How Filingwala.com Can Be Your GST Problem Solver

Among the numerous consultants out there, Filingwala.com stands out as a GST solution provider you can truly rely on. Here’s why:

Full-Service GST Consultancy

With Filingwala.com, you get end-to-end support for all your GST needs – from registration, returns, payments and reconciliation, to periodic audits, assessments, appeals, and GST refunds. Our experts assist with any issue, big or small.

Automated GST Filing & Reconciliation

Filingwala.com harnesses the power of technology through its fully automated GST filing platform. It handles everything from data extraction and error checks to invoice matching and generating returns for filing. This minimizes human errors, saves time, and ensures 100% reconciliation.

Experienced Professionals & Customized Solutions

Every client engagement is handled by seasoned chartered accountants, tax practitioners, and legal experts with deep GST domain knowledge. We provide personalized guidance tailored to your specific industry, size, and challenges. This is not one-size-fits-all.

Why spend months trying to wrap your head around GST nuances or hire an inexperienced in-house team? By outsourcing it to the specialists at Filingwala.com, you can rest assured your GST compliance is in safe hands. This frees you up to concentrate on your core business.

Solve Your GST Problems Today

Don’t let GST hurdles hold your business back or make you vulnerable to tax demands and penalties. Take charge of the situation by partnering with Filingwala.com.

With our expertise at your side, issues like ITC mismatches, compliance errors, and refund delays will be a thing of the past. You’ll gain full visibility into your GST liabilities, plug revenue leakages, become audit-ready, and unlock trapped cash flow.

Solving GST evasion requires a multi-pronged approach. While the government strengthens enforcement and systems, businesses must play their part too. By improving compliance through expert assistance, you’ll not only secure your interests but contribute to India’s fight against tax fraud.

Contact Filingwala.com today for a free consultation on how we can support your business. Navigate the GST maze with confidence and peace of mind. Together, we can fix the GST bleed.

FAQs About GST & Filingwala.com

Q1. Why is GST compliance so complex in India?

GST in India has multiple tax slabs, a multitude of returns, complex rules for ITC eligibility, frequent changes in procedures and interpretation, and tech glitches – all of which combine to make compliance challenging. Lack of proper infrastructure and domain expertise also compounds the difficulties.

Q2. Will engaging a GST consultant be very expensive?

Not necessarily. An experienced GST partner can actually end up saving you much more in terms of avoided tax liabilities, penalties, interest, and operational costs. The efficiency gains and peace of mind also make it worthwhile. Look for transparent and flexible pricing models.

Q3. How can I ensure my business data remains confidential with a third party?

Filingwala.com follows stringent protocols around data privacy, confidentiality and security. We sign comprehensive NDAs with all clients and use enterprise-grade tools to protect your information.

Q4. What kind of sector experience does Filingwala.com have?

Our team has handled GST matters for a wide range of industries including manufacturing, services, e-commerce, exports, real estate, healthcare, and more. We customize our approach to fit your specific business needs.

Q5. Does Filingwala.com provide support beyond GST?

Yes, we offer a comprehensive suite of taxation and compliance services covering direct taxes, company law, foreign trade policy, intellectual property, payroll processing, and more. Think of us as your one-stop-shop for all legal and regulatory requirements.

Optimize your GST compliance, control costs, and avoid tax leakages. Contact Filingwala.com today!

GST’s Issues and Problems: Solutions 2024 India

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The introduction of Goods and Services Tax (GST) on July 1, 2017 was hailed as a landmark moment in India’s taxation history. This new unified indirect tax system was meant to simplify taxation, remove cascading effects, promote tax compliance and boost economic growth.

However, more than 4 years since its rollout, GST continues to face several roadblocks that are impacting businesses, government revenues and the economy. Let’s examine the key ongoing issues and problems with GST implementation in India.

Technical Issues Plaguing GST

The GST Network (GSTN) – the IT backbone supporting GST – has faced glitches and outages ever since GST’s introduction. Some major technical issues include:

  • Tight return filing deadlines – The due date for September GST returns is too short, not giving taxpayers enough time to claim input tax credit (ITC) before return filing. This leads to interest liabilities.
  • Credit reversal requirements – Taxpayers have to reverse ITC if payment to vendors is not made within 180 days. This adds compliance burden for tracking payments.
  • Lack of downloadable GSTR-2A – Since the annual GSTR-2A cannot be downloaded, it becomes difficult for taxpayers to match books of account and file accurate returns.
  • No modification facility in GSTR-3B – There is no provision to amend GSTR-3B after filing. Even small errors require filing a revised return and paying interest.
  • Ambiguity in TRAN-1 form – The tax department sends notices to all TRAN-1 filers, increasing hassles for genuine taxpayers.

The GST Council needs to address these procedural issues on priority to reduce difficulties faced by taxpayers across India.

Problems Faced by Small Businesses

Small businesses with turnover under ₹20 lakhs were expected to benefit the most from GST. However, small traders are facing several challenges:

  • High compliance cost – Additional expenses for hardware, accounting software and accountants for GST compliance.
  • No GST exemption benefits – Despite being exempt, small businesses face demands for GST bills from buyers.
  • Pricing challenges – Difficulty in ascribing MRP for handmade products like artisan goods. Dealer confusion on applicable GST rate.
  • Lack of awareness – GST requires basic IT literacy. But many small units are run by illiterate artisans unable to issue GST invoices.

The government needs to increase awareness and reduce compliance burden for small businesses to enable them to focus on growth.

E-commerce Companies’ Struggles

E-commerce giants also faced unexpected challenges after GST implementation:

  • Capital lock up – TCS (Tax Collection at Source) provisions lead to working capital blockage, affecting day-to-day operations.
  • Additional logistics costs – Interstate supply of goods was seamless pre-GST but now attracts SGST, increasing costs.
  • Compliance burden – E-commerce operators must collect TCS from sellers on each transaction and file monthly TCS returns in addition to usual GST returns.

The GST Council should tweak provisions to lower compliance burden and operational costs for e-commerce companies.

E-way Bill and Interstate Trade

The e-way bill mechanism was introduced to track interstate movement of goods and prevent evasion. However, roll out issues created havoc:

  • Technical glitches – Network failures on e-way bill launch date left transporters stranded and highways deserted.
  • Procedural difficulties – Constant expiry and need to regenerate e-way bill for each shipment increases hassles for transport companies.
  • Impact on supply chain – Disruptions due to e-way bill compliance leads to delays and wastage for time-sensitive sectors like cold storage.

The e-way bill system needs stabilization along with a simplification of procedures to prevent disruptions to interstate trade.

Tax Evasion Becoming Easier

Frequent changes in GST rates and procedures, along with glitches have facilitated increased tax evasion:

  • GST rate cuts – Reduced rates on over 200 items and a generous composition scheme attracted non-compliant dealers.
  • Return filing delays – Only 70% of GST taxpayers file returns regularly. Delayed filing enables evasion.
  • GSTR-1 and GSTR-3B mismatch – ₹34,000 crore differences indicate large-scale under-reporting of revenue by businesses as per a 2019 CAG report.
  • Fake invoicing – GST has seen a spurt in bogus billing networks misusing input tax credit. 225 fake GSTIN entities identified till March 2022.

The GST Council needs to plug loopholes and take strict action against fake invoicing, under-reporting and delayed filing to shore up collections.

Revenue Shortfall Impacting Budgets

GST revenue shortfall has been a constant issue, falling short of projections by ₹1-2 lakh crore each year:

  • State compensation – Centre paid ₹90,000+ crore in FY19 to compensate states for GST losses, against projected ₹60,000 crore.
  • Fiscal deficit – Revenue loss forces increased borrowing and taxation to fund budgets, increasing common man’s burden.
  • Subsuming fuels difficult – States unwilling to bring petrol, diesel etc. under GST due to existing revenue uncertainty.

Revenue augmentation measures like improved compliance and expanded tax base are vital for GST stability.

Difficulty Adapting to the IT Ecosystem

The main challenges faced in moving to an IT-driven tax system are:

  • Digital literacy – Majority of small businesses in India have limited technology exposure and struggle with digital solutions.
  • Procedural knowledge – GST involves regular invoice data uploads, reconciliations, report creation and return filing. Lack of expertise in these activities leads to errors.
  • Cost of compliance – Smaller firms cannot afford expensive ERP software or dedicated compliance teams, resulting in compliance gaps.

Simplified procedures and extensive taxpayer education drives can enable smooth transitioning to GST technology.

Widespread Confusion

The multiple rate slabs, frequently changed rates, complicated procedures and compliance needs have led to mass confusion and instability:

  • Too many tax slabs – 0%, 0.25%, 3%, 5%, 12%, 18% and 28% GST rates, apart from exempt items, are difficult to keep track of.
  • Frequent rate changes – 200+ items have seen rate cuts since GST inception. Frequent changes become difficult to adapt to.
  • Partial coverage – Crude oil, natural gas, aviation fuel, alcohol are still outside GST, distorting input pricing.
  • Compliance burden – Multiple monthly and quarterly returns to be filed with extensive data. Complex procedures for invoicing, reporting and reconciliations.

Stability in terms of rates and procedures is needed to enable businesses to streamline operations. Extensive awareness programs explaining GST aspects can also help reduce confusion.

Challenges for Chartered Accountants

Chartered Accountants play a crucial role in assisting businesses with GST compliance. But CAs also face key challenges:

  • Full digitization – GST envisages online registration, return filing,payments. CAs used to offline processes struggle to adapt.
  • Procedural Knowledge – Keeping updated on invoice formats, debit/credit notes rules, reverse charge, e-way bill etc. is difficult.
  • Data reconciliation – Reconciling books of accounts, 2A data, purchases, sales & ITC for clients every return cycle becomes strenuous.
  • Multiple returns – Helping clients with timely compliance across 3B, GSTR-1, CMP-08 etc. returns is challenging.

Robust IT infrastructure and extensive GST training programs for CAs can help overcome teething issues in assisting taxpayer compliance.

Recommendations to Fix GST Issues

Some measures that can help fix many of the problems seen with GST include:

  • Improve GSTN robustness and simplify compliance procedures
  • Mandate e-invoicing integration with GSTN to curb fake billing
  • Increase taxpayer outreach programs to improve voluntary compliance
  • Bring petrol/diesel under GST to streamline tax structure
  • Tweak GST rates into 3 slabs to reduce complexity
  • Increase tax official training to improve

FAQs

Q. What is the standard GST rate in India?

The standard GST rate in India is 28%. This is among the highest in the world. Only Chile has a higher standard rate of 29%.

Q. Are petrol and diesel included under GST?

No, petrol, diesel, natural gas, aviation turbine fuel and alcohol for human consumption are still outside the GST tax bracket. Bringing them under GST can significantly streamline taxation on these products.

Q. How many GST returns need to be filed in a year?

Based on business type, up to 37 GST returns may need to be filed in one year, including monthly, quarterly and annual returns.

Q. What is TCS under GST?

TCS or Tax Collected at Source refers to up to 1% tax collected by e-commerce operators or suppliers from their vendors/sellers and paid to the government on their behalf.

Q. What is meant by GST revenue shortfall?

The difference between the assured compensation amount to states by Centre at 14% yoy revenue growth, and the actual GST collections is known as the GST revenue shortfall.

Q. Who develops the GSTN network?

GSTN or GST Network is the IT infrastructure providing registration, return filing, tax payments and other technology services. GSTN is owned by Centre and states and was developed by Infosys.

Q. How is GST revenue shared between Centre and states?

CGST portion of GST revenue goes fully to Centre, SGST portion to states. Of IGST revenue, generally Centre gets 50% and states get 50% share.

Conclusion

Four years since starting its GST journey, India still has some distance to go in realizing the full potential of this tax reform. The technology infrastructure and compliance mechanisms need further stabilization. Procedures should be simplified and clarity improved to ease taxpayer difficulties.

Addressing the key ongoing challenges with focused action in critical areas can help realize the intended benefits of increased tax compliance, economic growth, transparent taxation and “one nation, one tax”. The GST Council must continue to proactively engage with stakeholders to quickly resolve issues and bottlenecks.

As India’s most comprehensive indirect tax reform, GST has set the stage for a globally competitive tax regime. But the positive impact can only be achieved through collaborative efforts between government, industry, chartered accountants and taxpayers to smooth out implementation wrinkles. With time and constant fine-tuning, India’s GST will start yielding the desired dividends.

How to Claim Your GST Refund: A Comprehensive Guide


Claiming Goods and Services Tax (GST) refunds can be confusing, but it’s an essential process for many businesses in India to maintain healthy cash flows. According to data, over ₹1.5 lakh crore in GST refunds remain unpaid. If you deal with exports, inverted duty structures, or have any unutilized input tax credit (ITC), you may be owed a GST refund.

This comprehensive guide will teach you everything you need to efficiently claim your entitled GST refund. You’ll learn who qualifies for refunds, the different types of refunds, documents required, mistakes to avoid, and more. Arm yourself with the knowledge needed to claim what’s rightfully yours.

Who is Eligible for a GST Refund?

You are eligible for a GST refund if you:

  • Export goods or services outside India
  • Purchase goods or services taxed at a higher rate than goods or services you provide (inverted duty structure)
  • Have unutilised input tax credit at the end of a tax period
  • Are an embassy or UN body entitled to refunds under special provisions
  • For exports and inverted duty structures, you can claim a refund on excess GST paid. Those carrying forward an unutilised ITC balance can also recover the credit in cash.

Types of GST Refunds

There are three main types of GST refunds:

Refunds for Exports

Exporters can recover GST levied on raw materials and other inputs for exported goods and services. To promote Indian exports globally, exporters receive up to 90% of taxes back as refunds.


Refund Due to Inverted Duty Structure

GST paid on inputs can be higher than the GST applicable on a good or service. This inversion allows businesses to claim refunds of excess GST paid. Common in textile manufacturing where inputs are taxed at 18% but output at 12%.


Refund of Unutilised ITC

If your input tax credit for a tax period remains unutilized, you can claim an ITC refund up to the minimum refund amount or 10% of total ITC, whichever is higher. This refund clears out your ITC balance sheet.


Now let’s dive into the separate procedures for an unutilized ITC vs. export refund.

Claiming an Unutilized ITC Refund

When input tax paid exceeds your GST tax liability for that period, you generate an unutilised ITC balance eligible for refunds. Follow this process:

Step 1: File Your Monthly GSTR-3B

You must file monthly GST returns before applying for a refund. This fixing your ITC claims, taxes paid, and liabilities for that tax period.

Step 2: File a GST RFD-01 Application

Access the GST portal and select Services > Refund > Application for Refund to start your refund application with form GST RFD 01.

Step 3: Fill in Your Refund Details

Enter your taxpayer details, ITC balance, bank details, reason for refund, and verification information correctly to ensure smooth processing.

Step 4: Submit Supporting Documents

Attach all supporting documents listed in the next section, including statement of invoices and customs clearances.

Step 5: Receive Provisional Refund Order

A tax officer will verify your GST RFD-01 application and issue an RFD-04 provisional refund order if approved. 90% of the sanctioned refund amount releases.

Step 6: Submit Proof of Refund Received

After receiving the provisional refund, file an RFD-05 to submit proof of refund received. This helps finalize the remaining 10%.

Step 7: Get Remaining Refund Amount

After satisfactory proof, the tax officer closes the refund case and issues the remaining 10% refund amount. Account is settled.

Claiming an Export Refund

Exporters enjoy various GST refund benefits to boost India’s exports globally. Follow this process:

Step 1: Ensure Export Eligibility

Only exports qualify for refunds. Maintain valid documents like customs/foreign inward remittance proof, bank realisation certificates etc.

Step 2: File Shipping Bill Details

Provide shipping bill details and integrated GST paid in GSTR-1 for relevant tax period. This links GST paid on inputs with exports.

Step 3: File Bond/LUT

Submit a Letter of Undertaking (LUT) or bond to export without paying integrated GST. This LUT commits to pay IGST if export proof isn’t provided later.

Step 4: File GST RFD-01

Claim refund by filing details of exports, ITC claimed, bank account details etc. in form GST RFD-01 under the export with payment of tax option.

Step 5: Submit Supporting Documents

Attach documents like exports invoices, bank realisation slips, foreign inward remittance proofs, transport proofs etc. to establish genuinity.

Step 6: Receive Provisional Refund

Tax officer scrutinizes the application and issues RFD-04 for 90% of eligible refund on a provisional basis.

Step 7: Submit Proof of Refund Received

File an RFD-05 to submit proof of receiving the provisional refund. Helps tax authorities reconcile accounts.

Step 8: Get Remaining 10% Refund

On satisfactory reconciliation, the officer disposes case and refund balance 10% to close account.

Important Steps to Receive Your Refund

Follow these steps for smooth GST refund processing:

  • File accurate, consistent GST returns ensuring ITC claims match liabilities.
  • Ensure bank account active to avoid refund rejection.
  • Match invoices uploaded with actual tax paid to avoid queries.
  • For exports, submit export proof quickly to expedite refund.
  • If refund application rejected, timely resolve issues and reapply correctly.
  • Track refund application status online and check for processing issues.
  • For large refunds, break into smaller amounts in multiple applications.

Documents Required for Refund Claim

Include these documents to verify your GST refund claim and avoid deficiencies:

  • GST Registration Certificate
  • Tax Invoices
  • Tax Payments Receipts
  • Export/ITC Details
  • GST Return Copies (GSTR-1/GSTR3B)
  • Bank Statement
  • Export Documents (Shipping Bill, Foreign Inward Remittance Proof etc.)

Timeline for Receiving Approved Refunds

Expect the following refund processing timeline:

ITC Refunds: 60 days from application to disburse full refund
Export Refunds Without Payment of Tax: 60 days from receipt of full documentation
Export Refunds With Payment of Tax: 90 days from receipt of full documentation
The tax officer can also initiate further investigation/verification which can delay refunds.

Common Mistakes to Avoid

Steer clear of these errors that can lead to refund rejection:

  • Incorrect Bank Account Details
  • Mismatch in Tax Details of Purchases/Sales
  • Failure to Respond to Deficiency Memos
  • No Supporting Export Documents
  • GST Return Filing Default
  • Past Demand or Recovery Issue

Take time to enter accurate details, cross-verify ITC claims, and proactively respond to queries through the proper channel. This prevents refund rejection or delays.

FAQs on GST Refund

Confused about certain aspects of GST refunds? Here are answers to some frequently asked questions:

Q: Can I claim refund and ITC carry forward together?
A: No, you must choose one option in your GST refund application.

Q: Is interest paid if refund gets delayed?
A: Yes, interest is paid if refund not granted within 60 days of receipt of documentation.

Q: Is export refund amount subject to income tax?
A: No, GST refund of taxes paid related to exports is tax exempt income.

Q: Can I claim refund on exclusively zero-rated supplies?
A: Yes, those dealing only in exports/SEZ supplies still claim refund of taxes paid on inputs.

Q: What if refund claim gets rejected?

A: Analyze the reasons, rectify issues and reapply for refund with correct documents within 2 years.

Conclusion & Next Steps

Claiming GST refunds allow businesses to boost working capital liquidity significantly while staying tax compliant. With this definitive guide, you should clearly understand the GST refund eligibility criteria, process to file, documents required and common pitfalls.

The next step is to determine your export/ITC status, assemble all documents outlined above, take professional assistance if needed, and apply for refund through form GST RFD 01. Be sure to capture all details accurately in both returns and refund application and respond promptly to any discrepancies.

With some time and diligence to follow the proper procedures, you can ensure successful GST refund disbursal without delays or rejection. The boost to cash flows make the effort well worth it.

If you need any assistance with registering for GST, filing returns, understanding compliance requirements or claiming refunds, the dedicated experts at filingwala.com can help. Filingwala.com is an accounting services company that specializes in providing small businesses and startups with accurate and affordable services for taxes, registrations, bookkeeping, payroll and more.

Their tax professionals have filed thousands of successful GST registrations and refund claims worth crores of rupees in savings for clients across India. By customizing their services for your unique business needs at a fraction of high CPA fees, filingwala’s experts guarantee 100% accuracy of your compliance at affordable rates.

To determine your eligibility and get started with claiming GST refunds stress-free, book a consultation with filingwala.com today. Their reliable accounting services ensure your business remains compliant, cashes in on every tax benefit and bonus refund owed, and avoids any penalties or interest.

GSTR-7: A Comprehensive Guide to Return Filing, Format, Eligibility and Rules

Introduction

Filing GSTR-7, the monthly Tax Deducted at Source (TDS) return, is a compliance requirement for all individuals deducting TDS under Goods and Services Tax (GST). This comprehensive guide will explain everything you need to know about GSTR-7, including the filing format, eligibility, due dates, and other key rules.

Whether you are an accountant helping clients file GSTR-7 or a business owner deducting TDS for the first time, this article will provide clarity on all aspects of GSTR-7. Read on for a detailed understanding of this important GST return.

What is GSTR-7?

GSTR-7 is a monthly return that must be filed by every individual who deducts Tax Deducted at Source (TDS) under GST. It contains details of all:

  • TDS deducted
  • TDS paid
  • TDS payable
  • Any TDS refunds claimed

In simple terms, GSTR-7 provides the government with insights into TDS compliance for the filer. It enables tax authorities to cross-check if the right TDS amounts were deducted and paid correctly.

Filing GSTR-7 is mandatory for all GST registrants who deduct TDS, irrespective of their business type, size or industry. It is an important compliance requirement under GST.

Who Can Deduct TDS under GST?

As per GST laws, the following individuals or entities can deduct TDS:

  • Central or State Government Departments and Establishments
  • Local Authorities
  • Government Agencies
  • Persons or entities notified by the Central or State Governments on recommendation of the GST Council

Additionally, the following can also deduct TDS as per Notification No. 33/2017 – Central Tax dated 15th September 2017:

  • Authorities, boards, or bodies established by Parliament, State Legislatures, or governments and having 51% or more government equity
  • Societies registered under the Societies Registration Act, 1860 and established by the Central or State Governments or local authorities
  • Public Sector Undertakings

These deductors are required to deduct TDS when the total value of a contract exceeds Rs. 2.5 lakhs. The TDS rate is 2% divided as 1% CGST and 1% SGST for intrastate supplies. For interstate supplies, the TDS rate is 2% IGST. However, no TDS will be deducted if supplier and recipient locations are different.

Why is GSTR-7 Important?

Filing GSTR-7 is crucial for:

  • Providing Visibility of TDS Compliance: The government can verify if the right TDS amounts were deducted and deposited correctly each month.
  • Enabling ITC for Suppliers: Suppliers can claim the TDS amount reflected in GSTR-7 as Input Tax Credit (ITC). This helps improve working capital.
  • Avoiding Discrepancies: Any mismatch between GSTR-7 and GSTR-2A can be identified and resolved proactively.
  • Claiming TDS Refunds: Taxpayers can claim TDS refunds seamlessly through GSTR-7 if excess TDS was deducted and taxes paid.

Overall, GSTR-7 return filing ensures disciplined TDS compliance under GST for smooth ITC claims and tax administration.

Due Date for Filing GSTR-7

The due date for filing GSTR-7 is the 10th of the next month. For example, the GSTR-7 deadline for TDS deducted in October 2023 is November 10, 2023.

Strict adherence to the monthly deadline is vital to avoid interest and late fees. The table below summarizes the due dates for GSTR-7 filing for different months:

MonthDue Date for Filing GSTR-7
October 2023November 10, 2023
November 2023December 10, 2023
December 2023January 10, 2024

Penalties for Not Filing GSTR-7

Late filing of GSTR-7 attracts the following repercussions:

  • Late Fees: Rs.50per day (Rs. 25 CGST + Rs. 25 SGST) with a maximum cap of Rs. 2,000
  • Interest: 18% annual interest on TDS amount till date of payment

These penalties apply even if the delay is just by 1 day. Hence, taxpayers must prioritize on-time GSTR-7 filing every month.

How to Revise GSTR-7?

Unlike GSTR-1 and GSTR-3B, GSTR-7 filed for a month cannot be revised.

Any corrections must be reported in the GSTR-7 of the subsequent month. For example, if there is an error in the GSTR-7 filed for October 2023, it can be rectified only through GSTR-7 for November 2023.

Based on the corrections filed, GSTR-7A (the TDS certificate) will also be amended. So taxpayers must be extremely careful while filing GSTR-7 and cross-check all details.

Details Required in GSTR-7

GSTR-7 must be filed online on the Government Portal and contains the following sections:

1. GSTIN

Auto-populated based on login details

Auto-populated from registration data

3. Details of TDS

Covers GSTIN of deductee, total and TDS amount (CGST, SGST, IGST)

4. Corrections in Earlier Periods

Original and revised details of past month’s TDS

5. Tax Deducted and Paid

Tax amount deducted and paid (CGST, SGST, IGST)

6. Interests and Late Fees

Interest, late fee payable and paid on TDS

7. Refund Claimed

Details for claiming refund of excess TDS

8. Cash Ledger Credits

Auto-populated credits from return filing

Filers must report all information accurately as per their TDS deducted, paid, and pending. Declarations regarding the correctness of data must also be submitted along with the return filing on the portal.

Frequently Asked Questions

Q: Can I file a revised GSTR-7?

A: No, GSTR-7 once filed for a month cannot be revised. Any changes have to be reported in next month’s GSTR-7.

Q: Is there any offline utility for filing GSTR-7?

A:Yes. GSTR 7 return can be filed through offline mode also.

Q: Can I claim refund of excess TDS through GSTR-7?

A: Yes, filers can claim refund of any excess TDS amount through GSTR-7.

Q: What is the maximum late fee for delayed GSTR-7 filing?

A: Maximum Rs. 2,000 (Rs. 1000 CGST + Rs. 1000 SGST)

Conclusion

File error-free GSTR-7 on time every month to avoid penalties and seamlessly enable ITC claims for suppliers. Ensure you report accurate details of all TDS deducted and paid. Double check form accuracy before filing as revisions are not permitted.

Filing GSTR-7 does not have to be confusing or intimidating. By understanding the key rules and formats outlined above, you can discharge your GST TDS compliance with confidence. Reach out to accounting services like Filingwala for any assistance with TDS filing under GST. Their team of experts can help you stay compliant with GSTR-7 filings in a hassle-free manner every month.

Goods and Services Tax (GST) in India: Super Guide

Goods and Services Tax (GST) in India: Super Guide

Everything You Need to Know About GST Implementation, Objectives, Advantages, Components, and Compliances

Goods and Services Tax (GST) is one of the biggest tax reforms that has happened in India’s indirect taxation system. Implemented on July 1, 2017, it has replaced a plethora of indirect taxes levied by the central and state governments.

GST aims to unify the country under a single, comprehensive tax system for goods and services. It has been in the works for over 17 years before final implementation. With its far-reaching impact on businesses and consumers alike, GST is truly a historic transformation of India’s taxation landscape.

This guide is from the experts of filingwala.com will provide a deep dive into all aspects of GST in India. We’ll explore what GST is, the journey to its implementation, its objectives and advantages, the tax components, and the major compliances under the GST regime.

By the end of this guide, you’ll have a 360-degree understanding of this landmark tax reform that has transformed the way trade and commerce operate in India.

Let’s get started!

Table of Contents

  • What is GST?
  • The Journey of GST Implementation in India
  • Objectives of GST
  • Advantages of GST
  • GST Tax Components: CGST, SGST, and IGST
  • Tax Structure Before GST
  • How GST Has Helped Reduce Prices
  • New Compliances Under GST
    • e-Way Bills
    • e-Invoicing
  • Frequently Asked Questions

What is GST?

Goods and Services Tax or GST is an indirect, consumption-based tax levied on the supply of goods and services in India. It is a comprehensive destination-based tax on the value-added at each stage of the supply chain.

In straightforward terms, GST is a singular tax that has assimilated nearly all indirect taxes applicable to goods and services. It applies to the final consumer but collects at each stage of the supply chain, providing credit for taxes paid in the preceding stages.

Some key characteristics of GST:

  • Multi-stage tax – It is levied across the entire supply chain i.e. from manufacture to sale, whenever there is a supply of goods or services.
  • Value added – At each stage, GST levies tax exclusively on the value added. For instance, during the manufacturing stage, businesses pay tax on the value added by converting raw materials into finished products.
  • Destination based – GST is applicable in the destination state, which is where the consumer finally consumes the product.
  • Comprehensive – GST has subsumed around 17 indirect taxes under a single umbrella.
  • Digital – The entire GST framework functions online via portals and provides for electronic compliance procedures.

So in summary, GST is a comprehensive, multi-stage, value-added tax on goods and services that is applicable on the final point of consumption.

The Journey of GST Implementation in India

Developing over a span of 17 years, the implementation of the Goods and Services Tax in India originated from the proposal in the year 2000. It navigated through various twists and turns before finally reaching full implementation in 2017.

2000 – The Vajpayee government sets up a committee to draft GST laws.

2004 – The Kelkar Task Force suggests a comprehensive GST model based on VAT.

2006 – The government presents a proposal to implement GST by April 1, 2010.

2011 -The Parliament introduces the Constitution Amendment Bill, but it lapses with the dissolution of the 15th Lok Sabha.

2014 -The Parliament passed the Constitution (122nd Amendment) Bill after incorporating changes recommended by the Select Committee of Rajya Sabha.

The Parliament passed the Constitution (122nd Amendment) Bill after incorporating changes recommended by the Select Committee of Rajya Sabha.

2016-In September 2016, the Parliament finally passed the Constitution (122nd Amendment) Bill, formally becoming the Constitution Amendment Bill.

2017 – The GST Council finalizes all rules and rates for GST implementation.

1st July 2017 – The Goods and Services Tax Finally Comes Into Effect in India.

As you can see, GST implementation has been a long, arduous journey spanning over 17 years. But the results have been worth it, as GST transforms India into a unified market under a single tax umbrella.

Objectives of GST

The Goods and Services Tax in India was introduced with some key objectives in mind:

  • One Nation, One Tax – To create a unified national market by replacing a web of local taxes. GST establishes a common national tax across the country.
  • Subsume multiple taxes – To merge the plethora of indirect taxes like VAT, excise duty, service tax etc. into a single tax structure. This greatly reduces compliance burden for businesses.
  • Eliminate cascading effect – Remove the cascading effect of taxes i.e. tax on tax. Under GST, there is a seamless flow of credit across the supply chain.
  • Improve tax compliance – A unified tax system results in higher tax compliance and transparency. All activities fall under a common portal.
  • Boost “Make in India” – The reduction in tax burden promotes manufacturing activity and investments in India.
  • Higher revenue – Widening the tax base and including more taxpayers leads to higher tax revenue.
  • Simplified tax system – Having a centralized tax structure makes compliance much simpler for businesses.

Keeping these key objectives in mind, the designers have structured the GST tax system, and the results so far show encouragement on all these fronts.

Advantages of GST

The implementation of GST has bestowed several benefits to various stakeholders of India’s economy:

For businesses

  • Elimination of cascading effect – No double taxation
  • Seamless flow of credit – Set off available across supply chain
  • Unified tax structure – One tax for goods and services
  • Simpler compliance – Single point interface on GSTN portal
  • Improved logistics and faster delivery of goods
  • Warehouse consolidation

2. For consumers

  • Reduced prices – No cascading effect so lower prices
  • Uniform prices – One unified national market
  • Simple tax structure – Easier to understand
  • More transparency – Details available on portal

3. For government

  • Wider taxpayer base – Better tracking of transactions
  • Increased tax collection – Higher revenues
  • One unified market – Easier to regulate
  • Less tax evasion – Improved compliance and tracking
  • Ease of doing business – Simplified and online procedures

4. For economy

  • Boost to ‘Make in India’ – Encourages manufacturing and exports
  • Higher investment – Due to easier tax compliance
  • Jobs creation – Increase in economic activity
  • GDP growth – Expanded tax base contributes to growth

GST has also made India more competitive globally by removing the disadvantages of the previous indirect tax structure. Overall, it has led to economic growth, higher revenues, and a simplified tax system.

GST Tax Components: CGST, SGST, and IGST

There are 3 taxes applicable under the GST regime:

CGST – Collected by Centre on an intra-state sale

SGST – Collected by State on an intra-state sale

IGST – Collected by Centre on inter-state sale

Here is an overview of the GST tax components:

  • Intra-state supply – When goods or services are sold within the same state, CGST + SGST will apply. Revenue is shared equally between Centre and State.
  • Inter-state supply – IGST (Integrated GST) applies on sales to another state. IGST is levied by Centre and revenue is later apportioned between destination state and Centre.
  • Imports – Imports are deemed as inter-state supply and subject to IGST plus customs duties.
  • Exports – Exports are zero-rated under GST i.e. no tax is charged but credit is available for taxes paid on inputs.

This comprehensive dual GST model has integrated the country into a single market. CGST and SGST have given both Center and States the power to levy GST simultaneously. IGST has resolved the problem of taxing inter-state transactions.

Tax Structure Before GST

India had a complex indirect tax structure before GST implementation. There were a multitude of taxes levied by the state and central governments:

State Taxes

  • VAT
  • Central Sales Tax
  • Purchase Tax
  • Entertainment Tax
  • Luxury Tax
  • Entry Tax
  • Taxes on Lottery, Betting etc.

Central Taxes

  • Excise Duty
  • Additional Excise Duty
  • Service Tax
  • Countervailing Duty (CVD)
  • Special Additional Duty (SAD)
  • Cesses and Surcharges

This led to significant complications for businesses. Some taxes were levied concurrently by Centre and State. Taxes paid on inputs were not available as credit against output GST. This resulted in cascading of taxes and higher overall tax burden. There were also additional compliance obligations for taxpayers who had to deal with multiple authorities.

GST has integrated all these taxes into a simple, unified GST structure leading to lower compliance burden and reduced prices for consumers.

How GST Has Helped Reduce Prices

One of the major benefits of GST is that it has reduced the final price of goods and services for consumers. Let’s see how it achieved this.

Under the earlier tax regime, there was a cascading effect of taxes i.e. tax on tax. Consumers bore this cumulative burden of taxes that got added at every stage of the supply chain.

For example, VAT was charged on the finished product. But embedded in the cost were already excise duties paid on raw materials inputs etc. This cascading effect led to artificially inflated prices for consumers.

GST removes this cascading effect by providing seamless flow of credit across the entire supply chain. Taxes paid at earlier stages can be claimed as credit against GST charged at later stages.

This helps reduce the price as the tax is calculated only on the value addition at each stage. The final price paid by consumer is lower compared to earlier regimes.

To illustrate, let’s take the example of chocolate manufacturing:

Earlier Regime

StageCost10% TaxTotal
Manufacturer$100$10$110
Warehouse$40$14$154
Retailer$50$20$224
Total Tax$44

GST Regime

StageCost10% GSTGST PaidTotal
Manufacturer$100$10$10$110
Warehouse$40$4$4$114
Retailer$50$5$5$169
Total Tax$19

As you can see, the price paid by consumer is lower under GST due to input tax credits and elimination of cascading effect. This is a win-win for both consumers and businesses.

New Compliances Under GST

The GST regime has introduced some new compliances that taxpayers need to adhere to:

e-Way Bills

E-way bills are electronic documents that must be generated for transporting goods valued over Rs. 50,000 within or between states. They contain details of the shipment, goods, recipient, etc.

E-way bills bring in a digital and unified system for tracking movement of goods. It helps boost tax compliance and makes cross-border trade easier by reducing delays and bottlenecks.

e-Invoicing

E-invoicing is mandatory for businesses with turnover over Rs.100 crore. They need to generate all B2B invoices by uploading details on the Invoice Registration Portal.

It obtains an IRN (Invoice Reference Number) that acts as a unique identity for the invoice. This improves accuracy and eliminates duplicate invoices. It also saves time and cost of data entry for filing returns. The tax department also gains better visibility into transactions.

Both e-way bills and e-invoicing improve transparency and compliance under GST. They represent the increasing focus on technology adoption and digitization.

Frequently Asked Questions

Q: What is the GST tax rate in India?

A: India has a four-tiered GST rate structure of 5%, 12%, 18% and 28%. There is also a 0% tax on essential daily-use items. The applicable rate depends on the goods or services.

Q: How is IGST split between Centre and State?

A: IGST is split based on the destination state where goods/services are consumed. The Centre transfers the state’s share of IGST to the destination state.

Q: Is GST charged on imports in India?

A: Imports are chargeable to IGST plus customs duties. The IGST rate on imports is equal to the total of CGST and SGST applicable in case of domestic goods.

Q: Is petrol and diesel covered under GST?

A: No, petrol and diesel along with alcohol, real estate etc. are not included under GST currently. They continue to be taxed separately by states and Centre.

Conclusion

The implementation of Goods and Services Tax is truly historic in transforming India’s indirect taxation ecosystem. It has replaced the complex multi-layered tax system with a simple, tech-driven GST system.

GST has benefited businesses, consumers, government, and the Indian economy alike. It has eased compliance burden, reduced prices, boosted tax collections and enhanced market competitiveness.

Despite some initial hiccups, the implementation of GST has taken firm root in the country and its long-term benefits have begun to materialize. This reform is poised to boost productivity, investments, and growth, propelling India’s economic narrative to the next level.

Filingwala.com

With the complexities of GST compliance and running a business in India, it becomes essential to have expert help by your side. This is where filingwala.com comes in. As a leading provider of legal, tax and accounting services for businesses, they offer end-to-end solutions for income tax return filing, company registration, trademark services, GST compliance, auditing and more. Their team of experienced Chartered Accountants, Company Secretaries and lawyers leverage technology and process excellence to deliver high quality services on-time. Businesses can rely on their expertise to stay legally compliant, manage finances better and focus on their core operations. So partner with the professionals at filingwala.com and stay worry-free about your business legalities.

The Complete Guide to Goods and Services Tax (GST) in India

Table of Contents

  • Introduction
  • What is GST?
  • Brief History of GST in India
  • Objectives of Implementing GST
  • Key Benefits of GST
  • Components of GST
  • GST Tax Rates
  • GST Registration
  • GST Return Filing
  • Input Tax Credit
  • GST E-Way Bills
  • GST Payment Process
  • Key Differences Between Old and New Tax Regime
  • Frequently Asked Questions

Introduction

Goods and Services Tax (GST) is considered one of the most significant tax reforms in India’s history. Implemented in 2017, it transformed the country’s complex and convoluted indirect tax structure into a simplified, unified system.

But what exactly is GST and how does it impact businesses and consumers in India? This comprehensive guide provides an in-depth look at everything you need to know about Goods and Services Tax in India.

What is GST?

GST stands for Goods and Services Tax. It is an indirect, multi-stage tax levied on the supply of goods and services across India. Under the GST regime, taxes are levied at every point of sale.

For intrastate transactions, Central GST (CGST) and State GST (SGST) are applicable. For interstate transactions, Integrated GST (IGST) is levied.

GST has subsumed all major indirect taxes previously applicable in India, including:

  • Excise duty
  • Service tax
  • Value Added Tax (VAT)
  • Entertainment tax
  • Luxury tax
  • Octroi
  • CST

By combining all of these taxes into one unified tax system, GST has created a common national market across the country.

Brief History of GST in India

The introduction of a nationwide Goods and Services Tax in India has been in discussion for over a decade.

In 2000, the Vajpayee government first initiated the idea of GST by forming an empowered committee. Over the years, several committees and working groups were formed to analyze and recommend GST models.

Finally, in 2017 after extensive debate, the Indian Parliament passed four GST bills – CGST, SGST, IGST and GST Compensation Cess. The Goods and Services Tax was officially launched on 1st July 2017.

Objectives of Implementing GST

The key objectives behind introducing GST in India were to:

  • Simplify the complex indirect tax structure with a single, unified tax system
  • Eliminate the cascading effect of taxes
  • Improve tax compliance and collection efficiency
  • Reduce tax evasion by curbing black money
  • Boost foreign investment and Make in India initiative
  • Enhance ease of doing business in India
  • Create a common national market with lower tax burden
  • Reduce logistics and transportation costs

Key Benefits of GST

The implementation of GST in India has brought several benefits for businesses, consumers and the overall economy:

1. Elimination of Cascading Effect of Taxes

One of the major advantages of GST is that it has eliminated the cascading effect of taxes.

In the earlier system, taxes were levied at each stage of production and distribution. No credit was available for taxes paid in procuring inputs. This cascading of taxes ultimately increased the cost of goods and services for the end consumer.

GST removes this effect by allowing set-off and input tax credit across the entire supply chain.

2. Improved Tax Compliance and Revenue

GST has made tax compliance much easier via a single online registration and return filing system. This has brought many unorganized sectors under the tax system, widening the tax base.

According to government data, over 1.3 million businesses have registered under GST since its implementation. Tax collections have also gradually increased over the years, crossing the Rs 1 lakh crore mark.

3. Boost to ‘Make in India’ Initiative

Under the GST regime, complex customs duties have been replaced with a simple taxation system. This has facilitated the ‘Make in India’ initiative by making exports more competitive. Domestic manufacturers can now produce goods at low costs and export them worldwide at zero rating.

4. Enhanced Ease of Doing Business

With online, unified tax procedures, GST has eased processes for doing business in India. Common registration, filing, and compliance norms under CGST and SGST have reduced difficulties faced earlier in inter-state trade. Overall, it has improved the ease of doing business ranking of India globally.

5. Creation of Unified National Market

GST has dismantled inter-state trade barriers and created a common national market. Earlier, states had their own VAT rates and regulations, causing delays and costs for movement of goods across state borders. GST has eliminated this fragmentation through a pooled taxation system.

6. Lower Logistics Costs

The e-way bill system under GST has eliminated inter-state check posts. This has reduced transit times and logistics costs for transport of goods considerably across the country.

Components of GST

There are 3 main taxes under the GST regime in India:

CGST: Collected by the Central Government on an intrastate sale

SGST: Collected by the state governments on an intrastate sale

IGST: Collected by the Central Government on interstate sale

In most cases, the GST tax structure is as follows:

TransactionTaxes Applicable
Intrastate supplyCGST + SGST
Interstate supplyIGST

The CGST and SGST are parallel taxes which run alongside each other without any tax on tax. IGST is a single consolidated tax levied on interstate supplies.

The IGST mechanism ensures proper revenue collection for both the origin and destination states in case of interstate transactions.

GST Tax Rates

There are 4 main GST tax rates applicable on goods and services in India:

  • 0% – This GST rate is applicable on essential commodities and services like food grains, dairy products, books, etc.
  • 5% – This lower GST slab rate is applicable on mass-use items like spices, packaged food, footwear, etc.
  • 12% – The 12% GST rate applies to processed food, hair oil, soaps, apparel, etc.
  • 18% – The standard 18% rate applies to most goods and services including electronics, stationery, AC restaurants, etc.
  • 28% – The highest 28% GST rate applies to white goods, automobiles, tobacco products, luxury items, etc.

Besides these rates, some goods like pan masala, aerated beverages, and luxury cars attract a cess over and above the 28% GST.

GST Registration

Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year exceed Rs40 lakh (Rs. 20 lakhs for Northeastern states) have to register for GST. In case of service provider’s, the threshold limit is Rs 20 lakhs (Rs 10 lakh for special category) The registration can be done online via the GST portal.

The documents required for GST registration include:

  • PAN Card
  • Business Address Proof
  • Business Bank Account Details
  • Authorized Signatory Details
  • Digital Signature Certificate

For small businesses, the GST composition scheme allows easy compliance by paying a flat 1-5% tax based on turnover, without input credits.

GST Return Filing

Under GST, a regular taxpayer has to file monthly, quarterly and annual returns summing up their sales and purchases.

GSTR-1: Filed monthly, it provides invoice-level details of all outward supplies, interstate transactions, and taxes collected.

GSTR-2: Filed monthly, it provides the details of all inward supply invoices on which input tax credit will be claimed. (Currently suspended)

GSTR-3: The monthly return that auto-populates values from GSTR-1 and GSTR-2 giving the overall tax liability, ITC claims and settlements.

GSTR-9: Filed annually, it is a consolidated statement providing reconciliation of sales, purchases and input tax credit for the financial year.

For composition dealers, a simple quarterly return (GSTR-4) has to be filed online.

Input Tax Credit

Input Tax Credit (ITC) is a unique feature of GST that eliminates cascading of taxes. ITC allows businesses to claim the tax already paid on inputs, and reduce this from their output GST liability.

For example, a textile firm buying yarn worth Rs. 25 lakhs plus GST at 12% (Rs 3 lakhs) can claim the Rs. 3 lakhs in its return to lower the GST burden on output supplies.

ITC can be claimed on invoices uploaded by vendors as long as the goods or services are used for taxable business purposes. This incentivizes B2B buyers to only source inputs from GST-registered suppliers.

GST E-Way Bills

E-way bills serve as a tax compliance and track and trace mechanism under GST for interstate and intrastate movement of goods.

For consignments above Rs. 50,000 in value, e-way bills must be generated online prior to transit. It contains key details of the shipment, transporter, and vehicle for easy identification by tax officials during transit.

E-way bills have improved efficiencies in logistics by reducing delays and overhead costs of physical verification of goods at state borders.

GST Payment Process

The government has introduced several digital options to make GST payment convenient:

  • NEFT/RTGS: Online payment of GST using internet banking facility from any bank.
  • Net Banking: Over 55 banks allow direct payment of GST from the taxpayer’s account.
  • Credit/Debit Card: Payment can be made using credit or debit cards of Visa, Mastercard, American Express or RuPay.
  • UPI/BHIM: GST can also be paid via BHIM app or other UPI apps like Google Pay, PhonePe, etc.
  • Cash Ledger: Cash or leftover credit in the taxpayer’s ledger account can be utilized for making GST payments.
  • TReDS: Corporates can settle GST dues through Trade Receivables Discounting System (TReDS).

Taxpayers also get MSG alerts via SMS and email whenever any payment is made to their GSTIN.

Key Differences Between Old and New Tax Regime

The transition from previous indirect taxes to GST has brought several crucial changes to the tax and compliance landscape:

  • Wide range of taxes subsumed into a single tax
  • No differentiation between goods and services
  • Credit setoff is available across the entire supply chain
  • Online procedures replace manual processes
  • E-way bills and e-invoicing enhance tracking of goods
  • No Entry Tax or Octroi on state borders
  • Exports are zero-rated under GST
  • Refunds are directly deposited to bank accounts
  • Unified tax slabs across the country

While GST compliance has become much simpler, taxpayers must cautiously manage their working capital by monitoring invoice-level credits and vendor payments. Overall, it is a win-win reform for all stakeholders creating one unified common market.

Frequently Asked Questions

Q. What are the benefits of GST for consumers?

GST has reduced the overall tax burden on consumers by eliminating the cascading effect of taxes. Unified tax rates have also decreased costs of many categories of goods and services. Consumers also benefit from simpler tax-inclusive pricing.

Q. How is GST advantageous for traders?

GST provides traders a simplified way of doing business with availability of input tax credit, online procedures, lowered logistics costs, and a unified tax structure across the country. Traders also benefit from widened market reach.

Q. How is interstate trade of goods operated under GST?

Interstate trade and movement of goods is facilitated through the e-way bill and IGST mechanism under GST. IGST levied on interstate supply can be claimed as input credit to ease the cash flow.

Q. Can input credit be claimed on all business expenses under GST?

No, input tax credit can only be claimed on inputs, capital goods and services used in the course or furtherance of taxable business operations. Credit is not available on ineligible expenses.

Q. How is GST beneficial for the economy?

GST has made India a unified, common market by merging all states into one tax base. It has increased tax revenues, boosted international trade, improved compliance and eased business operations across the country.

Conclusion

The implementation of GST in India has successfully overhauled the convoluted indirect tax structure with a simple, transparent, and technology-driven tax regime. Despite initial transition challenges, it has widened the tax base, removed inter-state barriers, ended the cascading effect of taxes, and enhanced the ease of doing business. With each passing year, the government is taking steps to fine-tune GST rates and compliance procedures based on feedback from taxpayers and experts. Most agree that GST is one of the most progressive policy reforms that has set the stage for a competitive, single unified Indian market.

Impact of GST on Rent in India

Impact of GST on Rent in India

Table of Contents

  • Introduction
  • Rental Income Taxation Pre-GST
  • Applicability of GST on Rental Income
  • Exemption for Residential Rentals for Living
  • GST Registration Thresholds for Rental Income
  • Place of Supply Provisions for Rental GST
  • GST Treatment for Commercial Rentals
  • How to Calculate GST on Rented Property
  • Eligibility to Claim ITC on Rental Expenses
  • TDS Provisions on Rental Income
  • Key Takeaways for Landlords and Tenants
  • Frequently Asked Questions

Introduction

The rollout of Goods and Services Tax (GST) in 2017 significantly altered the Impact of GST on Rent in India. For landlords earning rental income and businesses taking property on rent, it is essential to understand GST implications to ensure tax compliance and maximize savings. This comprehensive guide written by experts from filingwala.com examines GST treatment on residential & commercial rentals, registration requirements, place of supply rules, calculation methodology, input tax credits eligibility, and other crucial aspects every landlord and tenant should know.

If you don’t know who is filingwala.com, they are a legal service providers for businesses and businessmen. Filingwala handles your GST Filings, Setups, Returns and other Taxes Services.

Rental Income Taxation Pre-GST

In the pre-GST regime before 2017, landlords with over ₹10 lakh total annual rental income from all properties had to obtain service tax registration and pay 15% service tax only on commercial rental income. No service tax applied on residential property rentals. The higher ₹20 lakh GST registration threshold (₹10 lakh in special category states) exempts many more small landlords from tax compliance.

Applicability of GST on Rental Income

As per GST law, renting an immovable property is considered a service. GST applies only if the property is rented to a business, either wholly or partially for business use. Renting a residential property solely for living purposes does not attract GST. Whereas a residential property used by registered tenant for business purpose will be liable to pay GST at 18%, irrespective of whether the landlord is GST-registered or not. Commercial property rentals attract 18% GST as it qualifies as a supply of service.

Exemption for Residential Rentals for Living

A key update came through the 48th GST Council meeting, whereby renting a residential property to a registered person for use as their own residence is exempt from GST. However, the rental income must be received in the landlord’s personal capacity, not as a business transaction.

GST Registration Thresholds for Rental Income

Landlords with over ₹20 lakh annual rental income from properties that are rented out to businesses are required to register under GST and comply with tax filings and payments. This ₹20 lakh registration threshold excludes rental income earned from leasing residential properties solely for living purposes.

For properties rented out for business use, there is no minimum rental income threshold for GST registration – GST registration and compliance is mandatory irrespective of total rental income.

Place of Supply Provisions for Rental GST

The rental property’s location determines whether CGST + SGST (intrastate supply) or IGST (interstate supply) will be applicable:

  1. If landlord and rented property are located in different states – IGST at 18% will apply
  2. If landlord and tenant are registered in the same state where the rented property is located – CGST + SGST at 9% each will apply
  3. If landlord is registered in the state where property is located but tenant is registered in a different state – CGST+SGST applies, though tenant cannot claim corresponding input tax credit

GST Treatment for Commercial Rentals

For commercial property rentals, 18% GST (either CGST + SGST or IGST) applies on the total rental amount. Invoices issued to tenants should charge and collect GST periodically based on the rent amount payable for that period.

Certain exemptions exist if the owner is a registered charitable or religious trust renting out space in a religious structure meant for public use, with caps on daily/monthly rent.

How to Calculate GST on Rented Property

The landlord must actively calculate GST on the total rental amount charged to the tenant for each tax period. For instance, in the case of a monthly rent of ₹1 lakh, the landlord must actively collect 18% GST on the full ₹1 lakh for every month, totaling ₹18,000 to be collected as GST each month. This results in a total monthly rental invoice of ₹1 lakh for rent, plus ₹18,000 for GST, amounting to ₹1.18 lakhs.s.

Eligibility to Claim ITC on Rental Expenses

Tenants may claim input tax credit (ITC) for the GST paid on their rentals, provided they meet all the eligibility conditions. The sole exception is when CGST and SGST were paid in a different state by the landlord, but the tenant is registered in a different state. In such situations, the tenant cannot claim the ITC for the CGST and SGST components paid.

Landlords can avail limited Input Tax Credit (ITC) on expenses like maintenance charges and brokerage commissions for their rented properties, provided they refrain from capitalizing these costs in their accounting records. However, it’s crucial to remember that ITC is not permitted on the construction expenses of rented properties.

TDS Provisions on Rental Income

Tenants must deduct 5% TDS from the rent paid if the total annual rent for a property exceeds ₹2.4 lakh, regardless of whether it is residential or commercial property. Additionally, there is no need to pay any additional GST on the TDS deducted from rental payments..

Key Takeaways for Landlords and Tenants

  • No GST applies on residential property rentals solely for living purposes
  • Commercial rentals attract 18% GST – either CGST + SGST or IGST depending on place of supply
  • Landlords with >₹20 lakh annual rental income need GST registration
  • For properties rented for business use, GST registration is compulsory irrespective of rental income
  • Place of supply rules determine whether CGST+SGST (intrastate) or IGST (interstate) applies
  • Tenants can claim ITC for GST paid on rentals, with some conditions
  • Landlords can claim limited ITC on maintenance charges, brokerage etc. if costs are not capitalized in accounts
  • 5% TDS must be deducted if annual rental payments exceed ₹2.4 lakh

Thus, gaining clarity on GST guidelines is essential for both property owners and tenants to remain compliant and maximize tax efficiency. Proper planning and record keeping enables optimizing available credits and deductions. Consulting taxation experts helps apply rules precisely based on specific circumstances.

Frequently Asked Questions

Q1. Does GST apply if I rent my residential property to a tenant for living purposes?

A1. No, renting out residential property solely for living attracts no GST, even if it is partly used for business activities.

Q2. I have rented a warehouse in Karnataka. Can I claim CGST+SGST credit if I am registered in Maharashtra?

A2. No, you can claim ITC only for the IGST component paid on renting the Karnataka property, not the CGST+SGST portions.

Q3. I pay ₹50,000 as monthly rent for my office. How much GST will I need to pay?

A3. You will have to pay 18% GST on ₹50,000 which is ₹9,000. So your total rental invoice will be ₹59,000 including ₹50,000 rent + ₹9,000 GST.

Q4. As a landlord, can I claim ITC on property brokerage charges?

A4. You can claim Input Tax Credit (ITC) on expenses like brokerage for rented out properties, provided you do not capitalize them in your books of account.

Q5. Do I need to deduct TDS if I rent a residential property for self-living?

A5. No, TDS provision does not apply if you self-occupy the rented residential property. It applies only if you sub-let the property to someone else.

What is GST Returns in India: Due Dates, Late Fees, and How to File Hassle-Free

Table of Contents:

– Introduction
– What is a GST Return?
– Who Needs to File GST Returns?
– Types of GST Returns and Due Dates
– Upcoming Due Dates for GST Returns
– Consequences of Late Filing or Non-Filing
– How to File GST Returns Online
– Tips for Hassle-Free GST Return Filing
– Frequently Asked Questions
– Conclusion

Introduction

Filing GST returns in India can seem complicated and stressful for many businesses in India. However, it is a mandatory compliance that cannot be ignored. Failing to file your GST returns on time can lead to heavy late fees, penalties, and even imprisonment in severe cases.

This comprehensive guide will make GST return filing easy to understand and comply with. It covers everything you need to know, from due dates to the process of filing online. Follow our tips and expert advice for hassle-free GST compliance.

What is a GST Return in India?

A GST return is a document containing details of your business’ sales, purchases, input tax credit, and GST paid for a specific tax period. There are various types of returns prescribed under GST, with different due dates based on your business type. These returns have to be filed online on the Government’s GST portal.

The purpose of a GST return is to:

– Report your outward and inward supplies, tax liability, and ITC claimed
– Pay due GST to the government
– Claim refunds of excess GST paid
– Reconcile books of accounts with GST returns

Who Needs to File GST Returns in India?

If you are a GST registered business in India exceeding the threshold limit, you are required to file GST returns periodically. This includes:

– Regular businesses with >Rs. 5 crore aggregate turnover – Monthly and Annual Return
– Small businesses between Rs. 1.5 – 5 crore turnover – Quarterly Return under QRMP Scheme
– Businesses with <Rs. 1.5 crore turnover – Quarterly Return and Annual Return
– E-commerce operators, casual taxable persons, Input Service Distributors
– Composition scheme businesses – Quarterly Return

The frequency of returns is typically monthly or quarterly based on your aggregate annual turnover. Even if you have zero transactions, nil returns must be filed. Non-filing can lead to your GST registration being canceled.

Types of GST Returns and Due Dates

There are various types of GST returns prescribed under the law. The key ones include:

Monthly Returns:

– GSTR-1 – Due 11th of next month – Outward supplies
– GSTR-3B – Due 20th of next month – Summary return with tax payment
– GSTR-5 – Due 20th of next month – Return for non-resident taxable person
– GSTR-6 – Due 13th of next month – Return for Input Service Distributor
– GSTR-7 – Due 10th of next month – Return for Tax Deducted at Source
– GSTR-8 – Due 10th of next month – Return for e-commerce operators

Quarterly Returns:

– GSTR-1 – Due 13th of month after quarter – Outward supplies (for QRMP scheme taxpayers)
– GSTR-3B – Due 22nd/24th of month after quarter – Summary return (for QRMP scheme taxpayers)
– CMP-08 – Due 18th of month after quarter – Return for composition taxpayers

Annual Returns:

– GSTR-9 – Due 31st Dec of next financial year – Annual return for regular taxpayers
– GSTR-9A – Due 31st Dec of next financial year – Annual return for composition taxpayers
– GSTR-9C – Due 31st Dec of next financial year – Reconciliation statement (for >Rs. 5 crore turnover)

Other Returns:

– GSTR-4 – Due 30th April – Return for composition taxpayers
– GSTR-5A – Due 20th of next month – Return for OIDAR service providers
– GSTR-10 – Within 3 months of cancellation – Final return
– GSTR-11 – Due 28th of month – Return for UIN entities

The exact due dates keep getting extended by notifications, so do refer to the GST portal for updated dates.

Upcoming Due Dates for GST Returns

Here are some key upcoming due dates for GST returns in 2023:

– GSTR-3B for May 2023 – Due 20th June
– GSTR-1 for Apr-Jun 2023 (QRMP scheme taxpayers) – Due 13th July
– GSTR-7 for June 2023 – Due 10th July
– GSTR-3B for Apr-Jun 2023 (QRMP scheme taxpayers) – Due 22nd/24th July
– GSTR-3B for June 2023 – Due 20th July
– GSTR-1 for June 2023 – Due 11th July

Set calendar reminders for due dates to prevent delays and penalties. You can also authorize experts like [Filingwala] to file on your behalf and avoid missing deadlines.

Consequences of Late Filing or Non-Filing

Late filing or non-filing of GST returns attracts the following consequences:

– Interest @18% per annum on late tax payment
– Late fee up to Rs. 5000 (Rs. 10,000 for over Rs. 5 crore turnover)
– Loss of input tax credit
– Scrutiny and tax assessments
– Cancellation of GST registration
– Prosecution in severe cases

Hence, it is critical for businesses to comply and file returns on time, either in-house or through an expert like Filingwala.

How to File GST Returns Online in India?

Follow these steps to file your GST returns smoothly online:

1. Collect documents like invoices, bank statements, previous returns, etc.

2. Log in to the Government GST Portal using your login credentials.

3. Go to Services > Returns > Returns Dashboard.

4. Select the tax period and return form (GSTR-1, 3B etc.)

5. Ensure your business details are updated in the return.

6. Input invoice-wise outward supplies, inward supplies, and ITC claimed.

7. Preview the drafted return and ensure no errors.

8. Submit the return along with tax payment (for GSTR-3B).

9. Download confirmation and save for records.

Alternatively, you can use the GST software by [Filingwala] for an easier filing experience.

Tips for Hassle-Free GST Return Filing

Follow these expert tips to sail through GST return filing every time:

– Maintain detailed records of your sales, purchases, invoices, payments, and inventory for easy return filing.

– Reconcile your books of accounts before filing returns to avoid data mismatches.

– Save invoices and files systematically to quickly retrieve when required.

– Track due dates and set reminders to prevent delayed filing.

– Ensure all business details are updated on the GST portal before filing.

– Preview returns thoroughly and correct errors to avoid rejection.

– Opt for [GST compliance services] like Filingwala to stay stress-free.

– Save acknowledgment of returns filed for future reference.

Frequently Asked Questions

Q. What if I miss the GST return due date?

A. You can still file returns up to the 20th of the next month along with late fees.

Q. How do I revise a filed GSTR-1 return?
A. You can revise GSTR-1 of a particular month in the next GSTR-1 return.

Q. Is it mandatory to file nil returns?
A. Yes, even if you have zero turnover, you must file nil returns to comply.

Q. Do I have to link my bank account while filing GSTR-3B?
A. Yes, you need to link your bank account and pay taxes while filing GSTR-3B.

Q. What is the maximum late fee under GST?
A. For large businesses, it is Rs. 10,000 (Rs. 5000 CGST + Rs. 5000 SGST).

Conclusion

Filing accurate GST returns on time should be a top priority to avoid heavy penalties. Businesses can ease GST compliance by maintaining thorough records, monitoring due dates, and seeking expert assistance.

Use this guide on due dates, returns, online filing process, and tips to get your GST compliance in order. Stay updated on the latest changes to the GST law. Partner with a trusted GST Suvidha Provider like [Filingwala] for assistance.

File your GST returns on time, every time! Effective compliance will help your business stay

GST Impact on Swiggy, Zomato and India’s Restaurant Industry – Food Aggregators Detailed Analysis

At Filingwala.com we beleive that the advent of food delivery platforms like Swiggy and Zomato has transformed the restaurant industry in India. From small roadside eateries to posh fine-dining establishments, every restaurant today relies on food aggregators for increased orders and revenue.

But while Zomato and Swiggy have been a boon for both restaurants and customers, they’ve also created some confusion around the applicability of GST. Filingwala.com experts have created this in-depth article, where we analyze how GST impacts food aggregators, restaurants, consumers and the solutions.

Table of Contents:

  • Overview of the Restaurant Industry in India
  • How Do Food Aggregators Like Swiggy and Zomato Work?
  • GST Rules for Food Aggregators
  • Impact of GST on Swiggy, Zomato and Other Food Apps
  • How GST Affects Restaurants Using Food Delivery Platforms
  • Effect of Food Aggregator GST on End Consumers
  • Key Takeaways on GST and India’s Food Services Industry

The Restaurant Industry Landscape in India

The Indian restaurant industry has witnessed exponential growth in the last decade, especially with the rise of nuclear families, millennial diners, and busy work lifestyles.

Some key highlights:

  • Size of India’s food services industry expected to grow from ₹4.2 lakh crore in 2017 to ₹8.0 lakh crore by 2022.
  • Organized food services account for ₹99,000 crore, or around 35% of the overall market.
  • The unorganized sector including small street vendors and dhabas make up the rest.
  • A CAGR of 10% expected over the next 5 years.
  • New restaurant openings growing at 15% year-on-year.

This remarkable growth has been enabled by food tech startups like Swiggy and Zomato that connect customers with their favorite restaurants via online delivery and table reservations.

How Do Food Aggregators Like Swiggy and Zomato Work?

Food delivery platforms have an easy-to-use app interface allowing users to:

  • Browse menus and food options across different cuisines and restaurants in their city.
  • Place orders seamlessly and make payments via multiple options.
  • Track the delivery in real-time right till the food arrives at your doorstep.

For restaurants, Zomato and Swiggy provide the technology to manage incoming orders, as well as the delivery fleet to ensure faster and timely fulfillment.

Key advantages provided by food aggregators:

For Customers:

  • Convenience of dining at home with wider cuisine choices.
    Attractive discounts and offers on food orders.
  • Streamlined ordering and payments.
  • Live order tracking for a superior user experience.

For Restaurants:

  • Wider reach and visibility among tech-savvy customers.
  • Higher revenue and order volumes.
  • Marketing and promotions assistance.
  • Data-driven insights into menu performance.

GST Rules for Food Aggregators in India

Under GST guidelines, food aggregators are categorized as ‘e-commerce operators’. This means they are liable to collect and deposit GST on restaurant commissions they charge:

  • 18% GST is applicable on the commission a food delivery app earns per order.
  • Tax calculated on gross commission amount before deducting any expenses.
  • Input tax credit can be claimed on such commissions.

Many restaurants earlier did not pay any indirect tax on the commission they shared with aggregators. With Swiggy and Zomato now obligated to collect GST, it has increased tax compliance.

Impact of GST on Swiggy, Zomato and Other Food Apps

For food delivery apps, GST has resulted in enhanced tax liability and compliance requirements:

  • As e-commerce operators, apps need to compulsorily register, file returns and pay 18% GST on commissions.
  • GST is calculated on their gross commission, increasing the tax incidence.
  • Additional resources required for managing registration, filings and integrating GST systems.
  • Rise in accounting costs due to multiple GST rates across different food items.

Apps are also concerned that GST may prevent small restaurants from agreeing to list on the platform. Overall, GST has increased the operational costs of running a food delivery business.

How GST Affects Restaurants Using Food Delivery Platforms

For organized restaurants already registered under GST, the impact is minimal. They now only share the post-GST commission with aggregators. But small unregistered food vendors are affected:

  • Unregistered players now need to compulsorily pay 18% GST on the commission they share. This increases compliance costs.
  • Narrow profit margins of small restaurants get impacted due to increased tax incidence.
  • Accounting systems need upgrading to handle multiple GST rates.
  • Loss of competitive edge vis-a-vis organized chains, as they can claim input tax credits.

However, GST also helps unorganized players come under the tax net and makes the system more transparent. They may benefit from availing input credits.

Effect of Food Aggregator GST on End Consumers

For end consumers, the impact of GST on food delivery apps and restaurants has been negligible so far:

  • GST incidence only on the commission portion, not the entire food bill.
  • Aggregators have managed to absorb the added GST burden so far, avoiding increase in delivery fees.
  • Most restaurants have also managed to bear the extra indirect tax cost due to higher volumes generated via online ordering.

However, some marginal price increases may be passed on to consumers in the long run. But overall, the convenience, discounts and choices offered by food delivery platforms are expected to offset this.

Key Takeaways on GST and India’s Food Services Industry

To conclude, GST has been a mixed bag for India’s booming food services sector:

  • Food aggregators have seen increased tax and compliance burden.
  • Unorganized players reluctant to list on Zomato and Swiggy due to GST costs.
  • But larger organized restaurants mostly remain unaffected.
  • Consumers largely protected from major cost inflation so far.

As the industry evolves, smaller eateries may also realize the benefits of formalization and increased reach offered by delivery apps and adjust to the new GST regime.

The implementation of GST has brought about many changes in tax compliance and reporting for food delivery platforms, restaurants, and the entire food services industry. While this article covers the major impacts, the full implications may be complex for businesses to handle on their own. 

We recommend you consult GST experts at Filingwala to get personalized advice and assistance with GST registration, return filing, input tax credits, reconciliations, and other compliance aspects for your restaurant or food tech business. Their team can hand-hold you through the transition to GST and ensure full compliance at affordable costs. Reach out to Filingwala today to understand how GST affects your business and start leveraging professional help.