GST is a procedure-driven system where timely and accurate compliances are necessary. We list important actions you should keep in mind as a GST-registered firm.
Decide if the product/ service you are buying or selling is subject to levy of GST. Check the list of goods and services exempted from GST. On the rest, the GST is leviable. The overarching principle is GST is applicable on all made in India supplies of Goods or Services by a taxable person for business purpose and imports.
Know who will pay the GST in a transaction? Generally, the supplier is liable to pay the tax. But many exceptions to this rule exist. So, if you are buying from a firm not registered with GST, you have to raise a self-invoice and pay tax under the reverse charge mechanism. The importer of the goods also pays the GST. An e-commerce operator has to pay tax collected at source (TCS) @1 per cent on behalf of firms selling goods on its website.
File returns on time: The submission of correct and timely return is the most crucial responsibility of a GST registered firm. A GST registered firm will have to provide information to GSTN in electronic format at regular intervals. As a GST-registered business, you must submit your GST returns one month after the month in which supplies took place. You need to file monthly, quarterly and annual returns. Any wrong filing of return would result in blocking of money and possible loss of business. Annual return is to be filed by December 31 of the following financial year. Incomplete returns are considered invalid returns.
Pay tax and claim input tax credits: The GST charged and collected at the time of supplies is known as the output tax which must be paid to the government through the GSTN. The GST paid by you on business purchases and on import is known as input tax. You can claim input tax credit on such purchases if your firm satisfies the conditions for doing so.
Keep proper business and accounting records: You need to keep all business and accounting records for at least five years. This requirement remains even if your business ceased or is de-registered from GST. The accounts and records must be maintained in electronic form.
Inform GST authority of changes: You need to inform the GST authority within 30 days after any change in your business circumstances. These changes include: Change in business registered address or mailing address, Change in business name, Change in business constitution or ownership etc.
Reconcile account at time of de-registration: When your GST registration is cancelled, you need to account for GST on business assets held on the last day of registration. These assets include inventories, fixed assets, non-residential properties and goods imported under the various GST schemes.
You must ensure that not only you but firms involved in the business transactions with you file returns and pay tax on time.
If they fail, you will not get the input credit due and suffer financially.
The writer is from the Indian Trade Service. The views are personal. Adapted from his book, ‘The GST Nation: A Guide for Business Transformation’
This is part four of a series to introduce readers to GST’s intricacies. Read the previous part here |