Goods & Service Tax
1.What is Goods and Service Tax (GST)?
It is an indirect tax on goods and services. Taxes paid at each stage from manufacture to consumptions will be set off and credited. Taxation will be value-added only. The final consumer will bear the burden of the tax.
2.What is the type of GST implemented? Why is it required?
A dual GST. Tax is levied by the Centre and States simultaneously on a common tax base. Both Centre and States will thus receive the funds needed for their operations.
3.What is CGST?
This is GST levied by the Centre on goods and/or services supplied by a State.
4.What is SGST?
This is GST levied by the States.
5.What is Integrated GST (IGST)?
This tax is levied by Centre on the supply of goods and services between States.
1.What is Composition Scheme?
This is a mode of taxation designed for small taxpayers with a turnover as follows:
- For goods: Up to Rs 1.5 Crore
- For services: Up to Rs 5 Lakhs
2.What is the specified rate of composition levy?
|Manufacturers, other than manufacturers of such goods as may be notified by the Government (Ice cream, Pan Masala, Tobacco products etc.)||1% (.5% Central tax plus .5% State tax) of the turnover|
|Restaurant Services||5% (2.5% Central tax plus 2.5% SGST) of the turnover|
|Traders or any other supplier eligible for composition levy||1% (0.5% Central tax plus 0.5% State tax) of the turnover|
3.How are Returns to be filed under Composition Scheme?
Form GSTR-4 has to be electronically filed on the GSTN common portal every quarter by 18th of the month following the quarter.
4.If I am providing Online Consultancy services from Kochi to entities in Tamil Nadu, do I need to register in Tamil Nadu? Is Composition Scheme possible?
Services are provided from Kochi. So registration is required to be taken only in Kerala. IGST has to be paid for the interstate supply of services. Composition Scheme is not allowed on interstate supplies.
5.If I am a trader from Tamil Nadu selling Fruits & Vegetables with a turnover of Rs 1.6 Crore, with distribution to Kerala, Bangalore, Chennai and Vijayawada, do I need to register under GST? Is Composition Scheme possible?
6.Fresh Fruits & Vegetables have GST exemption. So there is no need to register. Since the goods are exempt, there is no question of Composition Scheme.
- If my turnover is Rs 60 lakhs for the manufacture of inner tubes for bicycles at Bangalore and I am currently paying 5% GST, can I opt for Composition Scheme?
7.You can opt for Composition Scheme. The turnover limit for Composition Scheme is Rs 1.5 Crore. 2% of turnover is applicable as GST rate under Composition Scheme.
- If I am a Chennai based retailer selling FMCG products who has opted for Composition Scheme and have paid input GST of Rs 45,000, how am I to claim Input Tax Credit?
8.Input Tax Credit cannot be availed by a Composition Dealer since consumer does not need to pay GST. GST rate is 1%. You can file Returns on a quarterly basis.
- If a person opting to pay tax under the composition scheme receives inputs/input services from an unregistered person, will the composition taxpayer have to pay GST under reverse charge? If so, how should it be done?
9.GST has to be paid by the composition taxpayer under reverse charge. It has to be paid by the 18th day of the month following the quarter in which the supplies were received. Payment can be made online while GST Return filing in FORM GSTR-4.
- Is it possible to withdraw voluntarily from composition scheme? If so, what is the procedure?
10.A person can withdraw voluntarily from the scheme. A signed or verified application has to be submitted. FORM GST CMP-04 has to be used for this purpose. Also, a statement in FORM GST ITC-01 has to be submitted within a period of thirty days of withdrawal.
- I have opted for Composition Scheme, but if during the financial year the turnover crosses Rs 1.5 Crores, can I continue under composition scheme for rest of the year i.e. till 31st March 2018?
- You cannot continue under composition scheme. From the day on which the aggregate turnover during the financial year exceeds the specified limit (Rs 1.5 Crores), your eligibility under Composition Scheme lapses.
- You have to file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the date of exceeding the limit.
- Input tax credit can be availed in respect of the following held by you on the date of withdrawal:
- the stock of inputs
- inputs contained in semi-finished or finished goods held in stock
- capital goods
- Within 30 days of withdrawal, you have to furnish a statement in FORM GST ITC-01 with details of such stock held.
11.In the case of a person opting for composition levy, what are the compliances required with regard to ITC reversal?
- He has to pay an amount equal to the input tax credit relating to inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately before the date of applicability of Composition Scheme. Calculation of ITC will be proportionate to corresponding invoices on which credit was obtained.
- With regard to capital goods held in stock on the day before the date of the change to Composition Scheme, the input tax credit relating to the remaining useful life (in months) has to be calculated on pro-rata basis, considering the useful life as 5 years. For example, if capital goods have been in use for 4 years, 6 months and 15 days, the useful remaining life in months will be 5 months (excluding the month containing the 15 days). If ITC is taken as C, ITC on the remaining useful life will be C multiplied by 5/60. The result will be the amount payable on capital goods. The ITC amount is to be calculated separately for integrated tax, central tax and State tax/Union territory tax.
- Payment can be made by debiting electronic credit ledger, if there is enough balance or by debiting electronic cash ledger.
- If there is any balance in the electronic credit ledger, it will lapse.
- Form GST ITC-03 has to be submitted. It is a declaration of intimation of ITC reversal/payment of tax on input. Submission has to be within a period of sixty days from the beginning of the relevant financial year.
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Recording Transactions under GST
1.Can we account for works contract sales and purchases in Tally?
Works contract is treated as a service under GST. The works contract purchases and sales have to be recorded as taxable purchases and sales.
2.Can we record inclusive-of-tax transactions?
Yes, this can be done in Tally.
3.Can we record expenses incurred in the furtherance of business like rent, telephone expenses, stationery, etc, and claim them under GST?
Such expenses can be claimed under GST by recording them as purchases and not as expenses.
4.Can I make stock transfer entry between two godowns of same organisation inside the State and outside the State?
- Under the GST regime, stock transfer to a godown or to an entity with a different GSTIN registration is considered taxable supply.
- Hence, if the stock is transferred to a godown of the same organisation, it is recorded as a transfer if the godown is operating under the same GSTIN.
- In case the godown has a different GSTIN, it is recorded as a taxable outward supply. You can record transfers using the delivery note or material out voucher types, and taxable outward supplies using sales vouchers in Tally.
- In case of supply to a godown outside the State, it is recorded as a taxable outward supply, since the same GSTIN cannot be used for business operations in two different States.
5.Can I account for consignment sales?
Consignment sales are similar to other sales under GST. You can record the sales invoice with GST ledgers (if it is taxable), and record a tax payment voucher to pay tax.
6.Can we maintain transactions of job work under GST?
You can maintain your job work entries using the existing features of job work in Tally. Necessary changes will be made available in Tally when the GST rules related to job work are finalised.
GST Features and Tax Calculations
1.Is there a provision for identifying service and goods ineligible for input credit?
In Tally, there is a provision to set such goods or services as ineligible for input credit. (The tax paid on procuring certain services such as renting of the motor cab, the supply of tour operator services and items that are used in the manufacturing of exempt goods fall under “ineligible for input credit category”. You cannot claim credit for tax paid for these items.)
2.Can I adopt GST in case I am not maintaining Inventory?
You can by enabling the option “Maintain Accounts Only” and then enabling GST.
3.If I have a multiple-location customer with different GSTINs, can I create multiple addresses in one ledger?
You can create multiple addresses for one customer and update all the GSTINs of that customer along with the corresponding address.
4.Can I use a common GST tax ledger for all GST tax types? If not, why?
Common GST tax ledger cannot be used for all GST tax types (Central Tax, State Tax, Integrated Tax, and Cess). Each tax type has to be separately accounted for, which will help:
- In payment of tax under separate tax type heads as required by GSTN
- In availing input tax credit for each tax type
- The government in ascertaining revenue for each tax type, which will enable smooth revenue-sharing mechanism
5.If our company has multiple GSTINs, do we need to have one company with multiple godowns, or should we create multiple companies in Tally?
You can have only one GSTIN per company. If you have multiple GSTINs, you need to create multiple companies in Tally.
6.Can we calculate GST on free supplies?
GST is not applicable to free supplies or samples. The value of invoice will be based on billed quantity. The quantity of free supply/samples will be added at zero value. In case a separate invoice is created for free supplies/samples, the invoice has to be recorded with zero value.
7.Is auto calculation possible with central tax/state tax/integrated tax using voucher class?
An auto calculation will happen when you create a voucher class with central tax/state tax/integrated tax as a default additional ledger.
Unregistered Dealers under GST
1.In case of reverse charge transactions with unregistered dealers, can we create self-invoices in Tally?
You can do this by creating a voucher type with separate series of voucher numbering and generating the purchase invoice for tracking reverse charge to unregistered dealers.
1.Can I view the Central tax (CGST) and State tax (SGST) separately in Profit and Loss A/c?
Values of duties and taxes are not displayed in Profit and Loss A/c. You can view the ledger-wise value of each tax type under selecting Duties & Taxes in Balance Sheet.
2.Is there an entry option in Tally if we do not know the registration type?
If you are not sure about the registration type of your party while creating or updating the party master, you can select “Unknown” as the registration type in the party ledger. You can update the details later by altering the party ledger.
3.Can we manage GST accounts when we have multiple branches in different states?
You can create a separate company for each registration obtained under GST for the branch offices, and maintain your data.
4.Can I create GST e-Cash, e-Credit, and e-Liability masters in Tally?
You can create ledgers named as e-Cash, e-Credit, and e-Liability in Tally and maintain these ledgers separately for GST.
5.Can we configure GST for a composite dealer in Tally?
Tally currently does not provide support for composite dealer type.
6.Can we carry a forward excess of Input Credit to next month in Tally?
This happens automatically in Tally and will appear in ledgers created under Duties & Taxes.
7.Can GST Classification for Capital Goods be done in Tally?
You can create capital goods under Fixed Assets and then enable GST.