Dec 292018
 

Annual return under GST

Legal provisions:

Section 44(1) of CGST Act read with Rule 80(1) of CGST Rules:

Every Registered person other than –

  1. An Input Service Distributor,
  2. A person paying tax under section 51 (TDS) or section 52 (TCS),
  • A casual taxable person and
  1. A non-resident taxable person,

Shall furnish an annual return for every financial year electronically in Form GSTR9 through the common portal (www.gst.gov.in) either directly or through facilitation center on or before the thirty-first day of December following the end of such financial year

Section 35(5) of CGST Act:

Every registered person whose turnover during a financial year exceeds the prescribed limit (Rs. 2 cr.) shall get his accounts audited by a chartered accountant or a cost accountant and shall submit:

  • A copy of the audited annual accounts,
  • The reconciliation statement (GSTR-9C) under sub-section (2) of section 44 and
  • Such other documents in such form and manner as may be prescribed.

Reconciliation statement – GSTR-9C is reconciliation of data as per books of accounts and data as reported in
GSTR-9.

Analysis of provision:

Who shall file annual return (GSTR 9) Who shall file GSTR 9A Who shall file GSTR 9B Who shall not file GSTR 9
–  Every registered person –  By a supplier who was under composition scheme at any time during the relevant financial year – A person paying tax under section 52 (TCS) [GSTR 9B required to be file in this case from 2018-19 and same is not applicable for 2017-18] –  An Input Service Distributor,

–  A person paying tax under section 51 (TDS) or

–  A person paying tax under section 52 (TCS) [GSTR 9B required to be file in this case from 2018-19 and same is not applicable for 2017-18]  or

–  A casual taxable person and

–  A non-resident taxable person.

Case study:

Case 1: A registered dealer was earlier registered as composition taxpayer but later he switched over from composition scheme.

He shall be required to file both the Annual Return GSTR-9A and GSTR-9.

Case 2: What is the effect of cancellation of registration under GST on filing of GSTR -9?

 GSTR 9 is required to be filed for the period for which registration is effective.

Case 3: How much annual return is required to be filed in case more than one GST registration is taken by same person?

Annual return for each GST registration is required to be filed separately.

Dec 272018
 

How to avoid penalty under GST

Section 122 of CGST act read as follows:

Section 122. (1) Where a taxable person who––

  • Supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
  • Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
  • Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • Collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • Fails to deduct the tax in accordance with the provisions of section 51(1), or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
  • Fails to collect tax in accordance with the provisions of of section 52(1), or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
  • Takes or utilises ITC without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
  • Fraudulently obtains refund of tax under this Act;
  • Takes or distributes ITC in contravention of section 20, or the rules made thereunder;
  • Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
  • Is liable to be registered under this Act but fails to obtain registration;
  • Furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
  • Obstructs or prevents any officer in discharge of his duties under this Act;
  • Transports any taxable goods without the cover of documents as may be specified in this behalf;
  • Suppresses his turnover leading to evasion of tax under this Act;
  • Fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
  • Fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
  • Supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
  • Issues any invoice or document by using the registration number of another registered person;
  • Tampers with, or destroys any material evidence or document;
  • Disposes off or tampers with any goods that have been detained, seized, or attached under this Act,

he shall be liable to pay a penalty of:

  • Ten thousand rupees or
  • An amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently,

whichever is higher.

Dec 202018
 

Procedural aspects of E way bills

Basic procedure:

The following is the basic procedure to generate an e-Way bill

  1. Furnish information in Form GST EWB-01 (PART A and PART B) before the commencement of movement of goods (on ewaybillgst.gov.in)
  2. PART A contains the consignment details which cannot be changed later are as under.
GSTIN GSTIN of supplier and recipient of goods. (If unregistered, “URP” shall be entered)
Place of Dispatch / Delivery It shall indicate the PIN Code of the places of Dispatch / Delivery. Option available to enter the addresses of these places (not mandatory)
Document Number It shall contain reference of Invoice No., Bill of supply No., Delivery Challan No.
Document Date Date shall be based on the date of document, as specified above.
Value of Goods Value shall be determined in accordance with Section 15 and shall include CGST, SGST or UTGST, IGST and Cess, if any
HSN Code If Annual Turnover (in preceding FY) is less than Rs. 5 Cr. – 2 Digits

If Annual Turnover (in preceding FY) is more than Rs. 5 Cr. – 4 Digits

Reason for Transport Following are the available options:

(i) Supply (ii) Export / Import (iii) Job Work

(iv) SKD / CKD – i.e., Semi Knocked Down / Completely Knocked Down (v) Recipient not known (vi) Line Sales (vii) Sales Returns (viii) Exhibition or fairs (ix) For own use (x) Others

  1. PART-B contains the details of the conveyance to be entered.
  2. A unique e-Way number (EBN) will be generated on the portal after the details as mentioned above are filled.
  3. Obtain a print of the details along with the unique (EBN) generated after the details are uploaded
  4. Move the goods under the cover of the e-Way bill and the ‘tax invoice’ or such other document
  5. Acceptance / rejection of the e-Way bill to be made within 72 hours of details being available on portal (OR time of delivery of goods if earlier than 72 hours) – Else it results in deemed acceptance
  6. PART A slip is a temporary number generated after entering all the details in PART-A. This can be shared or used by the transporter or the client who can later enter the details in PART B and generate the e-Way bill. This is useful when you have prepared the invoice and when transporter details are not available. This is temporarily stored on the portal and once the transporter details are entered in PART B the e-Way bill can be generated.
  7. The details of conveyance are not required to be declared if the distance between the place of consignor and the place of transporter is less than 50 Kms. It is not required even where the distance between the place of transporter and the place of consignee is less than 50 Kms.
  8. Where the goods are transported by railways or by air or vessel, the e-Way bill shall be generated on the common portal in Part B of Form GST EWB-01. Where the goods are transported by railways, the railways shall not deliver the goods unless the e-Way bill is produced at the time of delivery. The time period for filling details in Part B shall be furnished within fifteen days of furnishing details in Part A.
  9. Where the goods are transported by the registered person using his own conveyance or public conveyance by road then Part B of Form GST EWB-01 must also be filled in addition to part A of Form GST EWB 01.
  10. Transporters not registered under GST who wish to cause the movement of goods shall enroll on the portal to get a 15-digit unique Transporter ID or TRANSIN. This can be shared by them to their clients who may enter this number while generating e-Way bills.
  11. The particulars of PART A cannot be changed even in case of entering the wrong information. The only option left to the person is to cancel the e-Way bill. However, PART-B can be updated any number of times within the overall validity of E way bills.
  12. If E way bill has been verified by a proper officer during its transit it can not be cancelled.

Practical issues:

If a person has more than one place of registered supply Create sub users for a particular place of business and generate the e-Way bill with that business location.

A maximum of 3 sub users can be created for each additional place of business.

Multiple invoice for same customer EWB have to be generated for each invoices separately
Goods are transported from one conveyance to another Details of conveyance in  the  E-Way bill in Part B should be updated

Dec 112018
 

E-way bills –detailed analysis w.r.t. generation of E – way bills

Legal background (Section 68 of CGST act and Rule 138A):

Section 68. (1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.

(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed.

(3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.

Objective of E – way bills:

  • Basically to avoid or curb GST evasion.

Who shall generate E way bill:

Who shall generate E way bill:
1. The persons responsible to generate the e-Way bill are:
(i) The person causing movement of goods if consignment value exceeds 50,000/-:
– Ordinarily, the consignor;
– Where the consignor is not a registered person, the Consignee;
(ii) The Transporter, where an e-Way bill has not been generated as cited supra in respect of movement of goods;

2. In case of inter-State movement of goods, irrespective of the value of goods, the following persons would be responsible for raising an e-way bill:
– Principal/job worker;
– An unregistered consignor of handicraft goods for inter-State movement, who is exempt from registration under Section 24(i) and (ii);

3. The registered person can authorize a transporter or e-commerce operator or a courier agency to furnish the information in Part A of Form GST EWB-01, on behalf of the registered person.

4. Unregistered transporter can enroll on the common portal and generate e-Way bill on behalf of its customers;

5. Any Person (unregistered recipient) can enroll & generate the e-Way bill for movement of goods for his/her own use

6. Any person desirous of generating may voluntarily generate an e-Way bill even when value of consignment is lesser than 50,000 Rupees. If the goods are moved by unregistered person and handed over to the transporter for transportation of goods then either of them can generate an e-Way bill (EWB). The unregistered person can generate EWB as an unregistered person.

Practical issues relating to generation of E way bills:

Issue Solution
Sales return Either the customer or the transporter will issue the E-way bills
High seas sales Since sales is effected through documents and hence no E way bill is required to be generated.

–  Ultimate buyer will be required to generate an e-Way bill to move goods from the port to the place of business

Customer moving goods himself E-Way bill can be generated by:

–  The taxpayer or

–  Supplier based on the invoice issued to him.

–  The customer may also enrol as a citizen and generate the e-Way bill himself

The consignee or recipient refuse to take the delivery of goods Transporter can get one more e-Way bill generated with the help of the supplier/ recipient
Individual bills are less than Rs. 50,000/- but the total value of goods in a conveyance exceed Rs. 50,000/ The transporter shall be responsible / liable to raise an e-Way bill

.

Dec 102018
 

Return of time expired goods under GST

Meaning of “Expiry of time”:

For layman:

The drugs or medicines are sold by the manufacturer to the wholesaler and by the wholesaler to the retailer on the basis of an invoice/bill of supply as case may be. They have a defined life term which is referred to as the date of expiry and on crossing the date of expiry these are returned back to the manufacturer through supply chain.

Under GST:

Section 34(1) and (2) is reproduced as below:

  • Where a tax invoice has been issued for supply of any goods or services or both and
    1. The taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or
    2. Where the goods supplied are returned by the recipient, or
    3. Where goods or services or both supplied are found to be deficient,

The registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.

  • Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed: Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person.

Implication:

There could be two cases while returning time expired goods in general trade practices:

Case 1:

Goods being return before furnishing annual return of taxable person who have supplied the goods:

  • In this case goods can be returned against credit note issued by supplier. Thus, goods will be return on the basis of delivery challan and in case value of return goods being more than Rs 50000/- E way bill shall be generated accordingly.
  • In this case full ITC needs to be reversed attributable to such goods.

Case 2: Goods being return after the expiry of above period:

  • In this case such return would be treated as fresh supply.
  • Such goods shall be accompanied by tax invoice and E way bill if required.
  • Full ITC attributable to it need not to reversed
  • GST liable to be paid based on value at the time of return.

Procedure to be followed:

Case 1:

  1. As per section 34(1) of the CGST Act, the manufacturer or the wholesaler who has supplied the goods to the wholesaler or retailer, as the case may be, has the option to issue a credit note in relation to the time expired goods returned by the wholesaler or retailer, as the case may be.
  2. If the credit note is issued within the time limit specified in section 34(2) of the CGST Act, the tax liability may be adjusted by the supplier, provided the person  returning the time expired goods has either not availed the ITC or if availed has reversed the ITC so availed against the goods being returned. However, if the time limit has expired, a credit note may still be issued but the tax liability cannot be adjusted by him in his hands
  3. Further, in case they are returned beyond the time period specified and a credit note is issued, there is no requirement to declare such credit note on the common portal by the supplier as tax liability cannot be adjusted in this case.

Case 2:

  1. Person returning the time expired goods is a registered person
    • Return of goods to be treated as fresh supply
    • Value of the said goods as shown in the invoice on the basis of which the goods were supplied earlier may be taken as the value of such return supply
    • Recipient is eligible to avail Input Tax Credit on said return supply subject to section 16 of the CGST Act.
  2. Person returning the time expired goods is a composition taxpayer
    • Return the said goods by issuing a bill of supply and pay tax at the rate applicable
    • Recipient is not eligible to avail ITC of said return supply
  3. Person returning the time expired goods is an unregistered person: Recipient may return the said goods by issuing any commercial document without charging any tax.

Where the time expired goods which have been returned by the retailer/wholesaler are destroyed by the manufacturer, he/she is required to reverse the ITC availed on the return supply in terms of section 17(5) (h) of the CGST Act. However, ITC which is required to be reversed in such scenario is the ITC availed on the return supply and not the ITC that is attributable to the manufacture of such time expired goods.

Dec 052018
 

Del-credere agent (DCA) under GST

Meaning of Del-credere agent:

It is a type of principal-agent relationship wherein the agent acts not only as a salesperson or broker for the principal, but also as a guarantor of credit extended to the buyer.

  • Where the buyer fails to make payment to the principal by the due date, DCA makes the payment to the principal on behalf of the buyer and
  • The commission paid to the DCA may be higher than that paid to a normal agent.
  • DCA in turn charges small amount of interest from the buyer with the amount of supply from supplier.
  • In some cases DCA enters into a separate agreement for extending transactional based loan to buyer.

Issue involved:

Whether valuation of supply would include amount of interest being paid by the buyer to agent for supplies made by principle?

Examination of Relevant law:

Section 7 of CGST Act read with para 3 of schedule 1: ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION:

Supply of goods—

  1. by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
  2. by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

Thus, if agent is working on behalf of principal then supply of goods is different from interest charged by agent from buyer and

if both agent and principal are working independently than supply of goods be agent to buyer and interest charged by him are against for one and same transaction and thus, GST would charged on combine value of amount against supplies and interest charged thereon.

Analysis of facts:

Here two scenarios are possible:

Scenario 1 Scenario 2
Where the invoice for supply of goods is issued by the supplier to the buyer:

1.     Invoice may directly issued by supplier to buyer

2.     Invoice may be passed through agent but issued by supplier

Where the invoice for supply of goods is issued by the DCA in his own name
Result of scenario
Agent is not working as DCA agent. Agent is DCA agent.
Implication on GST:
The value of interest charged by agent would be a separate transaction and GST would not be applicable on that amount as same in exempted supply. The value of the interest charged for such credit would be required to be included in the value of supply of goods by DCA to the recipient as per section 15(2)(d) of the CGST Act

Nov 222018
 

Consequences of non filing to regular return in GST

Who are non fillers for the purpose of section 62 of GST act?

A non-filer is a taxpayer who has not met his tax filing obligation by the due date of the return / statement or approved extended due date.

Non-filers and unregistered non-compliant person are normally misunderstood as one and the same but, these two persons are different. The difference is as under:

  1. An unregistered non-compliant person under GST is the person liable to apply and obtain registration but failed to do so, i.e., unregistered non – compliant person.
  2. Non-filer is a person who is already registered and is therefore liable to file the return/ statement but has failed to do so, i.e., registered non – compliant.

Thus, A Non-filer is a Registered Person liable to file the return or statement periodically but one who has failed to do so.

Assessment of non – filers under section 62 of CGST act:

Under Section 62 of the CGST Act, where a registered taxable person fails to furnish the return (non-filer), the proper officer may,

  • After allowing a period of 15 days from the date of service of the notice under 46 of the CGST Act 2017,

proceed to assess the tax liability of the person to his best judgment, taking into account all the relevant material which is either available on records or which he has gathered.

Assessment of unregistered non compliant person:

Under Section 63 of the CGST Act, where a taxable person (i.e. a person liable to take registration) fails to obtain registration, the proper officer may:

  • Decide to assess the tax liability of the said taxable person to his best judgment for the relevant tax periods, .i.e., 15 days notice period need not to be given in such cases, and
  • Issue an assessment order within a period of five years from the due date for filing of the annual return for the year to which the tax not paid relates to.

What material department would consider for making best judgment assessment?

Best Judgment Assessment are made either

  1. ex-parte or
  2. by rejecting the accounts or
  3. plea of the Registered person.

In such cases no records or documents are furnished, or claims are not substantiated. Records and evidence produced before proper officer are rejected, whether wholly or partly, due to unreliability, incorrectness or incompleteness.

In making best judgment assessment the officer does not possess arbitrary powers to assess any figure as he like. Though quasi judicial in nature these assessments are to be based on the principles of justice, equity and good conscience. In common parlance the words ‘best judgment’ carry the connotation that what is being done is in order to make an estimate.

The best judgment is made in a non-arbitrary way and the nexus seems apparent the decision is final and there is no scope for interfering with the best judgment. Thus, in a way there remains no scope for challenging a best judgment assessment. This is because an assessee cannot be allowed to take advantage of his own illegal act.

Nov 152018
 

Auidt under GST: person covered and annual return to be furnished

Meaning of Audit in GST:

The definition of Audit given in Section 2(13) of Central Goods and Services Tax Act, 2017(CGST Act) as “audit means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made there under.”

As per Rule 80(3) of the CGST Rules “every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of the audited annual accounts and a reconciliation statement, duly certified, in GSTR 9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner”.

Thus, the entire compliance of GST law has to be confirmed in GST audit.

What are the outcomes of GST audit:

According to section 35(5) “every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall Submit:

  • A copy of the audited annual accounts,
  • The reconciliation statement under sub-section (2) of section 44 and
  • Such other documents in such form and manner as may be prescribed”.

According to section 44(2) “every registered person who is required to get his accounts audited in accordance with section 35(5) shall furnish, electronically:

  • The annual return under sub-section (1) along with
  • A copy of the audited annual accounts and
  • A reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and
  • Such other particulars as may be prescribed”.

Whether for the first financial year, i.e., 2017-18, aggregate turnover of 9 months shall be taken for considering the application of audit provision to the auditee?

For the financial year 2017-18, the GST period comprises of 9 months whereas the relevant section 35(5) uses the expression financial year.

Therefore, in the absence of clarification from government, also to avoid any cases of default, it is reasonable to understand that to reckon the turnover limits prescribed for audit i.e., Rs. 2 crores one has to reckon the turnovers for the whole of the financial year which would also include the first quarter of the financial year 2017-18.

What are the documents required to be furnished annually after audit being carried out?

  1. Annual Return;
  2. Copy of the audited annual accounts;
  3. Reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement in FORM GSTR 9C, duly certified;
  4. Such other particulars, as may be prescribed
Nov 132018
 

Exemptions for charitable trust : GST

Exemptions available to charitable trust:

Exemption from Section / NN Summary of exemption
Income Tax Section 11 and Section 13 Complete exemption of income from tax net
GST NN 12/2017 Central Tax (Rate)

NN 9/2017 Integrated Tax (Rate)

Specific exemption:

1.     Health services

2.     Educational services

3.     Religious services

General exemption:

services by an entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities

Here an attempt being made to combined study the effect to above exemption:

  1. Since Under GST only registration under income tax enough to avail the benefit of exemption and in income tax act registration under section 12AA clubbed with certain other condition are critical requirement to avail total exemption. Hence there may be situation where income of charitable trust is taxed with no GST is payable by them.
  2. Charitable organization prior to 01/04/1997 is registered under section 12A of income tax act and hence such organization may face problem in availing exemption under GST regime.
  3. Since income tax provide exemption on assessment year basis, i.e., situation that exist at the end of relevant previous year and GST levy based on situation exist at the time of supply of services and hence there may be situation where in the same year exemption is available in GST but no exemption in income tax and vise versa. Such situation will occur on 1st year of registration or year of cancellation of registration under income tax act.
  4. Under GST regime a charitable organization should involved in charitable activity. That means a trust registered under section 12AA of income act must also engaged in charitable activities as specified in GST regime. Thus, coverage of organization under GST regime is restrictive and full of various open ended and undefined terms.

The effect of above it may be concluded that while a trust is availing benefit of income tax exemption may not avail benefit of GST exemption in certain cases. The relevant clauses are reproduce below for the sake of comparison:

Charitable activities under GST:

GST Exemption Notification in para 2 (r) defines “charitable activities” to mean activities relating to –

  • public health by way of ,-
    • care or counselling of
      • terminally ill persons or persons with severe physical or mental disability;
      • persons afflicted with HIV or AIDS; (III)persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or
    • public awareness of preventive health, family planning or prevention of HIV infection;
  • advancement of religion , spirituality or yoga
  • advancement of educational programmes or skill development relating to,-
  • abandoned, orphaned or homeless children;
  • physically or mentally abused and traumatized persons;
  • prisoners; or
  • persons over the age of 65 years residing in a rural area;
  • preservation of environment including watershed, forests and wildlife.

Aug 272018
 

Review of GST Input Tax Credit Claim

Why there is need for review of ITC claim:

Since the rules for claiming ITC are neo for everyone including tax consultants and hence it can be understood that there could be:

  • Errors of understanding,
  • System errors and
  • Transactional mistakes

Thus, for every taxable person there is last chance to ensure total reconciliation and proper availment is carryout before filing September 2018 return.

Special focus point in review of ITC claim:

  • Transaction not entered in accounting records at all:
    1. Stock transfers to different states
    2. Agent principle supply
    3. Supply to related party without consideration / inadequate consideration
    4. Liability under reverse charge
    5. Identification of Barter activities
    6. In the same line identification of non-monetary consideration in any exchange transaction, which leads to revision of valuation

Since no records for above transaction is available in normal book of accounts and accounting trail and hence special focus must be adopted on these transaction to avoid under booking and under payment of liability.

  • Review of ITC on transaction entered in books of accounts:
    1. Procurement policy to ensure that vendor had paid taxes on invoice
    2. Invoice must have properly indicated and value of taxes paid
    3. All major inputs, capital goods and services needs to be review to ensure that anything on which credit have been taken is not blocked under the act
    4. Ensure source of procurement must be from registered vendor
    5. Whether ITC is taken only after receipt of goods and /or services
    6. Whether GST liability under RCM is actually paid to avoid payment of irrevocable interest.
    7. Ensure that the tax paid on purchases returns on GST invoice is equal to credit on inputs
    8. In case of capitalization of expenses ensure whether ineligible credits exist or eligible credits are not availed
    9. Confirm whether all vendor payments being made within 180 days: There is a time limit for payment to vendors within 180- days. If it exceeds, ITC needs to be reversed with interest, however an amendment for without interest reversal has been proposed for amendment in the CGST Bill. On payment to the vendor is made, the credit can be claimed back.
    10. Review the discount given / taken and debit notes and credit notes
    11. ITC credit is not available for personal transactions
    12. Review of various returns filed under GST such as GSTR 1 and GSTR 3B and identification of differences in ITC if any, between GSTR 3B and GSTR 2A.
    13. Reivew of ratios like credit availed and utilised to total GST, ITC/ Total purchases and expenses

The above are few focus areas of ITC review which must be done before the end of every financial year to ensure that any wrong credit availed must be reversed to avoid future legal tangle.