Common mistake occurred in transition to GST regime
I have personally identified some mistakes which business man are doing in the transition process from existing acts to GST regime. If the data is not properly synchronize properly from the very beginning of transition process it is obvious that difficulty may arise subsequently at the time of filing of return or validation of return or claiming refund.
Here it should be noted that under GST there is a online process of matching date and cross validation and hence any mistake you incurred at the time of making sale invoice it cant be hidden and get noticed at the time of filling return or matching of return. Further, non filing of data or wrong filing of data is auto penalized under GST and hence it is important file correct data to avoid future difficulties.
Here an attempt is being done to identify such common mistakes that are doing viral in transition process which needs to be avoided:
- Place of supply in case of providing services is not known or not known properly. In case of provider of services place of supply is specifically mentioned under section 12 & 13 of the act.
a. In case any service is not specifically covered under section 12 or as the case be section 13 then place of supply will be registered address of recipient of services in case supply of services to registered person.
b. In case supply of services to unregistered person place of supply will be the address of recipient known to the service provider.
c. In case address is not known than supplier address will the address of recipient. In such cases supplier will charge CGST and SCGST in all cases.
d. In few cases act have made it compulsory to mention the address in that cases service bill can be provided only after recipient address is mentioned on invoice.
- The next common mistake is to mentioning GST against tax charge. This is technically wrong under that act. Mentioning GST over the invoice and charging tax combining CGST and SGST means you are charging IGST.
a. In case of inter-state sale: If you are selling goods / services to registered person where IGST is applicable then clearly mention IGST over the invoice. As IGST, CGST and SGST needs to be transferred under different account heads of the government.
b. In case of local sale: If you are selling to local registered person than mentioned both CGST and SGST and corresponding amount of tax under different column of the invoice.
c. Avoid: Never mix the CGST, SGST and IGST.
- How to apply for composition levy (CMP – 01) – Still there is confusion among trades that how can they avail benefit of composition scheme. Now new CMP forms for applying for composition scheme are now available on website.
a. It should be noted that while applying for composition scheme every trade or restaurant service provider shall give details of his stock as on 30th June 2017.
b. Further, if you have any stock of inter state purchase than you will not be allowed to avail the benefit of composition scheme at the time of migration.
c. In the above case you shall register first as normal trader under GST and then apply of composition scheme under GST subsequently.
d. Option of paying tax under composition levy shall be chosen at the start of the year and the same needs to be carry forward of the rest of the year.
- Problem in identifying correct tax Rate – Clarity over tax rates on items dealing with is required and best way to avoid future disputes is to sit with your supplier and get clear over the HSN code of the items you are dealing with. Once your HSN code is clear tax rate corresponding to that HSN code is your tax rates.
a. Here it’s the worth to note that HSN code is required to mention only in those cases where your turnover is more than 150 lacs rupees.
b. But clarity over HSN code is required to all suppliers as in all cases return are cross matched and in case return are not matched mis-match report will be generated by GSTRN. This will cause unnecessary difficulties at the time of validation of return.