Aug 022017
 

Rounding of tax etc. under GST:

Section 170. The amount of tax, interest, penalty, fine or any other sum payable, and the amount of refund or any other sum due, under the provisions of this Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise, then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored.

Thus, from the above the following points may be concluded:

  • The amount of tax or interest payable shall be rounded off to nearest rupees.

Manner of rounding off:

Rounding of under GST shall done at the stage where tax is actually liable to be paid. As per section 12 / section 13 tax is payable at the time of supply which is generally at the time of issue of invoice by the supplier. The extract of the section 12 and section 13 of the act is given below:

Section 12: Time of supply of goods i.e., liability to pay tax in case of supply of goods:

(1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section.

(2) The time of supply of goods shall be the earlier of the following dates, namely:—

  1. the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or
  2. the date on which the supplier receives the payment with respect to the supply:

Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount.

Explanation 1.––For the purposes of clauses (a) and (b), “supply” shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.

Explanation 2.––For the purposes of clause (b), “the date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier.

Section 12: Time of supply of services i.e., liability to pay tax in case of supply of services:

(1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section.

(2) The time of supply of services shall be the earliest of the following dates, namely:—

  • the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
  • the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
  • the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply:

Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount.

Explanation.––For the purposes of clauses (a) and (b)––

  1. the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;
  2. “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier.

Conclusion:

Rounding of tax shall be done at each time when liability to pay tax arises. Under the normal circumstances liability to pay tax arises at each time when an invoices is issue to the recipient and hence at each invoice level rounding off the tax needs to done and the aggregate tax liability for a tax period (which is on monthly basis) shall be paid within 20 days after the end of the particular month.

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