Tally.ERP 9 Release 6.4.7

The latest version under Tally.ERP 9 Release 6 series is Release 6.4.7, launched on 2nd August, 2018.

Below are the key enhancements of Tally.ERP 9 Release 6.4.7:

Enhanced GSTIN validation

Earlier for few taxpayer types, GSTIN validation was failing in Tally.ERP 9. Now, with this new Release, GSTIN will get validated for all taxpayer types

Option to avail Input Credit under Reverse Charge in current or future period 

  • If your business needs to avail input credit using reverse charge mechanism, you will find it delightfully useful and flexible to take credit on reverse charges in current or future periods
  • If you wish to keep track of total liability towards reverse charges or input credit availed, you can easily do so now with the new report, “Input Credit to be booked”

 

Highlights of Tally.ERP 9 Release 6 series.

Record Fixed Asset purchases in account invoice mode 

For your convenience, you can now record Fixed Assets purchases in account invoice mode as well. This was earlier possible only in the voucher mode.

Automatic rounding off invoice amountsCreate a Round off Ledger and select Invoice Rounding as the type of ledger. While creating invoice and upon selecting this ledger, Tally.ERP9 will auto calculate the difference value.

Manage e-Way Bills using Tally.ERP 9When you create the invoice before transporting goods, Tally.ERP 9 captures all the necessary details required to capture e-Way Bill. You need not re-enter these details in the e-Way Bill portal again. Just export the invoice in JSON format and upload to the portal for generating e-Way Bill.

  • Enter e-Way Bill Number (EBN) in its corresponding invoice, print the invoice and hand it over to the transporter.
  • You can export JSON file for a single invoice or for multiple invoices together in one go.
  • If the mode of transport, vehicle no., place of supply and State are same for a given set of invoices, you can group invoices accordingly and generate a single JSON file for a consolidated e-Way Bill. But first, you must generate e-Way Bills for each invoice as a prerequisite.
  • Tally.ERP 9 identifies invoices for which e-Way Bills are yet to be generated. You can add, modify, delete, consolidate and track e-Way Bills against invoices.Tally.ERP9 also shows which details are missing in the invoice for the purpose of generating e-Way Bills.
  • You can generate e-Way Bills on behalf of your supplier or transporter; or in cases of purchases and also for credit notes, delivery notes and receipt notes as well.

Click here for release notes

Click here for download

28th GST Council Meeting Updates – Rate Changes for Goods

Reduction in GST Rates – 28th GST Council Meeting

The 28th GST Council meeting saw a plethora of reductions in the GST rate, which are listed as follows:

Reduction in GST Rates from 28% to 18%

As per the 28th GST Council recommendations, the rate of the following goods were reduced from 28% to 18%:

  • Paints and varnishes, including enamels and lacquers
  • Glazier’s putty, grafting putty, resin cements
  • Refrigerators, freezers and other refrigerating or freezing equipment including water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer etc.
  • Washing machines
  • Lithium ion batteries
  • Vacuum cleaners
  • Domestic electrical appliances – food grinders and mixers, food or vegetable juice extractors, shavers, hair clippers etc.
  • Storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc.
  • Televisions up to the size of 68 cm
  • Special purpose motor vehicles – crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries
  • Works trucks which are self-propelled, not fitted with lifting or handling equipment which are used in factories, warehouses, dock areas or airports for short transport of goods
  • Trailers and semi-trailers
  • Miscellaneous articles such as scent sprays and similar toilet sprays, powder puffs and pads for the application of cosmetics or toilet preparations

Reduction in GST Rates from 28% to 12%

As per the 28th GST Council updates, the GST rate for fuel cell vehicles was reduced from 28% to 12%. In addition, the 28th GSTCouncil also decided to remove the previously applicable compensation cess on fuel cell vehicles.

Reduction in GST Rates from 18% to 12%

As per the 28th GST Council meeting updates, the GST rates of the following goods was decided to be reduced from 18% to 12%:

  • Bamboo flooring
  • Brass kerosene pressure stove
  • Hand operated rubber roller
  • Zip and slide fasteners
  • Handbags including pouches and purses, jewellery box
  • Wooden frames for painting, photographs, mirrors etc.
  • Art ware of cork, including articles of sholapith
  • Stone art ware, stone inlay work
  • Ornamental framed mirrors
  • Glass statues, other than those of crystal
  • Glass art ware including pots, jars, votive, cask, cake cover, tulip bottle, vase
  • Art ware of iron
  • Art ware of brass, copper / copper alloys, electro plated with nickel / silver
  • Aluminium art ware
  • Handcrafted lamps including panchloga lamp
  • Worked vegetable or mineral carving, articles thereof, articles of wax, of stearin, of natural gums or natural resins or of modelling pastes, including articles of lac, shellac
  • Ganjifa card

Reduction in GST Rates from 18% to 5%

As per the 28th GST Council meeting highlights, the GST rates of the following goods were reduced from 18% to 5%:

  • Ethanol for sale to oil marketing companies for blending with fuel
  • Solid bio fuel pellets

Reduction in GST Rates from 12% to 5%

As per the 28th GST Council meeting news, the GST rates of the following goods was reduced from 12% to 5%:

  • Chenille fabrics and other fabrics
  • Handloom dari
  • Phosphoric acid – fertilizer grade only
  • Knitted cap / topi having retail sale value not exceeding INR 1000
  • Handmade carpets and other handmade textile floor coverings, including namda / gabba
  • Handmade lace
  • Hand woven tapestries
  • Hand-made braids and ornamental trimming in the piece
  • Toran

Reduction in GST Rates to 0%

This was probably the most lauded section of the 28th GST Council changes. At the 28th GST Council meeting, the GST rate for the following goods were culled down to 0%:

  • Stone / Marble / Wood Deities
  • Rakhi (other than that of precious or semi-precious material)
  • Sanitary Napkins
  • Coir pith compost
  • Sal Leaves, siali leaves and their products
  • Sabai Rope
  • Phool Bhari Jhadoo which is a raw material for brooms
  • Khali dona
  • Circulation and commemorative coins, sold by Security Printing and Minting Corporation of India Ltd to the Ministry of Finance

Clarifications in GST Rates – For specific goods

Apart from GST rate reductions, certain clarifications with regards to GST rates of certain goods also formed part of the 28th GST Council highlights.

Fabrics

Fabrics attract GST at the rate of 5%, but it was subject to the condition, that refund of accumulated ITC because of inverted duty structure will not be allowed. However, considering the difficulties faced by the fabric sector, it was decided in the 28th GST Council meeting, that the refund will henceforth be allowed – and the same will be applicable on all purchases post the notification is issued.

Footwear

A GST rate of 5%, which was earlier applicable to footwear priced up to INR 500, will now be extended to footwear priced up to INR 1000. Footwear having a retail sale price of more than INR 1000, will continue to attract 18% GST.

Other Clarifications

  • Milk enriched with vitamins or minerals salt (fortified milk) will be exempt from GST
  • Water supplied for public purposes (other than in sealed containers) will be exempt from GST
  • 5% GST will be charged on Pool Issue Price (PIP) of Urea imported on government accounts for direct agriculture use, instead of assessable value plus custom duty
  • 5% GST will be charged on both treated (modified) tamarind kernel powder and plain (unmodified) tamarind kernel powder
  • 5% GST will be charged on beet and cane sugar, including refined beet and cane sugar
  • 5% GST will be charged on marine engines
  • 5% GST will be charged on unpolished kota stone and similar stones (other than marble and granite)
  • 18% GST will be charged on ready to use polished kota stone and similar stones (other than marble and granite)
  • Coal rejects from washery, arising out of cess paid coal on which ITC has not been taken, will be exempt from GST compensation cess

Recent AAR Rulings – Food, Beverages & Catering Services

AAR-Rulings

AAR Rulings – Canteen Services provided by outside vendors in offices and factories

Rashmi Hospitality Services, based out of Gujarat had filed an application, seeking an advance ruling on whether, the GST rate on supplies made to non-air conditioned canteens of offices and factories, needed to be taxed at 12% GST or 18% GST. In response to this application, the Gujarat bench of the Authority of Advance Rulings stated, that the catering service provided by Rashmi Hospitality Services to recipients who have in-house canteens, where meals, snacks, tea etc., are ultimately consumed by employees or workers, and thus, do not alter the nature of service provided. Thus, the GST rate for such a service will be considered as 18%.

Thus it was a given, that such a move would imply a higher compliance burden for companies, which would translated into higher cost for food. Thus most companies would, understandably, tend to recover the food expenses from employees. To attain further clarity on the same, Caltech Polymers, based out of Kerala had filed an application, seeking an advance ruling on whether, the recovery of food expenses from employees or canteen services would come under the definition of outward supplies, and whether it will attract GST or not.

In response to this application, the AAR Kerala bench stated, that recovery of food expenses from the employees, for the canteen services provided by the company, would indeed come under the definition of “outward supply”, and therefore be considered taxable as a supply of service under GST. However, the authority of advance ruling Kerala, did not clarified, whether the GST rate to be levied was 5% (without ITC), or 18%, treating the same as an outdoor catering service. Irrespective of the rate, such a move is bound to push up the cost of food for employees and factory workers, and also could lead to possible disputes on valuation, which will then need to get solved.

AAR Rulings – Canteen Services provided by outside vendors in educational institutions

Similar to the above scenario, quite a few applications were filed, asking for an advance ruling on the GST rate to be levied on services provided by canteens in educational institutions. In response to the same, the AAR as well as the Ministry of Finance clarified, that food and drinks, served in a mess or a canteen of an educational institution would attract 5% GST, without ITC. However, if schools (only up to higher secondary level) supplied food directly to students, then the same will be exempt from GST.

AAR Rulings – Supply of food and beverages in trains

Deepak & Co, based out of Delhi had filed an application, asking for an advance ruling on the GST rate to be levied on the supply of food and beverages in trains. Deepak & Co, had entered an agreement with the Indian Railways for the supply of food and beverages, packaged, cooked or at MRP, on mail and express trains, and thus needed immediate clarity on the same. The application had come in the aftermath of a circular from the Central Board of Indirect Taxes and Customs (CBIC) in January 2018, which had announced a lower GST rate of 5% for foods and drinks served on trains, platforms or stations by Indian Railways or IRCTC. However, there were a faction of businesses who felt that serving food and drinks on train, was to be treated equivalent to outdoor catering, the rate for which was specified already at 18% GST.

In response to this application, the AAR Delhi bench clarified, that the train is after all, a medium of transport, and thus could not be treated equivalent of a restaurant, eating joint or canteen. Thus, the supply of food and beverages directly to passengers at a fixed rate on platforms or trains, did not have any element of services, and therefore, GST should ideally be charged on the individual items as per their respective applicable rates. The authority of advance ruling Delhi also noted that the mere heating and cooling of beverages were incidental and not eligible for any tax benefit. Thus, in a final AAR ruling, it was stated, that supply of food and beverages in trains will face GST as per the respective items being served and not at the concessional rate of 5% specified by the government earlier.

27th GST Council Meeting Updates – Returns Simplified

Recommendations-made-by-27-GST-Council

On the 4th of May, 2018, the 27th GST Council meeting got underway, giving shape to the new returns filing model, which was awaited for the past several months. The new model was decided, based on the recommendations of the Group of Ministers, which had been constituted for the purpose of making the process a simplified one on the 17th of April, 2018. In addition the GST Council also did announce a few rate changes, and some structural changes in the shareholding pattern of the GSTN.Let’s go through all the major 27th GST Council meeting highlights:

27th GST Council meeting – Simplified returns

The 27th GST Council meeting introduced a simplified return filing process, major features of which are as follows:

One monthly return

All taxpayers, with a few exceptions, will have the facility to file one monthly returns, and the return filing dates will be determined in a staggered order, based on the turnover of the registered person. This has been primarily done to manage the load on the GST portal. Composition dealers and dealers with nil transactions will continue to file quarterly returns, as per the 27th GST Council meeting highlights.

Unidirectional flow of bills

There shall be a unidirectional flow of bills, i.e. bills may be uploaded by the seller anytime during the month, which will serve as valid documents to avail input tax credit for the buyer. The buyer too, will be able to see the uploaded invoices on a continuous basis, during a particular month. There will be no need to upload any purchase invoices as per the model suggested initially. Also, for all B2B transactions, HSN codes of 4 digits or more will need to be specified to achieve uniformity in the reporting system, as per the 27th GST Council highlights.

Simpler returns design

B2B dealers will need to fill invoice wise details of all outward supplies made by them, based on which the system will automatically calculate their tax liability. Similarly, their input tax credit will be calculated automatically by the system based on the invoices uploaded by their sellers. All this will be supported by a user-friendly interface coupled with an offline tool to upload invoices. Another major aspect of simplifying the returns process introduced by the 27th GST Council meeting was, the reduction in the content or the information required to be filled in the return forms. The details of the design of the return form, business processes and legal changes will be worked out by the appointed law committee based on these principles, as per the 27th GST Council updates.

No automatic reversal of ITC

There shall not be any automatic reversal of input tax credit from the buyer, in case the seller does not pay the tax, as was the case earlier. In case the seller defaults on the payment of tax, the recovery shall be made from the seller itself. However, as per the 27thGST Council recommendations, the option of reversal of ITC from the buyer shall also be an option available to the GST authorities, to address exceptional scenarios, such as, missing dealers, closure of business by the supplier, supplier not having adequate assets etc.

Online process for recovery and reversal

The recovery of tax or reversal of ITC shall be done through an online and automated process to reduce the human interface. The process will continue to follow the due course of issuing a notice and order, as per the updates from 27th GST Council meeting.

Supplier side control

In case a supplier has defaulted in payment of tax above a threshold amount, such a supplier will not be allowed to upload invoices and thus will not be allowed to avail any ITC. This has been introduced to avoid and to control misuse of the ITC facility. Similar safeguarding provisions have now been built in for newly registered dealers as well as per the 27th GST Council meeting updates. The GST Council has proposed setting up analytical tools to identify such transactions at the earliest, so that loss in revenue may be prevented.

Three stage transition

The following 3 stage transition to the new returns filing system was decided upon at the 27th GST Council meet:

  • Stage 1 – Present system of filing GSTR 3B and GSTR 1 returns. GSTR 2 and GSTR 3 will remain suspended. This will continue for a maximum of 6 months, by which the new return filing software will be ready.
  • Stage 2 – New return system will go live, with the facility for invoice – wise data upload and also facility for claiming ITC on a self-declaration basis, similar to the role of GSTR 3B currently. During this stage, the dealer will be constantly fed with information about the existing gap between ITC available, and provisional ITC being claimed.
  • Stage 3 – Provisional credit will get withdrawn totally, and ITC will be limited only to the invoices uploaded by the sellers from whom the dealer has purchased goods.

GST Rates discussed at the 27th GST Council meeting

While there were no GST rate changes announced as such at the 27th GST Council meeting, there was a good deal of discussion on the following two aspects:

  • Reduction of GST rates for digital transactions – Keeping in mind the need to move towards a less cash economy, the GST Council discussed a proposal to have a concession of 2% in the GST rate i.e. 1% each for CGST and SGST, for all B2C supplies in which payments are done via cheque or via digital mode. This was proposed in all cases where the overall GST rate is more than 3%, with a ceiling of INR 100 per transaction. The GST Council has recommended to set up a Group of Ministers from the State Governments to look into the proposal and make recommendations, before the next GST Council meeting, as suggested by the 27th GST Council meeting news.
  • Sugar Cess over and above 5% GST and reduction in GST rates of ethanol – Keeping in mind, the record production of sugar in the current sugar season, and the consequent reduction in sugar prices, the GST Council discussed imposing a sugar cess over and above the stipulated 5% GST rate and also considered reducing the GST rate on ethanol. The proposal has come from the food ministry, which has been mulling cutting down the GST rates on ethanol to help sugar mills clear dues worth INR 19,000 crore to sugarcane farmers. However, a conclusion could not be reached, and the GST Council finally recommended to set up a Group of Ministers from the State Governments to look into the proposal and make recommendations, within a period of 2 weeks, as per the 27th GST Council news.

GSTN changes finalised at the 27th GST Council meeting

The GSTN, as one may be aware, was created as a private limited, non-profit company, with an objective to provide shared IT infrastructure and services to Centre and State governments, tax payers and other stakeholders for the implementation of GST. Currently, the Central government and State governments are holding 24.5% equity shares respectively and the remaining 51% are held by 5 non-governmental institutions namely – HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd. Majority of the GST processes including registration, return filing, tax payment, refunds processing are largely IT driven, and thus it was a given that the GSTN was handling large scale invoice level data of lakhs of business entities.

Considering the nature of the functions handled by GSTN, the GST Council felt that the GSTN should be converted into a fully owned government company.

Keeping this in mind, it was decided at the 27th GST Council meeting, that the 51% held by the non-governmental institutions, worth INR 5.1 Crore, was decided to be distributed equally among the Centre and the State governments, thus taking the respective share of both bodies to 50% each. It was also decided that the GSTN board will be allowed to retain the existing staff at the existing terms and conditions for a period of up to 5 years, and shall also have the flexibility to hire people through contract on the terms and conditions similar to those used by GSTN till now, while hiring regular employees. Nevertheless, the existing financial commitments given by the Centre and the States to GSTN to share the capital costs and O&M costs of the IT systems will continue as before.

In short, the 27th GST Council meeting was a major game changer, as far as the simplified return filing process is concerned. Given the various initiatives discussed, proposed and finalised at the meeting, life for the business is surely bound to become simpler as far as GST compliance is concerned.

Minimize Mismatches between GSTR-2A and GSTR-3B using Tally.ERP 9

Mismatches-between-your-GSTR-2A-and-GSTR-3B

Mismatch in Input Tax Credit arising due to any difference in values between inwards supply details (furnished by businesses in their GSTR-3B) and outwards supply details uploaded by respective suppliers (available on GST portal as GSTR-2A) may lead to loss in the claimed Input Tax Credit (ITC).

Let’s look at how GSTR-3B and GSTR-2A mismatch can happen

Typically, you would have declared the consolidated value of your inward supplies in your monthly GSTR-3B returns. Your suppliers would have uploaded their sales invoices in GSTR-1, based on which your inward supplies get auto populated in GSTR-2A.

Now in case there are any discrepancies in the values of inward supplies available in GSTR-2A and inward supplies declared by you for the month in your GSTR-3B, it may lead to loss of Input Tax Credit.

Now let us understand the probable reasons for such mismatches.

Possible reasons for mismatches

  1. Your supplier has not uploaded the invoices for which you have already claimed Input Tax Credit.
  2. Values in the supplier’s invoices are not matching with values available in your books.
  3. You might have missed out recording any Purchases or Debit Notes (Purchase Returns) which resulted in reduced Input Tax Credit.

How to identify GSTR-3B and GSTR-2A mismatch

  1. Firstly, you must compare the purchases available in your books with GSTR-2A (available on GST Portal) of the respective returns period.
  2. You can manually match each purchase invoice and identify the differences or identify invoices that are not available on the GST portal or in your books.
  3. If you identify invoices whose values are either not matching or invoices are not available, connect with the respective supplier and ask him to either upload the related invoice in his latest return which is yet to be filed, or amend the invoice details at the time of filing his returns.
  4. Alternately, you can check the physical copies of respective purchase invoices and correct your purchase data, and accordingly make corrections in your latest GST returns which are yet to be filed by reversing the Input Tax Credit.

How Tally.ERP 9 eases your efforts

  1. Download GSTR-2A of the corresponding period
  2. Open Tally.ERP 9. Go to GSTR-2 Report. Load GSTR-2A into Tally.ERP 9. Within seconds, Tally.ERP 9 will show you the details of invoices which are either –
    1. Fully Matched
    2. Partially Matched: This may be due to partial match between invoices available in the books with invoices available on the GST portal.
    3. Available only in Books: This can happen if your supplier has not uploaded some invoices.
    4. Available only in Portal: This can happen if you have not recorded the transaction in your books but your supplier has uploaded the same.
  3. You can take action on the invoices which are mismatched, available only in books and available only in portal by checking with your suppliers or correcting/recording respective purchase invoices in your books.

You can download and compare GSTR-2A of previous periods with your books for all the GST returns filed for the previous periods to ensure that you have claimed the right Input Tax Credit and identify mismatch of GSTR-2A with GSTR-3B. Also, going forward, you can follow this activity for the returns of all upcoming months to reduce chances of mismatches.

Tally. ERP 9 Release 6.2 and higher versions allow you to import and match GSTR-2A. Download the latest release of Tally.ERP 9 and ensure that you get the right Input Tax Credit.