GST Updates

GST Exempted Goods: List of Goods Exempt Under GST

Posted on by Tally Academy

Under different taxation systems, a host of goods or services is exempt from tax owing to socio-economic reasons. For instance, under the service tax regime, clinical and education services were exempt from service tax. Similarly, the sale of life-saving drugs or books meant for reading in different state governments were exempt from taxes.

Like all such taxes, there are few exceptions even under GST where goods or services are exempt from tax liability. Such exemptions on specified goods or services are granted by the government based on certain conditions. Hence, while determining the tax liability under GST, one needs to check for not only the goods or services that are chargeable to GST. But, one also needs to look into the goods or services that are exempt from tax.

Thus, the taxpayers need to understand not only the provisions regarding exemptions but also their implications to avoid any wrong application. So, before jumping to the list of non-gst goods, let’s first define what is an exempt supply under GST?

What is an Exempt Supply under GST?

As per section 2(47) of CGST Act 2017, an exempt supply means any goods or services or both:

  • which attract nil rate of tax or
  • that may be wholly exempt from tax under section 11 or
  • may be wholly exempt from tax under section 6 of IGST act or
  • including non-taxable supply

Thus, exempt supply includes the supply of following types of goods or services:

  • supply attracting nil rate of tax
  • supplies wholly exempt from tax
  • non – taxable supplies

GST Exempted Goods: List of Goods Exempt Under GST

Live Animals

  • Live asses, mules and hinnies (HSN Code – 0101)
  • Bovine animals (Live) (HSN Code – 0102)
  • Live swine (HSN Code – 0103)
  • Sheep and goats (Live) (HSN Code – 0104)
  • Live poultry, that is to say, fowls of the species Gallus domesticus, ducks, geese, turkeys and guinea fowls (HSN Code – 0105)
  • Other live animal such as Mammals, Birds, Insects (HSN Code – 0106)

Meat

  • Meat of bovine animals, fresh and chilled (HSN Code – 0201)
  • Bovine animals’ meat or frozen meat (other than frozen and put up in unit container) (HSN Code – 0202)
  • Meat of swine, fresh, chilled or frozen (other than frozen and put up in unit container) (HSN Code – 0203)
  • Sheep or goats’ meat, fresh meat, chilled meat or frozen meat (other than frozen and put up in unit container) (HSN Code – 0204)
  • Meat of horses, asses, mules or hinnies, fresh, chilled or frozen (other than frozen and put up in unit container) (HSN Code – 0205)
  • Edible offal of bovine animals, swine, sheep, goats, horses, asses, mules or hinnies, fresh, chilled or frozen (other than frozen and put up in unit container) (HSN Code – 0206)
  • Meat and edible offal, of the poultry of heading 0105, fresh, chilled or frozen (other than frozen and put up in unit container) (HSN Code – 0207)
  • Other meat and edible meat offal, fresh, chilled or frozen (other than frozen and put up in unit container) (HSN Code – 0208)
  • Pig fat, free of lean meat, and poultry fat, not rendered or otherwise extracted, fresh, chilled or frozen (other than frozen and put up in unit container) (HSN Code – 0209)
  • Poultry fat, free of lean meat, and pig fat, not rendered or otherwise extracted, salted, in brine, dried or smoked (other than put up in unit containers) (HSN Code – 0209)
  • Meat and edible meat offal, salted, in brine, dried or smoked; edible flours and meals of meat or meat offal, other than put up in unit containers (HSN Code – 0210)

Fish, Meat and Fillets

  • Fish seeds, prawn / shrimp seeds whether or not processed, cured or in frozen state (other than goods falling under Chapter 3 and attracting 5%) (HSN Code – 3)
  • Fish, fresh or chilled, excluding fish fillets and other fish meat of heading 0304 (HSN Code – 0302)
  • Live fish (HSN Code – 0301)
  • Fish fillets and other fish meat (whether or not minced), fresh or chilled (HSN Code – 0304)
  • Crustaceans, whether in shell or not, live, fresh or chilled; crustaceans, in shell, cooked by steaming or by boiling in water live, fresh or chilled (HSN Code – 0306)
  • Molluscs, whether in shell or not, live, fresh, chilled; aquatic invertebrates other than crustaceans and molluscs, live, fresh or chilled (HSN Code – 0307)
  • Aquatic invertebrates other than crustaceans and molluscs, live, fresh or chilled (0308)

Eggs, Honey and Milk Products

  • Natural honey, other than put up in unit container and bearing a registered brand name (HSN Code – 0409)
  • Fresh milk and pasteurized milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk (HSN Code – 0401)
    Curd; Lassi; Buttermilk (HSN Code – 0403)
  • Chena or paneer, other than put up in unit containers and bearing a registered brand name (HSN Code – 0406)
  • Birds’ eggs, in shell, fresh, preserved or cooked (HSN Code – 0407)

Non – Edible Animal Products

  • Human hair, unworked, whether or not washed or scoured; waste of human hair (HSN Code – 0501)
  • All goods i.e. Bones and horn-cores, unworked, defatted, simply prepared (but not cut to shape), treated with acid or gelatinized; powder and waste of these products (HSN Code – 0506)
  • Semen including frozen semen (HSN Code – 0511)
  • All goods i.e. Hoof meal; horn meal; hooves, claws, nails and beaks; antlers; etc. (HSN Code – 050790)

Live Trees and Plants

  • Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage (HSN Code – 6)

Vegetables

  • Tomatoes, fresh or chilled (HSN Code – 0702)
  • Cucumbers and gherkins, fresh or chilled (HSN Code – 0707)
  • Potatoes, fresh or chilled (HSN Code – 0701)
  • Onions, shallots, garlic, leeks and other alliaceous vegetables, fresh or chilled (HSN Code – 0703)
  • Cabbages, cauliflowers, kohlrabi, kale and similar edible brassicas, fresh or chilled (HSN Code – 0704)
  • Lettuce (Lactuca sativa) and chicory (Cichorium spp.), fresh or chilled (HSN Code – 0705)
  • Carrots, turnips, salad beetroot, salsify, celeriac, radishes and similar edible roots, fresh or chilled (HSN Code – 0706)
  • Other vegetables, fresh or chilled (HSN Code – 0709)
  • Dried vegetables, whole, cut, sliced, broken or in powder, but not further prepared (HSN Code – 0712)
  • Manioc, arrowroot, salep, Jerusalem artichokes, sweet potatoes and similar roots and tubers with high starch or inulin content, frozen or dried, whether or not sliced or in the form of pellets (inserted w.e.f 14/11/2017 : and put up in unit container and –
    (a) bearing a registered brand name; or
    (b) displaying a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily] (HSN Code – 0714)
  • Dried leguminous vegetables, shelled, whether or not skinned or split (HSN Code – 0713)
  • Manioc, arrowroot, salep, Jerusalem, artichokes, sweet potatoes and similar roots and tubers with high starch or inulin content, fresh or chilled; sago pith (HSN Code – 0714)

Fruits and Dry Fruits

  • Coconuts, fresh or dried, whether or not shelled or peeled (HSN Code – 0801)
  • Brazil nuts, fresh, whether or not shelled or peeled (HSN Code – 0801)
  • Other nuts, Other nuts, fresh such as Almonds, Hazelnuts or filberts (Coryius spp.), walnuts, Chestnuts (Castanea spp.), Pistachios, Macadamia nuts, Kola nuts (Cola spp.), Areca nuts, fresh, whether or not shelled or peeled (HSN Code – 0802)
  • Bananas, including plantains, fresh or dried (HSN Code – 0803)
  • Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh (HSN Code – 0804)
  • Citrus fruit, such as Oranges, Mandarins (including tangerines and satsumas); clementines, wilkings and similar citrus hybrids, Grapefruit, including pomelos, Lemons (Citrus limon, Citrus limonum) and limes (Citrus aurantifolia, Citrus latifolia), fresh (HSN Code – 0805)
  • Grapes, fresh (HSN Code – 0806)
  • Melons (including watermelons) and papaws (papayas), fresh (HSN Code – 0807)
  • Apples, pears and quinces, fresh (HSN Code – 0808)
  • Apricots, cherries, peaches (including nectarines), plums and sloes, fresh (HSN Code – 0809)
  • Other fruit such as strawberries, raspberries, blackberries, mulberries and loganberries, black, white or red currants and gooseberries, cranberries, bilberries and other fruits of the genus vaccinium, Kiwi fruit, Durians, Persimmons, Pomegranates, Tamarind, Sapota (chico), Custard-apple (ata), Bore, Lichi, fresh (HSN Code – 0810)
  • Peel of citrus fruit or melons (including watermelons), fresh (HSN Code – 0814)

Tea, Coffee and Spices

  • Coffee beans, not roasted (HSN Code – 0901)
  • Unprocessed green leaves of tea (HSN Code – 0902)
  • Seeds of anise, badian, fennel, coriander, cumin or caraway; juniper berries [of seed quality] (HSN Code – 0909)
  • Fresh turmeric, other than in processed form (HSN Code – 09103010)
  • Ginger (Fresh), other than in processed form (HSN Code – 09101110)
  • All goods of seed quality (HSN Code – 09)

Edible Grains

  • Wheat and meslin (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1001)
  • Rye (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1002)
  • Barley (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1003)
  • Oats (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1004)
  • Maize (corn) (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1005)
  • Rice (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1006)
  • Grain sorghum (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1007)
  • Buckwheat, millet and canary seed; other cereals such as Jawar, Bajra, Ragi (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1008)

Milling Industry Products

  • Wheat or meslin flour (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1101)
  • Cereal flours other than of wheat or meslin, (maize (corn) flour, Rye flour, etc.) (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1102)
  • Guar meal (HSN Code – 11061010)
  • Cereal groats, meal and pellets (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1103)
  • Flour, of potatoes (other than those put up in unit container and bearing a registered brand name deleted w.e.f 10/11/2017) (HSN Code – 1105
  • Cereal grains hulled (HSN Code – 1104)
  • Flour, of the dried leguminous vegetables of heading 0713 (pulses) (other than guar meal 1106 10 10 and guar gum refined split 1106 10 90), of sago or of roots or tubers of heading 0714 or of the products of Chapter 8 i.e. of tamarind, of singoda, mango flour, etc. (other than those put up in unit container and bearing a registered brand name) (HSN Code – 1106)

Oil Seeds, Fruit and Part of Plants

  • All goods of seed quality (HSN Code – 12)
  • Soya beans, whether or not broken, of seed quality (HSN Code – 1201)
  • Ground-nuts, not roasted or otherwise cooked, whether or not shelled or broken, of seed quality (HSN Code – 1202)
  • Linseed, whether or not broken, of seed quality (HSN Code – 1204)
  • Rape or colza seeds, whether or not broken, of seed quality (HSN Code – 1205)
  • Sunflower seeds, whether or not broken, of seed quality (HSN Code – 1206)
  • Other oil seeds and oleaginous fruits (i.e. Palm nuts and kernels, cotton seeds, Castor oil seeds, Sesamum seeds, Mustard seeds, Safflower (Carthamus tinctorius) seeds, Melon seeds, Poppy seeds, Ajams, Mango kernel, Niger seed, Kokam) whether or not broken, of seed quality (HSN Code – 1207)
  • Seeds, fruit and spores, of a kind used for sowing (HSN Code – 1209)
    Hop cones, fresh (HSN Code – 1210)
  • Plants and parts of plants (including seeds and fruits), of a kind used primarily in perfumery, in pharmacy or for insecticidal, fungicidal or similar purpose, fresh or chilled (HSN Code – 1211)
  • Locust beans, seaweeds and other algae, sugar beet and sugar cane, fresh or chilled (HSN Code – 1212)
  • Cereal straw and husks, unprepared, whether or not chopped, ground, pressed or in the form of pellets (HSN Code – 1213)
  • Swedes, mangolds, fodder roots, hay, lucerne (alfalfa), clover, sainfoin, forage kale, lupines, vetches and similar forage products, whether or not in the form of pellets (HSN Code – 1214)

Gums, Resins, Vegetable SAP & Extracts

  • Lac and Shellac (HSN Code – 1301)

Vegetable Materials and Products

  • Vegetable materials of a kind used primarily for plaiting (for example, bamboos, rattans, reeds, rushes, osier, raffia, cleaned, bleached or dyed cereal straw, and lime bark) (HSN Code – 1401)
  • Unworked coconut shell (HSN Code – 1404)
  • Betel leaves (HSN Code – 4049040)
  • Vegetable materials, for manufacture of jhadoo or broom sticks (HSN Code – 14049090)

Sugar, Jaggery, Honey & bubble Gums

  • Jaggery of all types including Cane Jaggery (gur) and Palmyra Jaggery (HSN Code – 1701 or 1702)

Pizza, Cake, Bread, Pasta & Waffles

  • Puffed rice, commonly known as Muri, flattened or beaten rice, commonly known as Chira, parched rice, commonly known as khoi, parched paddy or rice coated with sugar or gur, commonly known as Murki (HSN Code – 1904)
  • Pappad, by whatever name it is known, except when served for consumption (HSN Code – 1905)
  • Bread (branded or otherwise), except when served for consumption and pizza bread (HSN Code – 1905)

Tea & Coffee Extract & Essence

  • Prasadam supplied by religious places like temples, mosques, churches, gurudwaras, dargahs, etc. (HSN Code – 2106)

Water, Mineral & Aerated

  • Water (other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container) (HSN Code – 2201)
  • Non-alcoholic Toddy, Neera including date and palm neera (HSN Code – 2201)
  • Tender coconut water other than put up in unit container and bearing a registered brand name (HSN Code – 2202 90 90)

Flours, Meals & Pellets

  • Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grass, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake (HSN Code – 2302, 2304, 2305, 2306, 2308, 2309)

Salts & Sands

  • Salt, all types (HSN Code – 2501)

Fossil Fuels – Coal and Petroleum

  • Electrical energy (HSN Code – 27160000)

Gases and Nonmetals

  • Dicalcium phosphate (DCP) of animal feed grade conforming to IS specification No.5470 : 2002 (HSN Code – 2835)

Drugs & Pharmaceuticals

  • Human Blood and its components (HSN Code – 3002)
  • All types of contraceptives (HSN Code – 3006)

Fertilizers

  • All goods and organic manure (other than put up in unit containers and bearing a registered brand name) (HSN Code – 3101)

Essential Oils, Beauty Products

  • Kajal (other than kajal pencil sticks), Kumkum, Bindi, Sindur, Alta (HSN Code – 3304)

Insecticides, Artificial Carbon & Graphite

  • Municipal waste, sewage sludge, clinical waste (HSN Code – 3825)

Polymers, Polyethylene, Cellulose

  • Plastic bangles (HSN Code – 3926)

Rubber, Plates, Belt, Condensed Milk

  • Condoms and contraceptives (HSN Code – 4014)

Fuel wood, Wood Charcoal

  • Firewood or fuel wood (HSN Code – 4401)
  • Wood charcoal (including shell or nut charcoal), whether or not agglomerated (HSN Code – 4402)

Newsprint, Uncoated paper & paperboard

  • Judicial, Non-judicial stamp papers, Court fee stamps when sold by the Government Treasuries or Vendors authorized by the Government (HSN Code – 4802)
  • Postal items, like envelope, Post card etc., sold by Government (HSN Code – 4802)
  • Rupee notes when sold to the Reserve Bank of India (HSN Code – 48)

Printed Books, Brochures, Newspapers

  • Cheques, lose or in book form (HSN Code – 4907)
  • Printed books, including Braille books (HSN Code – 4901)
  • Newspapers, journals and periodicals, whether or not illustrated or containing advertising material (HSN Code – 4902)
  • Children’s picture, drawing or coloring books (HSN Code – 4903)
  • Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed (HSN Code – 4905)

Silk Worm Cocoon, Yarn, Waste & Woven Fabrics

  • Silkworm laying, cocoon (HSN Code – 5001)
  • Raw silk (HSN Code – 5002)
  • Silk waste (HSN Code – 5003)
  • Khadi fabric, sold through Khadi and Village Industries Commission(KVIC) and KVIC certified institutions/outlets (HSN Code – 50)

Wool Materials & Waste, Animal Hairs

  • Wool, not carded or combed (HSN Code – 5101)
  • Fine or coarse animal hair, not carded or combed (HSN Code – 5102)
  • Waste of wool or of fine or coarse animal hair  (HSN Code – 5103)

Cotton Materials, Synthetics & Woven Fabrics

  • Gandhi Topi (HSN Code – 52)
  • Khadi Yarn (HSN Code – 52)

Flex Raw, Vegetable Materials & Paper Yarn

  • Jute fibers, raw or processed but not spun (HSN Code – 5303)
  • Coconut, coir fiber (HSN Code – 5305)

Blankets & Bedsheets

  • Indian National Flag (HSN Code – 63)

Artificial flowers, Wigs & False Beards

  • Human hair, dressed, thinned, bleached or otherwise worked (HSN Code – 6703)

Bricks, Blocks & Ceramics

  • Idols made of clay (HSN Code – 69)
  • Earthen pot and clay lamps (HSN Code – 69)

Glasses, Mirrors, Flasks

  • Glass bangles (except those made from precious metals) (HSN Code – 7018)

Hand Tools & Cutlery

  • Agricultural implements manually operated or animal driven i.e. Hand tools, such as spades, shovels, mattocks, picks, hoes, forks and rakes; axes, bill hooks and similar hewing tools; secateurs and pruners of any kind; scythes, sickles, hay knives, hedge shears, timber wedges and other tools of a kind used in agriculture, horticulture or forestry (HSN Code – 8201)
  • Handloom (weaving machinery)

Industrial Machinery

  • Amber charkha (HSN Code – 8445)

Balloons, Parachutes & Airlift Gear

  • Spacecraft (including satellites) and suborbital and spacecraft launch vehicles (HSN Code – 8802 60 00)
  • Parts of goods of heading 8801 (HSN Code – 8803)

Medical, Chemical & Astronomy

  • Hearing aids (HSN Code – 9021)

Pencil Lighter Toiletries

  • Muddhas made of sarkanda and phool bahari jhadoo (HSN Code – 9603)
  • Slate pencils and chalk sticks (HSN Code – 9609)
  • Slates (HSN Code – 9610 00 00)

Musical Instruments

  • Indigenous handmade musical instruments (HSN Code – 92)

Machinery Lab Chemicals Drugs Medicines

  • Passenger baggage (HSN Code – 9803)

Difference between Old Vs New GST Return System

Posted on by Tally Academy

Introduction

The Indian government aimed at introducing GST to streamline the taxation policies even further. Under GST scheme, businesses followed the rule of ‘One Nation, One Tax’ which helped several taxpayers stay compliant seamlessly. However, several entrepreneurs found GST a bit complicated with numerous forms which are to be filed. Thus, to make the taxation system more simplified, the government announced the launch of GST 2.0 aka New Return Filing. The objective of the New Simplified GST Returns is to completely knock off the tax evasion pan India so that the transparency and equality can be attained under the indirect tax mechanism.

Let’s look at how different GST 2.0 is from the old return filing mechanism and how it will benefit the taxpayers.

Under the old return filing system

GSTR-1 return should be filed for reporting outward supplies and declaring tax liability on the same. Input Tax Credit (ITC) on imports has to be claimed in GSTR-3B under eligible ITC.

The taxpayer has to file monthly GSTR-1 if his annual turnover is more than Rs.1.5 crore. Otherwise, the taxpayer can file a quarterly GSTR-1.
This return includes/developers on a bill of entry

S. no Particulars
1 Supplies made to registered persons other than reverse charge mechanism (RCM) supplies and supplies through e-commerce operator
2 Supplies made under reverse charge mechanism
3 Supplies made through e-commerce operator
4 Interstate supplies to unregistered persons where invoice value is more than Rs.2.5 lakh
5 Zero rated supplies and deemed exports
6 Nil rated, exempted and non-GST outward supplies
7 Amendments to taxable outward supply
8 Advances received/adjusted during the tax period
9 HSN-wise summary of outward supplies
10 Documents issued during the tax period

Under the new return filing system

GST ANX-1 should be filed for reporting sales and declaring tax liability on the sales. Imports are also to be reported in GST ANX-1 and ITC on imports will be auto-populated in GST RET-1.
In the new return system, taxpayers are categorised into large taxpayer (whose annual turnover is more than Rs.5 crore) and the small taxpayer (whose annual turnover is up to Rs.5 crore). A large taxpayer has to file monthly GST ANX-1, whereas the small taxpayer can file his GST ANX-1 monthly or quarterly at his option.

This return includes

S No Particulars
1 Supplies made to consumers and unregistered persons
2 Supplies made to registered persons (Other than RCM supplies)
3 Exports with/without payment of tax
4 Supplies to SEZ units/developers with/ without payment of tax
5 Deemed exports
6 Inward supplies attracting reverse charge
7 Import of goods/services
8 Import of goods from SEZ units/developers on a bill of entry
9 Missing invoices which are to be uploaded by recipients
10 Details of the supplies made through e-commerce operators
11 Amendments to various supplies

Comparison – old vs new GST return system

The form GST ANX-1 under the new return system is similar to GSTR-1 under the old return system. There are some changes under the new return system when compared to old return system. Some of them are

  • Reporting of Supplies Under RCM

In the current filing system, invoice details can be reported while filing GSTR 1 form but can be viewed afterwards in GSTR-2A. In the new filing system, filing and viewing go simultaneously so that instant action can be taken on that.

  • HSN Summary Reporting

Under the old return system, the HSN code summary needs to be reported separately. But in the new return system, the supplier has to report the HSN codes at the invoice level (based on his turnover). In this way, the taxpayer will get the HSN data via his GST ANX-2 wherever the supplier was required to declare HSN.

  • Reporting of Imports

Under the old return filing system, ITC on imports alone has to be reported in GSTR-3B. However, under the new return filing system, the taxpayer has to report imports of goods and services in GST ANX-1.

  • Tax Payment

In the current system, Full Tax liability must be paid for a tax period while filing monthly return GSTR-3B. In the new system, complete Tax liability must be paid for a tax period in monthly PMT-08, regardless of monthly or quarterly filing of GST returns.

  • Reporting of Documents Issued

Under the new return system, there is no requirement for reporting of documents (along with serial numbers) like invoices, debit/ credit notes, receipt/ payment/ refund vouchers, delivery challans which were issued during the tax period.

GST Return Filing Date for March-May Extended till June Amid Corona Virus

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GST_Return_Filling_Date

The government on March 24 announced extension of the last date for filing GSTR-3B for Goods and Services Tax (GST) for March, April and May to June 30, amid the Corona Virus chaos. “Others can file returns due in March, April and May 2020 by last week of June 2020 but the same would attract a reduced rate of interest at 9 percent per annum from 15 days after due date (current interest rate is 18 % per annum),” she said.

Bigger companies, the FM said, would have to pay only interest but no late fee or penalty will be imposed. “No late fee and penalty to be charged, if complied with before or till 30th June 2020,” she said.

In a press conference, Sitharaman announced some crucial measures to fight the economic fallout of Covid-19 pandemic. The government also extended the date till the last week of June, for opting for composition scheme. “Further, the last date for making payments for the quarter ending 31st March, 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June, 2020,” the FM said.

The date for filing GST annual returns of 2018-19, which was due on March 31, has been extended till the last week of June. “Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020,” the government said.

Sitharaman also extended the deadline for filing FY19 income tax (I-T) returns till June 30. ATM charges have been scrapped till June 30.

FORM RET 1 – Quarterly GST Return

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In the 31st meeting of GST Council, it was recommended to introduce and implement a new GST return system. One of the key aspects of the new GST return system is the introduction of different types of return forms considering the business profile. Quarterly return form RET-1 is one such return type designed for small taxpayers.

In this blog, let us understand the applicability, return filing period and format of quarterly return form RET-1

What is quarterly return form RET-1?

Quarterly Return form RET-1 is a return type for small taxpayers whose aggregate turnover in the financial year does not exceed 5 Crores and their outward supplies consist of B2B B2C and all other types supplies such as exports, SEZ etc.

To put it in simple words, businesses opting quarterly return form RET-1 will be allowed to make all types of outward supplies such as supplies to end consumers, unregistered business, registered business, exports, SEZ etc.

Except for the periodicity of filing return, the form type, format and details required to be furnished are similar to monthly returns.

Periodicity of filing quarterly return form RET-1

The periodicity of filing quarterly return form RET-1 is similar to the Sahaj and Sugam. You need file the returns quarterly with a monthly payment of tax on a self-assessed basis. The due date to file a quarterly return in Form RET-1 is 25th of the subsequent month following the quarter-end.

The due date for filing Sugam GST returns is given below

Quarterly Return Form RET-1
Quarters Due Data
April -June 25th July
July – September 25th October
October- December 25th January
January-March 25th April

Due date for payment of tax

Though the return filing periodicity is quarterly, businesses opting quarterly RET-1 are required to make the monthly payment.

The tax payment is on the self-assessed basis and the payment declaration challan known as Form GST PMT -08 should be used to remit the payment. The due date to remit the monthly payment is 20th of the subsequent month.

Types of supplies allowed under quarterly GST Return Form RET-1

Business opting quarterly return Form RET-1 will be allowed to make all types of supplies as mentioned in the below table.

Type of Outward Supplies Allowed (Yes) / Disallowed (No)
B2B transactions Yes
B2C transactions Yes
Exports Yes
SEZ units/developers Yes
Deemed Exports Yes
Outward Supply to e-Commerce Operators Yes
Nil Rated, Exempted or Non – GST Yes
Inward supplies attracting RCM Yes
Import of goods/services Yes
Import of Goods from SEZ Yes

 

Difference between Sahaj, Sugam and quarterly return form RET-1

All these returns are quarterly and designed for small taxpayers. The first difference, the obvious one is that each of these returns differs basis nature of supplies it supports. Sahaj supports only B2C supplies, Sugam supports B2C as well as B2B supplies and quarterly return form RET-1 support all types of supplies.

Second, the most important one, the facility of availing ITC on the missing invoice (invoices not uploaded by the supplier) and reporting of such bills is allowed for businesses opting monthly return and quarterly return in form RET-1. In other words, businesses who have opted Sahaj return and Sugam return will not be allowed avail ITC on the missing invoice.

Quarterly return form RET-1 return filing process

The quarterly return form RET-1 consist of one main return, to be filed on a quarterly basis supported by two main annexures. Form GST RET-1 is the return form to be used to file Sugam returns supported by the annexures.

The details of return forms and annexures to be used for filling Sugam return is given below.

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-1 Form RET-1 is a quarterly return applicable for business opting Sugam returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end

How to Transit to e-Invoice System?

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With the introduction of e-Invoice concept, the businesses will be mandated to validate and authenticate the invoices by the government portal. Before getting into the ways to transit to a new system of e-invoicing, let us understand the current practice.

Current Practice Vs E-invoicing in GST

Today, every business whether big or small, create invoices using various accounting /ERP software and some even through a manual process. As a supplier, these invoice details are furnished in GSTR 1 and the buyer gets the visibility of invoices uploaded in GSTR -2A.

With e-invoicing, the current practice of generating the invoice and reporting will change.e-Invoice requires B2B invoices to be authenticated electronically by IRP (Invoice Registration portal).

The concept of e-invoice begins with uploading of e-invoice data in the prescribed format (JSON) to the IRP system and post validation, a unique number called ‘Invoice Registration Number (IRN)’ is generated for every invoice uploaded. Along with IRN, the e-invoice is tagged with a QR code for further use by various Government portal like GSTN or E – Way Bill portal.

If you closely look at the current and e-invoice system, two changes are evident. First, the need to get the invoice authenticated with IRN. Remember, an invoice without IRN is not a valid invoice. Second, the reporting of invoice details in GST returns and the e-Way bill will be auto-captured based on the e-invoice data.

All in all, by just uploading your e-invoice data to IRP system, most of your compliance needs will be taken care of. That’s the level of technology at which the e-invoice system is being built by the government.

What does this change imply to businesses?

As they move forward, businesses should make provision for a new form of issuance of invoices and leverage the benefit of technology with which the e-invoice system is built. Just like any new system, e-invoice too requires businesses to be prepared and smoothly transit.

In a bid to help the businesses to transit smoothly to e-invoicing, the next section highlights the key things businesses should take care of.

How to transit to e-invoice system?

The first step towards preparing your business for e-invoicing system is to know and understand the e-invoice system. Understanding the fundamentals and how the e-invoice system works will help you identify the requirements and fill gaps. This also calls for educating your internal teams about the change in the invoice process that comes with e-invoice.

 

Secondly, the accounting software you use will play a key role in e-invoice system. The new system requires you to upload and authenticate the invoice with IRN. Accounting software or ERP that seamlessly interacts with the IRP system will make the task of e-invoicing easier.

Here are the key things the accounting software is expected to do.

  • Generating e-Invoice Data

You need to upload e-invoice data in JSON format as per the schema provided. Here, the accounting software should generate e-invoice JSON from the invoice details recorded as per the e-invoice standards. e-invoice standard consists of mandatory and optional fields and the accounting software should be able to cater to it considering your business necessities.

  • Seamless Integration with IRP System

After you create an invoice with the help of your accounting software, you will have to upload such an invoice on the IRP portal for validation and generating IRN. Here, the accounting software should have the in-built capability to interact with the IRP system and upload the e-invoice JSON without manual intervention. This will not only save your time but also increases the efficiency in invoice processing.

  • Download and Capture IRN

Once an invoice generated by you sails through the IRP portal, on its return, e-invoice JSON will be digitally signed and added with new elements such as IRN number and QR Code. The accounting software should be able to download the digitally signed JSON and accordingly incorporate the IRN and other details into the invoice you issue to your customer.

Sugam GST Returns – Form GST RET-3

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The new GST return framework has introduced a set of return forms specially designed for small taxpayers. Among the new returns available, Sugam return form is once such GST return aims to simplify the GST complexities.

In this blog, let us discuss and understand Sugam returns, return filing periodicity, tax payment, format and filing process.

What is Sugam GST returns?

Sugam is a new GST return for small taxpayers whose aggregate turnover in the financial year does not exceed 5 Crores and their outward supplies consist of B2B as well as B2C. Businesses opting Sugam GST returns will be allowed to make outward supplies to end consumers, unregistered business and business registered under GST.

Applicability of Sugam return

To opt Sugam return under GST, you need to satisfy the below two conditions.

  • The aggregate turnover in the previous financial years is up to 5 crores
  • You are engaged in making B2B supplies (Unregistered Business and end consumers) and B2B supplies (supplies to business registered under GST)

Periodicity of filing Sugam return

The periodicity of Sugam return filing is on a quarterly basis with a monthly payment of tax. For businesses opting Sugam GST return, the due date to file a quarterly return is 25th of the subsequent month following the quarter-end.

The due date for filing Sugam GST returns is given below

Due Date to File Sugam GST Return
Filing Period Due Data
April -June 25th July
July – September 25th October
October- December 25th January
January-March 25th April

Due date for payment of tax

Though the return filing periodicity is quarterly, businesses opting Sugam return are required to make the monthly payment.

The tax payment is on the self-assessed basis and the payment declaration challan known as Form GST PMT -08 should be used to remit the payment. The due date to remit the monthly payment is 20th of the subsequent month.

Like Sahaj return, the self-assessed payment is required only for 1st and 2nd month of the and for 3rd month, payment with all adjustments should be made along with the returns.

Let’s understand with an example.

For April to June quarter, the taxpayer needs to remit the tax of April by 20th May and May’s tax by 20th June. For June, you need to pay tax along with first 2 months adjustment (if any) with main Sugam returns.

Difference between Sahaj and Sugam GST returns

While both the returns are quarterly and applicable for small taxpayers, basis the supplies nature it supports, these 2 differs. Sahaj as a small taxpayer return supports only B2C supplies whereas Sugam supports B2C as well as B2B supplies.

In other words, Sahaj return is suitable for businesses who are engaged in making only B2C outward supplies. On the other hand, Sugam is suitable for a business who make both B2C as well as B2B supplies.

Types of supplies allowed under Sugam returns

The following table gives the list of supplies allowed and disallowed under Sugam GST returns.

Type of Outward Supplies Allowed (Yes) / Disallowed (No)
B2B transactions Yes
B2C transactions Yes
Exports No
SEZ units/developers No
Deemed Exports No
Outward Supply to e-Commerce Operators No
Nil Rated, Exempted or Non – GST Yes
Inward supplies attracting RCM Yes
Import of goods/services No
Import of Goods from SEZ No

Sugam return filing process

The Sugam GST returns consist of one main return, to be filed on a quarterly basis supported by two main annexures. Form GST RET-3 is the return form to be used to file Sugam returns supported by the annexures.

The details of return forms and annexures to be used for filling Sugam return is given below.

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-3 Form RET-3 is a quarterly return applicable for business opting Sugam returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end

 

The key point which businesses should take note is that the option to avail input tax credit on the missing invoices (invoices not uploaded by the supplier) is not available in Sugam returns. This implies that businesses will be allowed to avail the ITC to the extent of the invoices auto-populated in Form GST ANX-II.

However, the option to claim ITC on a provisional basis on the missing invoice is available for taxpayers opting monthly return and quarterly normal return using Form GST RET-1.

Format of Sugam returns – Form GST RET – 03

The Sugam form RET – 03 contains the details of supplies (both inward and outward) declared through Form GST ANX – 1 and GST ANX – 2. This is the main return form which auto-populates the information of supplies from the first two annexure forms. The supplier (taxpayer) needs to complete the remaining details and calculate their tax liability.

To summarize the Sugam return format (Form GST RET-3), it contains the summary level details of outward supplies, inward supplies and adjustments related to it. The Sugam return format consists of the following details:

  • Outward supplies
  • Inward supplies attracting reverse charge
  • Debit/credit notes
  • Advanced received
  • Total tax liability
  • Inward supplies for claiming ITC
  • Net ITC available
  • Amount of TDS/TCS credit received (Transition / Switchover)
  • Interest and late fee (if any) and
  • Final payable tax along with details of tax payment and
  • Refund claimed from the ledger.

Types of New GST Return Forms and Annexures

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In a bid to simplify the GST compliance, the GST Council has proposed the new GST returns expected to be introduced from 1st October,2020.  Considering the diversity of businesses operating in the country, different returns forms supported with annexure are proposed as a part new return framework.

while the idea of different returns for different business aims at simplifying the GST compliance, businesses are recommended to carefully asses the business profile, their vendors, supply type etc. and accordingly choose the one which suits the most.

Having said there are different returns, the immediate question which comes to mind is what are the returns that are available on the GST shelf? Which return should I shop on the GST portal?

Let’s understand the different returns forms and annexures introduced in the new GST returns.

Return forms and Annexure in new GST Returns

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details of document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-1 (Monthly) Form RET-1 is a monthly return to be filed by the businesses having aggregate turnover over more than 5 Crores in a financial year. Business needs to file the monthly return by 20th of the subsequent month.
Form RET-2 Form RET-2 is a quarterly return applicable for business opting Sahaj returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end
Form RET-03 Form RET-02 is a quarterly return applicable for business opting Sugam returns (up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end
Form RET-1(Quarterly) This is similar to monthly return but applicable for business having aggregate turnover up to 5 crores. Business need to file the monthly return by 25th of the subsequent month following the quarter-end

As detailed in the above table, the main return will be supported by the annexures. Every return is supported by two annexures, one for reporting the outward supplies (liability) and the other one for inward supplies (ITC).

Among the main returns, you need to choose and file only one return which is suitable for your business profile.  Choosing the right GST return is key for simplification and assessing your business profile inline with new return types is must. This because each return form has its own implication on the Input tax credit.

Highlights of New GST Returns

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The new GST returns proposed to be introduced on 1st October,2020, aims to drastically reduce the complexities attached to GST compliance in the current day. In order to allow businesses to get used to new returns, a trail functionality has been enabled on the GST common portal.

The prototype of new GST returns will enable the businesses to experience and learn the new functionality before it goes live. Before you get your hands into the prototype of new GST returns, it is recommended to know few key aspects of new GST returns.

Here are the key highlights of all-new simplified GST return which will come into effect from 1st April, 2020.

Classification of Taxpayers

Classification of Taxpayers under new gst

Under the new GST return framework, the taxpayers are classified into small Taxpayers and large taxpayers. Small taxpayers are those having annual turnover up to 5Cr in previous financial year and taxpayers having a turnover of more than 5 Cr in a previous financial year are treated as large taxpayers.

This change will widen the small taxpayer’s bracket eligible for quarterly returns from the existing threshold of 1.5 Cr. The increased threshold will ensure that around 90% of businesses will benefit the simpler compliance under the new GST return framework.

Single GST Return

Types of New GST Returns

Single GST return is introduced with the concept of outward annexure (Form GST ANX-1) and inward annexure (Form GST ANX-II). In outward annexure, the businesses are required to admit the liability by furnishing the outward supplies and inward supplies attracting reverse charge. In-turn, these details will be auto-populated into your main return.

On the other hand, inward annexure will capture the details of purchases for claiming the input tax credit. This annexure will be auto-populated based on the invoices uploaded by your supplier. Like Form GST Anx-1, these details too will be auto-populated into main GST return.

The new GST return framework will significantly reduce the efforts and time required for filing returns as most of the details required are auto-populated into the main returns.

Different Types of New GST Returns

Types of New GST Returns

Based on the size the businesses, the type of supplies, customers you deal and the geography, the GST council has designed different type of GST Returns. Sahaj, Sugam and quarterly normal returns are the quarterly return available for small taxpayers. Monthly return (Form GST RET-1) for larger taxpayers.
The returns are so simple that it requires only fewer details basis the business profile and the compliance requirements in relation to ITC are very minimum. It is expected that the cost of compliance will be less.

Profile Based Returns Format

Profile Based Returns Format

Instead of having a common GST return format for all, the council has designed different type of GST returns considering the diversity of business operations. This comes with the option to personalize the return format based on the supplies you make.

As a result, only the relevant information will be shown based on the business profile. For example, a small manufacturer or trader, buying and selling locally may need to file a return consisting of only fewer information.

Continuous Upload of Invoice

continuous uploading of invoices

The new GST return is provisioned for continuous uploading of invoices by the supplier anytime during the month. At the end of the filing period, these invoices will be auto-populated in the return.

By just uploading the Invoices, most of your work-related return filing is done and at the end of the return period, it becomes so simple that you can validate with your tax expert and file the return.

Viewing facility of Invoices     

Viewing facility of Invoices

Based on the invoices uploaded by your supplier, the real-time viewing facility of invoices is made available to the buyer. This achieved by auto-populating the details of the invoices uploaded by the supplier into the inward supplies’ annexure known as Form GST ANX-II. This also comes with an option for looking of invoice.

This will help you to verify and lock the invoice to confirm the eligible ITC. Locking of invoice will ensure that invoices uploaded by your supplier is correct and the invoice will be locked for further modification by the supplier. Thus, the risk of ITC loss in a certain business situation is mitigated.

Amendment of Returns and invoice

The concept of revised returns to be introduced and you will be allowed to revise return for any tax period. Returns will be revised either by filing amendment returns or reporting of missing invoice.  Provision to revise the current returns (GSTR-1 and GSTR-3B) is not available.

Also, amendment (editing) of invoice by the supplier is provisioned in the new GST return framework. The supplier can edit only if the invoice has not been locked by the recipient. If it is already locked, unless it is reset/unlocked by the recipient, the details cannot be edited by the supplier.

No Automatic Reversal of ITC

No automatic reversal of input tax credit at the recipient’s end in the case of default in the payment of tax by the supplier. In such situations, recovery efforts will be first made from the supplier.

ITC on Missing Invoice

Invoices or debit notes which have not been uploaded by the supplier, the recipient is allowed to avail input tax credit (ITC) on a provisional basis in the same month and a window of 2 tax period are allowed to report such missing invoice.

The facility of availing ITC and reporting is allowed for Larger taxpayers (Monthly returns) and small taxpayers filing RET-1 (quarterly normal return). In other words, businesses who have opted Sahaj return and Sugam return will not be allowed avail ITC on the missing invoice.

How to File GST Sahaj Return in Form RET-2

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The Sahaj return is a quarterly GST return to be filed by 20th of the subsequent quarter. The businesses whose turnover in the previous financial year is up to 5 Crores and engaged in making outward supplies only to B2C i.e. end consumers or unregistered businesses can opt to file GST Sahaj return. The form to be filed by businesses opting Sahaj is Form RET-2

Though the Sahaj return in form RET-2 filing is on a quarterly basis, the payment of GST needs to be made on monthly basis using the payment declaration form known as Form GST PMT-08. The businesses need to determine the tax liability and Input tax credit on the self-assessed basis and accordingly remit it through Form GST PMT-08

Let’s understand the complete Sahaj return filing Cycle.

How to file Sahaj Return in Form RET-2

The details of outward supplies in GST Sahaj form are required only at a summary level. This is because, GST Sahaj is applicable only if you are making B2C supplies and your customer (the buyer) will not be in a position to claim ITC on the supplies made by you.

The GST Sahaj return filing cycle through Form RET-02 is explained with an illustration.

filing sahaj returns ret-2

We have considered the April-June, 2019 to explain the GST Sahaj return filing cycle. In the above illustration:

  • The taxpayer makes the self-assessed payment for the month of April, 2019 and May, 2019 using Payment Declaration Form GST PMT-08
  • On completion of the quarter April to June, 2019, GST Sahaj return needs to be filed by 20th of July 2019 with the payment of Tax
  •  The taxpayer needs to furnish the consolidated outward supplies details at rate-wise (5%, 12% etc.) and place of supply-wise in Form GST ANX-1. This, in turn, gets auto-populated into the Sahaj return Form GST RET-2
  • Input Tax credit details will be auto populated in Sahaj return form RET-2
  • As illustrated, as and when the invoices are uploaded by the supplier, details of ITC will be auto-captured in inward supplies annexure ‘ANX-02’ and which in turn gets auto-populated in GST Sahaj return form.
  • Remember, Sahaj returns forms will not have a concept of claiming and reporting ITC on missing invoices which supplier has not uploaded. You can claim the ITC only to the extent of invoice uploaded by the supplier
  • Once the required details are furnished in GST Sahaj return, the next step is to make payment
  • The tax payment here includes:
    • Tax payable for supplies made during 3rd month of the quarter
    • Adjustment due to the difference in tax paid on the self-assessed basis in the first and second month versus the outward supplies’ details declared in the Sahaj return.
    • Adjustment due to ITC claimed on self-assessed basis versus the auto-populated ITC available in inward supplies annexure.
  • Once the tax payment is done, you can submit and file the GST Sahaj returns.

Conclusion

For businesses, the Sahaj return filing cycle is very simple. All you have to do is the self-assessed monthly payment and mention the consolidated details of outward supplies in annexure -1. The rest of the details are auto-populated in Sahaj return. The businesses can leverage on simplification only when they carefully assess their businesses profile and choose the one which is suitable.

38th GST Council Meeting: Updates and Highlights

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38th-GST-Council-Meeting-updates_Blog-Banner

The 38th GST Council meeting held on 18 December 2019, Wednesday was chaired by our Hon’ble Union FM Nirmala Sitharaman and conducted at New Delhi. A presentation was made to the 38thGST Council on the issue of revenue, GST rate structure and compensation needs of the States. Before the presentation, the Convenor of GoM on revenue augmentation Sh. Sushil Kumar Modi, Dy CM (Bihar) made opening remarks about the revenue position and future roadmap.

Here are the main decisions that were taken during the recent meeting.

GST Updates:

  1. Due dates extended for GSTR-9 and GSTR-9C for FY 2017-18 till 31 January 2020

The due date of GSTR-9 and GSTR-9C are extended further till 31 January 2020 from the earlier date of 31 December 2019. It was done to allow more time for taxpayers to use the offline tool of GSTR-9C that is expected to be made available on 21 December 2019.

  1. Provisional ITC claim in GSTR-3B further restricted:

The amount of ITC availed on a provisional basis restricted to 10% from the earlier 20%, where invoices or debit notes are not reflected in GSTR-2A. Hence, invoice matching must be frequently done, and vendor communication becomes challenging.

  1. Late fee waiver on GSTR-1 through amnesty scheme:

Waiver of late fee for GSTR-1 for tax periods between Jul 17 and Nov 19, if filed by 10 January 2020. If the taxpayer does not still file for more than two consecutive tax periods, then e-way bills of such taxpayer will be blocked from generation.

  1. Standard Operating Procedure (SOP) in case of non-filing of GSTR-3B defined for taxman:

The SOP is to be released for the benefit of tax officers about actions taken for non-filing of GSTR-3B. These will help in blocking or reversal of fake ITC availed.

  1. Due dates for GST returns extended for certain category of taxpayers

The due date extension for GST returns for some North Eastern States (November 2019) to be extended till 31 Dec 2019.

  1. The GST Council decided to levy 28% tax on all lotteries

  • Opts for voting to conclude the matter
  • Date of applicability is 1 March 2020
  • Prior, GST rates on lottery schemes were as follows:
  • State-owned – 12%
  • State-authorised – 28%

  1. GST Rate rationalised to remove inverted tax structure

The GST Council imposes a uniform rate of 18% from earlier 12% on bags belonging to HSN code 3923/6305 from 1 January 2020 (woven and non-woven bags and sacks of polythene or polypropylene strips or the like, whether or not laminated, of a kind used for packing of goods including FIBC). It effectively removes the inverted tax structure.

  1. GST exemption for the industrial land developers:

Supply should be a long-term lease of an industrial or financial infrastructure plots. The Central or State Government holds 20% or more shares in the developer’s capital from the earlier share of at least 50%. Exemption to apply from 1 January 2020.

Other Decisions:

  • Amendments to the GST law to be taken up in the Union Budget 2020-21. Several thoughts deliberated on GST revenue augmentation. Grievance Redressal Committees (GRC) will be constituted at Zonal/State level to address grievances of specific/ general nature of taxpayers.