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GST Compliances

About This Plan

GST (Goods and Services Tax) is an indirect tax that has replaced many indirect taxes in India, such as:

1. Taxes levied and collected by the Centre:

  • Central Excise duty
  • Additional Duties of Customs (commonly known as CVD)
  • Special Additional Duty of Customs (SAD)
  • Service Tax, and

2. Taxes levied and collected by the State:

  • State VAT
  • Central Sales Tax
  • Entertainment and Amusement Tax (except when levied by the local bodies)
  • Taxes on lotteries, betting, and gambling.

 

The Goods and Service Tax Act came into effect on July 1, 2017.

Goods and Services Tax Law in India is a comprehensive, multi-stage & destination-based tax that is levied on every value addition. Since it provides credit for the input tax paid at each previous stage of a supply chain, this method considerably reduces the overall cost of manufacturing and selling goods & providing services.Implementation of GST enforces One Nation One Tax in India for Indirect taxation.

 

What are the statutory compliances in GST?

As per the rules, regulations, and notifications issued from time to time, in the GST Act, all registered businesses must file monthly or quarterly, and an annual GST return based on the type & classification of their business, as notified by the Act. All these GSTR (Return) filings are done online on the GST portal.

 

What is to be declared in GST returns?

A registered business entity must declare the following in a GST return:

  • All Incomes/sales, output GST,
  • Expenses/purchases, Input Tax Credit (ITC), and
  • Required details of its vendors and suppliers in the format as required by the Act.

All this information is used by tax authorities to calculate net tax liability, which is to be paid by Taxpayer at regular intervals.

 

How many GST returns are to be filed by a Taxpayer?

Any regular business entity having an aggregate turnover of more than INR 5 crores per annum must file two monthly returns and an annual return, i.e. 26 GST returns per annum.

 

However, the number of GST returns vary for Taxpayers under The QRMP (Quarterly return filing and Monthly Payment) scheme. The number of GSTR filings for such class of entities is 9 per annum, including the GSTR-3B and an annual return.

 

There are separate returns required to be filed by composition dealers whose number of GSTR filings is 5 per annum.

 

What are the names of different returns and their classification criteria for the taxpayers to file monthly/ quarterly GST returns?

 

GSTR-1

Quarterly Filing

(Annual turnover up to Rs 1.5 crore can opt for quarterly filing*)

*Such taxpayers can also make use of IFF to upload B2B invoices or documents every month.


Monthly Filing

(Annual turnover of more than Rs 1.5 crore must file monthly)

 

GSTR-3B

GSTR-3B, the summary return is to be filed by all taxpayers except those registered under the composition scheme, every month.

However, from 1st January 2021, there is also a quarterly filing option provided to taxpayers with an annual aggregate turnover of up to INR 5 crore, opting for the QRMP scheme.

 

What is the GST compliance rating?

The GST compliance rating is a grade given by the government of India to a business so that other businesses can see how cooperative they are with the tax department. This grade will be calculated based on parameters such as timely filing of monthly and annual returns, furnishing details of input credits used, taxes paid, etc.

 

GST brings uniformity in the taxation process and allows centralized registration. This gives a chance to small businesses to file their tax return every quarter via an easy online mechanism This will allow small businesses to choose the most GST-compliant vendor for their business endeavors.

 

Why do people need to stay GST compliant and receive a high rating?

With the GST-compliance rating in place, buyers will be able to see which vendors have the best track record of paying their dues on time, and they’ll be able to choose a more compliant vendor right at the beginning so that they don’t have to suffer the consequences of vendor negligence later. The higher a vendor’s compliance score, the better the buyer’s chances to claim the input tax credit.

 

Benefits of the GST Compliance:

  • A firm with a higher compliance rating is likely to attract more business deals, as the clients can maintain their compliance rating by doing business with them.
  • A good compliance rating implies that the organization is punctual in filing its returns, thereby making it easy for buyers to claim a timely input tax credit on their purchases.
  • Businesses with a rating of 5 or above on a scale of 10 will be provided immediate tax refunds.   
  • Compliant businesses are likely to undergo fewer external audits compared to their non-compliant counterparts.

How It's Done

  • File your GSTR1 & GSTR2 on time

Businesses should include all their outward and inward supply transactions on their monthly GSTR-1 and GSTR-2. They should file their GSTR-1 and GSTR-2 for a particular month by the 10th and 15th respectively of the following month.

  • Pay your tax dues

Before filing their next tax returns, businesses should first ensure that they’ve paid all their tax dues. According to section 27(3) of the GST legislation, filing a GST return with existing tax dues would make the next return invalid. This would reduce a company’s compliance rating score and could even trigger a chain reaction along the supply chain, making it difficult for their buyers to claim the input tax credit.

  • Submit Annual Return

Apart from filing the GSTR-1 and GSTR-2 on a monthly basis, businesses should also submit a consolidated annual return called the GSTR-9

Information Guide

Payments to be made under GST

Under GST the tax to be paid is largely divided into 3:

  • IGST – To be paid when interstate supply is made (paid to center)
  • CGST – To be paid when making supply within the state (paid to center)
  • SGST – To be paid when making supply within the state (paid to the state

 

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