03 November 2015

GST in India – Reports on business processes released

The Joint Committees on Business Processes for Goods & Services Tax (GST), set up by the Ministry of Finance, have given their reports providing a broad outline of the processes to be followed in respect of registration, payments, refunds and in case of filing of returns under the proposed GST regime by the assessees.
While the report relating to registration processes, highlights various processes to be followed by both new applicants and existing taxpayers to get registered under the GST regime, the report on payment processes outlines the processes to be followed and responsibility to be assigned to various stakeholders in respect of tax payment. Similarly, report on return processes gives an outline of the return filing process, return formats, data requirement for filing the returns and the mechanism of back-end processing of the returns, and the report on refund processes gives a bird’s eye view of the circumstances and the procedural mechanism for granting of refunds under the GST regime. Some important points covered in the Reports are:-


Registration process under GST

  • All existing registered persons, whether with the Centre or State under any of the tax statutes being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on voluntary basis.
  • Once a dealer crosses the specified threshold or he starts a new business, registration application should be filed within 30 days from the date of the dealer’s liability for obtaining such registration.
  • Higher threshold of Gross Annual Turnover to be called compounding turnover shall be provided, up to which the registered person can opt to pay tax at a specified percentage of the turnover, without entering the credit chain.
  • For each State the taxable person will have to take a separate registration, even though the taxable person may be supplying goods or services or both from more than one State as a single legal entity.
  • For obtaining registration, all the taxable persons shall interact with tax authorities through a common portal called GST Common Portal that would be set up by Goods and Services Tax Network (GSTN).
  • Registration procedure has been specified for new applicants and for existing registrants.


GST Payment Process

  • Three modes of payment are proposed - through Internet Banking through authorized banks and through credit card/debit card; Over the Counter payment (OTC) through authorized banks; and through NEFT/RTGS from any bank.
  • Process flow has been specified for each mode of payment.
  • Payment process would be simplified with only one challan required per registration for payment of Central as well as State levies.
  • Taxpayer will have the option to pay CGST, IGST, Additional Tax and SGST concurrently.
  • Technical, infrastructural, systemic and procedural capabilities of the banks required for supporting the payments processes, have been specified. Only those banks which are able to refine their IT systems to handle GST remittances in a seamless manner shall be accredited for GST payment process.


GST Returns

  • Every registered person would be required to file returns (even if there is no business activity).
  • One common return would be sufficient for Central GST, State GST, Integrated GST and Additional Tax.
  • Each taxpayer would have to file three monthly returns for each registration. Separate registrations within the State for different business verticals would require independent return filing.
  • Description of goods and services, in the returns, may not be required to be submitted by the taxpayer.
  • Separate returns would be prescribed for filing outward supply details (GSTR 1), inward supply details (GSTR 2), consolidated details (GSTR 3), annual details (GSTR 8), input service distributor details (GSTR 6) and tax deducted at source (‘TDS’) (GSTR 7). Separate returns would be prescribed for the dealers opting for compounding scheme.
  • There will be no provision to file revised return. All corrections would have to be undertaken in the subsequent period return (time limit shall be prescribed).
  • Taxpayers would have to report place of supply wherever destination State is different from the location of the recipient.
  • Phased implementation of HSN code for supply of goods depending upon the turnover of taxpayers would be prescribed. Accounting code would be mandatory for specific services where special rules are prescribed in the Place of Supply Rules for determining the consumption destination.


GST Refund process

  • The Report visualizes nine situations which may call for a refund of the taxes/ amount paid - Excess payment of tax due to mistake or inadvertence; Export (including deemed export); Finalization of provisional assessment; Refund of pre-deposit for filing appeal including refund arising in pursuance of an appellate authority’s order; Tax paid during investigation but where no/ less liability arises at the time of finalization of investigation / adjudication; Tax payment on purchases made by Embassies or UN bodies; Credit accumulation due to inverted duty structure; Year-end or volume based incentives provided by the supplier through credit notes; and Tax refund for international tourists.
  • Period of one year from the relevant date may be allowed for filing of refund application.
  • ‘Relevant date’ for various business situations has also been specified.
  • Option of filing refund application either through the GSTN portal or through the respective State / Central Tax portal, to be available.
  • Adjustment of refund claim against any amount of un-stayed confirmed demand lying beyond the appeal period, may be provided for.
  • Law may provide for prescribed time limit of 90 days, from the date of the system generated acknowledgment of complete refund application, within which refund has to be paid.

Interest may accrue from the last date when refund should have been sanctioned even when the refund is ordered to be paid by the order of the appellate authority.


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