Implementation of Mandatory HSN Codes in GSTR-1 & GSTR-1A

What You Need to Know

From January 2025, GSTN started phasing in the implementation of mandatory HSN codes in Table 12 of both GSTR 1 and GSTR 1A. It is a step based on the correct reporting of tax that has minimal human errors and simplifies compliance for businesses across the nation.

Below is a blog that has broken down what HSN codes are, change that has been introduced in Phase III, and compliance steps that need to be followed by businesses in India.

What Are HSN Codes and Why Are They Important?

It is, in fact the Harmonized System of Nomenclature, or HSN-an internationally accepted classification of goods and services. It classifies products or services with a unique numerical code, thereby standardizing trade and tax systems.

HSN is important for Goods and Services Tax in India in the following manners:

The implementation of HSN codes must be done correctly, and GST registered entities should cover it.

Phase III Implementation: Key Changes

GSTN has brought phase III in the process of reporting of HSN Codes in GSTR -1 and GSTR-1A. Here are the critical changes in the same:

  1. Segmentation of Table 12
    • Table 12 divided into two heads:
      • B2B Supplies: Business-to-business.
      • B2C Supplies: Sales to consumers.
    • Separation gives clear clarity and easy reporting of supplies.
  2. Validations Rules of Supplies and Value of Taxation
    • These supplies and taxation reported values have the new validations developed which cross-matching will happen on this reported value of supplies.
    • The business must complete the submission during this time period, so the rule will initially serve as a warning due to the mismatching.
  3. Features associated with the upgraded user
    • Download HSN Code List now with a new button whereby taxpayers can download the latest HSN and SAC codes along with descriptions in the Excel format.
    • My Master now facilitates search on product descriptions, making it easy to decide which HSN codes to use.

Change in Detail

  1. Verification for B2B Supplies
    • Verification rules will be applicable on tables like:
      • 4A, 4B, 6B and 6C for registered recipient.
      • 9A, 9B, and 15A for Exports or to registered recipient. 
    • This verification is an adjustment of tax values with correct tax amount.
  2. Verification in B2C Supplies
    • We will verify the non-registered recipient on the table such as.
      • 5A, 6A, 7A, and 7B. Domestic Supplies for non-registered recipient.
      • 9A (Ex) and 10 or 15 for unregistered recipient.

Addressing Amendments

If they conduct a revaluation, they will compare it based on differential value to eliminate the reuse of similar data.

Business Implication

Phases III Changes to GST registered will have more substantial effects for tax payers as follows -What Businesses should know:

Benefits of the new system
Challenges to be Overcome

Steps to comply with Phase III

To align the business to the new needs and ensure compliance, the businesses need to do:

  1. Study the Advisory
    • Read the official advisory given by GSTN in detail and understand what is changed and its implications.
    • The complete guidance is available on the GST portal that can be referred to.
  2. Accounting System
    • Check whether your accounting and billing software has the facility of dropping down the codes of HSN.
    • If yes then collaborate with the software vendor also to make the changes
  3. Train Your Employee
    • Train those employees who are handling GST return, which will file returns along with new updations.
    • Completely educate them about the drooping system as well as newly implemented validation rule and all change
  4. Validation Warnings Monitoring
    • Develop a procedure in order to trace the validation warnings that are arising while filing of returns.
    • Clear up the mismatches at once so no further penalties should arise.

FAQs on HSN Code Implementation

Q1: Will the validation warnings prevent the returns from being filed?

No, in the initial days, the validation warnings will not stop the filing of returns. However, the business needs to correct the warnings so as not to incur improper compliance in the future.

Q2: How can I get the new list of HSN codes?

You can download the latest HSN and SAC codes from the GST portal by clicking on the "Download HSN Code List" button on Table 12.

Q3: Is the drop-down selection compulsory for all taxpayers?

No, HSN code entry cannot be done manually. All the taxpayers must choose the appropriate HSN codes available in the list.

Why Compliances Are Important

In case of non-compliance with the latest rule, among other issues, the following may be faced:

Companies can avoid such issues and maintain smooth compliance with GST regulations by raising awareness and taking proactive measures.

Conclusion
The introduction of HSN codes in GSTR-1 and GSTR-1A in Phase III is a major step toward the betterment of GST compliance and accuracy. Mandatory drop-down selection, validation rules, and enhanced features make the process easy for businesses and promote transparency in taxation.
For that, companies should update their systems, train the teams, and be vigilant for validation warnings. Need help?
Contact Book My Accountant for expert assistance with GST compliance, tax planning, and more. Together, let's simplify your tax journey!

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55th GST Council Meeting Brings Relief to GST- Registered Taxpayer

Important to know for taxpayers concerning GST

It's a big thing for registered GST taxpayers who want to minimize the hassle of claiming input credit. Taxpayers under GST who filed GSTR-3B from 2017-2018 to 2020-2021 must be cautious, as authorities are issuing demands for late ITC claims. According to the GST law, they cannot claim ITC until return filing that affected many. They have missed the advantage of ITC and, thus, their output tax liability went high. Now is the new opportunity to correct the same and obtain the available ITC.

The 2024 Budget addresses taxpayer issues and simplifies the rectification of outstanding input tax credits from previous years. It was released on 8th October, 2024 in this regard. GSTN has permitted businesses to file amendments online until January 7, 2025. It mentions that Taxpayer has to complete the process before 9th April and up to 8th April to avail its benefits from it.

Understanding the Process of GST ITC Rectification

A Simple Guide to Businesses GST. It is one of the essentials involved in conducting any business in India. Input Tax Credit, as per the scheme, enables one to recover any tax that may have been levied on buying. Companies may get an ITC demand from the tax department to repay claimed ITC with penalties and interest. Well, it is again due to the process developed by the government which enables a company to rectify this mistake. Let us tell you how is GST ITC rectification and what this is to be used to correct it with reduced penal cost on businesses.

A GST ITC Demand Order: Something Went Wrong?

As a taxpayer, you monthly filed your GST returns, only to be shocked by a portal demand stating you exceeded your input tax credit limit, despite everything seeming fine on paper, necessitating further investigation. An error on the GST portal wrongly marked specific invoices. That is why a recovery demand order for excess ITC was sent.

The New Solution: GST Rectification Process

So, instead of paying the demanded amount, businesses have the option to file for rectification under the newly introduced GST ITC rectification process. This will provide the proper rectification of the errors that arise because of technical bugs without penalty and interest.

Step-by-Step Guide to Rectify an ITC Demand Order:

Here comes Step By step-by-step guide to File a rectification application on the GST portal as per the advisory of January 7, 2025

  • GST Portal Login Go to www.gst.gov.in and login through User Id and Password
  • Proceed Further Dashboard > Services > User Services > My Applications In the next,
    Select "Application for rectification of order," then click "NEW APPLICATION."
  • Fill All the Details Download Annexure A from the portal. Fill in details of your demand order and provide details of ITC wrongly claimed by you. Upload Annexure A in complete detail now.
  • Check Your Application: Check your application once and then click on "FILE".
  • Last step:  On the specified date, one application under three months will be shown for review. Cancellation of verification for old GST claims now allows outstanding ITCs to be credited to the GST ledger.

BMA Insight

This current trend of GST advisory measures in our views, at BMA, seems progressive ones aimed more towards improving issues of compliance problems and subsequently pre-ITC errors. IThis ability to correct unadjusted ITC is a relief for trade, but it highlights the need for flexible time limits to prevent future issues. Stiff rules around e-way bills and combined multi-factor authentication are strengthening security and transparency but sometimes raise a concern for compliance for small business enterprises.

We at BMA believe that if the government makes smooth implementation and support toward taxpayers sufficient, then these initiatives could bring out positive outcomes. The thrust must be towards easier compliance rather than introducing new complexities.

Gift Vouchers and GST: What the CBIC Clarified After the 55th GST Council Meeting

The latest round of scrutiny focuses on the Indian GST regime regarding the tax treatment of gift vouchers. The 55th GST Council meeting, held on June 24, 2022, provided much-awaited clarifications on the GST treatment of gift vouchers. This post aims to clarify the implications for both businesses and consumers.

Understanding Gift Vouchers Under GST

Gift vouchers or tokens have always been a unique category of transactions falling in the grey area of taxation. A gift voucher is an instrument you can redeem for goods or services. The CBIC clarified that businesses must tax vouchers under GST at the point of sale instead of at the time of redemption.

Essential Clarifications by CBIC

The CBIC has provided much-needed clarification regarding the GST treatment of gift vouchers. The key takeaways are as follows:

1. The CBIC defines a gift voucher as a financial instrument that enables the holder to purchase goods or services. Vouchers unrelated to specific products or services will be considered 'money' in the GST regime.

2. Timing of GST Liability: The Circular clarifies that GST liability on gift vouchers is to be levied on the recipient at the time of redemption, not at the time of sale. The supplier incurs GST liability only when the voucher is redeemed for goods or services, aligning with GST principles.

3. Whether Gift Voucher sale would attract GST Gift Vouchers will be less taxed if sold since selling the same may be more or less considered as a form of consideration. Therefore, businesses which already face GST on both their sales and redemptions may find this more reassuring.

4. GST Rates: The CBIC further clarified that the specific GST rates would be applicable when the recipient receives the goods or services purchased by the gift vouchers. The GST rate will correspond to the type of goods or services that the voucher redeems. If you use a coupon and your redemption falls within a specific income tax slab, you will receive payment according to that slab.

5. Exemptions: Depending upon the nature of goods or services involved in redemption, some types of gift vouchers will be exempt from GST. It would include basic requirements and educational purposes per GST law exemptions.

Impact on Business Operations

CBIC clarifications are beneficial to business houses, particularly the issuers of the gift voucher, as the above clarification of the issue when GST will be levied may help an enterprise to arrange their accounts well and improve their effectiveness in keeping tax compliance in view.

1. Cash Flow Management: The things discussed above will enable them to manage cash flow efficiently as, due to the traditional system, currently, cash flow is recorded at the time voucher is actually liquidated. The use of gift vouchers may enhance the liquidity of businesses, particularly in the retailing and hospitality sectors.

2. Increased Sales: Because GST is not charged at the point of sale, this leaves a more flexible scenario and persuades the customer to buy gift vouchers. This can boost sales, as consumers might buy vouchers without seeing tax at checkout.

3. Customer Confidence Boosts: This transparent guideline by CBIC would make customers confident of dealing commercially. They are sure that the amount of excess tax they should not pay except they wish to encash gift vouchers.

Customer Criticism for Long-overdue amendments under which CBIC

These are some long-overdue amendments under which CBIC has clarified that it treats this kind of GST.

1. More Value: The problem of gift vouchers offers value to the consumer since, when using a voucher, an immediate tax liability will not arise. This will offer better value as customers can use the full face value of the gift voucher when purchasing.

2. Informed Choices: The justification refers to the surcharges and tax implications of a gift card, which would let the consumers realize the scenario in order to make proper choices about their purchase behaviour.

Future

The CBIC's clarification is useful, but businesses still need to remain vigilant. The law of GST would keep evolving as new developments and changes might erupt.

1. Continuous Learning: Businesses monitor GST and tax rules for gift vouchers to ensure compliance.

2. Technology: Accounting technologies manage gift voucher sales and redemptions, ensuring compliance and efficiency.

3. Adaptation in Market Dynamics: Business entities need to get ready to respond

TDS on Metal Scrap under GST: A Complete Guide

The Indian government has brought into effect new TDS provisions under the framework of Goods and Services Tax-specifically targeting all transactions in the form of metal scrap. With effect from 10 October 2024, these rules are aimed at improving tax compliance and transparency in the scrap materials sector. Let us dive into this and see what it will mean for the businesses buying and selling metal scrap.

What is TDS in GST for Metal Scrap?

TDS is a mechanism where tax is deducted at source at the time of making payment to the seller. Based on the latest GST rules, businesses, whose subject of business is procurement of metal scrap, are dutifully liable to deduct TDS at the time of entering into qualifying transactions.

And the transactions which attract TDS are under Chapter 72 to Chapter 81 of the Customs Tariff Act 1975, which comprises of:

Important Provisions of the TDS Rule

TDS shall apply on metal scrap under GST if the aggregate value of supplies exceeds ₹2,50,000 per transaction. The taxable value of scrap material will be deducted for deduction, and not the total invoice value.

Rate of deduction is provided as 2%, split as below:

Who must deduct TDS?

The Ministry of Finance issued Notification No. 25/2024-Central Tax on October 9, 2024, amending the earlier Notification No. 50/2018-Central Tax to clarify the Tax Deduction at Source (TDS) provisions under Section 51 of the CGST Act, 2017. Section 51 of the CGST Act 2017 deals with the mechanism of Tax Deduction at Source (TDS).

TDS provisions under Section 51 of the CGST Act shall not apply to the supply of goods or services between certain categories of persons specified in clauses (a), (b), (c), and (d) of sub-section (1) of Section 51 except for those specified in clause (d).

Process for becoming compliant

If you are a buyer dealing with metals scrap, here is what you need to do to become compliant with the new GST rules:

Obtain a Separate GST Registration

The buying party would be required to apply for a separate GST registration under REG-07 in order to start deducting TDS. Subsequently, the buyer can claim TDS on eligible transactions with which they will have to file a return month under Form GSTR-7. Simultaneously, the system generates a certificate of TDS, just like Form 16A under the Income Tax Act, after filing GSTR-7.

File Monthly Returns

The buyers who deduct TDS are liable to file GSTR-7 for the month. The return should be filed by the 10th of the next month where a payment liability will arise along with the return filing. This return should state the amount of TDS deducted.

Provide TDS Certificates

Once the return is filed by the purchaser, he shall issue the TDS certificate, GSTR-7A, to the supplier. Therefore, he would get the TDS credit to his ledger of cash at the end of every month.

TDS not Applicable in Respect of Metal Scrap

It is another important aspect that TDS under GST is not levied upon importing the metallic scraps. It does not draw any TDS deduction under such rules if the buyer imports scraps from abroad.

Conclusion

The introduction of TDS on metal scrap under the GST is perhaps a landmark to ensure better tax compliance in the industry. With the above move, the government has consequently mandated 2% TDS on all transactions, with an element of transparency and accountability that can be availed by the suppliers in due time.

Ensure your business is GST compliant with these new provisions by registering for GST TDS and the timely returns filing, contact Book My Accountant today for help with GST registration, TDS filing, and much more in accounting.

Direct Tax Vivad se Vishwas Scheme, 2024

The Income Tax Assessee can file appeals before the higher authorities in case disputed assessment orders. The department is also empowered to file an appeal in case the assessee gets relief in the case. The appeal can be filed at various levels, including Joint Commissioner, Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal, High Courts, and Supreme Court. Pending litigations are rising due to more cases being appealed and fewer cases being disposed of. The successful 2020 Direct Tax Vivad se Viswas will be followed by the 2024 scheme to reduce litigations further. The scheme though announced yet to come in force on a date to be notified by the Central Govt. The starting and end date of the scheme shall be announced very soon.

Direct Tax Vivad se Vishwas Scheme Key points

Main Objective

The main objective of the scheme to resolve the pending income tax disputes by depositing a portion of the disputed tax, interest and penalties. The aim is to provide immediate relief to the taxpayers vide the speeding up the resolution process for pending disputes before various tax appellate forums

Eligibility

As of July 22, 2024, all pending disputes/appeals are before Supreme Court, High Court, ITAT, Commissioner (Appeals), or DRP. Except a few exclusions, the scheme covers disputes/appeals filed by any of the taxpayer and/or tax authorities.

Application

The eligible taxpayers may file a declaration in the prescribed form with the designated authority. The designated authority shall determine the tax arrears and issue a certificate stating the tax arrears payable within 15 days. The taxpayer is required to deposit the arrear payable within 15 days from the date of receipt of such certificate.   

Arrear Payment

In the previous Direct tax VSV Scheme, taxpayers were required to pay a percentage of the disputed tax, but received full waivers on penalties and interest. The amount payable depends on the timing of the settlement and the type of dispute. If the scheme is opted on or before 31.12.2024, only 100% of the disputed tax will be in question. Persons will be charged a little more in disputed tax if they opt for the scheme after December 31, 2024 but before its closure.

In case the dispute is about Interest, Penalty or Fee i.e. non tax disputes, only 25% of such non tax arrear is payable if the scheme is opted on or before 313.12.2024 and 30% if after 31.03.2024.

Immunity and Settlement

Under this scheme, the taxpayer is granted immunity from further prosecution, penalties, and interest for resolving disputes. After filing the declaration and making the payment, the appellants before relevant forums (such as High Courts or ITAT) will withdraw their pending appeals.

Exclusions

As we have discussed earlier, some of the litigations are not eligible under VsV 2024 like cases involving search and seizure operations, where prosecution under any law has been initiated, undisclosed foreign income or assets and cases received in DTAA.

Conclusion

The Direct Tax Vivad se Vishwas Scheme 2024 improves upon the previous VSV Scheme by efficiently resolving tax disputes cost-effectively. It waives interest and penalties and avoid further litigation.

The government will soon announce closure dates for the scheme, along with notifications and clarifications, to maximize benefits for taxpayers.

Disclaimer:

This document is general information and is not intended to be advice or legal opinion on any matter. Readers should seek appropriate professional advice before acting on the basis of any information contained herein.

Understanding the New Advisory on RCM Liability and ITC Statements: What Businesses Need to Know

India's GST regime has evolved, with new responsibilities in RCM and ITC tax returns per the latest GST Council advisory. This update is important especially for businesses that require to adhere to the changing GST laws.

What Is the Reverse Charge Mechanism (RCM)?

In reverse charge, the tax burden shifts from supplier to recipient. This is used when the supplier isn't GST registered or for goods/services under reverse charge.

Businesses must analyze transactions to determine RCM coverage per the new advisory. Non compliance attracts penalties and interest charges.

Filing RCM Liability in GSTR 3B

One of the significant components of the advisory is the proper disclosure of RCM liabilities in GSTR 3B return. The GSTR 3B is a return that has to be filed on a monthly basis by the businesses and in this the details of the tax liabilities and the ITC claimed in GSTR 3B.

Therefore, to remain compliant, all parties must accurately report the RCM liabilities in the GSTR 3B returns. This involves confirmation of the invoices and deciding whether the reverse charge applies. This is because, in the process of auditing, inaccurate or omitted entries can cause a lot of problems.

ITC Statement and ITC claimed in GSTR 3B ITC Statement and ITC claimed in GSTR 3B

Starting from August 2024, the authorities have introduced a new “RCM Liability/ITC Statement” to improve accuracy in reporting Reverse Charge Mechanism (RCM) transactions.

This statement will capture RCM liabilities from Table 3.1(d) of GSTR-3B and the related ITC from Tables 4A(2) and 4A(3) of GSTR-3B. Monthly filers must start using it from August 2024, while quarterly filers will begin from the July-September 2024 period.

Any discrepancies between RCM liabilities and claimed ITC should be corrected in this statement, reconciling opening balances up to July 2024 for monthly filers and Q1 FY 2024-25 for quarterly filers. The deadline for declaring and amending the opening balance is October 31, 2024, with three amendments accepted until November 30, 2024.

Why This Advisory Matters

This advisory is therefore a timely reminder for businesses to remain cautious in their approach to GST compliance. New RCM liabilities and the emphasis on accurate ITC tax statements indicate that the authorities want to increase accountability.

Businesses should check their current GST compliance, especially regarding the Reverse Charge Mechanism and the ITC declared in GSTR 3B. Consider regular GST audits or consulting experts to identify potential issues that could lead to complications.

How Book My Accountant Can Help

At Book My Accountant (BMA), we offer GST services where we help you with GSTR 3B filing, reverse charge mechanism, and ITC tax. Our team of professionals keeps abreast with all the current advisories so that your business does not fall foul of any of the GST regulations.

To know more about GSTR 3B filings, you may refer to our comprehensive article on the same here. To get updated with the latest GST updates, please visit the GST Council’s official website here.

Book My Accountant is your one-stop solution for all your GST requirements. Get in touch with us for professional help and make sure your business is always up to date.

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Understanding the New Form GSTR-1A: A Guide for Businesses
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Understanding the New Form GSTR-1A: A Guide for Businesses

The Indian GST regime is still under an ameliorative process, which introduces new forms and procedures on the tax compliance. Among such new forms is Form GSTR-1A, which is essential for correcting the records about outward supplies made by the taxable person. This is a comprehensive amending return in respect of the outward supplies made during a month, which is a consolidated return under Form GSTR-1, which every registered dealer has to file.

What is Form GSTR-1A?

The registrant can make changes to the sale details captured in GSTR-1 through an ancillary GST form. In case you find any difference or you require to update additional information for GSTR-1 GSTR-1A allows you to make these changes before the submission of GSTR-3B return for the same period.

Why is it Important?

To report tax accurately and avoid prosecution for GST revenue offenses, is mandatory for them. Such mistakes cause wrong tax computations or assessments on your part, fines or assessments that you never expected, or audit. Through the filing of GSTR-1A, you will be in a position to have correct records of your outward supplies since they will help you avoid some complications when filing GSTR-3B.

Who Should File the form?

Any registered taxpayer, who finds any discrepancy or mistake after filing of GSTR 1 should file GSTR 1A. This form is useful to businesses that they make many transactions with the clients; because they are able to rectify many factors that are on the invoices such as details, taxes, and other rates.

Steps to File GSTR-1A

Filing GSTR-1A is a straightforward process:

  • Access the Form: You have to go to the GST portal and then click on the Returns Dashboard. Choose the correct financial year and return period, ( GSTR-1A Visible after filed GSTR-1 ) then go to the GSTR-1A section and click on “Prepare Online”.
  • Amend Details: Recall the particulars from GSTR-1. Some of the changes that can be made include changing the invoice numbers, altering the dates or modifying the tax values.
  • Add Missed Records: In case you have not been able to include any record in the GSTR-1, you can include it in GSTR-1A. Make certain that all entries are correct.
  • Save and Submit: Before submitting the form, check that it opens after you have saved all the corrections.
  • This step is very important in order to prevent mistakes in your GSTR-3B.

Effect on GSTR-3B and GSTR-2B

The system automatically populates the changes made in GSTR-1A in the taxpayer's GSTR-3B and the recipient's GSTR-2B during the subsequent tax period. This helps to maintain the compliance of your tax returns and reduces the chances of encountering problems during an audit.

Conclusion

GSTR-1A form is one of the critical forms under the GST structure. It allows for the amendment of any errors made during the first filing of GSTR-1, and this makes your tax information accurate. If you manage it properly, you will not have to pay penalties, facilitate your tax return, and follow the GST norms.

At Book My Accountant, we know how challenging GST can be and how it affects your business. Our team of specialists is ready to assist you in understanding all the complexities of GST returns, including 1A. To learn more about our professional services in filing your GST returns and compliance, contact us today.

Read more about Fake GST Registrations :

https://bookmyaccountant.com/strengthening-the-gst-system-indias-second-all-india-drive-against-fake-gst-registrations/

Strengthening the GST System: India's Second All-India Drive Against Fake GST Registrations

India’s GST is a key part of the tax system, aiming to unify indirect taxes effectively. However, some of the challenges have been fraudulent activities especially the abuse of GST registration. CBIC launched a drive to combat fake GST registrations, protect revenue, and fortify the GST system.

Identifying Fake GST Registrations

There are also fake GST registrations which are very dangerous since they affect the credibility of the GST system. The dishonest players get fake GST Identification Numbers (GSTINs) to commit tax fraud and falsely claim input tax credit. These actions impact the revenue and at the same time burden the honest taxpayers.

The CBIC, in consultation with the Directorate General of Analytics and Risk Management (DGARM), has a comprehensive strategy in place to track down and neutralize these fake GSTINs. New age data analytics and risk parameters identify suspicious GST numbers sent to tax departments for confirmation.

The Role of the GST Portal

The GST portal is very useful in registration as well as the monitoring of the whole process. You can use this channel to manage GST registration, check your application status, and access necessary tax details. Many fake registrations have been reported, resulting in strict verification procedures on the GST website. Tax officers are using the GST portal during this drive to verify GST numbers and registration compliance of genuine businesses.

Actions Against Fraudulent GSTINs

When fake GST registrations are identified, appropriate action is taken against them. Entities can be suspended or cancelled in their GST registration by the tax authorities if they are found to be committing fraud. They can suspend the input tax credit and reclaim any erroneously availed credit as well. Anyone who tries to misuse the GST system is immediately stopped.

Another essential part of this drive is the crackdown on the e-way bill system. Inter-state transportation requires the generation of the e-way bill through the GST portal, which is mandatory. From the analysis of e-way bills, tax authorities can also get additional information and prevent the abuse of GST registration.

Monitoring and Reporting

This drive must therefore have a sound monitoring and reporting system that can enhance its success. The GST Council Secretariat compiles weekly reports on identified tax evasion cases and activities leading to recoveries. An approach like this allows you to track progress and keep the drive from being deflected.

Special GST Drive Guidelines

Tax officers will visit registered businesses from August 16 to October 31, 2024, as part of a GST drive. Businesses are advised to take the following actions to ensure compliance:

  • Disclose all additional places of business.
  • Keep proper and updated records of all transactions, including purchase and sale invoices, consignment notes, and e-way bills.
  • Reconcile stock and cash balances regularly.
  • Maintain all bill books, vouchers, and documents in an organized manner.
  • Prominently display the GST registration certificate at every place of business, including godowns.
  • Complete bank authentication and KYC verification on the GST portal.
  • Place signboards properly at every location.

Conclusion

The second All-India drive against fake GST registrations is evidence of the Indian government’s seriousness towards maintaining a proper tax regime. This initiative proposes the use of the GST portal in protecting government revenue and the integrity of the GST system through data analytics. The government has called on business organizations to observe the GST laws by registering their GST number and other tax details. This drive is not merely to punish the offenders but also to build confidence in the Indian taxation system.

At Book My Accountant (BMA), we understand the complexities of the GST system and the importance of compliance. Experienced professionals on our team provide comprehensive GST consultancy services, ensuring that your business stays compliant with all regulations. From GST registration to ongoing compliance checks, BMA is your trusted partner in navigating the intricacies of the Indian tax system. Contact us today to learn how we can support your business in this crucial All-India drive against fake GST registrations.

Maximizing Efficiency Through Regular GST Health Check Up

The GST Health Check is a detailed analysis of how a business manages its GST compliance. It is a comprehensive and methodical examination of a business’s GST activities and responsibilities. This review evaluates a business's handling of GST, tax law compliance, report accuracy, and internal procedures. The review's first goal is to ensure business compliance with GST laws to reduce risks and penalties. Its purpose is to minimize risk exposure, avoid penalties, and ensure GST law compliance.

Elements of GST health check up

  • GST Registration Check
    A business undergoes a GST Registration Check to ensure proper GST registration and compliance with the law. The check confirms the business is ready to account for GST, recover it from customers, and claim input tax credits. It covers the analysis of the registration information and other related factors to ensure that the business satisfies all the requirements of GST registration. A GST Registration Check is an important component of a business’s GST compliance plan. This is important in ensuring that the business has complied with the necessary legal requirements on GST registration, has not omitted any crucial information, and is in line with the set laws to reduce on possible complications in tax management.                     
  • GST Books of Accounts Check
    A GST Books of Accounts Check entails an assessment of all the records of a business entity concerning the Goods and Services Tax (GST). We check to ensure that all GST transactions are accurately recorded, in compliance with GST laws and regulations, and are fully substantiated. The business ensures compliance with GST in terms of accounting practices and fulfills all GST responsibilities adequately. Through proper reviewing and verifying of GST transactions, invoices and records, this leads to minimizing risks, compliance and proper management of GST.
  • GST Liability & Payment Check
    GST Liability & Payment Check helps identify the amount of GST liability and payment to be made by the business. Thus, through proper analysis of the GST liabilities and payments, one can be in a position to report, meet compliance and manage GST effectively. It assists in keeping the financial records accurate, staying out of trouble with the tax authorities, and improving general tax compliance. To ensure that GST compliance is observed and penalties are avoided, while also maintaining cash flow, this check is essential.
  • GST ITC Eligibility Check
    GST ITC or Input Tax Credit Eligibility Check is a thorough verification process that helps in ascertaining whether a business is correctly availing input tax credit as per the GST laws. Input Tax Credit enables the business to avail credit of the GST paid on the inputs and use the same to pay the GST levied on the output. It is important to ensure that ITC claims are correct and do not violate the provisions of GST laws to avail the maximum benefits and to avoid any complications. This process assists in the prevention of risks, non-compliance with penalties, and accurate determination of ITC claims.
  • GST E-way Bill/E-Invoice Check
    We review electronic documents like GST E-Way Bill and E-Invoice under GST framework. This check ensures correct e-way bills and e-invoices compliance. E-way bills and e-invoices are necessary for the proper functioning of the supply chain and GST compliance. The e-way bills/E-invoices are issued in compliance with the threshold limits set under the GST laws for transporting goods. The e-way bill is verified to ensure all details are correctly mentioned on it. This includes the GSTIN of the supplier and recipient, invoice number, date, and description of goods. The e-invoices are generated with the correct and complete details, as verified by the e-invoices check. Details include GSTIN, invoice number, date, supply info, tax amount, and GST format.
  • GST Returns/Refund Check
    This verifies business GST compliance and refund processing. This check helps firms with GST records, detects issues, and optimizes tax situations. The GST returns verify sales, purchases, taxes, and adjustments. We match the figures from the GST returns with those in our account books for verifying their arithmetical correctness. This check ensures the business is GST compliant and meets refund requirements with correct supporting documents.
  • GST Dept Notices / Orders Check
    This is a process of going through and responding to the notices/orders issued by the GST department. Ensuring businesses function properly, comply with requirements, and identify tax issues is crucial for risk prevention. The check reviews GST authorities' notices and orders to ensure understanding of the matters or directions provided. Establish and follow specific steps to address issues within the provided time frame by conducting this check.
  • GST VLCR Check
    This is a process of conducting a critical assessment on the vendors or suppliers to determine their compliance to GST laws. This check is important for the credibility of a business’s supply chain, the ITCs claimed, and to minimize compliance risks. This check is concerned with the verification of the vendor’s compliance with GST, the correctness of the tax treatment, and the soundness of the business relationship. In this regard, vendor loyalty entails confirming that the vendor complies with GST requirements and has sound business ethics.

Conclusion

Now, you can guarantee your business’s GST compliance with Book My Accountant’s GST Health Check. Our professional staff scrutinizes all aspects of your GST operation including registration, record keeping, liability and input tax credit claims. We also manage e-way bills, returns, refunds, and departmental notices; consequently, this helps mitigate risks that may arise to your business. By partnering with us, you can stay compliant, reduce risks, and optimize your tax management processes, allowing you to focus on what you do best: that can help you grow your business.

Call Book My Accountant now to fix your business’s financial problems and GST issues. Let us deal with the challenges while you concentrate on achievement.

Streamline Section 16 of CGST Ac Compliance with BMA's VLCR Report

In today’s scenario of highly sensitive regulatory mechanism, Section 16(4) of the CGST Act, 2017 has been a major obstacle for all the business entities in India. Many of the enterprises have not been able to meet these provisions hence leading to high demand notices and financial burdens. This paper offers a detailed Section 16 and its sub-sections breakdown and actionable advice for any business to manage its ITC.

Interpretation of Section 16 of the CGST Act

Before delving into Section 16(4), it's crucial to grasp the broader context of Section 16:

  • Section 16(1): Allows every registered taxpayer to claim credit of ITC subject to the condition and restriction as mentioned in section 49.
  • Section 16(2): Draws conditions under which a registered person may claim ITC:
    • Supply of goods or services or both for consideration and issuance of tax invoice or debit note.
    • The delivery of the goods or services.
    • Payment of the ITC incurred on the goods to the Government.
    • Filing of a return under section 39.
  • Section 16(3): The rule is that if the taxpayer has claimed depreciation on the tax portion, this does not permit ITC on capital goods.
  • Section 16(4): Restrictions shall apply to any invoice or debit note claiming ITC. These restrictions will be in effect until the end of the year in which the invoice or debit note was issued or the annual return is filed, whichever comes first. This takes effect after the 30th of November of the following year.

Major Issues with Section 16(4) of CGST Act

Some courts have adopted constitutional interpretation to Section 16(4) and have interpreted that for availing ITC, one must meet only those conditions mentioned in Section 16(2). However, when interpreting Section 16 and the principles of statutory interpretation, it is evident that Sections 16(2), 16(3), and 16(4) form a part of restrictions regarding the scope and operation of ITC claims.

Supreme Court Observations

Thus, the Hon’ble Supreme Court has held that the taxpayers are under a statutory obligation to self-assess the eligible ITC under section 16(1) and section 16(2). This self-assessment involves:

Here are some practical tips for compliance:

To ensure smooth ITC claims and avoid penalties, businesses should:

  • Maintain Accurate Records: All the invoices and debit notes must be maintained properly for which it is important.
  • Monitor Vendor Compliance: Greatly reduce the time it takes for the ITC to be reflected in the GSTR-2B when the vendor files the GSTR-1.
  • Claim Timely ITC: Greatly reduce the time specified for availing ITC within the financial year, or by the end of November of the following year.
  • Verify Vendor Filings: Make sure that vendors have filled their returns in the right manner sometimes may be time consuming.
  • Address Mismatches Promptly: It is advisable that there is no discrepancy between the details mentioned in GSTR-2A/2B and GSTR-3B so that no demand is raised by the tax authorities.

Utilizing the BMA-VLCR Report

The BMA-VLCR report is one of the reference materials that would enable organizations to follow the provisions of GST. Businesses benefit by using reports to identify vendor non-compliance early.The report monitors vendors' compliance with GST laws and addresses issues. Examiners assess and compare claims with BMA-VLCR report to ensure accuracy and financial security.

Conclusion

While discussing the GST compliance where the law is quite specific with regard to the requirements of the businesses, one cannot afford to ignore Section 16 of the CGST Act, 2017. Some of these are record keeping, compliance by the vendors, claiming ITC within the stipulated time, cross verification of the vendor’s returns and handling of any discrepancy if found. The BMA-VLCR report also helps in enhancing the efficiency and effectiveness in managing GST compliance to ensure statutory compliance and ITC rights of organizations. Therefore, businesses should actively address GST issues and prepare to handle them to avoid penalties and maintain a stable business. Stay current, and compliant and safeguard your business against GST problems.

Stay current, stay legal, and safeguard your enterprise from the legalities of GST compliance.

Blog by BMA