EWB for supply of services

 update from GST portal 

Advisory for Taxpayers regarding Generation of EWB where the 

principal supply is Supply of services.

16/09/2021

1. Representations have been received from various trade bodies stating that they are not

able to generate EWB bill for movement of those goods where their principle supply is 

classifiable as a service, since there is no provision for generating E-way Bill by entering

SAC (Service Accounting Code-Chapter 99) alone on the E- way bill portal.

2. To overcome this issue, the taxpayers are advised as below:

a) Rule 138 of CGST Rules, 2017, inter alia, states “Information to be furnished prior to

commencement of movement of goods and generation of e-way bill.-(1) Every registered

person who causes movement of goods of consignment value exceeding fifty thousand 

rupees….” 

Thus, E way bill is required to be generated for the movement of Goods.

b) Therefore, in cases where the principal supply is purely a supply of service and involving no

movement of goods, the e-way bill is not required to be generated.

c) However, in cases where along with the principal supply of service, movement of some

goods is also involved, e-way bill may be generated. Such situations may arise in cases of 

supply of services like printing services, works contract services, catering services, pandal

or shamiana services, etc. In such cases, e-way bill may be generated by entering the 

details of HSN code of the goods, along with SAC (Service Accounting Code) of services 

involved.

GST - staggered returns

Ministry of Finance press release dated 22nd January, 2020

Considering the difficulties faced by trade and industry in filing of returns, the government has decided to introduce several measures to ease the process. The Finance Ministry today said that now GST taxpayers can file their GSTR-3B returns in a staggered manner.

Presently the last date of filing GSTR-3B returns for every taxpayer is 20th of every month. From now on, the last date for filing of GSTR-3B for the taxpayers having annual turnover of Rs 5 crore and above in the previous financial year would be 20th of the month. Thus, around 8 lakh regular taxpayers would have the last date of GSTR-3B filing as 20th of every month without late fees.

The taxpayers having annual turnover below Rs 5 crore in previous financial year will be divided further in two categories. The tax filers from 15 States/ UTs, i.e., Chhattisgarh, Madhya Pradesh, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh will now be having the last date of filing GSTR-3B returns as 22nd of the month without late fees. This category would have around 49 lakh GSTR-3B filers who would now have 22nd of every month as their last date for filing GSTR-3B returns.

For the remaining 46 lakh taxpayers from the 22 States/UTs of Jammu and Kashmir, Laddakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha having annual turnover below Rs 5 crore in previous financial year will now be having last date of filing the GSTR-3B as 24th of the month without late fees.

The Finance Ministry said that the necessary notification in this regard would be issued later by the competent authority.

In a statement issues, the Ministry further said that it has also taken a note of difficulties and concerns expressed by the taxpayers regarding filing of GSTR-3B and other returns. The matter has been discussed by the GSTN with Infosys, the Managed Service Provider, which has come out with above solution to de-stress the process as a temporary but immediate measure. For further improving the performance of GSTN filing portal on permanent basis, several technological measures are being worked out with Infosys and will be in place by April 2020.

GST - exhibition goods

Clarification in respect of goods taken out of India for exhibition or on consignment basis for export promotion

Posted On: 22 JUL 2019 1:18PM by PIB Delhi

Several goods are taken out of India on consignment basis for exhibitions or other export promotion events. These goods are sold only when approved by the prospective customers abroad. The unsold goods are then brought back to India. This is a widespread practice in various sectors, including the gems and jewellery industry. Exporters of these items were facing problems due to the the lack of clarity on the procedure to be followed under GST at the time of taking these goods out of India and at the time of their subsequent sale or return to India. Taking cognizance of these problems and in order to help exporters, the Central Board of Indirect Taxes and Customs (CBIC) has now issued a comprehensive clarification in this regard vide Circular No. 108/27/2019-GST dated 18.07.2019. The key points clarified in the Circular are the following:

1. The activity of taking goods out of India on consignment basis for exhibition would not in itself constitute a supply under GST since there is no consideration received at this time.
2. The movement of these goods out of India shall be accompanied by a delivery challan issued in accordance with the provisions contained in rule 55 of the CGST Rules.
3. Since taking such goods out of India is not a supply, it necessarily follows that it is also not a zero-rated supply. Therefore, execution of a bond or LUT, as required under section 16 of the IGST Act, is not required.
4. The goods taken out of India in this manner are required to be either sold or brought back within a period of six months from the date of removal.
5. The supply would be deemed to have taken place if the goods are neither sold abroad nor brought back within the period of six months. In this case, the sender shall issue a tax invoice on the date of expiry of six months from the date of removal, in respect of the quantity of goods which have neither been sold nor brought back. The benefit of zero-rating, including refund, shall not be available in respect of such supplies.
6. If the specified goods are sold abroad, fully or partially, within the period of six months, the supply shall be held to have been effected, in respect of the quantity so sold, on the date of such sale. In this case, the sender shall issue a tax invoice in respect of such quantity of goods which has been sold. These supplies shall become zero-rated supplies at the time of issuance of invoice. However, refund in relation to such supplies shall be available only as refund of unutilized ITC and not as refund of IGST.
7. No tax invoice is required to be issued in respect of goods which are brought back to India within the period of six months.

The above points are informative in nature and have been presented in this release in simple language for benefit of all stakeholders. The Circular issued in this regard, i.e. Circular No. 108/27/2019-GST dated 18.07.2019, may be referred which alone shall have the force of law.

GST - Housing sector

PIB press release dated 24th February, 2019

Real estate sector is one of the largest contributors to the national GDP and provides employment opportunity to large numbers of people. “Housing for All by 2022” envisions that every citizen would have a house and the urban areas would be free of slums. There are reports of slowdown in the sector and low off-take of under-construction houses which needs to be addressed. To boost the residential segment of the real estate sector, following recommendations were made by the GST Council in its 33^rd meeting held today:

2. GST rate:
   1. GST shall be levied at effective GST rate of 5% without ITC on residential properties outside affordable segment;
   2. GST shall be levied at effective GST of 1% without ITC on affordable housing properties.

3. Effective date: The new rate shall become applicable from 1^st of April, 2019.

4. Definition of affordable housing shall be:-

A residential house/flat of carpet area of upto 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities).

Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).

5. GST exemption on TDR/ JDA, long term lease (premium), FSI:

Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.

6. Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose.

7. Advantages of the recommendations made:

The new tax rate in principle was approved by the Council taking into consideration the following advantages:-

1. The buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%.
2. Interest of the buyer/consumer gets protected; ITC benefits not being passed to them shall become a non-issue.
3. Cash flow problem for the sector is addressed by exemption of GST on development rights, long term lease (premium), FSI etc.
4. Unutilized ITC, which used to become cost at the end of the project gets removed and should lead to better pricing.
5. Tax structure and tax compliance becomes simpler for builders.

8. GST Council decided that the issue of tax rate on lottery needs further discussion in the GoM constituted in this regard.

The decisions of the GST Council have been presented in this note in simple language for easy understanding.  The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.

*****

GSTR-7

Central Board of Indirect Taxes and Customs has vide its notification dated 8th February, 2019 extended the last date for filing of form GSTR-7 for the month of January, 2019 upto 28th February, 2019. This form GSTR-7 is a return by a registered person required to deduct tax at source under section 51 of CGST Act, 2017.

Section 51 mandates tax deduction at source at the rate of 1% from the payment made to supplier of taxable goods or services where total value of such supply, under a contract, exceeds Rs.250,000/-.

The copy of the notification can be found here

GST simplification

Press release by Ministry of Finance on GST simplification.

Major Decisions taken by the GST Council in its 32nd Meeting held today under the Chairmanship of the Union Minister of Finance & Corporate Affairs, Shri Arun Jaitley 

Posted On: 10 JAN 2019 6:18PM by PIB Delhi

The GST Council in its 32^nd Meeting held today under the Chairmanship of the Union Minister of Finance & Corporate Affairs, Shri Arun Jaitley in New Delhi took the following major decisions to give relief to MSME (including Small Traders) among others -

1.   Increase in Turnover Limit for the existing Composition Scheme: The limit of Annual Turnover in the preceding Financial Year for availing Composition Scheme for Goods shall be increased to Rs 1.5 crore. Special category States would decide, within one week, about the Composition Limit in their respective States.

1.1    Compliance Simplification: The compliance under Composition Scheme shall be simplified as now they would need to file one Annual Return but Payment of Taxes would remain Quarterly (along with a simple declaration).

2.    Higher Exemption Threshold Limit for Supplier of Goods: There would be two Threshold Limits for exemption from Registration and Payment of GST for the suppliers of Goods i.e. Rs 40 lakhs and Rs 20 lakhs. States would have an option to decide about one of the limits within a weeks’ time. The Threshold for Registration for Service Providers would continue to be Rs 20 lakhs and in case of Special Category States at Rs 10 lakhs.

3.   Composition   Scheme for Services: A Composition Scheme shall be made available for Suppliers of Services (or Mixed Suppliers) with a Tax Rate of 6% (3% CGST +3% SGST) having an Annual Turnover in the preceding Financial Year up to Rs 50 lakhs.

3.1  The said Scheme Shall be applicable to both Service Providers as well as Suppliers of Goods and Services, who are not eligible for the presently available Composition Scheme for Goods.

3.2  They would be liable to file one Annual Return with Quarterly Payment of Taxes (along with a Simple Declaration).

4.     Effective date: The decisions at Sl. No. 1 to 3 above shall be made operational from the 1^st of April, 2019.

5.    Free Accounting and Billing Software shall be provided to Small Taxpayers by GSTN.

 6.   Matters referred to Group of Ministers:

        i.   A seven Member Group of Ministers shall be constituted to examine the proposal of giving a Composition Scheme to Boost the Residential Segment of the Real Estate Sector.

      ii.    A Group of Ministers shall be constituted to examine the GST Rate Structure on Lotteries.

7.  Revenue Mobilization for Natural Calamities: GST Council approved Levy of Cess on Intra-State Supply of Goods and Services within the State of Kerala at a rate not exceeding 1% for a period not exceeding 2 years.

GSTR3B -waiver of late fee

The Central Government has vide a notification click here waived the late fee on delayed filing of form GSTR3B. Any amount of late fee which is in excess of Rs.25/- per day is waived. Similarly where the tax payable is NIL and still the registered person has to file the return, any excess late fee over Rs.10 per day is waived off. This is applicable for all GSTR3B returns from July, 2017 onwards i.e. from the inception of GST system.

So here it is only a partial waiver. But where the registered person has failed to furnish the return for the periods July 2017 to September, 2018 but has subsequently filed the same between 22nd December, 2018 and 31st March, 2019, the entire late fee is waived off.

This sounds ridiculous unless I am missing some thing here. That means if you have not filed at all but are filing now between those above dates, then you get full waiver, otherwise only partial waiver.

This begs a major question - why the hell did the government deem it so bloody important to levy a late fee and penalty in the first place if they have to go back and waive it from retrospective effect. Sounds like poor governance from the government.

GST annual return

The Ministry of Finance vide its notification dated 11th December, 2018 has extended the last date for filing of the annual return of GST for the period from 1st July, 2017 to 31st March, 2018 to 31st March, 2019. The annual return is required to be filed online, but the system is not yet ready at their end, so the extension.

Every registered person,  a casual taxable person and a non resident taxable person is required to file this annual return electronically.

The form for the annual return is not ready, so one does not know the contours of this return. Already taxpayers are burdened with two returns GSTR3B and GSTR1. The latter could be quarterly for taxpayers who have less than Rs.1.5 crore turnover and they have to opt for quarterly method of filing.

One does not know what is the reason for one more return under the GST regime. It does not help in "ease of doing business" 

GST on complex, building, flat etc.

Ministry of Finance press release dated 8th December, 2018

It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready to move-in flats where sale takes place after issue of completion certificate by the competent authority. GST is applicable on sale of under construction property or ready to move-in flats where completion certificate has not been issued at the time of sale.

   Effective rate of tax and credit available to the builders for payment of tax are summarized in the table for pre-GST and GST regime.

Period	Output Tax Rate	Input Tax Credit details		Effective Rate of Tax
Pre- GST	Service Tax: 4.5% VAT: 1% to 5% (composition scheme)	Central Excise on most of the construction materials: 12.5% VAT: 12.5 to 14.5% Entry Tax: Yes	No input tax credit (ITC) of VAT and Central Excise duty paid on inputs was available to the builder for payment of output tax, hence it got embedded in the value of properties. Considering that goods constitute approximately 45% of the value, embedded ITC was approximately 10- 12%.	Effective pre-GST tax incidence: 15- 18%
GST	Affordable housing segment: 8%, Other segment: 12% after 1/3rdabatement of value of land	Major construction materials, capital goods and input services used for construction of flats, houses, etc. attract GST of 18% or more.	ITC available and weighted average of ITC incidence is approximately 8 to10%.	Effective GST incidence, for affordable segment and for other segment has not increased as compared to pre- GST regime.

   

Housing projects in the affordable segment such as Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of State Government etc., attract GST of 8%. For such projects, after offsetting input tax credit, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST.

  For projects other than affordable segment, it is expected that the cost of the complex/ buildings/ flats would not have gone up due to implementation of GST. Builders are also required to pass on the benefits of lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been dow

GSTR extension

GST press release dated 7th December, 2018

FORM GSTR-9 and FORM GSTR-9A have been notified vide notification No. 39/2018-Central Tax, dated 04.09.2018 while FORM GSTR-9C has been notified vide notification no. 49/2018-Central Tax, dated 13.09.2018 as part of the CGST Rules. 2.

The competent authority has decided to extend the due date for filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C till 31st March, 2019. The requisite FORMs shall be made available on the GST common portal shortly. Relevant order is being issued.

GST on railway catering

PIB Press release dated 6th April, 2018

With a view to remove any doubt or uncertainty in the matter and bring uniformity in the rate of GST applicable to supply of food and drinks made available in trains, platforms or stations, it has been clarified with the approval of the competent authority that the GST rate on supply of food and drinks by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms (static units), will be 5% without input tax credit. The copy of letter F.No. 354/03/2018-TRU dated 31.03.2018 (Order No. 2/2018 – GST) issued to the Railway Board is available atwww.cbec.gov.in .

GST Council Decisions - 6th October, 2017

PIB release dated 6th October, 2017

Recommendations made by the GST Council in its 22nd Meeting held today under Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley in the national capital.

 Composition Scheme
1.      The composition scheme shall be made available to taxpayers having annual aggregate turnover of up to Rs. 1 crore as compared to the current turnover threshold of Rs. 75 lacs. This threshold of turnover for special category States, except Jammu & Kashmir and Uttarakhand, shall be increased to Rs. 75 lacs from Rs. 50 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand shall be Rs. 1 crore. The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018. The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised. New entrants to this scheme shall have to file the return in FORM GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period. The increase in the turnover threshold will make it possible for greater number of taxpayers to avail the benefit of easier compliance under the composition scheme and is expected to greatly benefit the MSME sector.

2.      Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme. 

3.      A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.

Relief for Small and Medium Enterprises

4.      Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover.  It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.

5.      To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs. 1.5 crores, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR1,2 & 3 and pay taxes only on a quarterly basis, starting from the Third Quarter of this Financial Year i.e. October December, 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis.

The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December, 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September, 2017 will be announced in due course.

6.      The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31.03.2018 and will be reviewed by a committee of experts.

This will benefit small businesses and substantially reduce compliance costs.

7.      The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.

8.      It has come to light that Goods Transport Agencies (GTAs) are not willing to provide services to unregistered persons. In order to remove the hardship being faced by small unregistered businesses on this account, the services provided by a GTA to an unregistered person shall be exempted from GST.

Other Facilitation Measures

9.      After assessing the readiness of the trade, industry and Government departments, it has been decided that registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.

10.  The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018. This is in order to give trade and industry more time to acclimatize itself with the GST regime.

11.  The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July September, 2017 shall be extended to 15.11.2017. Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15.11.2017.

12.  Invoice Rules are being modified to provide relief to certain classes of registered persons.

These are welcome reliefs especially for the small & medium sector. This sector has had its liquidity completely squeezed with having to deposit the monthly GST and also on reverse charge basis. It had become a double whammy for them.  

In fact there should be only one quarterly GSTR3B form required to be filed with the Government. All other forms i.e. GSTR 1, 2, 3 should be abolished. Too much of information is sought in these forms which had hitherto never happened in the history of tax administration in India. This had become a kind of micro management of the tax payers, which is not at all beneficial for any tax regime. 

GST issues

Now that GST is two months old, some thoughts from practical experience. Basically three issues.

One is payment of GST to govt within one month of raising invoice is draconian. Nobody in India pays us within one month of raising of bill save in exceptional cases. Mostly payments are received on average between 3 to 6 months. Earlier we used to pay to the govt. on quarterly basis and that too on receipt basis. Now if we have to pay the tax in advance even before we receive our money, that means our cash flow has gone out of the window. The SME sector is badly hit. It should be minimum 3 months from date of invoice.

Second is the ridiculous concept of reverse charge mechanism wherein we have to pay tax on our purchases from unregistered dealers. That means we have to pay the GST and will receive input credit on that the next month. But our cash flow is again gone.

Third is the micro management here which means we have to report every single invoice of purchases and sales to the govt. As far as i recall in all these years of tax administration, whether direct or indirect, govt. has never asked for details of every single invoice and then match it in the system. There is a trust issue here which was prevalent all along but is sorely lacking in the GST system. Self assessment has a different meaning here. Compliance never became so onerous.

These are my observations from practical experience, unless i have understood it wrongly. 

GST Council and its Secretariat

PIB press release dated 12th September, 2016

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has approved setting up of GST Council and setting up its Secretariat as per the following details:  

(a)          Creation of the GST Council as per Article 279A of the amended Constitution;

(b)         Creation of the GST Council Secretariat, with its office at New Delhi;

(c)          Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;

(d)         Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;

(e)          Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India).

The Cabinet also decided to provide for adequate funds for meeting the recurring and non-recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the Central and State Governments.

The steps required in the direction of implementation of GST are being taken ahead of the schedule so far.

The Finance Minister has also decided to call the first meeting of the GST Council on 22^nd and 23^rdSeptember 2016 in New Delhi.