How to claim old ITC under GST

How to claim old ITC under GST

How to claim old ITC under GST

Any business that has not availed Input Tax Credit (ITC) on services or a closing stock can claim credit of tax paid under the pre-GST regime, irrespective of whether they are registered or unregistered under this regime. Depending on the possession of the evidence of payment of taxes and being registered under the pre-GST regime, Form Tran 1 and Tran 2 are to be filed.

In order to claim ITC (Input Tax Credit), you will have to submit your input tax credits according to the previous tax regime and then claim it under GST. For that, you will have to file your Tran 1 and/or Tran 2 form within 90 days from the appointed date and sell your old stock which you are planning to carry forward to the subsequent i.e. GST tax regime within six months from the appointed date (i.e. 1st July 2017).

Check your eligibility for the Transition Forms you need to file

Form TRAN 1	Form TRAN 2
It needs to be filed by every person who has closing stock under the GST regime, even if they were not registered under the pre-GST regime.	Not a registered person under any pre-GST regime. Holds Closing stock on the appointed date (i.e. 1st July 2017) The person doesn’t possess any document that acts as an evidence of payment of taxes. The person is not a manufacturer in Central Excise. The person is not a service provider under the Service Tax.

Form GST Tran 1Rules 

        I.            Every person who is registered under the GST regime and wishes to claim the tax credit of ITC available under the pre-GST regime must file the Form Tran 1 within ninety days of the appointed date.

      II.            This form should be filed by every person who is registered under GST regime, even if he is not registered under the pre-GST regime if he wants to take credit of ITC available under the pre-GST regime.

    III.            If a registered person has purchased capital goods and was unable to claim the full amount of tax paid during the purchase, the remaining amount can be claimed under GST. 

Conditions to claim ITC

Ø   A registered person can be a manufacturer or a provider of the exempted goods and/or services, works contractors availing abatement under 26/2012-ST, first or second stage dealer, a registered importer, depot of a manufacturer, or a person who is currently not liable for registration.

Ø  The registered person shall be entitled to take in the inputs in finished goods held in the stock on the appointed day, inputs on the semi-finished goods, ECL, eligible credits on inputs.

Ø  The entitlement in case of finished goods will be subject to the following conditions:

Ø  The stock is to be used for making supplies that are taxable under this Act

Ø  The person is eligible to take ITC on inputs under this Act

Ø  The person should have the invoice or the prescribed documents

Ø  These documents or invoices should not have been issued earlier than 12 months from 1st July

Ø  The supplier of the service is not eligible for abatement under this Act  

Form GST Tran 2

The person who satisfies all the following conditions must file Form Tran 2

Ø  The person aiming to claim the ITC should be registered under GST but should not be registered under any pre-GST regime.

Ø  The person should not possess any invoice or other documents that act as an evidence of payment of taxes.

Ø  The person should neither be a manufacturer nor a supplier of services under Central Excise or Service Tax respectively.

Ø  The closing stock should be lying on 30th June 2017.

If the person wants to claim credit of State and Central Tax, following conditions should be fulfilled

Ø  The state and central tax have been paid on supplies.

Ø  The goods are not Nil rated or fully exempt from Excise Duty or under the State VAT Act.

Ø  The registered person should have the document for procurement of these goods.

Ø  The registered person should easily identify the stock of goods on which credit is allowed, which is why it should be stored in that way.

Ø  The amount allowed should be credited to the ECL (Electronic Credit Ledger).

The above conditions in case of State Tax will be applicable if the States offer Tax on the MRP Scheme. 

Latest Update:

Ø  The deadline for first GST Return, GSTR- 3B, has been extended to August 28 for taxpayers who opt to use the opening balance of pre-GST credit in the current month. Those who do not wish to claim opening credit in the current month or those who have no credit; the deadline continues to be August 20.

Ø  The extended deadline also allows the taxpayers to file form TRAN 1 by August 28.

GSTR 3B return deadline extended to August 28 for those claiming transitional tax credit

GSTR 3B return deadline extended to August 28 for those claiming transitional tax credit

                                                GSTR 3B return deadline extended to August 28 for those claiming transitional tax credit

The government on Thursday gave some relief to taxpayers availing of transitional input tax credit under the goods and services tax (GST) regime by giving them an extra week till August 28 to file tax returns.

Businesses under the GST set-up have to file their first return, GSTR 3B, for July on the portal of GST Network (GSTN) — the information technology (IT) infrastructure provider for the new indirect tax regime — by August 20. The return filing had commenced on August 5.

The finance ministry on Thursday offered some relaxation to those businesses that claim transitional input tax credit. These entities will have to deposit taxes on the basis of self-assessment by August 20, but they will have one more week till August 28 to file their returns.

Those taxpayers that do not claim any transitional input tax credit will have to necessarily pay tax and file return in Form 3B before the due date of August 20, the ministry said.

It added that concerns have been raised about the form to claim transitional input tax credit not being available on the GSTN website. This form will be available on the GSTN website from August 21.

"A small window of opportunity is being given to all the taxpayers... The taxpayers who want to avail of the transitional input tax credit ... (will) have to make full settlement of the liability after adjusting the transitional input tax credit before August 20, 2017," it said.

They will get time up to August 28, 2017, to submit Form TRANS I after estimating transitional credit and Form 3B.

"In case of shortfall in the amount already paid vis-a- vis the amount payable on submission of Form 3B, the same will have to be paid with interest of 18 per cent for the period between August 21, 2017, till the payment of such differential amount," the ministry said.

To make compliance easy for businesses, the GST Council has allowed businesses to initially file their returns on self-assessment basis in the first two months of the GST rollout.

So, the GST returns for July and August will be filed on the GSTN portal by filling the GSTR 3B form.

Over 71.30 lakh excise, service tax and value-added tax (VAT) payers have migrated to the GSTN portal. Also 15 lakh fresh registrations have happened on the portal.

The final GST returns for July will have to be filed by these businesses by September 5 instead of August 10. Companies will have to file sale invoice for August with GSTN by September 20 instead of September 10earlier.

GSTR – 3B Important Points to remember

GSTR – 3B Important Points to remember

 

GSTR – 3B Important Points to remember

The first return of GST is here and is due for filing is 20th of August, 2017. Most of the registered persons still haven’t filed the Return GSTR-3B.

Here are some points you need to remember for filing the first GST Return GSTR-3B.

1) It is Mandatory to file GSTR-3B and there is no exemption from filing GSTR-3B even if you have not carried on any business in the month of July’2017. NIL GSTR-3B is also to be filed mandatorily.

2) GSTR-3B is the provisional return for the month of July’2017. Therefore all dealers who are required to file monthly returns under the GST Regime are required to file GSTR-3B.

Note:- Composition dealers are required to file quarterly returns therefore dealers who have opted for composition scheme are not required to file GSTR-3B.

3) GSTR-3B is not the final return for the month of July’2017 this is only a provisional return. GSTR-1, GSTR-2, GSTR-3 for July’2017 are still required to be filed.

4) GSTR-3B cannot be revised. Any revision in the figures for July’2017 has to be done through GSTR-1, 2 and 3 to be filed later on.

5) Any taxes due for July’2017 have to be paid before filing GSTR-3B.

6) If there is any change in the figures at the time of filing forms GSTR-1,2 & 3 and if there is excess tax payable then the same will have to be paid with interest before filing GSTR-3 due in September.

7) If your input credits are more than your output in GSTR-3B then you need not pay any taxes before filing this return. However, it is to be noted that no refund can be claimed in form GSTR-3B and excess credit will be credited to the ITC Ledger.

8) A very important point to remember about filing GSTR-3B is that the transitional credits available from the previous VAT/Service Tax/Excise regimes will not be available for credit and use in GSTR-3B. Any such credits have to be shown by filing form TRAN-1 and will be available for use only after filing TRAN-1.

9) GSTR-3B is a simplified return where only total figures of purchases, sales input tax credits and payments are to be entered. Individual entries for each sale invoice are not to be entered in this return.

10) GSTR-3B is to be filed from the period from which the registration is taken by the supplier. Therefore, if you have taken registration in the month of August’2017 the option for filing GSTR-3B for July’2017 will not be available and the no GSTR-3B is to be filed for July’2017.

11) GSTR-3B is to be filed through online mode on the GST Portal gst.gov.in

12) Following details are to be shown in the return GSTR-3B.

1        GSTIN number of  Registered Person

2        Legal name of Registered Person

3.1     Summary of  Outward Supply &  Inward Supply under Reverse Charge

3.2     Bifurcation of Inter-state outward supplies as follows:

a) To unregistered Person

b) To Composite taxable Person

c) To UIN Holders

4        Summary of eligible ITC available and the ITC to be reversed and ITC which is ineligible bifurcated into IGST, CGST & SGST/UTSGT and Cess

5        Summary of Exempted, Nil rated  and Non GST  inward supplies

5.1     Interest and late fees payable

6        Details of payment of tax, which includes  Category wise tax payable, ITC availed , TDS credit and  Tax paid in cash along with interest and late fees (Though it is not applicable for initial 2 return)

7        Summary of tax category wise TDS/TCS credit

 13) Remember the order for set-off eligible ITC. ITC of IGST, CGST and SGST must be set-off from themselves (intra-head) first before being set-off inter-head. Remember that GST and SGST cannot be set-off against each other.

14) Any amounts to be paid on reverse charges have also be shown and paid in GSTR-3B also. Please remember that amount payable under reverse charges will not be available to be paid by utilising input credit. Amount payable on reverse charges will have to paid by cash.

15) GSTR-3B can be submitted through digital signatures or Electronic verification code except for Companies where it has to be filed by digital signatures.

Section 143 of Income Tax Act

Section 143 of Income Tax Act

An assessee is required to file an income tax return under Section 139 or in response to notice under section 142, consisting all the details of income earned during the previous year. Once the return is filed the next step of Income tax department is to examine the return for its correctness. This examination is known as ‘Assessment’.

Under Income Tax Act, 1961 there is section 143 under which assessment is done:

1. Assessment under section 143(1), Summary assessment without presence of assessee.

2. Assessment under section 143(3), Scrutiny assessment.

Section 143(1) – Summary assessment

Introduction:

This is the preliminary assessment without calling the assessee i.e. Tax payer.

Scope of assessment under section 143(1):

Under this assessment the general scrutiny is carried to discover the basic errors. Some adjustments (if necessary) are done to compute the correct income tax. The following are the adjustment, if required, namely:

1. Any arithmetical error in the return, or

2. An incorrect claim, which is apparent from the income tax return.

Following are the points which are to be inserted by the Finance Act i.e. 01/04/2017

3. The loss claimed or the loss carried forward of any previous previous year in return shall be disallowed if return is filed after the date specified in Section 139(1).

4. The expenditure shown in the audit report but not claimed while preparing income tax return shall be disallowed.

5. Various deductions claimed under Section 80 shall be disallowed if such return is furnished after due date specified in Section 139(1).

6. If any income found in Form 26AS or Form 16 or Form 16A but details not furnished while computing the total income shall be added.

For the above purpose “an incorrect claim apparent from any information in the return” means a claim on the basis of an entry in the return:

1. Of an item which is inconsistent with another entry of the same or some other item in such return. Example: Suppose in ITR 4 the other head income (like income from other sources, capital gain etc) are deducted from calculation of PGBP but the same are not added back in calculation of respective head of

2. In respect of which the information is required to be furnished under the Act to substantiate such entry and has not been so furnished:

Example: While calculating the capital gain the type of asset or security sold must be described such as Gold, Shares, Mutual Fund, Residential property, etc. Also the acquisition year and date of sale are to be furnished in the return. So any mismatch found may be discovered.

3. In respect of statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction

Example: The limit of section 80C is Rs 1,50,000. But assessee claimed the aggregate deduction of Rs 1,75,000. So the AO has to increase the Gross Total Income by excess amount i.e. Rs 25,000.

Process of Assessment under Section 143(1):

1. After the adjustments carried out, the comparative statement is formed showing the calculation of assesseee and calculation of the AO.

2. The Adjustments are not incorporated in the return unless intimation is given to the assesseee in writing or electronic mode.

3. The response received from the assesseee shall be considered before incorporating the adjustments in the income tax return, if the response is not received in 30 Days from the issuance date the adjustments should be incorporated.

4. Recomputation of the income shall be done by the AO and after making above given adjustments. The tax liability and Interest on it shall be computed.

5. After computing the tax liability the same amount should be adjusted against advance tax, any tax deducted at source, any tax collected at source, any relief allowable under an agreement under section 90,90A or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest

6. Intimation shall be prepared and sent to the assesseee specifying the sum determined to be payable by or the amount of refund due to the assesseee.

7. The amount of refund due to the assesseee shall be granted to the assesseee.

8. Intimation is also to be sent if the loss is adjusted but there is no change in the income tax liability and The acknowledgement can be considered as intimation if no tax payable or refund, and there are no adjustments required.

9. The issuance of intimation under section 143(1) is not necessary if AO has issued notice under section 143(2)

Time Limit

Assessment of the return can be done in two immediate consecutive assessment year after end of the previous year for which return was filed.

Example: If return was filed for FY 2015-16 on date 31/09/2016 then no intimation shall be sent after 31.03.2018. i.e. two assessment year 2016-17 and year 2017-18.

Section 143(2)

Introduction:

To ensure that the income furnished is not understated or any excessive loss is claimed or has not underpaid the tax. The AO may call the assesseee by serving a notice to remain present by himself of by representative and submit the evidences and documents to prove the genuinity of the income tax return. In this case the AO can send the notice only if the assesseee has filed the Income tax Return

Time limit:

After 6 months of completion of relevant assessment year in which return is filed no notice shall be served to the assesseee for this particular section. i.e. 18 Months from the end of relevant previous year.

Section 143(3) – Scrutiny Assessment

Introduction:

The detailed checking of the income tax return furnished by the assesseee is done at this stage by the assessing officer. Here the AO verifies the genuineness and correctness of the deductions, claims etc done by the assessee.

Scope of assessment under Section 143(3):

Under scrutiny assessment the AO verifies the evidences, documents, books of accounts etc. to confirm that the assesseee has not understated the income or shown excessive loss or underpaid the tax. The scrutiny will also be done of the claims and deductions incorporated in the income tax return.

No order making an assessment of the total income or loss should be done of following person:

1. Research association referred to in clause (21) of section 10;

2. News agency referred to in clause (22B) of section 10;

3. Association or institution referred to in clause (23A) of section 10;

4. Institution referred to in clause (23B) of section 10;

5. Fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) of clause (23C) of section 10,

Unless,

1. The AO has intimated the Central Government or the prescribed authority about the contravention of relevant section, where in his view contravention has taken place.

2. The approval granted to referred parties has been ended.

Process of Assessment under section 143(3):

1. If AO deems fit, then a notice may be served to assesseee to remain present in the office and produce the evidence related to the income tax return.

2. To carry out the assessment under section 143(3), the AO need to issue notice as per provisions of Section 143(2).

3. The assesseee or his representative can remain present in the office of the AO for placing supporting evidences arguments etc.

4. After gathering all the evidences obtained from the assesseee or the representative of the assesseee and considering its correctness on the related points, the AO shall make an assessment of the total income or loss of the taxpayer and determine the sum payable by him or refund of any amount due to him on the basis of such assessment.

Time limit:

As per section 153, assessment under section 143(3) shall be made within a period of two years from the end of the relevant assessment year.

Example: If income tax return is filed of FY 2015-16 is filed on 30/09/2016, then assessment shall be made within 3 years from the end of relevant FY i.e. last date of completion of the assessment will be 31/03/ 2019.

Section 143(4) Introduction:

This section relates to the tax paid or refund received after such assessment process is done under Section 143(3) or Section 144.

Process:

‘1. Any tax or interest, paid at the time of receipt of intimation under Section 143(1) shall be deemed to be paid under such assessment i.e. Section 143(3) or 144.

‘2. If after such regular assessment it is discovered, that excess refund was issued under section 143(1) as compared to assessment done under Section 143(3), then the excess amount so received shall be considered as tax payable by the assessee.

Example: If Refund of Rs. 1,00,000 was issued at the time of assessment under section 143(1), but during the assessment under 143(3), it was discovered that refund to be issued was of only Rs 75,000. So Rs. 25,000 will be deemed to be tax payable by the assessee.

Resident Director Section 149(3) and Independent Director Section 149(4)

Resident Director Section 149(3) and Independent Director Section 149(4)

(a)   Resident Director [Section 149 (3)]

Every company shall have at least one Resident Director i.e. who had stayed in India for a total period of not less than 182 days in the previous calendar year.

Transition period:  Section 149 (5) provides for the transition period of one year from the date of commencement i.e., 1st April, 2014 to comply with section 149 (3).

Section 149 (3) of the Companies Act, 2013 requires every company to have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year. The MCA clarified that residency requirement would be reckoned from the date of commencement of section 149 of the Act i.e., 1st April, 2014. The first previous calendar year for compliance with these provisions would, therefore, be calendar year 2014. The period to be taken into account for compliance with these provisions will be the remaining period of calendar year 2014 (i.e., 1st April to 31st December). Therefore, on a proportionate basis, the number of days for which the director(s) would need to be resident in India, during Calendar year 2014, shall exceed 136 days.

Regarding newly incorporated companies it is clarified that companies incorporated between 1st April, 2014 and 30th September, 2014 should have a resident director either at the incorporation stage itself or within six months of their incorporation. Companies incorporated after 30th September, 2014 need to have the resident director from the date of incorporation itself.

(b)   Independent Director [Section 149(4)]

Every listed public company shall have at least one-third of the total number of directors as independent directors [Section 149(4)].

The Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

Any fraction contained in such one-third numbers shall be rounded off as one. According to the Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the following class or classes of companies shall have at least 2directors as independent directors:

(1) the Public Companies having paid up share capital of ` 10 crore or more, or

(2) the Public Companies having turnover of ` 100 crore or more, or

(3) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding ` 50 crore.

However, in case a company covered under the above rule is required to appoint a higher number of independent directors due to composition of its audit committee, such higher number of independent directors shall be applicable to it.

Further, any intermittent vacancy of an independent director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later.

If intermittent vacancy arise in 15th June, 2015 and the immediate next Board meeting after the vacancy was held on 14th August, 2015, then the vacancy shall be filled-up by 14th August, 2015 or by 14th September, 2015 whichever is later. In this case it shall be filled up by 14th September, 2015.

If the immediate next Board meeting after the vacancy was held on 14th October, 2015, then the vacancy shall be filled-up by 14th October, 2015 or by 14th Sept. 2015 whichever is later. In this case it shall be filled up by 14th October 2015.

However, where a company ceases to fulfill any of three conditions laid down above for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions.

For the purpose of the above assessment, the paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, as existing on the last date of latest audited financial statements shall be take into account. A company belonging to any class of companies for which a higher number of independent directors has been specified in the law for the time being in force shall comply with the requirements specified in such law.

Download Soft copy of notes Click here 

Deduction under section 80RRB and 80TTA

Deduction under section 80RRB and 80TTA

Section 80RRB: Deduction with respect to any Income by way of Royalty of a Patent

Deduction for any income by way of royalty for a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available up to Rs. 3 lakhs or the income received, whichever is less. The taxpayer must be an individual resident of India who is a patentee. The taxpayer must furnish a certificate in the prescribed form duly signed by the prescribed authority.

Section 80 TTA: Deduction from Gross Total Income for Interest on Savings Bank Account

A deduction of maximum Rs 10,000 can be claimed against interest income from a savings bank account. Interest from savings bank account should be first included in other income and deduction can be claimed of the total interest earned or Rs 10,000, whichever is less. This deduction is allowed to an individual or an HUF. And it can be claimed for interest on deposits in savings account with a bank, co-operative society, or post office. Section 80TTA deduction is not available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

GSTR 3B : GST Return Filing For July And August 2017

The GST Council has relaxed filing rules for the first two months post implementation. Here's how to file your returns for these months using form GSTR-3B. 

GSTR 3B is a simpler return that businesses need to file in the first two months of GST (July and August, 2017) instead of the normal returns – GSTR 1, 2 and 3.

Under GST, a registered dealer is required to file three returns every month and one annual return. So, in total 37 returns have to be filed every year. Since filling up these complex forms require a great amount of time and understanding, the government has postponed the filing of GSTR 1,2 & 3 for July and August, 2017.

In the place of these monthly returns, GSTR 3B has been introduced.

Deadlines for July and August GST Returns are as follows:

Forms	For July 2017	For August 2017
GSTR 3B	20th August	20th September
GSTR 1	5th September	20th September
GSTR 2	10th September	25th September

You are not required to file GSTR 3 for the months of July and August.

Also, there is no late fee or penalty levied for the months of July and August in the case of delayed return filing.

From September 2017, every taxpayer has to strictly follow the regular provisions of filing GSTR 1, 2 and 3 on 10th, 15th and 20th of the next month respectively:

Due Date	GST Form No.	Form Name
10th of the next month	GSTR 1	Details of outward supplies of taxable goods and/or services effected
15th of the next month	GSTR 2	Details of inward supplies of taxable goods and/or services effected claiming input tax credit.
20th of the next month	GSTR 3	Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax.
31st December of next financial year	GSTR-9	Annual Return

Sections under GSTR 3B

1. Outward Supplies:
1. Details of outward supplies and inward supplies liable to reverse charge
2. Details of inter-State supplies made to unregistered persons, composition dealer and UIN holders
2. Input Tax Credit: Details of eligible ITC
3. Purchases: Details of exempt, nil-rated and non-GST inward supplies
4. Payment of tax: Outward Tax Liability (minus) Input Tax Credit
5. TDS/TCS Credit: Sections on TDS and TCS have not been notified till date.

You can download a sample GSTR-3B form issued by the Government Of India here.

Download Official Notification here.