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A Presentation on Basic Concepts
of GST
By CA Jatin Bakshi
Assistant Manager
Internal Audit Deptt.
The most awaited constitution bill GST finally passed on August 3rd, 2016. It
has been the topic of discussion in the past couple of years and everyone
was looking to it as a change that could bring some ease and transparency
in the Tax structure in INDIA.
In my opinion, this GST law was majorly required because of three reasons,
and those are:
1) To digitalize the working in the Industry
2) To make compliance easy
3) To remove the cascading effect of Central and
State Taxes
Meaning of GST: -- GST is a comprehensive value added tax on goods and services.
it is collected at each stage of sale or purchase in the supply chain. It is a tax collected
on the supply of goods. So the erstwhile taxable events such as Manufactured,
Produced, Sale, Provision of service will lose their relevance.
GST is going to bring Goods & Services under same platform. Both of these will be
taxed in the same way.
Major Features that the Law coming up with are: -
i) Seamless input tax credit throughout the supply chain.
ii) At all stages of supply chain, Input Tax will be passed on and will finally
be borne by the final consumer.
iii) As support to the Digital INDIA initiative. (Electronic Returns, Electronic
payments, Electronic records)
iv) The Law comprises of three Statutes : CGST, SGST, IGST
v) Shifting from origin based taxation of destination based taxation.
vi) Cross utilization of CGST/SGST between goods & services allowed.
vii) All types of goods & services will be covered by the law except
Alcoholic Beverages, Tabaco and Petroleum products.
GST Law basically comprises of three statutes: IGST, CGST, SGST.
To understand the Law, we will first have to understand what are these.
SGST: It is the Tax levied and collected by the State Government. All the goods & services
supplied on Intra-state transactions will attract SGST except some exempted goods and
transactions below certain prescribed limit. The state from which the supply originates will
charge SGST on the basic value of the goods or services and will transfer the collection to
the state where the goods or services are being delivered for their supply.
CGST: It is the Tax levied and Collected by the Central Government. All the goods & services
supplied on the Intra-state transactions will attract CGST except some exempted goods and
transactions below certain prescribed limit. The state from which the supply originates will
charge CGST on the basic value of the goods & services and will transfer the collection to the
central government.
So, which means that in case of intra state supply of goods & services, both SGST and
CGST will be charged on the basic value of the services whereby avoiding the cascading
effect of taxes.
IGST: It is simply a combination of SGST & CGST which will be charged on Inter state
transactions involving supply of Goods or Services. Rate of IGST will be the sum of
Rate of CGST & SGST. It will be firstly collected by the Central Government which will
then pass the SGST part to the respective state government.
1% Additional Tax: To compensate the loss pf revenue to the state government, 1%
additional tax will be levied by the central government on Inter state supply of goods &
services for 2 years which will be passed on to the state government. Period of 2years
may be extended in deem fit by the GST council. It is not clear as of now that whether
the credit of this additional duty will be available or not.
Compounding Scheme: - Assessee limited to one state and having turnover less that
Rs. 5 lacs can opt for composition scheme and pay GTS@1% of turnover. In that case,
neither he will charge any GST on his invoices nor he will take any credit.
Taxes subsumed by GST: -
State Taxes: -
 VAT/Sales Tax
 Entertainment Tax
 Luxury Tax
 Taxes on Lottery, Betting, Gambling
 State Cess and Surcharges
 Entry Tax not in lieu of Octroi
Central Taxes:
 Central Excise Duty
 Additional Excise Duty
 Service Tax
 Additional Custom Duty (CVD)
 Special Additional Duty (SAD)
 Surcharges
 Cesses
Now we will have to understand how the place of supply will be decided in a
transaction: -
Place of Supply of Goods: -
-- location of the goods at the time at which the movement of
goods terminates for delivery to the recipient
--where goods are supplied to a person at the direction of
some third person place of supply will be the location of that
third person
--where supply doesn’t involve movement of goods, place of
supply will be the location of such goods at the time of the
delivery
Place of supply of Services: -
-- Excluding some specific services, place of supply of all
other services will be the place of service receiver where
service receiver is a registered person.
-- For non registered person, POS will be location of recipient
if address of recipient exists on records.
-- Otherwise, POS will be location of service provider
Along with the term Place of Supply, another term is being used in the Law which is
‘Time of Supply’
Time of supply of goods will be considered as the earliest of the following: -
1) Date of removal for supply to recipient where goods are required
to be removed, or, Date of receipt of goods where they are not
required to be removed.
2) Date when supplier issues invoice
3) Date on which supplier receives the payment
4) Date on which recipient shows the receipt of goods in his books
Time of supply of services: -
a) If invoice is issued within the prescribed time: -
Invoice date or Payment Date whichever is earlier
b) If invoice is not issued within time: -
Completion of service or Date of payment whichever is earlier
In case of continuous supply of service: -
1) Where contract defines date of payments, each date
of payment whether actually received or not
2) Where contract doesn’t defines the date of payments,
where service provider receives payments or issues
invoice whichever is earlier
Reverse Charge Mechanism: Time of Supply will be earliest of the following: -
1) Date of receipt of service
2) Date on which payment is made
3) Date of receipt of invoice
4) Date of debit in the books of accounts of service
provider
GST working in Intra state transactions: -
Tax Invoice A
cost of goods sold=Rs. 100
SGST @10%=RS. 10
CGST @10%=Rs. 10
Total=Rs. 120
Tax Invoice B
cost of goods sold=Rs. 200
SGST @10%=RS. 20
CGST @10%=Rs. 20
Total=Rs. 240
Tax Invoice C
cost of goods sold=Rs. 300
SGST @10%=RS. 30
CGST @10%=Rs. 30
Total=Rs. 360
BakerFlour Maker Bread Retailer
Final
Consumer
State
SGST@10
%
Centre
CGST@10%
SGST paid Rs 10
SGST paid RS 10
(Rs 20-10 Credit)
SGST paid RS 10
(Rs 30-20 Credit)
CGST paid Rs 10
CGST paid RS 10
(Rs 20-10 Credit)
CGST paid RS 10
(Rs 30-20 Credit)
GST working in Inter State transactions: -
Tax Invoice A
cost of goods sold =Rs 100
SGST(G)@10% = Rs 10
CGST @10%= Rs 10
Total=Rs. 120
Tax Invoice B
cost of goods sold =Rs 200
IGST @20% = Rs. 40
Total = Rs 240
Tax Invoice C
cost of goods sold=Rs. 300
SGST @10%=RS. 30
CGST @10%=Rs. 30
Total=Rs. 360
Centre
CGST@10%
IGST@20%
BakerFlour Maker Bread Retailer
Final
Consumer
CGST paid
@10%
State X
SGST@10
%
State Border
Payment of IGST
IGST payable = Rs 40
Less CGST ITC = Rs 10
Less SGST(G) ITC = Rs
10
IGST paid = Rs 20
Payment of SGST
SGST(M)payable= Rs 40
Less CGST ITC= Rs 10
Less SGST(G) ITC = Rs
10
IGST paid =Rs 20
SGST paid =
Rs10
State Y
SGST@10
%
Payment of CGST
CGST payable = Rs 30
Less CGST ITC = Rs 00
Less IGST ITC = Rs 30
CGST paid = Rs 00
Mechanism for Availement of credit: -
IGST
IGST
CGST
SGST
CGST
IGST
CGST
IGST
SGST
SGST
Transfer of Credit in case of Inter state transactions: -
Center would levy IGST in case of Inter State transactions.
The seller in state-X will pay IGST to the Center
While paying IGST seller will adjust IGST, CGST or SGST
State government-X will have to transfer the credit of SGST used by the seller for
the payment of IGST to the center
Now when buyer in state-Y sells goods intra state, he will have to pay CGST &
SGST
For that he will avail credit of IGST paid while purchasing from state-X
Now center have to transfer the credit of IGST used for payment of SGST to state
government-Y
Imports & Exports: -
IGST will be charged on all imports in to the country.
There will be no tax on Exports.
Invoice System: -
In this system, credit of GST paid is claimed on the basis of invoice.
It is claimed when the invoice is received
It is immaterial whether the payment is made or not.
GST is accounted for when the invoice is raised
The time of receipt of payment is immaterial
The advantage of invoice based system is that the input can be claimed
without making the payment
The disadvantage of the invoice system is that GST has to be paid
without receiving the payment
Registration: -
As per draft law, every person who is liable to get registered under this law should
apply for registration within 30 days from the date when he becomes liable to.
All the existing assessees will be given a time frame of 6 months to submit the
required documents for registration.
Assessee having business verticals at multiple locations are required to take a
separate registration for each business vertical.
NSDL has been appointed to maintain an online portal named as ‘GST PILOT
PORTAL’
Here, every tax payer will be given a 15 digit identification number to be called as
‘Goods & Service Tax Identification Number (GSTIN)’
Online application forms will be available for dealers to provide their details and to
upload documents
Registration would include basic steps like registering yourself on enrolment page, and
then login using the given ‘User ID’ and ‘Password’, filing the application form by
uploading the requisite documents related to Excise, Service Tax, IEC, CIN,
Professional Tax Number, Shops and Establishment Number and any other state
specific registration number, contact numbers, postal address and E-mail address of
business entity, Bank account details including MICR code, place of Business, details
of goods & services, scanned signed photographs.
Online Payments & Credits: -
Any deposit made under this law will be deposited in to an Electronic
Cash Ledger which will be maintained online.
Balance in this ECL shall be used to pay Taxes, Fees, Penalties,
Interest etc.
ITC will be transferred in to an Electronic Credit Ledger which shall be
used to pay Taxes only.
Returns: -
Type of returns under GST Law: -
GSTR 1 Outward supplies made by taxpayer (other than
compounding taxpayer and ISD) 10th of the next month
GSTR 2 Inward supplies received by a taxpayer (other than a
compounding taxpayer and ISD) 15thof the next month
GSTR 3 Monthly return (other than compounding taxpayer and
ISD) 20thof the next month
GSTR 4 Quarterly return for compounding Taxpayer 18thof the
month next to quarter
GSTR 5 Periodic return by Non-Resident Foreign Taxpayer Last day
of registration
GSTR 6 Return for Input Service Distributor (ISD) 15th of the next month
GSTR 7 Return for Tax Deducted at Source 10th of the next month
GSTR 8 Annual Return By 31st December of next FY
A Normal/ Regular Taxpayer would have to file GSTR-1 with Annexure-II (detail of
outward supply), GSTR-2 with Annexure-III (detail of inward supply), GSTR-3 with
Annexure-IV (monthly return) for each registration.
Also GSTR-8 would be required to be filed by all Normal/Regular Taxpayer. It will be
based on financial records.
Normal / Regular taxpayers with multiple registrations (for business verticals) within a
State would have to file GSTR-1, GSTR-2 and GSTR-3 for each of the registrations
separately.
Procedure for Filing of GST return: -
Step 1: The taxpayer will upload the final GSTR-1 return form either directly
through data entry at the GST Common Portal or by uploading the file containing
the said GSTR-1 return form through Apps by10thday of month succeeding the
month during which supplies has been made. The increase / decrease (in supply
invoices) would be allowed, only on the basis of the details uploaded by the
counter-party purchaser in GSTR-2, up to 17th day of the month. (i.e. within a
period of 7 days). In other words, the supplier would not be allowed to include any
missing invoices on his own after 10th day of the month.
Step 2: GST Common Portal (GSTN) will auto-draft the provisional GSTR-2 of
taxpayer based on the supply invoice details reported by the counter-party
taxpayer (supplier) on a near real-time basis.
Step 3: Purchasing taxpayer will accept / reject/ modify such auto-drafted
provisional GSTR-2. (A taxpayer will have the option to download his provisional
purchase statement from the Portal or through Apps using Application
Programming Interface (APIs) and update / modify it off-line).
Step 4: Purchasing taxpayer will also be able to add additional purchase invoice details
in his GSTR-2 which have not been uploaded by counter-party taxpayer (supplier) as
described in Step 1 and 2 above, provided he is in possession of valid invoice issued
by counter-party taxpayer and he has actually received such supplies.
Step 5: Taxpayers will have the option to do reconciliation of inward supplies with
counter-party taxpayers (suppliers) during the next 7 days by following up with their
counter-party taxpayers for any missing supply invoices in the GSTR-1 of the counter-
party taxpayers, and prompt them to accept the same as uploaded by the purchasing
taxpayer. All the invoices would be auto-populated in the ITC ledger of taxpayer. The
taxpayer would, however, indicate the eligibility / partial eligibility for ITC in those cases
where either he is not entitled or he is entitled for partial ITC.
Step 6: Taxpayers will finalize their GSTR-1and GSTR-2 by using online facility at
Common Portal or using GSTN compliant off-line facility in their accounting
applications, determine the liability on their supplies, determine the amount of eligible
ITC on their purchases and then generate the net tax liability from the system for each
type of tax. Cash details as per personal ledger/ carried forward from previous tax
period, ITC carried forward from previous tax period, ITC reversal and associated
Interest/Penalty, taxes paid during the current tax period etc. would get auto-populated
in the GSTR-3.
Step 7: Taxpayers will pay the amount as shown in the draft GSTR-3 return generated
automatically at the Portal post finalization of activities mentioned in Step 6 above.
Step 8: Taxpayer will debit the ITC ledger and cash ledger and mention the debit entry
No. in the GSTR-3 return and would submit the same.
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Understanding practical aspects of gst

  • 1. A Presentation on Basic Concepts of GST By CA Jatin Bakshi Assistant Manager Internal Audit Deptt.
  • 2. The most awaited constitution bill GST finally passed on August 3rd, 2016. It has been the topic of discussion in the past couple of years and everyone was looking to it as a change that could bring some ease and transparency in the Tax structure in INDIA. In my opinion, this GST law was majorly required because of three reasons, and those are: 1) To digitalize the working in the Industry 2) To make compliance easy 3) To remove the cascading effect of Central and State Taxes
  • 3. Meaning of GST: -- GST is a comprehensive value added tax on goods and services. it is collected at each stage of sale or purchase in the supply chain. It is a tax collected on the supply of goods. So the erstwhile taxable events such as Manufactured, Produced, Sale, Provision of service will lose their relevance. GST is going to bring Goods & Services under same platform. Both of these will be taxed in the same way. Major Features that the Law coming up with are: - i) Seamless input tax credit throughout the supply chain. ii) At all stages of supply chain, Input Tax will be passed on and will finally be borne by the final consumer. iii) As support to the Digital INDIA initiative. (Electronic Returns, Electronic payments, Electronic records) iv) The Law comprises of three Statutes : CGST, SGST, IGST v) Shifting from origin based taxation of destination based taxation. vi) Cross utilization of CGST/SGST between goods & services allowed. vii) All types of goods & services will be covered by the law except Alcoholic Beverages, Tabaco and Petroleum products.
  • 4. GST Law basically comprises of three statutes: IGST, CGST, SGST. To understand the Law, we will first have to understand what are these. SGST: It is the Tax levied and collected by the State Government. All the goods & services supplied on Intra-state transactions will attract SGST except some exempted goods and transactions below certain prescribed limit. The state from which the supply originates will charge SGST on the basic value of the goods or services and will transfer the collection to the state where the goods or services are being delivered for their supply. CGST: It is the Tax levied and Collected by the Central Government. All the goods & services supplied on the Intra-state transactions will attract CGST except some exempted goods and transactions below certain prescribed limit. The state from which the supply originates will charge CGST on the basic value of the goods & services and will transfer the collection to the central government. So, which means that in case of intra state supply of goods & services, both SGST and CGST will be charged on the basic value of the services whereby avoiding the cascading effect of taxes.
  • 5. IGST: It is simply a combination of SGST & CGST which will be charged on Inter state transactions involving supply of Goods or Services. Rate of IGST will be the sum of Rate of CGST & SGST. It will be firstly collected by the Central Government which will then pass the SGST part to the respective state government. 1% Additional Tax: To compensate the loss pf revenue to the state government, 1% additional tax will be levied by the central government on Inter state supply of goods & services for 2 years which will be passed on to the state government. Period of 2years may be extended in deem fit by the GST council. It is not clear as of now that whether the credit of this additional duty will be available or not. Compounding Scheme: - Assessee limited to one state and having turnover less that Rs. 5 lacs can opt for composition scheme and pay GTS@1% of turnover. In that case, neither he will charge any GST on his invoices nor he will take any credit.
  • 6. Taxes subsumed by GST: - State Taxes: -  VAT/Sales Tax  Entertainment Tax  Luxury Tax  Taxes on Lottery, Betting, Gambling  State Cess and Surcharges  Entry Tax not in lieu of Octroi Central Taxes:  Central Excise Duty  Additional Excise Duty  Service Tax  Additional Custom Duty (CVD)  Special Additional Duty (SAD)  Surcharges  Cesses
  • 7. Now we will have to understand how the place of supply will be decided in a transaction: - Place of Supply of Goods: - -- location of the goods at the time at which the movement of goods terminates for delivery to the recipient --where goods are supplied to a person at the direction of some third person place of supply will be the location of that third person --where supply doesn’t involve movement of goods, place of supply will be the location of such goods at the time of the delivery
  • 8. Place of supply of Services: - -- Excluding some specific services, place of supply of all other services will be the place of service receiver where service receiver is a registered person. -- For non registered person, POS will be location of recipient if address of recipient exists on records. -- Otherwise, POS will be location of service provider
  • 9. Along with the term Place of Supply, another term is being used in the Law which is ‘Time of Supply’ Time of supply of goods will be considered as the earliest of the following: - 1) Date of removal for supply to recipient where goods are required to be removed, or, Date of receipt of goods where they are not required to be removed. 2) Date when supplier issues invoice 3) Date on which supplier receives the payment 4) Date on which recipient shows the receipt of goods in his books
  • 10. Time of supply of services: - a) If invoice is issued within the prescribed time: - Invoice date or Payment Date whichever is earlier b) If invoice is not issued within time: - Completion of service or Date of payment whichever is earlier In case of continuous supply of service: - 1) Where contract defines date of payments, each date of payment whether actually received or not 2) Where contract doesn’t defines the date of payments, where service provider receives payments or issues invoice whichever is earlier
  • 11. Reverse Charge Mechanism: Time of Supply will be earliest of the following: - 1) Date of receipt of service 2) Date on which payment is made 3) Date of receipt of invoice 4) Date of debit in the books of accounts of service provider
  • 12. GST working in Intra state transactions: - Tax Invoice A cost of goods sold=Rs. 100 SGST @10%=RS. 10 CGST @10%=Rs. 10 Total=Rs. 120 Tax Invoice B cost of goods sold=Rs. 200 SGST @10%=RS. 20 CGST @10%=Rs. 20 Total=Rs. 240 Tax Invoice C cost of goods sold=Rs. 300 SGST @10%=RS. 30 CGST @10%=Rs. 30 Total=Rs. 360 BakerFlour Maker Bread Retailer Final Consumer State SGST@10 % Centre CGST@10% SGST paid Rs 10 SGST paid RS 10 (Rs 20-10 Credit) SGST paid RS 10 (Rs 30-20 Credit) CGST paid Rs 10 CGST paid RS 10 (Rs 20-10 Credit) CGST paid RS 10 (Rs 30-20 Credit)
  • 13. GST working in Inter State transactions: - Tax Invoice A cost of goods sold =Rs 100 SGST(G)@10% = Rs 10 CGST @10%= Rs 10 Total=Rs. 120 Tax Invoice B cost of goods sold =Rs 200 IGST @20% = Rs. 40 Total = Rs 240 Tax Invoice C cost of goods sold=Rs. 300 SGST @10%=RS. 30 CGST @10%=Rs. 30 Total=Rs. 360 Centre CGST@10% IGST@20% BakerFlour Maker Bread Retailer Final Consumer CGST paid @10% State X SGST@10 % State Border Payment of IGST IGST payable = Rs 40 Less CGST ITC = Rs 10 Less SGST(G) ITC = Rs 10 IGST paid = Rs 20 Payment of SGST SGST(M)payable= Rs 40 Less CGST ITC= Rs 10 Less SGST(G) ITC = Rs 10 IGST paid =Rs 20 SGST paid = Rs10 State Y SGST@10 % Payment of CGST CGST payable = Rs 30 Less CGST ITC = Rs 00 Less IGST ITC = Rs 30 CGST paid = Rs 00
  • 14. Mechanism for Availement of credit: - IGST IGST CGST SGST CGST IGST CGST IGST SGST SGST
  • 15. Transfer of Credit in case of Inter state transactions: - Center would levy IGST in case of Inter State transactions. The seller in state-X will pay IGST to the Center While paying IGST seller will adjust IGST, CGST or SGST State government-X will have to transfer the credit of SGST used by the seller for the payment of IGST to the center Now when buyer in state-Y sells goods intra state, he will have to pay CGST & SGST For that he will avail credit of IGST paid while purchasing from state-X Now center have to transfer the credit of IGST used for payment of SGST to state government-Y
  • 16. Imports & Exports: - IGST will be charged on all imports in to the country. There will be no tax on Exports.
  • 17. Invoice System: - In this system, credit of GST paid is claimed on the basis of invoice. It is claimed when the invoice is received It is immaterial whether the payment is made or not. GST is accounted for when the invoice is raised The time of receipt of payment is immaterial The advantage of invoice based system is that the input can be claimed without making the payment The disadvantage of the invoice system is that GST has to be paid without receiving the payment
  • 18. Registration: - As per draft law, every person who is liable to get registered under this law should apply for registration within 30 days from the date when he becomes liable to. All the existing assessees will be given a time frame of 6 months to submit the required documents for registration. Assessee having business verticals at multiple locations are required to take a separate registration for each business vertical. NSDL has been appointed to maintain an online portal named as ‘GST PILOT PORTAL’ Here, every tax payer will be given a 15 digit identification number to be called as ‘Goods & Service Tax Identification Number (GSTIN)’
  • 19. Online application forms will be available for dealers to provide their details and to upload documents Registration would include basic steps like registering yourself on enrolment page, and then login using the given ‘User ID’ and ‘Password’, filing the application form by uploading the requisite documents related to Excise, Service Tax, IEC, CIN, Professional Tax Number, Shops and Establishment Number and any other state specific registration number, contact numbers, postal address and E-mail address of business entity, Bank account details including MICR code, place of Business, details of goods & services, scanned signed photographs.
  • 20. Online Payments & Credits: - Any deposit made under this law will be deposited in to an Electronic Cash Ledger which will be maintained online. Balance in this ECL shall be used to pay Taxes, Fees, Penalties, Interest etc. ITC will be transferred in to an Electronic Credit Ledger which shall be used to pay Taxes only.
  • 21. Returns: - Type of returns under GST Law: - GSTR 1 Outward supplies made by taxpayer (other than compounding taxpayer and ISD) 10th of the next month GSTR 2 Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD) 15thof the next month GSTR 3 Monthly return (other than compounding taxpayer and ISD) 20thof the next month GSTR 4 Quarterly return for compounding Taxpayer 18thof the month next to quarter GSTR 5 Periodic return by Non-Resident Foreign Taxpayer Last day of registration GSTR 6 Return for Input Service Distributor (ISD) 15th of the next month GSTR 7 Return for Tax Deducted at Source 10th of the next month GSTR 8 Annual Return By 31st December of next FY
  • 22. A Normal/ Regular Taxpayer would have to file GSTR-1 with Annexure-II (detail of outward supply), GSTR-2 with Annexure-III (detail of inward supply), GSTR-3 with Annexure-IV (monthly return) for each registration. Also GSTR-8 would be required to be filed by all Normal/Regular Taxpayer. It will be based on financial records. Normal / Regular taxpayers with multiple registrations (for business verticals) within a State would have to file GSTR-1, GSTR-2 and GSTR-3 for each of the registrations separately.
  • 23. Procedure for Filing of GST return: - Step 1: The taxpayer will upload the final GSTR-1 return form either directly through data entry at the GST Common Portal or by uploading the file containing the said GSTR-1 return form through Apps by10thday of month succeeding the month during which supplies has been made. The increase / decrease (in supply invoices) would be allowed, only on the basis of the details uploaded by the counter-party purchaser in GSTR-2, up to 17th day of the month. (i.e. within a period of 7 days). In other words, the supplier would not be allowed to include any missing invoices on his own after 10th day of the month. Step 2: GST Common Portal (GSTN) will auto-draft the provisional GSTR-2 of taxpayer based on the supply invoice details reported by the counter-party taxpayer (supplier) on a near real-time basis. Step 3: Purchasing taxpayer will accept / reject/ modify such auto-drafted provisional GSTR-2. (A taxpayer will have the option to download his provisional purchase statement from the Portal or through Apps using Application Programming Interface (APIs) and update / modify it off-line).
  • 24. Step 4: Purchasing taxpayer will also be able to add additional purchase invoice details in his GSTR-2 which have not been uploaded by counter-party taxpayer (supplier) as described in Step 1 and 2 above, provided he is in possession of valid invoice issued by counter-party taxpayer and he has actually received such supplies. Step 5: Taxpayers will have the option to do reconciliation of inward supplies with counter-party taxpayers (suppliers) during the next 7 days by following up with their counter-party taxpayers for any missing supply invoices in the GSTR-1 of the counter- party taxpayers, and prompt them to accept the same as uploaded by the purchasing taxpayer. All the invoices would be auto-populated in the ITC ledger of taxpayer. The taxpayer would, however, indicate the eligibility / partial eligibility for ITC in those cases where either he is not entitled or he is entitled for partial ITC. Step 6: Taxpayers will finalize their GSTR-1and GSTR-2 by using online facility at Common Portal or using GSTN compliant off-line facility in their accounting applications, determine the liability on their supplies, determine the amount of eligible ITC on their purchases and then generate the net tax liability from the system for each type of tax. Cash details as per personal ledger/ carried forward from previous tax period, ITC carried forward from previous tax period, ITC reversal and associated Interest/Penalty, taxes paid during the current tax period etc. would get auto-populated in the GSTR-3.
  • 25. Step 7: Taxpayers will pay the amount as shown in the draft GSTR-3 return generated automatically at the Portal post finalization of activities mentioned in Step 6 above. Step 8: Taxpayer will debit the ITC ledger and cash ledger and mention the debit entry No. in the GSTR-3 return and would submit the same.