GST UPDATE ON ANNUAL RETURN COMPLIANCE-PART-4

GST UPDATE ON ANNUAL RETURN COMPLIANCE-PART-4

Inearlier update, we discussed about theon the details required to be filed with respect to Inward Supplies on which tax is to be paid on reverse charge under serial no. 4G of the Annual Return.In our update, we discussed about different situations and reflection of liability and input tax credit of tax paid under reverse charge mechanism. Apart from the points taken in our earlier update, one common issue that is being encountered by us is the payment of tax under wrong head under reverse charge mechanism. For example-ABC Ltd. paid CGST/SGST on freight charges under reverse charge mechanism on the basis of document issued by the local office of transporter but in reality, the registered office of the transporter is situated in another State and has reflected tax liability under IGST in GSTR-1. This is resulting in payment of tax once again under IGST, that too, vide DRC-03 for which assessee is not eligible to avail any input tax credit. In the present update, we seek to discuss the issues pertaining toPart III requiring to furnish details of ITC for the financial year.

One additional requirement that the assessee is required to comply with is the bifurcation of input tax credit into inputs, input services and capital goods which has no tax implication as such except the different provisions of reversal prescribed for inputs and input services under Rule 42 and capital goods under Rule 43 of the CGST Rules, 2017. Furthermore, in case of input tax credit availed with respect to tax paid under reverse charge mechanism, the assessee is required to bifurcate the said credit also into inputs, input services and capital goods. One practical problem that is being commonly faced is the bifurcation in case of reverse charge mechanism that was applicable under section 9(4) of the CGST Act, 2017 pertaining to supplies received from un-registered persons. The provision required payment of tax under reverse charge mechanism if the total supplies from un-registered persons exceeded Rs. 5,000/- per day. The supplies procured from un-registered persons comprises of bouquet of inputs and input services, some of which are being capitalised. The bifurcation of tax paid under section 9(4) of the CGST Act, 2017 is cumbersome exercise to be undertaken for the period from 01.07.2017 to 12.10.2017. The difficulty is not limited to bifurcation under section 9(4) of the CGST Act, 2017, but it is practically difficult to correctly reflect the figure of tax paid from registered and unregistered supplies under reverse charge mechanism for specified goods and services also under section 9(5) of the CGST Act, 2017. This is for the reason that during the initial stages of implementation of GST regime, transporters were using old bilties wherein their GST registration number was not mentioned. However, some of the transporters have reflected the tax liability payable under reverse charge mechanism in GSTR-1 filed by them but this proportion is extremely low. Many of the transporters have not filed their GSTR-1 inspite of being registered. As such, there is confusion as regards transporter being registered or not and the assessee is unable to pin point the bifurcation of tax paid under reverse charge mechanism with respect to registered and unregistered suppliers. The additional requirement of bifurcations as enumerated in the annual return should be dispensed with as far as the applicable tax is discharged by the assessee under reverse charge mechanism.

The points as regards other aspects in filing annual return will be discussed in our next update.
This is solely for the educational purpose.
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GST UPDATE ON ANNUAL RETURN COMPLIANCE-PART-4

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