Assessment and Returns Short Answer Type Questions

Question 1.
What are the main features of GST payment process?
Answer:
The payment processes under proposed GST regime will have the following features:

Electronically generated challan from GSTN Common Portal in all modes of payment and no use of manually prepared challan.
Facilitation for the taxpayer by providing hassle free, anytime, anywhere mode of payment of tax.
Convenience of making payment online.
Logical tax collection data in electronic format.
Faster remittance of tax revenue to the Government Account.
Paperless transactions.
Speedy Accounting and reporting.
Electronic reconciliation of all receipts.
Simplified procedure for banks.
Warehousing of Digital Challan.

Question 2.
Write short notes on first return in GST.
Answer:
The following extract from GST Law (model) explains about 1st filing of GST return – Every registered taxable person paying tax under the provisions of section 7 shall furnish the first return containing the details of:
(a) outward supplies under section 25 from the date on which he became liable to registration till the end of the month in which the registration has been granted;

(b) inward supplies under section 26 from the effective date of registration till the end of the month in which the registration has been granted: Provided that a registered taxable person paying tax under the provisions of section 8 shall furnish the first return for the period starting from the date on which he becomes a registered taxable person till the end of the quarter in which the registration has been granted.

(2) Provisions of section 25, 26 and 27, other than the provision pertaining to tax period, shall apply mutatis mutandis to the said person furnishing return under subsection (1).

Question 3.
What is Input Credit? And how to claim it?
Answer:
Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs. Which means if a are person is manufacturer, supplier, agent, e-commerce operator, aggregator or any of the persons mentioned here, registered under GST, he is eligible to claim INPUT CREDIT for tax paid by the PURCHASES.

To claim input credit under GST:

A person must have a tax invoice(of purchase) or debit note issued by registered dealer.
Should have received the goods/services.
The tax charged on purchases has been deposited/paid to the government by the supplier in cash or via claiming input credit.
Supplier has filed GST returns.

Therefore, to allow you to claim input credit on Purchases all your suppliers must be GST compliant as well.
It is possible to have unclaimed input credit. Due to tax on purchases being higher than tax on sale. In such a case, you are allowed to carry forward or claim a refund.
If tax on inputs > tax on output → carry forward input tax or claim refund
If tax on output > tax on inputs → pay balance

No interest is paid on input tax balance by the government:

Input, tax credit cannot be taken on purchase invoices which are more than one year old. Period is calculated from the date of the tax invoice.
Since GST is charged on both goods and services, input credit can be availed on both goods and services (except those which are on the exempted/ negative list).
Input tax credit is allowed on capital goods.
Input tax is not allowed for goods and services for personal use.
No input tax credit shall be allowed after GST return has been filed for September following the end of the financial year to which such invoice pertains or filing of relevant annual return, whichever is earlier.

Question 4.
Explain the Types of GST Returns and their Due Dates.
Answer:
A return is a document that a taxpayer is required to file as per the law with the tax administrative authorities. Under the GST law, a normal taxpayer will be required to furnish three returns monthly and one annual return. Similarly, there are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS).
The various types of returns are:

Return Form	What to file?	By Whom?	By When?
GSTR-1	Details of outward supplies of taxable goods and/or services effected	Registered Taxable Supplier	10th of the next month
GSTR-2	Details of inward supplies of taxable goods and/or services effected claiming input tax credit.	Registered Taxable Recipient	15th 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.	Registered Taxable Person	20th of the next month
GSTR-4	Quarterly return for compounding taxable person.	Composition Supplier	18th of the month succeeding quarter
GSTR-5	Return for Non-Resident foreign taxable person	Non-Resident Taxable Person	20th of the next month
GSTR-6	Return for Input Service Distributor	Input Service Distributor	13th of the next month
GSTR-7	Return for authorities deducting tax at source.	Tax Deductor	10th of the nerxt month
GSTR-8	Details of supplies effected through	E-commerce Operator/	10th of the next month
GSTR-9	e-commerce operator and the amount of tax collected	Tax Collector	31st December of next financial year
GSTR-10	Annual Return	Registered Taxable Person	Within three months of the date of cancellation or date of cancellation order, whichever is later.
GSTR-11	Final Return	Taxable person whose registration has been surrendered or cancelled.	28th of the month following the month for which statement is filed

All these returns are required to be filed digitally online through a common portal to be provided by GSTIM, non-government, private limited company promoted by the central and state governments with the specific mandate to build the IT infrastructure and the services required for implementing Goods and Services Tax (GST).

Question 5.
Write short notes on matching, reversal and reclaim of input tax credit, Sec 42 of CGST Act, 2017.
Answer:
(1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched:
(a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in this section referred to as the “supplier”) in his valid return for the same tax period or any preceding tax period.

(b) with the integrated goods and services tax paid under section 3 of the Customs Tariff*Act, 1975 in respect of goods imported by him; and

(2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the details of corresponding outward supply or with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him shall be finally accepted and such acceptance shall be communicated, in such manner as may be prescribed, to the recipient.

(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed.

(4) The duplication of claims of input tax credit shall be communicated to the recipient in such manner as may be prescribed.

(5) The amount in respect of which any discrepancy is communicated under subsection (3) and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the recipient, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.

(6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall be added to the output tax liability of the recipient in his return for the month in which the duplication is communicated.

Question 6.
What is annual return? Explain.
Answer:
Every registered taxable person is required to furnish an annual return under GST law, electronically in FORM GSTR-9 through the Common GST Portal. Likewise, a taxable person registered as a composition dealer shall furnish the annual return in FORM GSTR-9A.

GST law also states that every registered taxable- person whose aggregate turnover during a financial year exceeds one crore rupees shall get his accounts audited. Such businesses shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9B, electronically through the Common Portal. GSTR-9 needs to be furnished by 31st December of next financial year.

The various heads under which information needs to be furnished:
GSTIN – Each taxpayer will be allotted a state-wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN). A format of proposed GSTIN has been shown in the image below. GSTIN of the taxpayer will be auto- populated at the time of return filing.
(i) Name of Taxable Person- Name of the taxpayer, will also be auto- populated at the time of logging into the common GST Portal.

(ii) Whether Liable to Statutory Audit – This head needs to be marked as applicable if the turnover exceeds Rs. 1 crore in the financial year for which annual return is being filed.

(iii) Auditors – In case the turnover of the registered business exceeds the threshold limit for audit, the taxpayer needs to provide the details of the appointed auditor who has audited the records furnished by the taxpayer.

(iv) Details of Expenditure Under the following heads, the taxpayer needs to furnish information of purchase of goods and services. Information needs to be bifurcated between goods and services along with HSN and SAC code respectively and the taxable value.
Total value of purchases on which ITC availed (inter-State)
Total value of purchases on which ITC availed (intra-State)
Total value of purchases on which ITC availed (Imports)

(v) Details of Income: All the supplies made in a tax year needs to be reported under the following heads, differentiating between goods and services.
Total value of supplies on which GST paid (inter-State Supplies)
Total value of supplies on which GST Paid (intra-State Supplies)
Total value of supplies on which GST Paid (Exports)
Total value of supplies on which no GST Paid (Exports)
Value of Other Supplies on which no GST paid
Purchase Returns
Other Income (Income other than from supplies)

(vi) Return Reconciliation Statement – Once all the information is furnished, the system will auto-reconcile the transactions and will determine tax liability payable against the tax actually paid. The system will also populate the amount of tax difference, interest and/or penalty if any.

(vii) Other – Any other amount payable will get auto-populated here. This may include arrears or any liability as a result of the assessment.

(viii) Profit as per the Profit and Loss Statement – Every registered taxpayer needs to report a breakup of gross profit, profit after tax and net profit under this head for the tax year for which return is filed.

Question 7.
What is final return? Explain.
Answer:
Every registered taxable person is required to furnish a finai return under section 31, and they shall furnish such returns electronically in FORM GSTR- 10 through the Common Portal within three months of the date of cancellation or date of cancellation order, whichever is later.
A taxable person who ceases to do business voluntarily or by way of an order by the authorities is required to furnish this return.
Following are the sections which will be auto-populated at the time of system login:

GSTIN
Legal Name
Business Name
Address

The sections under which information needs to be furnished:
(i) Application Reference Number – ARN needs to be furnished in case the application for cancellation has been approved by the authorities. In such cases, ARN will be communicated to the taxpayer at the time of passing the cancellation order.

(ii) Effective Date of Surrender/Cancellation – This will require the date of cancellation of GST registration as contained in the order.

(iii) Whether cancellation order has been passed – Taxpayer needs to specify whether the return is being filed on the basis of cancellation order or on a voluntary basis.

(iv) If Yes, Unique ID of Cancellation order – Unique ID will be provided by the authorities at the time of passing cancellation order.

(v) Date of Cancellation Order – This will be the date on which the GST registration cancellation order is passed by the authorities.

(vi) Particulars of Closing Stock – Taxpayer needs to furnish details of closing stock held at the time of ceasing the business. Any amount of credit lying in such stock needs to be paid along with this return.

(vii) Amount of Tax Payable on Closing Stock – As mentioned above, credit lying in input and/or capital goods needs to be paid to the administration. This amount is auto-computed under this head on the basis of the declaration of closing stock of goods.

(ix) Verification – Once ail the particulars are furnished correctly, the taxpayer is required to sign digitally either through a digital signature certificate (DSC) or Aadhar based signature verification to authenticate the return.

Practical Problems

Problem 1.
Mr. Balachandra of Karnataka purchased goods from Mr. Somu of Karnataka for ₹ 8, 55,000 including CGST @6% & SGST @ 6% in the month of July, 2017. He incurred ₹ 250000 as manufacturing expenses and added 30% profit on cost. Mr. Balachandra sold 80% of the goods to Mr. Rama of Karnataka on 2.8. 2017. Remaining 20% of the goods were transferred to his branch in AP on 2.8.2017. Compute net GST payable.

Problem 2.
Shankara enterprises, a registered dealer provides the following details for the year ended 31.3.2018
1. Purchase of raw material within state (1500 units), inclusive of CGST@6% &SGST @6%. = 4,05,000
2. Interstate purchases of raw material, inclusive of IGST@12% = 3,06,000
3. Import of raw material from other state = ₹ 4,50,000
4. Sale of goods within the state ₹ 10,92,000
5. Sale of exempted goods within the state ₹ 2,25,000
6. Closing stock of 200 units of raw material purchased within the state as on 31.3.2018. Compute net GST payable.

Problem 3.
Nandi Hills Limited (Registered dealer) situated in Pune has purchased raw material from a local registered dealer for ₹ 50,000, and Paid Consultation fees ₹ 8, 000, spent storage cost ₹ 4, 000, transportation cost ₹ 6, 000, Wages 10,000, and packaging cost ₹ 12,480. Calculate Net GST payable, if he sells goods (locally) at a profit is ₹ 20,50,000. (Assume CGST is 6% & SGST is 6%)

Problem 4.
Mr. Venkataramayan (Registered dealer) purchased goods 780,000 from a local registered dealer. He paid legal fees of ₹ 5,000. Purchased plastic packaging materials 75,000, transportation cost ₹ 5,000, wages ₹ 5,000, other manufacturing expenses ₹ 5000, consultation fees ₹ 12,000. If CGST is 9% and SGST is 9%, calculate net GST payable. He sold goods within the state at a profit of ₹ 20,33,000.

Problem 5.
Mr. Kanthi purchased goods for 710, 50,000 from a registered dealer outside the State.
He sold goods locally for ₹ 10, 50,000.
Again he sold goods outside the State for ₹ 10, 00,000.
If CGST is 9%, SGST is 9% and IGST 18%.
calculate net GST payable.

Problem 6.
Shri Vijendra Prasad (Registered dealer) imported goods for ₹ 90,000/- and incurred expenses to produce final saleable goods of ₹ 10,000. BCD @ 10 % was chargeable on imported goods. These manufactured goods were sold in the custom warehouse for ₹ 45, 00000. Rate IGST is 12%.Landing charges @1%. Compute value
of imported goods, aggregate Sale value and net GST payable for the transaction.

Problem 7.
The taxable supplies made by Mr. Akash (Registered Dealer) in Karnataka is as follows:
1. Intra state supplies ₹ 7,00,000
2. Interstate supplies ₹ 7,00,000
3. He purchases ten vacuum cleaners worth ₹ 2, 00,000 for business purposes but uses them for his domestic purpose.
Calculate net GST payable, if Mr. Akash has IGST credit of ₹ 1, 50,000. (CGST is 6%, SGST is 6% and IGST is 12%)

Problem 8.
Mr. X manufactures 10,000 units of goods. He sold 5,000 units of goods within the state, 3,000 units outside the state and the balance 2,000 units is stock transfer outside the state. Goods were sold to wholesaler @ ₹ 250 per unit. (Consider ITC is ₹ 300000 and ₹ 150000 for CGST and SGST respectively. Compute net GST liability.
Note: Assume CGST is 9%, SGST IS 9% & IGST is 18%.

Problem 9.
Shakir Ahamed, a registered dealer, based in Kerala submits the following information. Compute net IGST payable.
Import of raw material from Karnataka ₹ 2, 10,000
Raw material purchased from Kerala ₹ 2, 24,000
Raw material purchased from Karnataka ₹ 95, 000
Transportation and manufacturing ₹ 67,000
Z sold entire stock to A based in Karnataka at a profit o f 10% on the cost of production. IGST rate on such sale is 18%.

Problem 10.
From the following details, compute the value of taxable services and services tax liability for the Month of September, 2017.

Particulars	Amount in ₹
Services provided to foreign diplomatic mission	6,00,000
Aerial advertising	5,00,000
Service by way of private tuitions	80,000
Speed post services	70,000
House given on rent for residential purpose	50,000
Value of free services rendered to friends	2,00,000
Services rendered to UNO	5,00,000
Certification for exchange control purpose	1,00,000
Secretarial auditing	25,000
Fees to act as a liquidator	3,00,000
Vacant land used for horticulture	10,00,000
Sale of time slot by broadcasting organisation	2,00,000
Services rendered within Indian territorial water	4,00,000
Services relating to supply of farm labour	2,50,000
	Nov 2017

Solution:
Computation of taxable services and GST Payable

Particulars	Amount (in ₹)
Services provided by Foreign diplomatic mission	Exempted
Aerial advertising	5,00,000
Service by way of private tuitions	80,000
Speed post services	70,000
House given on rent for residential purpose	Exempted
Value of free services rendered to friends	2,00,000
Services rendered to UNO	Exempted
Certification for exchange control purpose	1,00,000
Secretarial auditing	25,000
Fees to act as a liquidator	3,00,000
Vacant land used for horticulture	Exempted
Sale of time slot by broadcasting organisation	2,00,000
Services rendered within Indian Territorial water	4,00,000
Services relating to supply of farm labour	Exempted
Transaction value	18,75,000
CGST Payable (18,75,000 x 9%)	1,68,750
SGST Payable (18,75,000 x 9%)	1,68,750
Total GST Payable	3,37,500