MSME

1: What is GST?

Answer: GST stands for Goods and Services Tax, which is
levied on supply of goods or services. “Supply” is a legal
term which has very broad sweep and various types of
economic activities are covered by it. For example, sale of
goods is a type of supply.

2: On what supply is GST levied?

Answer: GST is levied on all types of supplies which are –

• (i) made for a consideration and
• (ii) are for the purpose of
  furtherance of business.

There are some exceptions when
these conditions are not met, yet supply is considered to
have been made, for example, interstate stock transfer of
goods even without consideration or importation of services
even if not in the furtherance of business.

3: Will GST be levied on all goods or services or both?

Answer: No, GST will not be levied on alcohol for human
consumption. GST on Crude, Motor Spirit (Petrol), High Speed
Diesel, Aviation Turbine Fuel and Natural Gas will be levied
with effect from a date to be decided by the GST Council.
Electricity and sale of land and building are exempted from
levy of GST. Securities are neither goods nor services for
the purposes of the CGST Act, 2017 and therefore supply of
securities is not taxable.

4: How many types of GST will be levied on different kinds of supply of goods or services?

Answer: GST is a dual levy to be simultaneously levied by
both Centre and State. On every supply within a State/
Union Territory without legislature (intra-State supply), GST
levied will have two components – Central Tax and State Tax/
Union Territory Tax popularly called CGST and SGST/UTGST.
On every supply across States (inter-State), Integrated Tax
popularly called IGST will be levied. The rate of CGST and
SGST/UTGST would be equal. IGST would be levied at a rate
equal to the sum total of CGST and SGST/UTGST.

5: Whether a registered person will have to approach two authorities – Centre as well as State for various permissions, audit etc. under the Act?

Answer: No, a registered person will have to approach only
one tax authority for all practical purposes. Each registered
person would have one tax administration office, either of
the Centre or of the State. Legal provisions (called cross-empowerment) have
been made to ensure that one officer
can discharge all functions under CGST, SGST and IGST Act.
The registered person would be informed of the tax administration concerned
with him. A single registration is granted
for the purposes of CGST, SGST/UTGST and IGST.

6: What is destination based consumption tax?

Answer: When a supply originates in one State and is
consumed in another State, tax can accrue to either of the
two States. In a destination based consumption tax, taxes
accrue to the State where the supply is consumed. In origin
based tax, the tax accrues to the State where the supply
originates. GST is basically a destination based consumption
tax. For example, if a car is manufactured in Chennai but is
purchased eventually by a consumer in Mumbai, SGST (or the
State component in IGST) would accrue to Maharashtra and
not to Tamil Nadu.

7: Who will pay GST?

Answer: GST is generally paid by the supplier, i.e. the one
who makes the supply after collecting it from the recipient.
The supplier collects GST from the recipient of the supply
as part of the consideration. However, in a few exceptional
cases, the recipient, would be liable to pay GST to the
Government on reverse charge basis.

8: What is Input Tax Credit?

Answer: A person doing business will be purchasing goods/
availing services for making further supplies in the course
or furtherance of business. When such purchases are made
by him, tax would have been charged by his supplier and
collected from him. Since tax is collected from him, he
can avail credit of the tax paid by him to his supplier (that
is to say, he can use this amount for making payment
of tax due from him on further supply made by him).
This is known as input tax credit for the recipient.

9: Is GST going to increase compliance burden on the trade?

Answer: No. On the contrary GST will result in streamlining
of processes and reduction of compliance burden. GST is a
simple tax which uniformly applies across the country. GST has
been designed to have minimal human interface and would
be implemented through strong IT platform run by GSTN.
Also, in the earlier regime there were multiple compliances
required for taxes such as Central Excise, Service tax, VAT
etc. with Centre and State. GST makes it single and uniform
compliance for indirect taxes across the country. Under
GST, there is just one interface with no face-to-face meeting
between taxpayers and tax authorities and practically every
activity will be done online.

10: What is the threshold for registration in GST?

Answer: A person having business which has aggregate
turnover of more than Rs. 20 lakhs calculated for a given PAN
across the country would need to register under GST. There
are some exceptions to this rule as mentioned in section 24 of
the CGST Act, 2017. Aggregate turnover is defined in section
2(6) of the said Act.

For example, assume that a taxable person’s business is in
many States on same PAN. All supplies are below Rs. 10 lakhs
but collectively they are above Rs. 20 lakhs. He would be
required to register under GST.

11: Is an agriculturist liable to registration?

Answer: No. An agriculturist, to the extent of supply of
produce out of cultivation of land, is not liable to registration.

12: What is the most important precaution to be taken to avail the facility of threshold exemption?

Answer: An MSME availing threshold exemption should not
make any inter-State supply whatsoever, though the MSME
may receive supply from other States.

13: I am engaged exclusively in the business of supplying goods or services which are exempt from GST. Am I liable for registration?

Answer: No.

14: How do I make supply, if I have not applied for registration?

Answer: You should apply for registration at the earliest on
the GST common portal and obtain application reference
number (ARN). You need not disrupt your business and may
continue to make supplies on invoices without GSTIN. The
application for registration must be made within 30 days
of the turnover crossing Rs.20 lakhs or attracting any of the
conditions mentioned in section 24 of the CGST Act,
2017. After registration, you can issue revised invoices as
permitted under section 31(3)(a) of the said Act. These
supplies should be shown in the return and taxes paid on them.

15: How can an application for fresh registration be made under GST? Within what time will registration be granted?

Answer: Application for fresh registration is to be made
electronically on the GST common portal (www.gst.gov.in) in
FORM GST REG-01. If the details and documents are in order,
registration will be granted within 3 working days, except in
cases where an objection has been raised within this period
in which case registration will be granted within a maximum
period of 17 days.

16: I was registered under VAT but not under Central Excise. Do I need to apply for new registration?

Answer: No. Existing registrants of VAT having valid PAN have
been issued Provisional ID and password. If you have not
received provisional ID, please contact your tax administration
to obtain the same. This Provisional Identity Number (PID)
would eventually be your GSTIN, when the migration process
is completed.

17: If I have obtained provisional GSTIN (PID), can I use the same on the invoice to make supply without waiting for final GSTIN?

Answer: Provisional GSTIN (PID) would eventually be your final GSTIN. The
number would remain the same. Yes, you can use this PID on invoice for making
supply without waiting for final GSTIN.

18: I am a SME selling printed books after printing and have a turnover of twenty-five lakhs rupees per annum. I print only Children’s picture, drawing or colouring books which are exempt from GST. Do I need to register?

Answer: No. A person dealing with only exempted supplies
is not liable to registration irrespective of his turnover.
Section 23(1)(a) of the CGST Act, 2017 refers.

19: If I register voluntarily though my turnover is less than Rs. 20 lakhs, am I required to pay tax on supplies made post registration?

Answer: Yes. If you obtain voluntary registration despite the turnover being
below Rs. 20 lakhs, you would be treated as a normal taxable person and would
need to pay tax on supplies even if they are below the threshold for
registration. You will also be entitled to take input tax credit.

20: How will taxpayer get the certificate of registration?

Answer: The taxpayer can himself download the
certificate of registration online from the GST common portal
(www.gst.gov.in).

21: Can registration particulars once furnished be amended?

Answer: Yes, request for amendment has to be made online.
All amendments in registration particulars, except some core
fields, can be amended in the system without the intervention of any official
by merely filing the details of the amendment. Also for some amendments,
approval may be needed. Examples of fields which require approval are- legal
name of business, address of the place of business and addition, deletion or
retirement of partners or directors etc.
responsible for day to day affairs of the business.
Examples of fields which can be amended without any approval
are- change of telephone number, email ID, bank account etc.

22: In which State will a person be registered?

Answer: A person liable to be registered has to apply for
registration in each State from where he makes or intends
to make outward supplies under GST. Within each State,
generally only one registration is required to be obtained.

23: Are all manufacturers necessarily required to be registered under GST?

Answer: No, there is no provision requiring that a
manufacturer irrespective of threshold or nature of supply
to register himself under GST. For example, a manufacturer
dealing only in exempted goods or where his turnover is
only intra-State and below Rs. 20 lakhs, is not required to be
registered.

24: Who is liable to issue a ‘tax invoice’ and how many copies are required to be issued?

Answer: Every registered person (other than a registered
person availing the benefit of composition or a registered
person supplying exempted goods or services) supplying
goods or services or both is required to issue ‘tax invoice’.
Invoice should be issued in triplicate in case of supply of goods.
The original copy is meant for buyer, duplicate for transporter
and triplicate copy for record of the seller. A registered person
under composition scheme or supplying exempted goods
or services shall issue a bill of supply instead of a tax invoice.

25: What details are to be contained in a ‘tax invoice’?

Answer: The tax invoice shall contain details as specified
in the rule in this regard. The key details specified in the
rules are – name, address and GSTIN of the supplier and the
recipient (if registered), a unique number of the
invoice and the date of issue, description of goods,
value of goods, rate of tax, amount of tax and signature.

26: Is it necessary to issue invoices even if the value of transaction is very low?

Answer: A registered person may not issue a tax invoice
if the value of the goods/services supplied is less than
Rs.200/-, subject to the condition that the recipient is not a
registered person and the recipient does not ask for such
invoice (if the recipient asks for the invoice then the same
must be issued, irrespective of the value). In such
cases, the registered person shall issue a consolidated
invoice at the end of the day in respect of all such supplies.

27: When should a tax invoice be issued for goods?

Answer: Tax invoice for goods shall be issued on or before
the time of removal/delivery of goods. In case of continuous
supply of goods, it shall be issued on or before the time of
issue of statement of accounts /receipt of payment.

28: In case of supply of exempt goods or when tax is paid under Composition Scheme, is the registered person required to issue a tax invoice? How a bill of supply is different from a tax invoice?

Answer: No. In such cases, the registered person shall issue
a Bill of Supply and not a tax invoice. The bill of supply is
different from a tax invoice both in name and details
contained. While most of the details to be provided
in a bill of supply are similar to tax invoice, the bill of
supply does not contain the rate of tax and the amount of tax
charged as the same cannot be collected.

29: If goods are transported in semi-knocked down condition, when shall the complete invoice be issued?

Answer: When goods are transported in semi-knocked
down condition, the complete invoice shall be issued
before dispatch of the first consignment. Delivery challan
shall be issued for subsequent consignments. Original copy
of invoice shall be sent along with the last consignment.

30: Is there any scheme for payment of taxes under GST for small traders and manufacturers?

Answer: Yes. Composition levy is an alternative method of
levy of tax designed for small taxpayers whose turnover is
up to Rs. 75 lakhs (Rs. 50 lakhs for special category States,
excluding J&K and Uttrakhand). It is a kind of turnover tax. The
objective of the scheme is to provide a simplified tax payment
regime for the small tax payers. The scheme is optional and
is mainly for small traders, manufacturers and restaurants.

31: What is the eligibility criteria for opting for composition levy? Which are the Special Category States in which the turnover limit for Composition Levy for CGST and SGST purpose shall be Rs. 50 lakhs?

Answer: Composition scheme is a scheme for payment of
GST available to small taxpayers whose aggregate turnover
in the preceding financial year did not cross Rs.75 Lakhs. In
the case of 9 special category States, the limit of turnover is
Rs. 50 Lakhs in the preceding financial year, namely – Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, Tripura and Himachal Pradesh. However, if you are
a manufacturer of ice-cream, pan masala or tobacco or
tobacco products or if you are a service provider other than a
restaurant, you are not eligible for composition scheme.

32: What is the form in which an intimation to pay tax under the composition scheme needs to be made by the taxable person?

Answer: Composition scheme is optional and intimation that
option has been availed should be made electronically in FORM
GST CMP-01 by the migrating taxable person. A person who has
already obtained registration and opts for payment under
composition levy subsequently needs to give intimation electronically
in FORM GST CMP-02.

33: What is the rate of tax under Composition levy for a manufacturer?

Answer: Composition rate for manufacturers is 2% (1% CGST
and 1% SGST).

34: Are all manufacturers eligible for composition scheme?

Answer: A manufacturer is eligible to avail composition
scheme except manufacturers:

• (a) whose aggregate turnover in the preceding financial
  year crossed Rs. 75 lakhs;

• (b) who have purchased goods or services from
  unregistered suppliers unless they have paid GST on
  such goods or services on reverse charge basis;

• (c) who make any inter-State outward supplies
  of goods;

• (d) who make supply of goods through an electronic
  commerce operator;

• (e) who manufacture the following goods.

Sl. no	Tariff Head	Description
1	2105 00 00	Ice cream and other edible ice, whether or not containing cocoa
2	2106 90 20	Pan masala
3	24	Tobacco and manufactured tobacco substitutes

35: When will a registered person have to pay tax?

Answer: A registered person will have to pay GST on monthly
basis on or before 20th of the succeeding month and if he
has opted for composition levy he will have to pay GST on a
quarterly basis on or before the 18th day of the month after
the end of the quarter.

36: A person availing composition scheme during a financial year crosses the turnover of Rs. 75 Lakhs / Rs. 50 Lakhs during the course of the year i.e. say, he crosses the turnover of Rs. 75 Lakhs/Rs. 50 Lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?

Answer: No. The option to pay tax under composition
scheme shall lapse from the day on which his aggregate
turnover during the financial year exceeds Rs. 75 Lakhs/
50 Lakhs. Once he crosses the threshold, he shall
file an intimation for withdrawal from the scheme in
FORM GST CMP-04 within seven days of the occurrence
of such event. He shall also furnish a statement in
FORM GST ITC-01 containing details of the stock of inputs and
capital goods as per the rules in this regard. This would help
him join the input tax credit chain and avail credit of tax that
he has paid on his inputs/goods lying in stock on the day he
crosses over.

37: For the purpose of availing composition how will aggregate turnover be computed for the purpose of composition?

Answer: Aggregate turnover shall be computed on the basis of turnover on all
India basis. It includes aggregate value of all taxable supplies (excluding the
value of inward supplies on which tax is payable by a person on reverse charge
basis), exempt supplies, exports of goods or services or both and inter-State
supplies of persons having the same Permanent Account Number but excludes GST
and cess.

38: Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his inward supplies?

Answer: No, a taxable person opting to pay tax under the
composition scheme is out of the credit chain. He cannot take
input tax credit on the supplies received.

39: How is a manufacturer under the composition scheme required to bill his supply? Can a registered person, who purchases goods from a composition manufacturer take input tax credit?

Answer: A manufacturer opting to pay tax under the
composition scheme cannot issue a tax invoice to his
buyer but would issue a Bill of Supply. He cannot collect
any tax supplies made by him on his Bill of Supply and is
required to show only the price charged for the supply.
Consequently, the registered person buying goods from
a composition manufacturer cannot take input tax credit.

40: How would a manufacturer under the composition scheme who receives inputs or input services from an unregistered person pay GST? What will be the tax rate if the purchase is from a person availing composition?

Answer: GST will have to be paid on inputs and input
services received by such manufacturer under reverse charge at
normal rates and not at the composition rates. Purchase
from a person under the composition scheme is purchase
from a registered person and hence will not attract tax
under reverse charge under section 9(4) of the CGST Act,
2017. Any person migrating from the existing law to a
composition scheme and holding stock of goods purchased
from unregistered persons is required to pay tax on such goods.

41: In case a person has registration in multiple States, can he opt for payment of tax under composition levy only in one State and not in other States?

Answer: No. An intimation that composition scheme
has been availed in one State shall be deemed to be an
intimation in respect of all other places of business registered
on the same Permanent Account Number in other States.

42: What is the effective date of composition levy? Answer: There can be three situations with respective effective dates as shown below:

Situation	Effective date of composition levy
Persons who have been granted provisional registration and who opt for composition levy (Intimation is filed under Rule 3(1) in FORM GST CMP-01)	1st July, 2017.
Persons opting for composition levy at the time of making application for new registration in the same registration application itself (The intimation under Rule 3(2) in FORM GST REG-01)	Effective date of registration; Intimation shall be considered only after the grant of registration and his option to pay tax under composition scheme shall be effective from the effective dat of registration.
Persons opting for composition levy after obtaining registration (The intimation is filed under Rule 3(3) in FORM GST CMP-02)	The beginning of the next financial year.

43: What is the validity of composition levy?

Answer: The option exercised by a registered person to pay
tax under the composition scheme shall remain valid so long
as he satisfies all the conditions specified in the law. The
option is not required to be renewed.

44: What are the other compliances which a provisionally registered person opting to pay tax under the composition levy need to make?

Answer: Such person is required to furnish the details of
stock, including the inward supply of goods received from
unregistered persons, held by him on the 30th day of June, 2017
electronically, in FORM GST CMP-03, on the common portal,
either directly or through a Facilitation Centre notified by the
Commissioner, within a period of sixty days from the date on
which the option for composition levy is exercised or within
such further period as may be extended by the Commissioner
in this behalf. Further, if on 1st July, 2017 such person holds in
stock goods that have been received from outside the State or
imported from outside the Country, he is not eligible to opt for
composition scheme.

45: Can a person paying tax under composition levy, withdraw voluntarily from the scheme?

Answer: Yes, the registered person who intends to withdraw
from the composition scheme can file a duly signed or verified
application in FORM GST CMP-04. In case he wants to claim
input tax credit on the stock of inputs and inputs contained in
semi-finished or finished goods held in stock by him on the date
of withdrawal, he is required to furnish a statement in FORM
GST ITC-01 containing the details of such stock within a period
of thirty days of withdrawal.

46: Will withdrawal intimation in any one place be applicable to all places of business?

Answer: Yes. Any intimation or application for withdrawal in
respect of any place of business in any State or Union territory,
shall be deemed to be an intimation for withdrawal in respect
of all other places of business registered on the same Permanent Account
Number.

47: Can a person paying tax under composition scheme make exports or supply goods to SEZ?

Answer: No, because exports and supplies to SEZ from
Domestic Tariff Area are treated as inter-State supply. A
person paying tax under composition scheme cannot make
inter-State outward supply of goods.

48: Can a manufacturer under composition scheme do job-work for other manufacturers?

Answer: Job-work is a supply of service and not eligible for
composition scheme. Any manufacturer or processor who
wishes to carry out job-work for others would not be eligible
for composition scheme.

49: How can tax payments be made by a registered person under the composition scheme?

Answer: A registered person under composition scheme
would not have input tax credit and he would make all
his tax payments by debit in the electronic cash ledger
maintained at the common portal. The taxpayer can deposit
cash anytime in the electronic cash ledger at his convenience.
The payment in electronic cash ledger can be made through
all modes available like e-payment through net-banking,
credit card and debit card, over the counter of banks, RTGS
or NEFT.

50: Does a registered person under the composition scheme pay his taxes every month?

Answer: No, registered person under the composition
scheme will not pay taxes every month. He would file return
and pay taxes on a quarterly basis i.e. for each quarter of the
financial year. Due date for payment of tax for them would
be on or before the 18th day after the end of such quarter.

51: What are the accounts a manufacturer under the composition scheme needs to maintain?

Answer: Rules on Accounts and Records provide details of
the accounts to be maintained. They are maintained under
normal course of business by any small manufacturer. The
details to be maintained in accounts inter-alia consists of goods
supplied, inward supplies attracting reverse charge, invoices,
bills of supply, delivery challans, credit notes, debit notes,
receipt vouchers, payment vouchers, refund vouchers etc.

52: Does a manufacturer under the composition scheme need to maintain details of accounts of every supply received and made?

Answer: No, the requirement to maintain detailed
accounts of stocks in respect of goods received and
supplied, work in progress, lost, destroyed etc. does not
apply to a manufacturer under the composition scheme.
Such a person shall maintain a true and correct account of
production or manufacture of goods, inward and outward
supply of goods, stock of goods, tax payable and paid.

53: Does a manufacturer under the composition scheme needs to maintain account of inputs tax credit?

Answer: A manufacturer under the composition scheme
need not maintain account of input tax, input tax credit
claimed etc. as he is neither allowed to avail of input tax
credit nor can he issue an invoice showing tax using which
buyer can avail input tax credit.

54: Can a manufacturer under the composition scheme maintain his accounts manually? And can he issue his bill of supply manually?

Answer: Yes, a manufacturer under the composition scheme
can maintain his accounts in registers serially numbered and
also issue bill of supply manually following the conditions
specified in rules in this regard.

55: Whether a registered person under the composition scheme needs to learn HSN code of any input purchases and output supplies?

Answer: No, a registered person under the composition
scheme would not need to specify HSN code of their products
in bill of supply or return.

56:. What return a registered person under the composition scheme needs to file and at what frequency?

Answer: A registered person under the composition scheme
of GST is required to furnish quarterly return called GSTR-4
between the 11th day and 18th day of the month succeeding
the quarter.

57: What details are required to be furnished in the return to be filed by the registered person under the composition scheme?

Answer: GSTR-4 may be referred for details required to
be filled in the return. It is a very simple return containing
consolidated details of outward supplies, details of import of
services or other supplies attracting reverse charge and inward
supplies which shall be auto-populated.