GST Due Dates in September 2020

GST registration in Lucknow

1)  GSTR-1

GSTR-1 is a monthly or quarterly return that should be filed by every registered dealer. It contains details of all outward supplies i.e sales. The return has a total of 13 sections.

The due dates for GSTR-1 are based on your turnover. Businesses with sales of upto Rs. 1.5 crore have an option to file quarterly returns. Other taxpayers with sales above Rs. 1.5 crore have to file monthly return.

PeriodicityPeriodDue Date
Monthly filingsAugust 202011-09- 2020
Quarterly filingsJuly 2020 to September, 202031-10- 2020

2) GSTR-3B

GSTR-3B is a monthly self-declaration to be filed by a registered GST dealer along with GSTR 1 and GSTR 2 return forms. It is a simplified return to declare summary GST liabilities for a tax period. IMPORTANT: You have to file GSTR-3B even when there has been no business activity (nil return)

(in the preceding Financial
Tax PeriodDue DateDate up to Which relaxation ProvidedInterest*
Upto Rs. 5 Crore
(Specified States-I)
May 202022-06- 202012-09- 2020NIL up to  12-09- 2020, thereafter 9% till  3-09- 2020
Upto Rs. 5 Crore
(Specified States-I)
June 202022-07- 202023-09-2020NIL up to 23-09-2020, thereafter 9% till September 30, 2020
Upto Rs. 5 Crore
(Specified States-I)
July 202022-08 202027-09- 2020NIL up to 27-09-2020, thereafter 9% till 30-09-2020
Upto Rs. 5 Crore
(Specified States-I)
August 202022-09- 202001-10-2020.NIL upto 1-10- 2020
Upto Rs. 5 Crore
(Specified Sates-II)
May 202024-06- 202015-09- 2020NIL upto 15-09- 2020, thereafter 9% till 30-09-2020
Upto Rs. 5 Crore
(Specified Sates-II)
June 202024-07- 202025-09-2020NIL upto 25-09- 2020, thereafter 9% till 30-09-2020
Upto Rs. 5 Crore
(Specified Sates-II)
July 202024-08- 202029-09-2020NIL upto 29-09- 2020, thereafter 9% till 30-09-2020
Upto Rs. 5 Crore
(Specified Sates-II)
August 2002024-09- 202003-10-2020 NIL upto 03-10-2020
More than Rs. 5 CroreAugust 202020-09- 2020Not extended

Specified States-I 

Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep

Specified Sates-II

Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union territories of Jammu and Kashmir, Ladakh, Chandigarh and Delhi.

3) GSTR 5 and 5A

Every  registered non-resident taxable person is required to furnish a return in GSTR-5 in GST Portal. Non-Resident foreign taxpayers are those suppliers who do not have a business establishment in India and have come for a short period to make supplies in India. Such a person is required to furnish details of all taxable supplies in GSTR-5

 A Return in Form GSTR-5A has been prescribed which is to be furnished by the OIDAR service providers providing services to unregistered service recipients in India

PeriodDue Date
August, 202020-09-2020

4) GSTR 6

Every Input Services Distributor is required to file a monthly return furnishing details of invoices on which credit has been received. The due date for filing of GSTR 6 as per GST Act is 13th of next month.

PeriodDue Date
August, 202013-09-2020

 5) GSTR-7

GSTR-7 is a monthly return to be filed by the persons required to deduct TDS under the GST. Filing of GSTR 7 for a month is due on 10th of the following month.

PeriodDue Date
August, 202010-09-2020

6) GSTR-8

GSTR-8 is a return to be filed by the e-commerce operators who are required to deduct TCS (Tax collected at source) under GST. GSTR-8 contains the details of supplies effected through e-commerce platform and amount of TCS collected on such supplies. GSTR-8 filing for a month is due on 10th of the following month.

PeriodDue Date
August, 202010-09-2020

7) GSTR-9, 9A

GSTR 9 is an annual return to be filed yearly by taxpayers registered under GST. All taxpayers/taxable persons registered under GST must file their GSTR 9. However, the following are NOT required to file GSTR 9:

  • Taxpayers opting composition scheme (They must file GSTR-9A)
  • Casual Taxable Person
  • Input service distributors
  • Non-resident taxable persons

Persons paying TDS under section 51 of CGST Act.

GSTR-9 filing for businesses with turnover up to Rs 2 crore made optional for FY 17-18 and FY 18-19

The GSTR-9A is the annual return to be filed once in a year by taxpayers who have opted for the Composition Scheme under GST for a particular financial year.

Period F.Y. 2018-19   Due Date 30-09-2020

8) GSTR- 9C

Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 of the CGST Act, and shall furnish a copy of the audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C.

For businesses with an annual turnover of less than Rs 5 crore, filing of GSTR-9C for FY 2018-19 is waived off

PeriodDue Date
F.Y 2018-1930-09-2020

To transfer/shift the money available in Electronic Cash ledger, between various major and minor heads of GST, Just File FORM GST PMT 09


Taxpayers deposit money using challan and the paid amount gets credited in the particular head in the Electronic Cash ledger and the same can be utilized in settling liabilities of that head only. In case a taxpayer deposited any amount under a major head i.e. IGST, CGST, SGST/UTGST and Cess or minor head i.e. Tax, Interest, Penalty, Fee and Others, they can then utilize this amount for discharging their liabilities only under that major head and minor head. Sometimes, inadvertently, the taxpayer pays the amount under the wrong head and it cannot be used to discharge the liabilities which may be due in another head. In such cases taxpayers can claim the refund of the amount which may have been deposited under wrong head in GST by filing a refund application in FORM RFD-01 under the category “Excess balance in electronic cash ledger”. The process of filing refund claim and its disbursement can sometimes lead to blockage of funds for the taxpayer.

Form GST PMT-09 is now available on GST portal and it enables a taxpayer to make intra-head or inter-head transfer of amount available in Electronic Cash Ledger. A taxpayer can file GST PMT 09 for transfer of any amount of tax, interest, penalty, fee or others available under one (major or minor) head to another (major or minor) head in the Electronic Cash Ledger. Form GST PMT 09 provides flexibility to taxpayers to make multiple transfers from more than one Major/Minor head to another Major/Minor head if the amount is available in the Electronic Cash Ledger. To file Form GST PMT-09 taxpayers are required to login on GST portal with valid credentials and navigate to Services > Ledgers > Electronic Cash Ledger > File GST PMT-09 For Transfer of Amount option. After Form GST PMT-09 is filed:

  • ARN is generated on successful filing of Form GST PMT-09.
  • An SMS and an email is sent to the taxpayer on his registered mobile and email id.
  • Electronic Cash ledger will get updated after successful filing of Form GST PMT-09.
  • Filed form GST PMT-09 will be available for view/download in PDF format on GST portal.

GST Composition Scheme (Section 10):

gst registration

The  composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 1.5 Crore (s. 75 lakhs in case of few States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.

Rate of composition levy:

  • Manufacturers, other than manufacturers of such goods as may be notified by the Government (Ice cream, Pan Masala, Tobbacco products etc.) : 1% ( .50% Central tax plus .50% State tax) of the turnover.
  • Restaurant Services: 5% (2.5% Central tax plus 2.5% SGST) of the turnover.
  • Traders or any other supplier eligible for composition levy: 1% ( 0.5% Central tax plus 0.5% State tax) of the turnover of taxable supplies.
  • What is the eligibility category for opting for composition levy? Which are the Special Category States in which the turnover limit for Composition Levy for Central tax and State tax purpose shall be Rs. 75  lakhs?

 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. 1.5 Crores. In the case of the following States, the limit of turnover is Rs. 75 lakhs:-

(i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand.

 Following persons are not allowed to opt for the composition scheme:

a) a casual taxable person or a non-resident taxable person;

b)  Suppliers whose aggregate turnover in the preceding financial year crossed Rs. 1.5 Crore ;

c) Supplier who has purchased any goods or servcies from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;

d) Supplier of services, other than restaurant service;

e) Persons supplying goods which are not taxable under GST law;

f) Persons making any inter-State outward supplies of goods;

g) Suppliers making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and

h) a manufacturer of following goods:

 Chapter 2105 00 00 : Ice cream and other edible ice, whether or not containing cocoa.

 Chapter 2106 90 20 : Pan masala

Chapter 24 : Tobacco and manufactured tobacco substitutes

A person opting for composition levy will have to pay tax on quarterly basis before 18th of the month succeeding the quarter during which the supplies were made.(in Form CMP-08). The said persons shall furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4 of the Central Goods and Services Tax Rules, 2017, on or before the 30th day of April following the end of such financial year.

A person availing composition scheme during a financial year crosses the turnover of Rs.1.5 Crores /75lakhs during the course of the year i.e. say he crosses the turnover of Rs.1.5 Crores/75lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?

 The option to pay tax under composition scheme lapses from the day on which his aggregate turnover during the financial year exceeds the specified limit (Rs. 1.5 Crores/ Rs. 75 lakhs). He is required to file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the day on which the threshold limit has been crossed. However, such person shall be allowed to avail the input tax credit in respect of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him and on capital goods held by him on the date of withdrawal and furnish a statement within 30 days of withdrawal containing the details of such stock held in FORM GST ITC-01 on the common portal.

 Aggregate turnover be computed for the purpose of composition:

 Aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all taxable supplies, exempt supplies and exports made by all persons with same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess.

As per Removal of Difficulty order Order-01/2017-Central Tax dated 13.10.2017,  in  computing his aggregate turnover in order to determine his eligibility for composition scheme, value of supply of any exempt services including services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account.

Charge of GST on services provided by Goods Transport Agency:

transport agency under gst

In terms of notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by notification no. 20/2017- Central tax (Rate) dated 22.08.2017 , 9 and sr. no. 11, (i) Services of goods transport agency (GTA) in relation to transportation of goods (including used household goods for personal use) (Heading 9965 &9967 respectively) attracts GST @2.5% or 6% CGST. Identical rate would be applicable for SGST also, taking the effective rate to 5% or 12%. However, the rate of 5% is subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken. The Explanation to the notification further clarifies that it shall mean that,- (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and (b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of subsection (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made there under. GST @ 6% CGST (12% cumulative) is subject to the condition that the goods transport agency opting to pay central tax @ 6% under this entry shall, thenceforth, be liable to pay central tax @ 6% on all the services of GTA supplied by it. Further, there is no restriction on the GTA from taking ITC if this option is availed.

Thus, where the GTA is not eligible to take ITC for the supplies effected by it and the liability under GST is discharged under reverse charge basis, the recipient of GTA service discharging the tax liability is entitled to take Input Tax Credit (ITC) of the amount of tax paid under reverse charge, provided it is used in the course or furtherance of business at his end. Further the recipient would be eligible for ITC of the GST paid by GTA on forward charge basis. Notification no. 11/2017-Central Tax (Rate),, (ii) also provides that supporting services in transport other than those mentioned in (i) (Heading 9967) would attract GST @9% CGST. Identical rate would be applicable for SGST also, taking the effective rate to 18%. Similar rate has been prescribed for services falling under heading 9965 in terms of notification no. 11/2017-Central Tax (Rate), 9 (v).

Person Liable to Pay GST on GTA services (5% Rate – No ITC – RCM -7 Recipients)

The liability to pay GST devolves on the recipients for supply of services by a goods transport agency (GTA)who has not paid central tax at the rate of 6%, in respect of transportation of goods by road(in terms of notification no. 13/2017-Central Tax (Rate) dated 28.06.2017 ( as amended by notification no. 22/2017-Central Tax (Rate) dated 22.08.2017, if the recipients (located in the taxable territory)belong to the following category:

(a) Any factory registered under or governed by the Factories Act, 1948(63 of 1948); or

(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India; or

(c) any co-operative society established by or under any law; or

(d) any person registered under the Central Goods and Services Tax Act or theIntegrated Goods and Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or

(e) any body corporate established, by or under any law; or

(f) any partnership firm whether registered or not under any law including association of persons; or

(g) any casual taxable person.

Thus in cases where services of GTA are availed by the above categories of persons in the taxable territory the GTA supplier has the option to pay tax (and avail ITC) @12% (6% CGST + 6% SGST);and if the GTA does not avail this option, the liability to pay GST will fall on the recipients. In all other cases where the recipients do not fall in the categories mentioned above, the liability will be on the supplier of GTA services.

GST on Real Estate

real estate gst registration

In the recent times there are Headline News and Flashes in many Electronic Media about GST rate slash to just 1% & 5% from as high as 8% & 12%. It might have enthused the common man before election time.

The GST Council in its 33rd, 34th Council Meetings recommended the reduction in GST rates on residential house properties and accordingly notifications were flashed.  There may be some good intention behind it in line with Government’s vision to provide every citizen to afford to own a house by 2022. The measure also may be seen to boost demand so as to ease out the huge pileup of un-sold inventory in the real-estate sector which is somehow denting the growth of economy.  However, the Intentions are not seeming to be translated truly to ground level.

Let’s here analyze some of the major issues:

Multiple Schemes – Multiple Rates

The GST Rates applicable depending on multiple factors such as REP, RREP, Affordable Housing, Other than Affordable Housing, Commercial Complex, Completion Certificate Received or Not, New Project or Ongoing Project, Whether Builder has exercised the Option to Continue with Old Rate with ITC or New Rates with ITC etc,.

That means now for the similar flats, multiple rates are applicable depending on various conditions, which may lead to a lot of confusion, even experts in the field unable advice the buyers properly and builders do not disclose all the facts. When Confusion Prevails, Seeds of Corruptions Germinates. Unscrupulous builders may encash this opportunity mislead the public to collect higher rates.

 Multiple Definitions / Abbreviations

In a 27 page Notification 03/2019-Central Tax (Rate),dt. 29-03-2019 many Terms are used and provided their definitions, meaning or explanations like apartment, project, affordable residential apartment, promoter, Real Estate Project (REP), Residential Real Estate Project (RREP), ongoing project, commencement certificate, development works, external development works, internal development works, competent authority, carpet area, Real Estate Regulatory Authority, Residential apartment, Commercial apartment, floor space index (FSI) etc and many more explanations, in stroke. One has to understand the relevance and its applicability to determine GST Rates.

With Multiple Scenarios & Options and Multiple & Complex Calculations and Lengthy Descriptions, Definitions, Abbreviations, Notifications with Cross References, every one alike confused and unable to come to any conclusions & decisions.

 Buyer is Confused of Which Rate is Applicable on Residential Apartments as there are mix of offerings with New Rates of 1% & 5% or Old Rates of 8% & 12% or No GST applicable.

Builders / Developers Confused and unable decide on which option is better and its implications.

Consultants Confused unable advice the Clients properly

Officials are in great mess washing out their hands

Whether Reduction of Rates Benefit the Buyers?

The GST rate for residential houses was reduced to 1% from 8% for affordable housing and to 5% for other than affordable housing from the existing rate of 12% subject to some other conditions. The new rates are applicable from 1st April 2019. The new rates applicable are without availing benefit of the input tax credit which is the crux of the issue.

Though on the face of it seems GST rates are reduced, but since the Non-availability of Input Tax Credit, may compel the Builders to hike up the prices. The quantum of Input Tax Credit is not known. Figures in the books of accounts are mostly manipulated. For home-buyers, the rate change may not lead to a proportionate reduction in housing prices as the developer will not take on the burden of the input tax credit and it would be hence factored in the cost.

Despite clear provisions in the statute, mandating issue of Tax Invoice, Builders never issues such documents to the buyers. There is also no concept like Cost Plus. Generally, the rates are negotiated on inclusive price. The industry always operates on Demand & Supply basis making buyer “Bakry” (scamp goat).

Thus the question is Whether Reduction of Rates Benefit the Buyers?

Question remain as question without clear answer.

Builders too Undecided to Opt for the New Scheme

New Scheme with reduced GST rate comes with gambit of other conditions. Non- availment of ITC, mandatory 80% procurement from registered supplier, otherwise paying tax on reverse charge etc are very stringent conditions, the impact and implications of cost and compliance are still in conflicting mode.

Builders are mostly procuring most of their supplies from unregistered suppliers – sand, building materials, and other items even like steel & cement etc are sourced from unregistered for cost advantage or to avoid / evade tax. Mostly labour Contractors are unregistered.  Un-accounted buying and consumption of Cement, Steel and other material are also very difficult to ascertain.  Now the new conditions, mean more requirements of compliances and possibly a higher cost of inputs.

Undecided to Excise the Option of Continuing with Old Rates or Opt for New Rates, by 10th of May’2019, the extension of date come as a sigh of relief to the Developers. The Date is now Extended by another 10 Days ie upto 20th May’2019. Notification yet to be published. (God Knows still how many such extensions shall be granted)

Confusing Transitional Provisions of the Input Tax Credit

There are multiple methods of allocating input tax credit with complex calculations to provide pro-rata allocation based on credit proportionate to the amount on booking the flat and invoicing done for the booked flat. For mixed projects including commercial space, it would again depend on the proportionate carpet area.

All these calculations are mind boggling to just understand.

TDR, FSI, long term lease (premium) of Land by a Landowner to a Developer : Conditional Exemption

The supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer shall be exempted from GST if the constructed flats are sold before the completion certificate is issued, and tax has been paid on them.

If they have been sold after the completion certificate has been issued, the exemption stands withdrawn, however, the withdrawal is limited to 1% of the value in case of affordable houses and 5% of value in case of other than affordable houses.

Builder shall be Liable to pay tax on TDR, FSI, long term lease (premium) of land under RCM in respect of Flats sold after Completion Certificate. This will add up  tax expense, which may not get passed on to the buyers and have to be borne themselves, as GST is not applicable on completed properties.

However, in cases where this exemption applies, it could solve the cash-flow problem that is currently being faced.

GST Updates for April 2019

gst registration

Reversal of ITC availed  under Composition scheme for suppliers of goods or services or both – Suppliers of goods or services or both upto an aggregate turnover of Rs. 50 lakh, can opt to pay GST @ 6% (3% CGST + 3% SGST) and not collect any tax from the recipient on such supplies. Benefit of ITC is also not available to suppliers taking benefit of this notification (Notification No. 2/2019-Central Tax (Rate)

Also, as per Circular No. 97/16/2019-GST, dated 5-4-2019, a registered person who wishes to opt for benefit of said notification shall file intimation in Form GST CMP-02 by selecting the category of registered person as “Any other supplier eligible for composition levy”. Such person would also be required to furnish a statement in Form GST ITC-03.

Refund of accumulated ITC to merchant exporter clarified: Refund of accumulated input tax credit to merchant exporter where supplies are received by him after availing benefit under Notification No. 40/2017-Central Tax (Rate) or 41/2017-Integrated Tax (Rate) has been clarified by CBIC. As per  Circular No. 94/13/2019-GST, dated 28-3-2019, this refund of accumulated ITC under CGST Rule 89(4B) must be applied under the category ‘any other’ instead of ‘refund of unutilized ITC on account of exports without payment of tax’. Refund claim shall be filed in the Form GST RFD-01A.

Clarification regarding order of utilisation of ITC of IGST to set-off output tax liability – Rule 88A of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’) was inserted and relaxed the order of setting off IGST credit against CGST and SGST liability (in any order). The CBIC has now clarified that the taxpayers can utilise excess credit of IGST towards payment of CGST or SGST in any sequence and proportion provided that IGST liability is fully discharged first. [Circular No. 98/2019 dated April 23, 2019]

Non-filing of GST Returns to debar generation of e-way bill – Rule 138E of the CGST Rules was introduced on December 31, 2018 to provide that taxpayers who have not furnished their GST returns for consecutive two tax periods, will not be able to generate e-way bill. This provision was not notified till date and has been made effective from June 21, 2019. Rule 138E allows Commissioner to relax this provision on sufficient causes.

In this context, it is advisable that the taxpayers file their GST returns on time to avoid any obstruction in business due to non-generation of e-way bill.The taxpayers who could not file returns for genuine reasons (including IT issues), should approach their jurisdictional Commissioner for relaxing applicability of this provision. [Refer Notification No. 22/2019 dated April 23, 2019]

Changes in e-way bill portal – To improve operational efficiencies in e-way bill system, following changes have been integrated in the e-way bill portal:

 Auto calculation of route distance: The portal has been designed to auto-compute the distance basis the PIN code of source and destination locations. The user also has an option to enter actual distance, with maximum 10 percent variation of auto calculated distance.

 Single e-way bill for single invoice: Until now, where consignee or transporter originally generated an e-way bill, the consignor had an option to generate e-way bill for the same invoice. This option will no longer be available with consignor.

 Extension of e-way bill can now be sought for goods in transit or in movement. For availing the extension, the taxpayer is required to choose one of the following reasons and add remarks thereon:

  • Natural calamity,
  • Law and order,
  • Transhipment
  • Accident,
  • Others

On selection of the reason, the taxpayer needs to fill details of mode of transportation, location of goods and vehicle details for which the extension is required. Extended date is auto-calculated basis the reason and the distance between location of goods and final destination of goods.

Report on expiry date of e-way bills: Taxpayers can now view list of e-way bills that are about to expire in next four days from the date of view

Transfer of ITC in case of death of sole proprietor – Clarification- Transferee / successor shall be liable to pay any tax, interest or any penalty due from the transferor –  CBIC has clarified that transfer or change in the ownership of business will include transfer or change in the ownership of business due to the death of the sole proprietor. It is also stated that the transferee / successor shall be liable to pay any tax, interest or any penalty due from the transferor in cases of transfer of business due to death of sole proprietor. Circular No. 96/15/2019-GST, dated 28-3-2019 further clarifies that in case of transfer of business on account of death of sole proprietor, the transferee / successor shall file Form GST ITC-02 in respect of the registration which is required to be cancelled on account of death of the sole proprietor, before filing the application for cancellation of such registration by the legal heirs

Reversal of Input Tax Credit (GSTR 9 – Annual Return)

itr form filling in lucknow

Reversals explained in Detail are as Follows-

-Rule 37 – 180 Days Non Payment

-Rule 39 – Credit note issued to ISD

-Rule 42 – Inputs used for Exempted Supplies/Personal Use

-Rule 43 – Capital Goods used for Exempted Supplies/Personal Use


1. Rule 37(2)– 180 days Non Payment

Page Contents

1. Rule 37(2)– 180 days Non Payment

2. Rule 39(1) –Credit note issued to ISD

3. Rule 42(1) – ITC on input supplies partly used for business and partly for exempt supplies or personal use

4. Rule 43(1)– ITC on Capital Goods partly used for business and partly for exempt supplies or personal use

5. Others

As a dealer, you would have availed  I T C on inward supplies. But if you fail to pay the invoice amount to the supplier within 180 days the ITC has to be reversed. If part of the invoice is paid the ITC will be reversed on a proportionate basis.

This means that the business has to maintain the creditors aging and basis on that they have to reverse the Input Tax Credit. In big organizations it will be very challenging as they have lot transactions and maintained from various locations. This process would be very easy if the accounting or ERP they are using supports the same. Though it looks like a complex process but it would be simple if the technology is used in the process.

The reversal of the ITC is based on the provisions given in Section 16 of the CGST Act

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:

All the supplier invoices which are issued from 1st July 2017 to 3rd July 2017, if they are unpaid, ITC has to be reversed along with interest.

Also, amount of ITC to be reversed should be further segregated into IGST, CGST, SGST and Cess.

For example –

Mr. A received goods on 1st July 2017 worth Rs. 10000 on which GST Rs. 1800 was charged.

Mr. A claimed the GST of Rs 1800 as ITC in his GSTR 3B

Mr. A could not pay the invoice amount till December 2017.

This means that Mr. A will have to reverse the ITC of Rs 1800 while filing GSTR 3B for December 2017 in January 2018.

2. Rule 39(1) –Credit note issued to ISD

When an ISD receives a Credit Note from a supplier the ITC distributed previously has to be reversed. The dealers to whom the credit was distributed also have to reverse this ITC. This reversal of input tax credit shall be in the same proportion as in the original ITC distribution by the ISD.

Also, amount of ITC to be reversed should be further segregated into IGST, CGST, SGST and Cess.

For example –

M/s X receives services worth Rs 100000 on which GST of Rs 18000 was paid.

M/s X distributed this credit to 2 dealers A and B in the ratio of 1:2

A and B claimed the ITC in the GSTR 3B.

Now M/s X has received a credit note worth Rs 23600 (including GST of Rs 3600)

This GST of Rs 3600 has to be reversed by A & B in the ratio of 1:2

A will reverse ITC of Rs 1200 (3600 * 1 / 3)

B will reverse ITC of Rs 2400 (3600 * 2 / 3)

This will be included in the GSTR 3B by both A and B in the reversal of input tax credit section.

3. Rule 42(1) – ITC on input supplies partly used for business and partly for exempt supplies or personal use

The ITC used for exempt supplies and personal purpose has to be reversed in GSTR 3B.

How to Calculate ITC reversal on Exempt Supplies –

Step 1 – Calculate Common Credit

Common Credit = Total ITC on Input Supplies

(less) ITC on supplies used for exclusively Personal purposes

(less) ITC on supplies used for providing exclusively exempt supplies

(less) ITC on which credit is not available

(less) ITC on supplies other than exempted but including zero rated supplies (ITC on normal supplies)

In simple words, Common Credit is ITC on inputs partly used for exempt supplies or personal use.

Step 2 – Amount of reversal of input tax credit attributable to inputs partly used for Exempt supplies

= (Value of Exempt Supplies * Common Credit) / Total Turnover in the State

How to Calculate ITC on Personal Use – 5 % of Common Credit

Both these ITC amounts as calculate have to be reversed in the GSTR 3B filed by the dealer.

4. Rule 43(1)– ITC on Capital Goods partly used for business and partly for exempt supplies or personal use

ITC on capital goods used for the supply of exempt supplies and non-business purposes will also be reversed.

The calculation will be similar to the calculation for ITC on inputs used for exempt supplies and personal use.

Step 1 – Calculate Common Credit –

Common Credit = ITC on Capital Goods

(less) ITC on capital goods put to exclusively personal use

(less) ITC on capital goods used for exclusively exempted goods

(less) ITC on capital goods used in supplies other than exempted but including zero rated supplies (ITC on normal supplies)

Step 2 –  Amount of ITC reversal attributable to capital goods partly used for Exempt supplies and Personal use

= (Value of Exempt Supplies * Common Credit)/Total Turnover in the State

Step 3 – This reversal of input tax credit has to be done on a monthly basis. The life of any asset is considered as 5 years. So the amount of ITC reversal every month will be

= Amount arrived at in Step 2 / 60 (months)

5. Others

•             Reversing ITC related to inputs held as stock in trade: For inputs in stock, the input tax credit reversal amount shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed.

•             Reversing ITC – Non-availability of Invoices: Where aforesaid tax invoices are not available, credit reversal amount shall be based on the prevailing market price of the goods on the date of relevant event, based on which reversal is required.

•             Reversing ITC related to Capital goods: For capital goods, the input tax credit involved in the remaining residual life in months shall be computed on pro-rata basis, taking the residual life as five years.

Illustration – Capital goods have been in use for 4 years, 6 month and 15 days.

The residual remaining life in months= 5 months (60 – 55 months) ignoring a part of the month Input tax credit taken on such capital goods = 12000

Input tax credit attributable to remaining residual life= 12000 X 5/60 = 1000.