Compliance Requirements under GST Law
“This article attempts to comprehend the compliance requirements under the GST law across the board. GST compliances are amended frequently and staying abreast of the new developments can often be an onerous effort. The types of compliances are assorted with unalike target dates. The author aims to offer a lucid understanding of these new compliance amendments. This compilation entails to cover compliances to be made by numerous taxpayers from pre-registration period till the cancellation of their registration. I hope that this critique would assist the masses who may be in the finance departments of the businesses or in the offices of the practicing members at large. Read on…”
1 Introduction
Aimed to highlight the foremost compliances, the author simplifies the task of handling necessary compliances under GST laws both at pre and post registration. Compliance under these laws plays a pivotal role, both for the taxpayer to mitigate liabilities on account of tax, interest and penalties and for the revenue to fill its exchequer better than before.
In the modern fiscal laws, trust on a taxpayer is the kernel while codifying the law and its procedures. Over a period, the stakeholders have achieved an acceptable level of digital compliances from registration to filing of returns, from payment of taxes to assessment and refunds, from advance ruling to appeals, etc. The GSTN e-portal has been successfully handling such compliances with ease. E-way bill and e-invoices portals too have proved to be an immense accomplishment.
Pre-Registration Compliances & Statutory Thresholds (Section 22 & Section 24)
Section 22 of the CGST Act makes it necessary for any person supplying goods/services to seek registration as soon as his aggregate turnover as defined under section 2(6) crosses the threshold limit.
Mandatory Registration irrespective of Threshold Limit (Section 24)
Section 24 provides for mandatory registration requirements in certain specific cases:
- (i) A person making inter-State supply of goods;
- (ii) Casual taxable person making taxable supply;
- (iii) Persons who are required to pay tax under reverse charge;
- (iv) Persons who are required to pay tax under section 9(5);
- (v) Non-resident taxable person making taxable supply;
- (vi) Persons who are required to deduct tax under section 51, whether or not separately registered;
- (vii) Persons who make taxable supply of goods/services on behalf of other persons, whether as an agent or otherwise;
- (viii) Input Service Distributor (ISD), whether or not separately registered;
- (ix) Persons who supply goods/services or both, other than supplies specified under section 9(5), through such electronic commerce operator who is required to collect tax at source under section 52;
- (x) Every electronic commerce operator (who is required to collect tax under section 52); and
- (xi) Every person supplying online information and database access or retrieval (OIDAR) services from a place outside India to a person in India, other than a registered person.
2 Tax Invoice and E-Way Bill
Tax-Invoice and Bill of Supply (Section 31 & Rules 46 to 55)
Section 31 mandates to issue a Tax-Invoice in case a registered person is making taxable supply and to issue a Bill of Supply in case of exempted supplies or paying tax under the provisions of section 10.
- Supply of Goods: Such invoices are to be issued at the time of removal of goods.
- Supply of Services: Such invoices may be issued within 30 days from the date of provision of such services, subject to some exceptions like banking companies, financial institutions, etc.
- Statutory Particulars: Rules 46 to 55 specify various mandatory fields to be given in various types of invoices, credit and debit notes, delivery challans, etc. to be issued by a registered person.
E-Invoice Mandate
The Notification No. 5/2021-CT, dated 8-Mar-2021 tumbled the threshold limit for mandatory issuance of e-invoices in case of B2B taxable supplies by a taxpayer whose aggregate turnover is more than INR 50 Crore with effect from 01.04.2021, subject to certain exceptions.
QR Code Mandate
One must be cautious regarding the applicability of having a Quick Response (QR) code on B2C invoices issued. Various notifications and circulars have been issued by CBIC governing dynamic QR code requirements for large taxpayers.
E-Way Bill Compliance (Rule 138)
Rule 138 lays down the provisions for generation of e-way bill. As per the said rule, e-way bill is mandatorily required to be generated before the onset of movement of goods, in case of movement of goods of consignment value worth more than INR 50,000, subject to some exceptions.
- (i) Inter-State movement of goods between principal and job-worker.
- (ii) Inter-State supply of handicraft goods by a person who is exempted from registration requirement.
- (i) Movement of exempted goods;
- (ii) Goods falling under Schedule-III (non-supplies);
- (iii) Goods being transported through a non-motorised conveyance;
- (iv) Goods being transported from customs port, airport, air cargo complex and land customs station to an ICD or CFS for clearance.
3 Reverse Charge Mechanism (RCM)
Normally, taxes are to be paid by the supplier of goods and services. However, for varying reasons, in certain cases, the Government decides to shift this burden on to the recipient.
Section 9(3) Notified Goods & Services
Provides that in case of supply of goods as notified under Notification No. 4/2017-CT(R), dated 28-Jun-2017 and in case of supply of services as notified under Notification No. 13/2017-CT(R), dated 28-Jun-2017, the tax shall be paid under RCM by the recipient.
Section 9(4) Real Estate Promoters
Provides that “promoters” as a class of registered persons shall pay tax under reverse charge on receipt of goods or services from unregistered persons as notified vide Notification No. 7/2019-CT(R), dated 29-Mar-2019.
4 Returns and Payment of Tax
Details of Outward Supplies – Form GSTR-1 [Section 37 read with Rule 59]
Every registered person, other than – (i) an input service distributor, (ii) a non-resident taxable person, (iii) composition taxpayer, (iv) TDS deductor, (v) TCS collector, (vi) supplier of OIDAR services shall furnish the details of outward supplies in Form GSTR-1 electronically on or before the 11th day of the month succeeding the tax period.
Filing of Return in Form GSTR-3B [Section 39 read with Rule 61(5)]
Every registered person having an aggregate turnover above INR 5 crores in the previous financial year shall file return in Form GSTR-3B, on or before the 20th day of the month succeeding the tax period.
However, in cases where the aggregate turnover is up to INR 5 crores, the due dates are prescribed as given below:
| S. No. | Class of Registered Persons | Due Date |
|---|---|---|
| 1. | Registered persons whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or Lakshadweep. | Twenty-second (22nd) day of the month succeeding such quarter |
| 2. | Registered persons whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories. | Twenty-fourth (24th) day of the month succeeding such quarter |
QRMP Scheme – Quarterly Return Monthly Payment Scheme
As a measure of trade facilitation, the Board has introduced QRMP Scheme, i.e., Quarterly Return Monthly Payment Scheme. In this scheme, a registered person having an aggregate turnover up to INR 5 crores may be allowed to furnish return on quarterly basis along with monthly payment of tax, w.e.f. 1-Jan-2021.
In this respect, the Board has issued NN-81/2020-CT, NN-82/2020-CT, NN-84/2020-CT, NN-85/2020-CT, all dated 10-Nov-2020 along with Circular No. 143/13/2020-GST dated 10-Nov-2020. The abovementioned notifications read with the said Circular make it clear about the ins and outs of such scheme. The scheme comprehends as under:
- i. Eligibility: A registered person who is required to furnish a return in Form GSTR-3B and whose aggregate turnover is up to INR 5 crores in the preceding financial year is eligible for the QRMP scheme.
- ii. Effective Date: The scheme would be effective from 1-Jan-2021.
- iii. Turnover Exceeding Limit in Current Year: In case the aggregate turnover exceeds INR 5 crores during any quarter in the current financial year, the registered person shall not be eligible for the scheme from the first month of the quarter during which his aggregate turnover exceeds INR 5 crore.
- iv. Opt-in and Opt-out Mechanism: The detailed procedure to opt in and to opt out has been explained in the said Circular.
- v. Quarterly GSTR-1: The registered person opting for the scheme would be required to furnish the details of outward supply in Form GSTR-1 on quarterly basis.
- vi. Invoice Furnishing Facility (IFF): For each of the first and second months of the quarter, such registered person will be having the facility, as per his choice, to furnish details of his outward supplies to a registered person under IFF i.e., Invoice Furnishing Facility.
- vii. Monthly Tax Deposit (Form GST PMT-06): The registered person under the scheme would be required to pay the due tax in each of the first two months of the quarter by depositing the due amount in Form GST PMT-06 by the 25th day of the month succeeding such month. Such payment of taxes can be made by selecting either fixed sum method or self-assessment method as explained in the Circular.
- viii. Quarterly GSTR-3B: Such registered persons would be required to furnish Form GSTR-3B, for each quarter, on or before 22nd or 24th day of the month succeeding such quarter.
Specialized Returns Suite under GST
Quarterly statement in Form GST CMP-08 by the 18th day of the month succeeding such quarter; and annual return in Form GSTR-4 till 30th April following the end of the financial year.
Return giving outward and inward supplies in Form GSTR-5, within 20 days after the end of a tax period or within 7 days after the last day of validity of registration, whichever is earlier.
Monthly electronic return in Form GSTR-6, containing details of tax invoices on which credit has been received and those issued under section 20, on or before the 13th day of the succeeding month.
Return in Form GSTR-7 on or before 10th of the succeeding month along with tax payment; else interest shall be paid @18% p.a. for the period tax remains unpaid.
Statement in Form GSTR-8 containing details of outward supplies affected through it and returned during a month, within 10 days after the end of such month, along with deposit of TCS.
Every person issued a UIN claiming refund of taxes paid on inward supplies furnishes details in Form GSTR-11 along with application for refund claimed.
Declaration of outward supplies made in the period between the date on which liability arose and the date on which registration was granted, in the first return filed after grant of registration.
Every registered person required to furnish return under Section 39 whose registration has been cancelled must furnish final return in Form GSTR-10 within 3 months from date of cancellation or date of order, whichever is later.
Annual Return & Reconciliation Statement [Section 44 read with Rule 80]
- GSTR-9 Annual Return: Every registered person, other than an ISD, TDS deductor, TCS collector, a casual taxable person, a non-resident taxable person, a person supplying OIDAR from a place outside India to a person in India, any department of the CG/SG/local authority whose books of accounts are subject to audit by CAG of India, an airline company (Notification No. 9/2020-CT, dated 16-Mar-2020), shall furnish an annual return in Form GSTR-9, for every financial year.
- GSTR-9A: Taxable person paying tax under composition levy shall furnish the annual return in Form GSTR-9A.
- GSTR-9B: Every electronic commerce operator who is required to collect tax at source under section 52 shall furnish the annual statement in Form GSTR-9B.
- GSTR-9C Self-Certified Reconciliation: Every registered person, whose aggregate turnover during a financial year exceeds INR 5 crore, shall furnish a self-certified reconciliation statement in Form GSTR-9C along with a copy of his audited annual accounts.
- Statutory Due Date & Exemption: All such returns are to be filed on or before the 31st day of December, following the end of such financial year. However, taxpayers having AATO upto INR 2 crores are exempt from the requirement of furnishing annual return for FY 2020-21.
5 Payment of Taxes
Every taxpayer shall discharge his tax liability on or before the due date of furnishing his return. Under GST law, returns cannot be filed without discharging the applicable liability.
Electronic Cash Ledger (Rule 87)
Amount available in electronic cash ledger may be used for payment of tax, interest, penalty, fee or any other amount payable in the manner prescribed in rule 87.
Electronic Credit Ledger (Rule 86)
Amount available in electronic credit ledger may be used for payment of output tax in the manner prescribed in rule 86.
The manner of utilization of ITC available in electronic credit ledger is given under section 49(5), 49A and 49B of the Act. Interest for delayed payment of taxes shall be charged as per section 50.
6 Job Work Compliances (Section 143)
The word ‘job work’ has been defined under section 2(68) to mean any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly.
Time Limits & Deemed Supply Consequences
- Inputs: In case inputs are sent for job work and are not brought back or supplied within 1 year, it would be considered as deemed supply on the date when such inputs were originally sent to the job worker.
- Capital Goods: If capital goods are sent to a job worker and are not brought back or supplied within 3 years, it would be considered as deemed supply on the date when such capital goods were originally sent to the job worker.
7 Accounts and Records (Section 35, 36 read with Rules 56, 57, 58)
Maintenance of Accounts and Records (Section 35)
As per the provisions of section 35, every registered person has to maintain accounts and records at principal place of business in respect of:
In case of more than one place of business, such records are to be maintained at every place of business specified in the certificate of registration.
Retention of Records (Section 36)
Section 36 provides that the period of retention of such accounts and records shall be for 72 months from the due date of furnishing of annual return.
Types of Records (Rule 56)
Rule 56 gives detailed information about the accounts and records to be maintained by a registered person in a comprehensive manner. This rule talks about various types of records to be maintained:
Electronic Records (Rule 57)
Rule 57 gives an understanding about the generation and maintenance of electronic records. This rule comprehensively covers the manner of taking backup of electronic records, production of records before the proper officer along with passwords.
Warehouse & Transporter Records (Rule 58)
Rule 58 talks about records to be maintained by the owner or operator of godown or warehouse and transporters for storing and moving goods.