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GST

E Invoice

‘E-invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal.

Under the proposed electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).

All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time.

Therefore, it will eliminate the need for manual data entry while filing ANX-1/GST returns as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to GST portal.

Currently, businesses generate invoices through various softwares, and the details of these invoices are manually uploaded in the GSTR-1 return. The invoice information is thereafter reflected in GSTR-2A for the recipients for viewing only. On the other hand, the consignor or transporters must generate e-way bill by again importing the invoices in excel or JSON manually.

Under the new return system, an annexure in form GST ANX-1 will mostly take the place of the GSTR-1 return. However, the process of generating and uploading invoice details will remain the same. It will be done by importing using the excel tool/JSON or by the online entry of data. A seamless flow of data is expected for e-way bill generation. e-invoicing will be the key tool to enable this.

Businesses will have the following benefits by using e-invoice initiated by GSTN:

  1. E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
  2. E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
  3. Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
  4. Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
  5. Faster availability of genuine input tax credit.
  6. Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

The taxpayers with annual aggregate turnover of over Rs 500 Crore can voluntarily generate e-invoices starting from 7 January 2020 through APIs. Whereas the taxpayers with the turnover over Rs 100 but less than Rs 500 Crore can join them from 1 February 2020. The electronic invoicing will be mandatorily implemented from 1 April 2020. for taxpayers with turnover over Rs 100 Crore. The aggregate turnover will include the turnover of all GSTINs under a single PAN, across India.

The following are the stages involved in generating or raising an e-invoice.

1: Taxpayer must ensure to use the reconfigured ERP system as per PEPPOL standard. He must coordinate with the software service provider to incorporate the standard set for e-invoicing, i.e. e-invoice schema (standards) and must have the mandatory parameters, at least. It should be capable of generating the JSON file for multiple invoices together. Those taxpayers not having any software will be provided offline utility. At a future date when e-invoicing applies to small taxpayers, they can choose from 8 different accounting and billing softwares all tied up with the GSTN. It is available free of cost. It is available both as online (cloud-based) as well as offline (installed on the computer system of the user).

2: The taxpayer must thereafter raise a normal invoice on that software. He must give all the necessary details like, billing name and address, GSTN of the supplier, transaction value, Item rate, GST rate applicable, tax amount, etc.

3: Upload the details of invoice especially mandatory fields onto the IRP using the JSON file only. It can be done directly or through GSPs or APIs(apps or software providers). The IRP will act as the central registrar for e-invoicing and its authentication. There are several modes of interacting with IRP such as web-based, API-based, SMS based, mobile app-based, an offline tool-based, and GSP based.

4: IRP will validate the key details of the B2B invoice, checks for any duplications and generates an invoice reference number (hash) for reference. There are four parameters: Seller GSTIN, Invoice number, and FY in YYYY-YY) and document type (INV/DN/CN).

5: IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. On the other hand, the seller of the supply will get intimated of the e-invoice generation through email (if provided in the invoice).

6: IRP will send the authenticated payload to GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. ANX-1 of seller and ANX-2 of the buyer gets auto-filled for the relevant tax period. In turn, it determines the tax liability.

A taxpayer can continue to print his invoice as being done presently with logo. e-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.

It will help in curbing tax evasion in the following ways:

  • Tax authorities will have access to transactions as they take place in real-time since the e-invoice will have to be compulsorily generated through the GST portal.
  • There will be less scope for the manipulation of invoices since the invoice gets generated prior to carrying out a transaction.
  • It will reduce the chances of fake GST invoices and the only genuine input tax credit can be claimed as all invoices need to be generated through the GST portal. Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.

There are two different concepts of QR Codes when it comes to e-Invoicing in India.

  • QR Code for a Business-to-business B2B E-Invoice containing details of the Invoice (this article)
  • Payment QR Code for a Business-to-consumer B2C Invoice (different article)

In order to issue an e-Invoice, a taxpayer has to prepare a valid invoice in electronic format as per the e-Invoice schema and submit it to a government authorized Invoice Registration Portal (IRP).

The IRP will validate the invoice and also generate a QR code containing the unique Invoice Reference Number along with some important parameters of invoice and digital signature so that any person such as the recipient or tax officer could verify the details of the invoice. The QR Code contains important details of the invoice so that one can check those details even without internet access. The QR code will consist of the following e-invoice parameters:

  • GSTIN of supplier
  • GSTIN of Recipient
  • Invoice number as given by Supplier
  • Date of generation of invoice
  • Invoice value (taxable value and gross tax)
  • Number of line items.
  • HSN Code of main item (the line item having highest taxable value)
  • Unique Invoice Reference Number (IRN)

It is expected that suppliers include the QR Code while generating PDF format of the invoice or printing the invoice on paper. However, there is no legal requirement at present to display the QR code on the invoice.

GST is Director Remuneration

Director’s remuneration is paid for the services offered by the Director of the concerned company. In this article, let us look at if GST applies to Directors remuneration paid by a company.

What is Directors Remuneration?

Director is the head of a company or corporate body. The services offered by a director include that related to a company or body corporate. The following mentions the examples of services offered by a Director for payable remuneration:

  • Sitting fees,
  • Commission,
  • Services charges for providing a guarantee for a loan taken by the company

Applicability of GST on Directors Remuneration

The Central Board of Indirect Taxes and Customs (CBIC) has clarified that GST is applicable on Directors Remuneration on reverse charge basis. When the reverse charge applies while filing the returns, the recipient of the service should pay taxes on the reverse charge. Hence, in the case of Directors Remuneration, the recipient of service, the company becomes liable for the payment of GST on Directors Remuneration.

The taxpayer should determine the place of supply to calculate IGST or CGST and SGST. The supplier shall consider the place of supply where the delivery takes place. A director delivers services to the board of the company. The board is the highest body of corporate governance. For that reason, it can be mentioned that the place where directors’ services are being consumed is the place where the board of the company is located, its registered office.

In some cases, the registered office is not the place where management decisions or Board decisions are taken from. For instance, the Board could always decide to meet at a Corporate Office in a certain State. In such cases, the place where the substantive board meetings take place can be taken as the place of supply.

No, Directors of a company receiving the Remuneration are not liable to take GST registration. Merely providing Director services will not make a person liable for obtaining GST registration irrespective of turnover, as GST applies on reverse charge basis. However, the company receiving the services and liable to pay GST on reverse charge will have to obtain GST registration mandatorily irrespective of aggregate annual turnover.

GST Need

As a Startup you are incurring a lot of expenses and paid the GST on purchase. Hence if you are registered under GST you’ll get back the all GST amount. This can help with the cash flow for your business.

As per GST Rule, if your current combined supply is over Rs. 40 lakh, you are eligible for GST Registration (if your business operates exclusively in the North Eastern states, Rs. 20 lakh).

When your business is registered for GST, it actually becomes a tax collector for the government, as the GST you collect on your sales, less the GST you paid on your purchases, has to be remitted to the government. This needs to be completed annually, quarterly or monthly, depending on the business reporting obligations.

E-commerce aggregators are responsible under the GST law for collecting and depositing tax at the rate of 1% from each transaction. Any dealers/traders selling goods/services online would get the payment after deduction of 1% tax.

All the traders/dealers selling goods/services online would need to get registered under GST even if their turnover is less than 20 Lakhs for claiming the tax deducted by aggregators.

Note: Supplier of services, who is not supplying through an e-commerce operator liable to collect tax at source, having a turnover of less than 20 lakhs are exempted from obtaining registration under GST.

TDS is to be deducted at the rate of 1% on the payments made to the suppliers of taxable goods and/or services, where the total value of such supply, under an individual contract, exceeds Rs.2,50,000.

The following people/entities need to deduct TDS:

  1. A department or establishment of the Central or State Government
  2. Local authorities
  3. Government agencies
  4. a. an authority or board or any other body :
    i. set up by an Act of parliament or a state legislature or
    ii. Established by any government
    with fifty-one percent or more participation by way of equity or control.
    b. The society established by the central government or state government or any local authority
    c. Public sector undertakings as notified in the latest notification dated 13th Sep 2018.

Income Tax

IT Due Dates

Quarter

Period

Last Date of Filing

1st Quarter

1st April to 30th June

31st July 2019

2nd Quarter

1st July to 30th September

31st Oct 2019

3rd Quarter

1st October to 31st December

31st Jan 2020

4th Quarter

1st January to 31st March

30th June 2020

Note: TDS Deducted under section 194IA on the transaction in the month of March, has to be deposited on or before 30th April of 2020.

Quarter

Period

Last Date of Filing

1st Quarter

1st April to 30th June

15th July 2019

2nd Quarter

1st July to 30th September

15th Oct 2019

3rd Quarter

1st October to 31st December

15th Jan 2020

4th Quarter

1st January to 31st March

30th June 2020

Penalty (Sec 234E): The TDS deductor will be accountable to pay a penalty of INR 200/- per day to the IT department till the date the complete TDS amount is being paid. However, the penalty shall be limited to the actual TDS amount and can not be more than that.

Penalty (Sec 271H): As per this section, when an individual fails to file the TDS/TCS return before the due dates, the Assessing Officer may direct him/her to pay penalty under section 271H along with the late fee applicable as per section 234E.

The penalty under section 271H starts from INR.10,000 and can be extended to INR 1,00,000 when the Deductor/Collector files a wrong return.

Conditions when no penalty is levied for delayed filing or payment of TDS/TCS return as per section 271H.

  • The tax deducted at source is paid to the credit of the government.
  • The interest along with late filing fees is paid to the credit of the government.
  • The TDS/TCS return is filed prior to the expiry of one year period from the due date as stated (provided that the return submitted is correct)

 

In addition to the penalty, the interest will also be charged alongside. The interest is payable by the taxpayers before the filing of the TDS return. The details about interest rates are given in Section 201 A.

  • For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, the reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
    However, none or short payments of TDS/TCS made after 30th June will attract following interest liability:-
  • When a part or whole amount of tax is Non-deducted at source then 1% per month interest is subject to TDS/TCS amount when the Interest period starts from the date on which the tax was deductible and lasts till the actual date of deduction.
  • When a part or whole amount of TDS is not paid then 1.5% per month interest is subject to TDS/TCS amount when the Interest period starts from the deduction date and lasts till the actual date of payment.
  • Interest at the rate of 1.5% per month ( from the date when it was deducted to the actual date of deposit) has to pay for late payment of TDS after deduction.
  • Note: The interest is calculated on the basis of a number of months and not on the basis of a number of days so a part of a month will be taken as a whole month.

For instance – If you have to pay TDS amount of INR 3000 which you had deducted on January 15th. But you paid this TDS after the actual date of TDS deposit, on May 29th. So, the interest will be calculated as INR 3000 X 1.5% per month X 5= INR 225.

However, according to many High Court Cases, a month is a period of thirty days. But Under the Income Tax Act, 1961, there is no precise definition for a month.

The most noteworthy point:

  • The calculation of interest for payable TDS amount is done on the basis of the date from when TDS was deducted instead of the date on which it was due.

There is a different category of taxpayer viz. Individual, HUF, Firm, LLP, Company, Trust and AOP/BOI. Due Date is different according to audit or non-audit case of such categories as defined in section 139(1)

Last Date of Income Tax Return Filing for AY 2020-21 (Non-Audit Cases)

  • The common due date of filing the Income Tax Return by Assesse whose Books of Account are not required to be audited is 31st July 2020. Note:“Among other measures, Due date of all income-tax return for FY 2019-20 will be extended from 31st July 2020 & 31st October 2020 to 30th November 2020.”

Filing Income Tax Return Due Date for AY 2020-21 (Audit Cases)

The general due date for filing the Income Tax Return by Assesse is 30th September 2020 but finance ministry has extended till 31st October 2020.

Note:

  • Due date for filing of ITRs/ Tax Audit Reports for all the categories of assesses in UTs of J&K and Ladakh who were required to file ITRs and whose accounts are not required to be audited is 31st July 2020 and for assesses whose accounts are required to be audited is 30th September 2020.

 

Tax Rates

Every person carrying on business and maintaining books  of account is required to get them audited from a Chartered  Accountant if total sales, turnover or gross receipt from business  during the previous year exceeds Rs. 1 crore. 

To reduce compliance burden on small and medium enterprises,  Section 44AB is proposed to be amended to increase the threshold limit, for a person carrying on business, from Rs. 1 crore to Rs. 5  crore.

However, the increased threshold limit of Rs. 5 crore shall  be applicable only when cash receipt and payment made during  the year does not exceed 5% of total receipt or payment, as the  case may be.

In other words, more than 95% of the business  transactions should be done through banking channels.

Income Tax Slab

Tax Rate

Up to Rs 2.5 lakh

NIL

Rs 2.5 lakh to Rs 5 lakh

5% (Tax rebate of Rs 12,500 available under section 87A)

Rs 5 lakh to Rs 7.5 lakh

10%

Rs 7.5 lakh to Rs 10 lakh

15%

Rs 10 lakh to Rs 12.5 lakh

20%

Rs 12.5 lakh to Rs 15 lakh

25%

Rs 15 lakh and above

30%

  • The tax calculated on the basis of such rates will be subject to health and education cess of 4%
  • Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
    1. Leave Travel Allowance (LTA)
    2. House Rent Allowance (HRA)
    3. Conveyance
    4. Daily expenses in the course of employment
    5. Relocation allowance
    6. Helper allowance
    7. Children education allowance
    8. Other special allowances [Section 10(14)]
    9. Standard deduction
    10. Professional tax
    11. Interest on housing loan (Section 24)
    12. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
    1. Option to be exercised on or before the due date of filing return of income for AY 2021-22
    2. In case a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once. A business taxpayer withdrawing from the optional tax regime has to follow the regular income tax slabs.

    According to the current income tax laws in India, the income tax rate on resident individuals varies based on their age. There are different tax slabs applicable to the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual, aged below 60 years, with an income less than Rs 2.5 lacs is exempt from paying income tax.

TDS & TCS Rates

The economic stimulus package announced by the government reduces the TDS and TCS rates by 25%, leaving more liquidity in the hands of taxpayers. The revised rates of TDS and TCS will apply from 14 May 2020 until 31 March 2021. The tax deductors and collectors carrying on transactions from 14 May 2020 until 31 March 2021 should accordingly deduct or collect tax at the lower rates.

Please note that the relief from the reduction in TDS and TCS rates is not for salaried and for payments made to non-residents.

TDS rates effective from May 14, 2020

 

Nature of Payment

Relevant Section

TDS rate effective till May 13, 2020

TDS rate effective from May 14, 2020

Receiving accumulated taxable part of PF

Section 192A

10%

10%

Interest received on securities

Section 193

10%

7.50%

Dividend received from Mutual funds and on company’s shares

Section 194 and 194K

10%

7.50%

Interest other than Interest on Securities e.g. Fixed deposit interest

Section 194A

10%

7.50%

Winnings from lottery, crosswords or any sort of game

Section 194B

30%

30%

Winnings from horse races

Section 194BB

30%

30%

Insurance Commission received by an Individual

Section 194D

5%

3.75%

Life Insurance Policies not exempt under Section 10(10D)

Section 194DA

5%

3.75%

Commission or brokerage received except for Insurance Commission

Section 194H

5%

3.75%

Payment made while purchasing land or property

Section 194IA

1%

0.75%

Payment of rent by individual or HUF exceeding Rs. 50,000 per month

Section 194IB

5%

3.75%

Payment made to professional or commission or brokerage of more than Rs 50 lakh and above

194M

5%

3.75%

Cash withdrawal exceeding Rs 20 lakh or 1 crore as the case maybe

194N

2%

2%

Payment of Professional Fees etc.

194J

2%(FTS, certain royalties,call centre) 10%(others)

1.5%(FTS, certain royalties,call centre) 7.5%(others)

Payment in respect of deposits under National Savings Scheme

194EE

10%

7.50%

Rent for plant and machinery

194- I(a)

2%

1.50%

Rent for immovable property

194-I(b)

10%

7.50%

 

TCS rates effective from May 14, 2020

Section

Nature of payment

Applicable from 14/05/2020 to 31/03/2021

TCS Rate (%)

 

206C

Scrap

0.75

 

206C

Tendu leaves

3.75

 

206C

Timber obtained under a forest lease or other mode

1.875

 

206C

Any other forest produce not being a timber or tendu leaves

1.875

 

206C

Alcoholic liquor for human consumption and Indian made foreign liquor

1

 

206C

Parking lot, toll plaza, mining and quarrying (other than mining and quarrying of mineral oil, petroleum and natural gas)

1.5

 

206C

Minerals, being coal or lignite or iron ore

1

0.75

206C

Sale of motor vehicle of the value exceeding Rs. 10 Lacs

1

0.75

206C

Remittance out of India under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year (Applicable from 01.10.2020) – TCS will be charged on excess amount over 7 lacs

N.A.

5

206C

Sale of overseas tour programme package (Applicable from 01.10.2020)

N.A.

5

206C

Remittance out of India for education under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year (Applicable from 01.10.2020) – TCS will be charged on excess amount over 7 lacs

N.A.

0.5

206C

Sale of any goods (other than goods exported out of India or goods given in the above points) of the value exceeding 50 Lacs (Applicable from 01.10.2020) – TCS will be charged on excess amount over 50 lacs

N.A.

 
     

 

 



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