Tag: GST


Finalisation of accounts in GST Era-Part1

As we all know that GST was implemented wef 01/07/2017 hence during financial year there will have to be prepared two Financial statements one for three months for the period 01/04/2017 to 30/06/2017 and another for the remaining 9 months.Starting from this post we will try to explain various steps required to prepare the accounts under GST era

Preparing the accounts for the Pre GST period of 3 months:

Dealers were required to file trans 1 wherein it was required to declare the amount of direct and indirect taxes involved in the closing stock as on 30/06/2017 which we presume that maximum would have filed and if not filed for whatsoever reason now it is deemed to never have been filed so first thing to be considered is that the figures declared in TRANS 1 must match with the books of accounts .Just to recall we reproduce TRANS 1 below:

Now based upon the columns given in TRANS 1 above we have tried to explain the accounting entries required to be passed as also where no entries have to be passed

Please note that these entries will be passed in the books of accounts starting on 01/07/2017 and no entries will be passed in books closed on 30/06/2017

Reconciliation of GST ITC as on 31/03/2018 with that in system populated GST as on 31/03/2018

Though the GST was meant to tally with that populated by the portal but due to technical glitches the system is yet not fully operational so it becomes even more important that the reconciliation part is looked into with utmost care.

Reversal of Input Tax credit in case of non payment beyond 180 days:

Section 16 of CGST Act, 2017 says:

(1) Every registered person ……………..

(2)  Notwithstanding anything …………………

Provided that …………………………….

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

that is if  Recipient of goods/services fails to  pay to the supplier (Including Taxes), within 180 days from the date of issue of invoice, the Input Credit shall be reversed.

In terms of accounting it means that one has to observe age wise creditors and then find those whose outstanding is beyond 180 days .The input credit related to them on account of purchases has to be reversed.Not only this interest also has to be paid.

The relevant rules are appended below for reference:

Provisions under Rule 37 of the Central Goods and Services Tax (CGST) Rules, 2017 relating to “Reversal of Input Tax Credit in the case of Non-payment of Consideration”, as per CGST (2nd Amendment) Rules 2017 notified by CBEC on 28 June 2017, applicable w.e.f. 1st July 2017, are as under:

(1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice:

Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16.

(2) The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax liability of the registered person for the month in which the details are furnished.

(3) The registered person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid.

(4) The time limit specified in sub-section (4) of section 16 shall not apply to a claim for re-availing of any credit, in accordance with the provisions of the Act or the provisions of this Chapter,that had been reversed earlier.

The rule also provides such reversed amount is available for re-credit once the payment for the supplies is made.

Accounting entries to be passed if payment not made within 180 days :

Debit the CGST Reconciliation a/c and GST Reconciliation a/c  and Credit the corresponding GST liability account.

Once the payments are made the corresponding entries can be reversed

As is clear from above that a new account by the name GST Reconciliation has to be opened which will carry the figures of GST reversals in any case and further that the balance lying if any in this account should be matched with GSTR 2 for the month in which the balance is created and the reversal should match with the GSTR 1 of the month in which it is reversed subsequently (means in which month the creditor is finally paid)

In next post of this series we will try to analyse finalisation of accounts with manufacturing as activity



GST Provisions Rewritten

Yes the heading may be somewhat confusing but its true considering the outcome of yesterday’s GST council meeting .The provisions are virtually rewritten.Without going into the why ‘s and how’s here are the details

General Changes & Relief for Small and Medium Enterprises

To Analyse the changes brought we provide summary below

a) The Composition scheme threshold is now Rs.1.00 Cr
b) Small Dealer is now upto 1.5 Cr who can file its returns on a quarterly basis except for monthly basis previously
c) GST on services of motor cab at 5% without ITC and 12% with ITC extended to any motor vehicle
d)Persons who were otherwise eligible for composition scheme but becomes ineligible due to reciept of amount on account of exempt services will be now eligible for composition scheme
e)Now a service provider who has turnover below 20.00 lacs if providing inter state services need not register under GST.Earlier it was mandatorily required to be registered if providing inter state services
f) Reverse Charge under sec 9(4) and 9(5) has been DEFERRED (not abolished) till 31/03/2018
g)Small taxpayers will pay tax on quarterly basis though the buyers of these taxpayers can claim ITC on monthly basis.
h)Now Small taxpayers need not pay tax on Advances recieved but the tax will have to be paid once the service is provided
i) TDS provisions deferred till 31/03/2018 and e-way bill provisions deferred till Jan 2018
j) Due dates are also extended for composition dealer for july to sep 2017 to 15/11/2017
k) Invoice rules will also be modified to provide some relief

So if we can see almost all major provisions that had been in vogue have been tweaked thereby rewriting the GST provisions which are definitely a welcome move and a major relief to small tax payers


Filing Transitional Credit Claim (Trans 1 and Trans 2)

One important aspect under GST is the carry forward of credit that was available to a dealer under old regime of VAT and Service tax or Central Excise .The former being known as Input Credit or ITC and CENVAT in latter parlance.Please refer to our earlier post on conditions for claiming carry forward credit published in the month of july. For new visitors the link to the post is as under

Input Tax Credit in GST

Further brief provisions of filing claim for Input tax credit or CENVAT credit under erstwhile laws are as under

Common condition for all cases above that are required to file TRANS form (1 or 2)

The goods pertaining to the input credit have to be sold within 6 month of 01/07/2017

In case of registered dealers under old regime details of forms against which the goods have been procured are to be given

Goods on which credit is to be taken should not be used for taxable goods/services in GST

Still two conditions remain

Job work and Transitional Credit

Job Work

Where goods were sent on job work before 01/07/2017 and brought back after 01/07/2017 then no tax is payable provided the goods are returned within 6 month of appointed day provided that the said period of 6 month may be increased by 2 more month by the commissioner on application made for this effect .Same thing apply for goods returned within 6 month of 01/07/2017 subject to extension for 2 months on goods returned on which duty has been paid then the dealer can claim refund of such duty paid

Filing GST TANS 1 and GST TRANS 2:

For format of both form please see below

Documents required before filing

  • Last filed return copy
  • Copy of invoices on the basis of which INPUT VAT and CENVAT cenvat credit is to be claimed
  • In absence of invoice any other document evidencing payment of duty is required
  • Details of all forms issued and their details under VAT laws
  • Details of capital goods on which un availed credit is planned to be claimed
  • Details of goods sent on job work or goods send on approval basis within 6 month of date of applicability of GST
  • Details of goods lying with agent or held as agent within 6 month of appointed date

If you have with you all the documents detailed above you can file any of the two forms as required applicable to you with ease however in case of any difficulty you can always drop a mail on our site for assistance


Registration under GST

Registration Process

a) Registration Requirement

As per sec 22 following are liable for registration

i) Every Supplier if his turnover exceeds 20 lacs (10 lacs in case he is from special category of states)

ii)Every person who was registered on appointed day

iii)Any business that was registered is transferred owing to succession or otherwise as a going concern then the transferee is liable for registration

a) the expression “aggregate turnover” shall include all supplies made by the

taxable person, whether on his own account or made on behalf of all his principals;

(b) the supply of goods, after completion of job work, by a registered job worker

shall be treated as the supply of goods by the principal referred to in section 143, and

the value of such goods shall not be included in the aggregate turnover of the registered

job worker;

(c)  the expression “special category States” shall mean the States as specified

in sub-clause (g ) of clause (4 ) of article 279A of the Constitution

Persons Required to be Registration compulsorily irrespective of conditions given above:

(i) persons making any inter-State taxable supply;

(ii ) casual taxable persons making taxable supply;

(iii ) persons who are required to pay tax under reverse charge;

(iv ) person who are required to pay tax under sub-section (5 ) of section 9

This is applicable to services or goods provided by e-commerce operator

(v ) non-resident taxable persons making taxable supply;

(vi ) persons who are required to deduct tax under section 51, whether or not

separately registered under this Act;

(vii ) persons who make taxable supply of goods or services or both on behalf of

other taxable persons whether as an agent or otherwise;

(viii ) Input Service Distributor, whether or not separately registered under this


(ix ) persons who supply goods or services or both, other than supplies specified

under sub-section (5 ) of section 9, through such electronic commerce operator who is

required to collect tax at source under section 52;

(x ) every electronic commerce operator;

(xi ) every person supplying online information and database access or retrieval

services from a place outside India to a person in India, other than a registered

person; and

(xii ) such other person or class of persons as may be notified by the Government

on the recommendations of the Council.

Persons Not liable for Registration:

(a) any person engaged exclusively in the business of supplying goods or

services or both that are not liable to tax or wholly exempt from tax

(b ) an agriculturist, to the extent of supply of produce out of cultivation of land.

Application for registration.-

Form Required:

Form GST REG 01 is required to be filed under Rule 8


The applicant will first submit Name,Mobile No,E-Mail, State or Union Territory in GST REG 01 PART A on the portal gst.gov.in at this link

Once submitted the applicant data will be validated and on successful validation Temporary Reference No shall be generated and intimated

The applicant will now submit GST REG PART B online

On receipt of application an acknowledgement shall be generated in GST REG 02

Verification and Approval:

Please refer to flow chart given under for a detailed process flow

reg flow in gst.002.jpeg.002


For format of the various forms applicable in Registration process please visit the download section of our site at www.a2zefilingservices.com here