In its 14th meeting in Srinagar on 18th and 19th May,2017 the all-powerful GST council cleared seven rules pertaining to different aspects of GST. These rules relate to Registration, Input Tax Credit, Payment, Refund, Invoice, Valuation and Composition and have paved the way for the rollout of GST from July 1, 2017. The key highlights of these final GST Rules are as follows:
1. PAN is mandatory for taking registration under GST. PAN will be validated by CBDT. After successful validation, registration will be granted.
2. If a person has a SEZ unit, then he is required to make separate registration application for that unit. Similarly, a separate application of registration is required for becoming Input Service Distributor.
3. A non- resident seeking registration under Non-Resident Taxable Person has to appoint an authorized signatory who will sign the application of registration. That person must be resident of India having a valid PAN.
4. A person registered under GST is required to display his certificate of registration at a prominent location at his principal place of business and GST Number on the name board at entry of his principal place of business.
5. Physical verification of place of business will not be conducted to grant registration under GST. But officer can do physical verification after granting of registration, if he is satisfied that it is necessary to do the same. He must upload verification report on GST Portal within 15 working days after verification.
6. Tax invoice in case of supply of taxable services must be issued within 30 days of date of supply of services. However, time limit for banking company, insurance company or financial institutions is 45 days.
7. The invoice shall be in triplicate for Supply of Goods and in duplicate for Supply of Services.
8. The serial number of invoices issued will be furnished electronically on GST Portal.
9. On receiving advance, Receipt Voucher will be issued. If rate is not determinable, tax is to be paid at 18%. If nature of supply is not determinable, it will be treated as Inter-State Supply.
10. If reverse charge is applicable, the recipient will issue Payment Voucher.
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11. Electronic Liability Register shall be maintained for each person liable to pay tax on the GST Portal.
12. Electronic Credit Ledger and Electronic Cash Ledger shall also be maintained on the GST Portal for the person eligible for input tax credit and for person liable to pay tax respectively.
13. Tax will be paid only through internet banking, RTGS, NEFT or Debit and Credit Cards. However, over the counter payment is allowed through authorized banks for the amount up to Rs.10,000 per challan per tax period.
14. A separate formula is prescribed for Maximum Refund in case of inverted duty structure, i.e., GST rate is higher on Inputs than on Output Supply.
15. Refund application shall be filed electronically on GST Portal.
16. The grant of provisional refund shall be made if person clamming refund has not been prosecuted during any period of 5 years preceding the tax period for which refund is claimed. However, the following 2 condition mentioned in Draft Refund rules have been deleted:
a. The assessee should have a GST compliance rating of not less than 5.
b. The assessee should not have any pending proceeding or appeal on any issue.
17. If Commissioner wants to withhold refund, order must be issued along with reasons of withholding refund.
18. The value of supply made by principal to its agent or made to any related person shall be 90% of price charged for the supply of like kind and quality to unrelated person.
19. The value of a token, coupon or a voucher shall be equal to the money value of goods redeemable against such token or voucher or coupon.
20. The expense incurred by a supplier as a pure agent will not form value of supply and shall be excluded. The supplier will be treated as pure agent on complying with following three conditions:
a. He makes payment to third party on authorization by such recipient.
b. The payment made by pure agent on behalf of recipient has been shown separately on invoice.
c. The supplies procured from third party by pure agent on behalf of recipient are in addition to services he supplies on his own account.
Earlier, in draft rules, 8 conditions were prescribed. Now, only these three conditions have to be fulfilled.
Input Tax Credit
21. The person eligible to take credit in respect of input of goods held in stock after registartion is required to file a declaration on GST Portal that he is eligible for input tax credit within 30 days.
22. ITC would not be available to registered person if tax has been paid by supplier after issuing demand order on account of fraud, wilful misstatement or suppression of facts.
23. The time limit to claim input tax credit is not applicable to re-claim credit reversed earlier due to non-payment of consideration to supplier.
24. Following persons will not be eligible for composition scheme:
a. Casual taxable person or non-resident taxable person
b. Person having goods in stock which were purchased in course of inter-State trade or from unregistered person
25. Rates of Taxes for Composition Levy:
a. Manufacturers, other than manufacturers of such goods as may be notified by the Government – at 1%
b. Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II – at 2%
c. Any other supplier – at 0.5%