GST masterclass: Issues in registration

Identify the category of suppliers for whom GSTN registration is mandatory?

The following categories of suppliers need to mandatorily register irrespective of turnover: Firms making inter-State supply; businesses liable to pay tax under reverse charge; sellers on e-commerce platforms; all e-commerce operators; persons responsible for deducting TDS; input service distributor; and agents supplying on behalf of a taxable person.

What are the rules on GST registration for business verticals in States?

A firm has to register separately for each of its verticals in each of the States it has operations. Thus a firm having five business verticals and each operating in 6 states will have to obtain 30 GST registrations. For each such registration, the firm would be treated as a separate and distinct person for the purpose of levy of GST. However, for the purpose of recovery of dues, all business verticals, though separately registered, will be considered as a single legal entity.

What are the types of invoices under the GST?

Under the GST law, it is compulsory for a supplier to issue an invoice. Two types of invoices can be issued: Tax invoice is issued by a registered firm supplying taxable goods or services. Bill of supply is issued by a GST registered firm supplying exempted goods or services or by the Supplier paying tax under composition scheme. A bill of supply is not eligible for claiming input tax credits.

When are credit and debit notes issued?

A supplier issues credit note favouring recipient when the value of supplies is less than the value shown on invoice. A supplier issues debit note for the recipient when the value of supplies is more than the value shown on invoice.

How does the return reconciliation process take place at the GSTN?

A GST registered firm can claim input tax credit as self-assessed in the return only on a provisional basis. It cannot use such credit. GSTN matches details of input tax credit claimed by the recipient with the corresponding tax paid by the supplier, or with the additional duty of customs paid by the recipient himself. If details match, the input tax credit will be accepted and details of such acceptance will be communicated through form GST ITC-1. If the details of recipient’s claim for input tax credit and the details of returns and tax payment of supplier don’t match, and supplier does not agree for rectification, such Input tax credit is added to output tax liability of the recipient. The recipient would be eligible to reduction only when the supplier declares/ rectifies the invoice within the maximum time limit specified.

What are the situations where a refund is allowed?

Refund is allowed on the tax paid on (I) inputs used for making a product/service and (II) product/service which is subsequently exported. It is also allowed (I) on the unutilised input tax credit when output is exported or falls in the category of zero-rated supplies or (II) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies. But refund of unutilised input tax credit is not allowed in cases where goods exported are subject to export duty and if the supplier claims the refund of output tax paid under the IGST Act.

The writer is from the Indian Trade Service. The views are personal. Adapted from his book, The GST Nation: A Guide for Business Transformation

(This is Part 9 of a series to introduce readers to GST’s intricacies. The previous part appeared on June 27)

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