Agri Exchange is the name given to the Trade portal. An attempt first of its kind has been endeavored by APEDA, Govt. of India, where online trading is the specialty. In its stride, a joint collaboration of UNCTAD and Ministry of Agriculture has given the portal a shape. Globally buyers and sellers in the Agri business world has been given a platform to offer negotiate and transact a deal. Apart from this, it has been loaded with the latest statistics pertaining to India and the world.
If you’re planning to start a food retail business in India, the most important license is the one from the Food Safety and Standard Authority of India (FSSAI), Ministry of Family Health & Welfare, Government of India. The FSSAI provides licenses for the safety and standardization of food products manufactured and sold in India. Without one, no legitimate wholesaler or retailer would stock your products.
What is an FSSAI license?
The FSSAI works toward setting scientific standards for articles of food, to regulate their manufacturing, storage, distribution, sales, and import. It is mandatory for any startup or company with a plan to enter the food retail business to get an FSSAI license. This is, of course, in addition to the other licenses you would need.
This is an initiative by the Government of India to ensure the food produced, distributed or imported adheres to the standards set by the food authority and thereby avoid problems such as adulteration and inferior qualities of food.
The FSSAI license is divided into three categories:
a. FSSAI license for single-state businesses with annual turnover of under Rs. 12 lakh
b. FSSAI license for single-state hotels, restaurants, and medium-sized food manufacturers with an annual turnover of Rs. 12 lakh to Rs. 20 crore
c. FSSAI central license for enterprises with a turnover of over Rs. 20 crore
If you plan to open outlets in more than one state, you will need a Central FSSAI license for the registered office and state licenses for individual units. If you have warehouses in different states, you will be required to get a separate license for each facility.
Who will require an FSSAI registration?
Any enterprises involved in the manufacture, procurement (import), processing, packaging, storage and distribution of food items will need to acquire this license. Once you register online, the business is provided with a 14-digit registration number. Any food packages distributed or manufactured should carry the registration number.
Steps to procure an FSSAI license in India:
Fill in Application
Fill the application form (Form B) mentioned in The Food Safety and Standards (Licensing and Registration of Food Businesses), Regulations 2011.
Before filling up your application, check the type of FSSAI license you may require, from the concerned person. You can check this link below for details on State and Central licenses.
Send form to authority
Attach the following with the application form and send it to the Licensing Authority (State or Central):
1. A self-attested declaration as provided in the format in Annexure 1
2. Copies of documents provided in Annexure 2 of the Regulations.
3. Fees prescribed in Schedule 3, depending upon the category your food business falls in.
The list of documents that you might need include:
a) In the case of the proprietorship, photo ID and address proof of the proprietor, directors or partners. Proofs should have been issued by the Government of India
b) List of food categories that you wish to manufacture, procure, package, etc.
c) Blueprint or layout of the manufacturing, storage or distribution facility
d) Business name
e) Food analysis report (as demanded by the FSSAI)
f) Raw material source and NoC from the local municipality.
If the licensing authority requires any additional information relating to the application or if the application is found to be incomplete, you will be informed in writing within 15 days of your application.
You will be asked to provide the remaining information within 30 days from intimation. In case you fail to do the same; your application for a license will be rejected.
Once the complete application is received, including the additional information (if asked for) by the Authority, an Application ID number is issued. This ID number has to be used for reference and in all future correspondence. You can expect the license within 60 days of the issue of such an Application ID number.
After the issue of Application ID number, the Licensing Authority may direct an officer to inspect the premises in which your business is to be opened.
This is done in the manner prescribed by the regulations of the Food Safety and Standard Authority of India.
The Inspecting Officer may issue a notice to you, guiding you on necessary steps to be taken or changes to be made on your premises to ensure general sanitary and hygienic conditions.
You will need to carry out the required steps, changes or alterations and intimate the licensing authority about it within 30 days or within the time period allowed by it.
Within 30 days from receipt of the inspection report, excluding the time taken by you to comply with the feedback in the inspection report, the concerned licensing authority shall consider the application and may either grant a license or reject the application. However, before refusing your license application, you shall be given an opportunity of being heard, and if the authority still decides to reject your application, the reasons for refusal shall be recorded in writing.
Displaying the license
The licensing authority will issue you the license in Format C under Schedule 2 of the regulations, a true copy of which will be needed to be displayed in a prominent place at all times within your business premises.
In a move that would improve ease of doing business in the country, Commerce Ministry has allowed using PAN as Importer Exporter Code (IEC) with the introduction of Goods & Services Tax (GST).
According to the Foreign Trade (Development &Regulation) Act, 1992, no person shall make any import or export except under an IEC number, granted by the Director General of Foreign Trade or the officer authorized by the Director General in this behalf.
Further, FTP, 2015-20 also lays down that IEC, a 10 digit number, is mandatory for undertaking any import export activities, while Para 2.08 of the HBP (2015-20) lays down the procedure to be followed for obtaining an IEC, which is PAN based.
As on date, PAN has one to one correlation with IEC.
With the implementation of the GST from July 1, 2017, GSTIN would be used for purposes of – credit now of IGST on the import of goods, and refund or rebate of IGST related to the export of goods.
Registration No. under GST, called GSTIN, is a 15-digit alpha numeric code with PAN pre fixed by State Code and suffixed by 3 digit details of business verticals of the PAN holder.
“As GSTIN will be used for the purposes mentioned, it thereby assumes importance as an identifier at the transaction level. In view of this, it has been decided that importer/exporter would need to declare only GSTIN (wherever registered with GSTN) at the time of import and export of goods the PAN level aggregation of data would automatically happen in the system,” DGFT said.
Since e obtaining GSTIN is not compulsory for all importers/exporters below a threshold limit of turnover, all exporters / importers may not register with GSTIN (barring compulsory registration in certain cases as provided in section 24 of the Central Goods and Services Tax Act, 2017 (12 of 2017) or in cases where either credit is claimed of IGST), therefore, GSTIN cannot become universal, as IEC is for import/export business.
Further, DGFT recognizes only the corporate entity (single identity) and not individual transactions.
As a measure of ease of doing business, it has been decided to keep the identity of an entity uniform across the Ministries/Departments. Henceforth (with the implementation of GST), PAN of an entity will be used for the purpose of IEC, i.e., IEC will be issued by DGFT with the difference that it will be alpha numeric (instead of 10 digits numeric at present) and will be same as PAN of an entity, said the DGFT.
For new applicants, with effect from the notified date, application for IEC will be made to DGFT and applicant’s PAN will be authorized as IEC.
For residuary categories under Para 2.07of HBP 2015-20, the IEC will be either UIN issued by GSTN and authorized by DGFT or any common number to be notified by DGFT.
Further, for the existing IEC holders, necessary changes in the system are being carried out by DGFT so that their PAN becomes their IEC.
DGFT system will undertake this migration and the existing IEC holders are not required to undertake any additional exercise in this regard, said DGFT.
IEC holders are required to quote their PAN (in place of existing IEC) in all their future documentation, with effect from notified date of GST.
The legacy data which is based on IEC would be converted into PAN based in due course of time, said DGFT.
Our team at CA on Web is available at your service and will help you to obtain the company registration in a small time frame of 7 to 12 days. You are only required to plan for the business and all the paperwork and formalities will be handled by our team of experts.
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Question 1: What is GST?
Answer : GST stands for Goods and Services Tax, which is levied on supply of goods or services. “Supply” is a legal term which has very broad sweep and various types of economic activities are covered by it. For example, sale of goods is a type of supply.
Question 2 : On what supply is GST levied?
Answer : GST is levied on all types of supplies which are – (i) made for a consideration and (ii) are for the purpose of furtherance of business. There are some exceptions when these conditions are not met, yet supply is considered to have been made, for example, interstate stock transfer of goods even without consideration or importation of services even if not in the furtherance of business.
Question 3 : Will GST be levied on all goods or services or both?
Answer : No, GST will not be levied on alcohol for human consumption. GST on Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel and Natural Gas will be levied with effect from a date to be decided by the GST Council. Electricity and sale of land and building are exempted from levy of GST. Securities are neither goods nor services for the purposes of the CGST Act, 2017 and therefore supply of securities is not taxable.
Question 4: How many types of GST will be levied on different kinds of supply of goods or services ?
Answer : GST is a dual levy to be simultaneously levied by both Centre and State. On every supply within a State/ Union Territory without legislature (intra-State supply), GST levied will have two components – Central Tax and State Tax/ Union Territory Tax popularly called CGST and SGST/UTGST. On every supply across States (inter-State), Integrated Tax popularly called IGST will be levied. The rate of CGST and SGST/UTGST would be equal. IGST would be levied at a rate equal to the sum total of CGST and SGST/UTGST
Question 5: Whether a registered person will have to approach two authorities – Centre as well as State for various permissions, audit etc. under the Act?
Answer : No, a registered person will have to approach only one tax authority for all practical purposes. Each registered person would have one tax administration office, either of the Centre or of the State. Legal provisions (called crossempowerment) have been made to ensure that one officer can discharge all functions under CGST, SGST and IGST Act. The registered person would be informed of the tax administration concerned with him. A single registration is granted for the purposes of CGST, SGST/UTGST and IGST.
Question 6: What is destination based consumption tax?
Answer : When a supply originates in one State and is consumed in another State, tax can accrue to either of the two States. In a destination based consumption tax, taxes accrue to the State where the supply is consumed. In origin based tax, the tax accrues to the State where the supply originates. GST is basically a destination based consumption tax. For example, if a car is manufactured in Chennai but is purchased eventually by a consumer in Mumbai, SGST (or the State component in IGST) would accrue to Maharashtra and not to Tamil Nadu.
Question 7: Who will pay GST?
Answer : GST is generally paid by the supplier, i.e. the one who makes the supply after collecting it from the recipient. The supplier collects GST from the recipient of the supply as part of the consideration. However, in a few exceptional cases, the recipient, would be liable to pay GST to the Government on reverse charge basis.
Question 8: What is Input Tax Credit?
Answer : A person doing business will be purchasing goods/ availing services for making further supplies in the course or furtherance of business. When such purchases are made by him, tax would have been charged by his supplier and collected from him. Since tax is collected from him, he can avail credit of the tax paid by him to his supplier (that is to say, he can use this amount for making payment of tax due from him on further supply made by him). This is known as input tax credit for the recipient.
Question 9: Is GST going to increase compliance burden on the trade?
Answer : No. On the contrary GST will result in streamlining of processes and reduction of compliance burden. GST is a simple tax which uniformly applies across the country. GST has been designed to have minimal human interface and would be implemented through strong IT platform run by GSTN. Also, in the earlier regime there were multiple compliances required for taxes such as Central Excise, Service tax, VAT etc. with Centre and State. GST makes it single and uniform compliance for indirect taxes across the country. Under GST, there is just one interface with no face-to-face meeting between taxpayers and tax authorities and practically every activity will be done online.
Question 10: What is the threshold for registration in GST?
Answer : A person having business which has aggregate turnover of more than Rs. 20 lakhs calculated for a given PAN across the country would need to register under GST. There are some exceptions to this rule as mentioned in section 24 of the CGST Act, 2017. Aggregate turnover is defined in section 2(6) of the said Act. For example, assume that a taxable person’s business is in many States on same PAN. All supplies are below Rs. 10 lakhs but collectively they are above Rs. 20 lakhs. He would be required to register under GST.
Question 11: Is an agriculturist liable to registration?
Answer : No. An agriculturist, to the extent of supply of produce out of cultivation of land, is not liable to registration.
Question 12: What is the most important precaution to be taken to avail the facility of threshold exemption?
Answer : An MSME availing threshold exemption should not make any inter-State supply whatsoever, though the MSME may receive supply from other States.
Question 13: I am engaged exclusively in the business of supplying goods or services which are exempt from GST. Am I liable for registration?
Answer : No.
Question 14: How do I make supply, if I have not applied for registration?
Answer : You should apply for registration at the earliest on the GST common portal and obtain application reference number (ARN). You need not disrupt your business and may continue to make supplies on invoices without GSTIN. The application for registration must be made within 30 days of the turnover crossing Rs.20 lakhs or attracting any of the conditions mentioned in section 24 of the CGST Act, 2017. After registration, you can issue revised invoices as permitted under section 31(3)(a) of the said Act. These supplies should be shown in the return and taxes paid on them.
Question 15: How can an application for fresh registration be made under GST? Within what time will registration be granted?
Answer : Application for fresh registration is to be made electronically on the GST common portal (www.gst.gov.in) in FORM GST REG-01. If the details and documents are in order, registration will be granted within 3 working days, except in cases where an objection has been raised within this period in which case registration will be granted within a maximum period of 17 days.
Question 16: I was registered under VAT but not under Central Excise. Do I need to apply for new registration?
Answer : No. Existing registrants of VAT having valid PAN have been issued Provisional ID and password. If you have not received provisional ID, please contact your tax administration to obtain the same. This Provisional Identity Number (PID) would eventually be your GSTIN, when the migration process is completed.
Question 17: If I have obtained provisional GSTIN (PID), can I use the same on the invoice to make supply without waiting for final GSTIN?
Answer : Provisional GSTIN (PID) would eventually be your final GSTIN. The number would remain the same. Yes, you can use this PID on invoice for making supply without waiting for final GSTIN.
Question 18: I am a SME selling printed books after printing and have a turnover of twenty-five lakhs rupees per annum. I print only Children’s picture, drawing or colouring books which are exempt from GST. Do I need to register?
Answer : No. A person dealing with only exempted supplies is not liable to registration irrespective of his turnover. Section 23(1)(a) of the CGST Act, 2017 refers.
Question 19: If I register voluntarily though my turnover is less than Rs. 20 lakhs, am I required to pay tax on supplies made post registration?
Answer : Yes. If you obtain voluntary registration despite the turnover being below Rs. 20 lakhs, you would be treated as a normal taxable person and would need to pay tax on supplies even if they are below the threshold for registration. You will also be entitled to take input tax credit.
Question 20: How will taxpayer get the certificate of registration?
Answer : The taxpayer can himself download the certificate of registration online from the GST common portal (www.gst.gov.in)
Question 21: Can registration particulars once furnished be amended?
Answer : Yes, request for amendment has to be made online. All amendments in registration particulars, except some core fields, can be amended in the system without the intervention of any official by merely filing the details of the amendment. Also for some amendments, approval may be needed. Examples of fields which require approval are- legal name of business, address of the place of business and addition, deletion or retirement of partners or directors etc. responsible for day to day affairs of the business. Examples of fields which can be amended without any approval are- change of telephone number, email ID, bank account etc.
Question 22: In which State will a person be registered?
Answer: A person liable to be registered has to apply for registration in each State from where he makes or intends to make outward supplies under GST. Within each State, generally only one registration is required to be obtained.
Question 23: Are all manufacturers necessarily required to be registered under GST?
Answer: No, there is no provision requiring that a manufacturer irrespective of threshold or nature of supply to register himself under GST. For example, a manufacturer dealing only in exempted goods or where his turnover is only intra-State and below Rs. 20 lakhs, is not required to be registered.
Question 24: Who is liable to issue a ‘tax invoice’ and how many copies are required to be issued?
Answer : Every registered person (other than a registered person availing the benefit of composition or a registered person supplying exempted goods or services) supplying goods or services or both is required to issue ‘tax invoice’. Invoice should be issued in triplicate in case of supply of goods. The original copy is meant for buyer, duplicate for transporter and triplicate copy for record of the seller. A registered person under composition scheme or supplying exempted goods or services shall issue a bill of supply instead of a tax invoice.
Question 25: What details are to be contained in a ‘tax invoice’?
Answer : The tax invoice shall contain details as specified in the rule in this regard. The key details specified in the rules are – name, address and GSTIN of the supplier and the recipient (if registered), a unique number of the invoice and the date of issue, description of goods, value of goods, rate of tax, amount of tax and signature.
Question 26: Is it necessary to issue invoices even if the value of transaction is very low?
Answer : A registered person may not issue a tax invoice if the value of the goods/services supplied is less than Rs.200/-, subject to the condition that the recipient is not a registered person and the recipient does not ask for such invoice (if the recipient asks for the invoice then the same must be issued,irrespective of the value). In such cases, the registered person shall issue a consolidated invoice at the end of the day in respect of all such supplies.
Question 27: When should a tax invoice be issued for goods?
Answer : Tax invoice for goods shall be issued on or before the time of removal/delivery of goods. In case of continuous supply of goods, it shall be issued on or before the time of issue of statement of accounts /receipt of payment.
Question 28: In case of supply of exempt goods or when tax is paid under Composition Scheme, is the registered person required to issue a tax invoice? How a bill of supply is different from a tax invoice?
Answer : No. In such cases, the registered person shall issue a Bill of Supply and not a tax invoice. The bill of supply is different from a tax invoice both in name and details contained. While most of the details to be provided in a bill of supply are similar to tax invoice, the bill of supply does not contain the rate of tax and the amount of tax charged as the same cannot be collected.
Question 29: If goods are transported in semi-knocked down condition, when shall the complete invoice be issued?
Answer : When goods are transported in semi-knocked down condition, the complete invoice shall be issued before dispatch of the first consignment. Delivery challan shall be issued for subsequent consignments. Original copy of invoice shall be sent along with the last consignment.
Question 30: Is there any scheme for payment of taxes under GST for small traders and manufacturers?
Answer : Yes. Composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 75 lakhs (Rs.50 lakhs for special category States, excluding J&K and Uttrakhand). It is a kind of turnover tax. The objective of the scheme is to provide a simplified tax payment regime for the small tax payers. The scheme is optional and is mainly for small traders, manufacturers and restaurants.
Question 31: What is the eligibility criteria for opting for composition levy? Which are the Special Category States in which the turnover limit for Composition Levy for CGST and SGST purpose shall be Rs. 50 lakhs?
Answer: Composition scheme is a scheme for payment of GST available to small taxpayers whose aggregate turnover in the preceding financial year did not cross Rs.75 Lakhs. In the case of 9 special category States, the limit of turnover is Rs.50 Lakhs in the preceding financial year, namely – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Himachal Pradesh. However, if you are a manufacturer of ice-cream, pan masala or tobacco or tobacco products or if you are a service provider other than a restaurant, you are not eligible for composition scheme.
Question 32: What is the form in which an intimation to pay tax under the composition scheme needs to be made by the taxable person?
Answer: Composition scheme is optional and intimation that option has been availed should be made electronically in FORM GST CMP-01 by the migrating taxable person. A person who has already obtained registration and opts for payment under composition levy subsequently needs to give intimation electronically in FORM GST CMP-02.
Question 33: What is the rate of tax under Composition levy for a manufacturer?
Answer: Composition rate for manufacturers is 2% (1% CGST and 1% SGST).
Question 34: Are all manufacturers eligible for composition scheme?
Answer: A manufacturer is eligible to avail composition scheme except manufacturers:
(a) whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs;
(b) who have purchased goods or services from unregistered suppliers unless they have paid GST on such goods or services on reverse charge basis;
(c) who make any inter-State outward supplies of goods;
(d) who make supply of goods through an electronic commerce operator;
(e) who manufacture the following goods.
|Sl. no||Tariff Head||Description|
|1||2105 00 00||Ice cream and other edible ice, whether or not containing cocoa|
|2||2106 90 20||Pan masala|
|3||24||Tobacco and manufactured tobacco substitutes|
Question 35: When will a registered person have to pay tax?
Answer: A registered person will have to pay GST on monthly basis on or before 20th of the succeeding month and if he has opted for composition levy he will have to pay GST on a quarterly basis on or before the 18th day of the month after the end of the quarter.
Question 36: A person availing composition scheme during a financial year crosses the turnover of Rs. 75 Lakhs / Rs. 50 Lakhs during the course of the year i.e. say, he crosses the turnover of Rs. 75 Lakhs/Rs. 50 Lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?
Answer: No. The option to pay tax under composition scheme shall lapse from the day on which his aggregate turnover during the financial year exceeds Rs. 75 Lakhs/ 50 Lakhs. Once he crosses the threshold, he shall file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days of the occurrence of such event. He shall also furnish a statement in FORM GST ITC-01 containing details of the stock of inputs and capital goods as per the rules in this regard. This would help him join the input tax credit chain and avail credit of tax that he has paid on his inputs/goods lying in stock on the day he crosses over.
Question 37: For the purpose of availing composition how will aggregate turnover be computed for the purpose of composition?
Answer: Aggregate turnover shall be computed on the basis of turnover on all India basis. It includes aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number but excludes GST and cess.
Question 38: Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his inward supplies?
Answer: No, a taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take input tax credit on the supplies received.
Question 39: How is a manufacturer under the composition scheme required to bill his supply? Can a registered person, who purchases goods from a composition manufacturer take input tax credit?
Answer: A manufacturer opting to pay tax under the composition scheme cannot issue a tax invoice to his buyer but would issue a Bill of Supply. He cannot collect any tax supplies made by him on his Bill of Supply and is required to show only the price charged for the supply. Consequently, the registered person buying goods from a composition manufacturer cannot take input tax credit.
Question 40: How would a manufacturer under the composition scheme who receives inputs or input services from an unregistered person pay GST? What will be the tax rate if the purchase is from a person availing composition?
Answer: GST will have to be paid on inputs and input services received by such manufacturer under reverse charge at normal rates and not at the composition rates. Purchase from a person under the composition scheme is purchase from a registered person and hence will not attract tax under reverse charge under section 9(4) of the CGST Act, 2017. Any person migrating from the existing law to a composition scheme and holding stock of goods purchased from unregistered persons is required to pay tax on such goods.
Question 41: In case a person has registration in multiple States, can he opt for payment of tax under composition levy only in one State and not in other States?
Answer: No. An intimation that composition scheme has been availed in one State shall be deemed to be an intimation in respect of all other places of business registered on the same Permanent Account Number in other States.
Question 42: What is the effective date of composition levy?
Answer: There can be three situations with respective effective dates as shown below
|Situation||Effective date of composition levy|
|Persons who have been granted provisional registration and who opt for composition levy (Intimation is filed under Rule 3(1) in FORM GST CMP-01)||1st July, 2017.|
|Persons opting for composition levy at the ti me of making application for new registration in the same registration application itself (The intimation under Rule 3(2) in FORM GST REG-01)||Effective date of registration; Intimation shall be considered only after the grant of registration and his option to pay tax under composition scheme shall be effective from the effective dat of registration.|
|Persons opting for composition levy after obtaining registration (The intimation is filed under Rule 3(3) in FORM GST CMP-02)||The beginning of the next financial year|
Question 43: What is the validity of composition levy?
Answer: The option exercised by a registered person to pay tax under the composition scheme shall remain valid so long as he satisfies all the conditions specified in the law. The option is not required to be renewed.
Question 44: What are the other compliances which a provisionally registered person opting to pay tax under the composition levy need to make?
Answer: Such person is required to furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the 30th day of June, 2017 electronically, in FORM GST CMP-03, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, within a period of sixty days from the date on which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf. Further, if on 1st July, 2017 such person holds in stock goods that have been received from outside the State or imported from outside the Country, he is not eligible to opt for composition scheme.
Question 45: Can a person paying tax under composition levy, withdraw voluntarily from the scheme?
Answer: Yes, the registered person who intends to withdraw from the composition scheme can file a duly signed or verified application in FORM GST CMP-04. In case he wants to claim input tax credit on the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date of withdrawal, he is required to furnish a statement in FORM GST ITC-01 containing the details of such stock within a period of thirty days of withdrawal.
Question 46: Will withdrawal intimation in any one place be applicable to all places of business?
Answer: Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union territory, shall be deemed to be an intimation for withdrawal in respect of all other places of business registered on the same Permanent Account Number.
Question 47: Can a person paying tax under composition scheme make exports or supply goods to SEZ?
Answer: No, because exports and supplies to SEZ from Domestic Tariff Area are treated as inter-State supply. A person paying tax under composition scheme cannot make inter-State outward supply of goods.
Question 48: Can a manufacturer under composition scheme do job-work for other manufacturers?
Answer: Job-work is a supply of service and not eligible for composition scheme. Any manufacturer or processor who wishes to carry out job-work for others would not be eligible for composition scheme.
Question 49: How can tax payments be made by a registered person under the composition scheme?
Answer: A registered person under composition scheme would not have input tax credit and he would make all his tax payments by debit in the electronic cash ledger maintained at the common portal. The taxpayer can deposit cash anytime in the electronic cash ledger at his convenience. The payment in electronic cash ledger can be made through all modes available like e-payment through net-banking, credit card and debit card, over the counter of banks, RTGS or NEFT.
Question 50: Does a registered person under the composition scheme pay his taxes every month?
Answer: No, registered person under the composition scheme will not pay taxes every month. He would file return and pay taxes on a quarterly basis i.e. for each quarter of the financial year. Due date for payment of tax for them would be on or before the 18th day after the end of such quarter.
Question 51: What are the accounts a manufacturer under the composition scheme needs to maintain?
Answer: Rules on Accounts and Records provide details of the accounts to be maintained. They are maintained under normal course of business by any small manufacturer. The details to be maintained in accounts inter-alia consists of goods supplied, inward supplies attracting reverse charge, invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers etc.
Question 52: Does a manufacturer under the composition scheme need to maintain details of accounts of every supply received and made?
Answer: No, the requirement to maintain detailed accounts of stocks in respect of goods received and supplied, work in progress, lost, destroyed etc. does not apply to a manufacturer under the composition scheme. Such a person shall maintain a true and correct account of production or manufacture of goods, inward and outward supply of goods, stock of goods, tax payable and paid.
Question 53: Does a manufacturer under the composition scheme needs to maintain account of inputs tax credit?
Answer: A manufacturer under the composition scheme need not maintain account of input tax, input tax credit claimed etc. as he is neither allowed to avail of input tax credit nor can he issue an invoice showing tax using which buyer can avail input tax credit.
Question 54: Can a manufacturer under the composition scheme maintain his accounts manually? And can he issue his bill of supply manually?
Answer: Yes, a manufacturer under the composition scheme can maintain his accounts in registers serially numbered and also issue bill of supply manually following the conditions specified in rules in this regard.
Question 55: Whether a registered person under the composition scheme needs to learn HSN code of any input purchases and output supplies?
Answer: No, a registered person under the composition scheme would not need to specify HSN code of their products in bill of supply or return.
Question 56:. What return a registered person under the composition scheme needs to file and at what frequency?
Answer: A registered person under the composition scheme of GST is required to furnish quarterly return called GSTR-4 between the 11th day and 18th day of the month succeeding the quarter.
Question 57: What details are required to be furnished in the return to be filed by the registered person under the composition scheme?
Answer: GSTR-4 may be referred for details required to be filled in the return. It is a very simple return containing consolidated details of outward supplies, details of import of services or other supplies attracting reverse charge and inward supplies which shall be auto-populated. Note: Reference to CGST Act, 2017 includes reference to SGST Act, 2017 and UTGST Act, 2017 also.
Question 1: Whether formulations cleared have to be assessed to GST under transfer price mechanism or on the basis of MRP printed on them?
Answer : The assessment of drugs and formulations under GST would be on the basis of transaction value at each level of supply with end to end ITC chain for neutralizing the GST paid at the procurement level.
Question 2: What are the requirements for clearance of physician samples distributed free of cost?
Answer : In case of clearance of physician samples distributed free of cost, the ITC availed on the said samples has to be reversed in view of the provisions under Section 17(5)(h) of the CGST Act, 2017.No tax is payable on clearance of physician samples distributed free of cost as the value of supply is zero and no credit has been availed.
Question 3: What is the procedure for movement of time expired medicines from the retail outlets to the manufacturer for destruction?
Answer : In such cases, the manufacturer may issue a credit note within the time specified in sub-section (2) of section 34 of the CGST Act, 2017 subject to the condition that the person returning the expired medicines reduces his ITC. Subsequently, when the time expired goods are destroyed, the manufacturer has to reverse his ITC on account of goods being destroyed. Where the goods are returned after the time limit specified in section 34(2) of the CGST Act, 2017, the registered person returning the goods shall issue a tax invoice, as it is a supply within the meaning of Section 7 of the CGST Act, 2017.
Question 4: How loan and licensee units carry out their operations in GST regime?
Answer : GST law does not have any special provision for loan and licensee units. Where the contract are in the nature of performance of job-work, these units can opt to follow the procedure laid down in section 143 of the CGST Act, 2017 i.e. the principal can send any inputs etc. to such units without payment of tax and the principal can clear the goods from the premises of such units if the principal declares these units as his additional place of business or where such units are themselves registered under section 25 of CGST Act, 2017.
Question 5: What is the treatment of clearances effected to Special Economic Zones?
Answer : The clearances effected to the SEZ are zero rated supplies in terms of Section 16 of the IGST Act, 2017. Accordingly, the supplier can claim refund of IGST paid on such supplies or clear the same under bond/ letter of undertaking and claim refund of the unutilised ITC.
Question 6: Whether SEZ unit located in a State requires a separate registration under GST?
Answer : The SEZ unit located in a State is treated as a business vertical distinct from other units located in the State outside the SEZ [first proviso to Rule 8 of the CGST Rules, 2017 read with Section 25 of the CGST Act, 2017]. Hence, separate registration is required to be obtained for the unit located in SEZ
Question 7: Whether ISD registration is required to be obtained separately?
Answer : In terms of second proviso to Rule 8 of the CGST Rules, 2017 read with Section 25 of the GST Act, 2017, every person being an Input Service Distributor has to make a separate application for registration
Question 8 : What is the transitional credit that can be availed on the existing stocks held by a registered person under GST, who was not required to be registered under the existing law?
Answer : In terms of Rule 117(4) of the CGST Rules, 2017 (transitional provisions) read with Section 140(3) of the CGST Act, 2017, a registered person who was not registered under the existing law and who is not in possession of any document evidencing payment of central excise duty in respect of the goods held in stock, shall be allowed credit at the rate of sixty per cent on such goods which attract central tax at the rate of nine per cent or more and forty per cent for the other goods of the central tax applicable on supply of such goods after 01st July 2017 and the said amount shall be credited in the electronic credit ledger after the central tax payable on such supply has been paid. In case where integrated tax is paid, the amount of ITC would be at the rate of thirty per cent and twenty per cent respectively of integrtaed tax. This facility is available for a maximum period of 6 months from the appointed day (i.e. upto 31st December, 2017) or till the goods are sold out, whichever is earlier.
Question 9: Whether a manufacturer can avail deemed credit in respect of transitional stocks on the appointed day in respect of the stocks for which duty paying document is not available?
Answer : In terms of the proviso to Section 140(3) of the CGST Act, 2017, the manufacturer is not eligible to avail deemed credit in respect of transitional stocks, for which duty paying document is not available. Such credit is not available in case of SGST except where VAT was payable on the basis of MRP.
Question 10: Whether deemed credit is available in respect of goods purchased from tax free zones?
Answer : The deemed credit in terms of Rule 117(4) of the CGST Rules, 2017 (transitional provisions) read with Section 140(3) of the CGST Act, 2017 would be available in respect of the goods, which were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule. As the goods purchased from tax free zones were exempted from duty payment under a Notification issued under Section 5 of the Central Excise Act, 1944 and not Nil rated in the First Schedule to the Central Excise Tariff Act, 1985, the deemed credit would be available in respect of such goods held in stock on the appointed day.
Question 11: What is the obligation cast on the Registered Person in case of purchases from Unregistered Person?
Answer : In terms of Section 9(4) of the CGST Act, 2017 read with Section 31(3) ibid, the Registered Person procuring the taxable supplies from an Unregistered Supplier has to raise invoice and pay GST on reverse charge basis in respect of such supplies.
Question 12: What is the treatment of supplies made from erstwhile tax free zones?
Answer : Since GST is a destination based consumption tax with seamless transfer of ITC credit, no exemptions are accorded to supplies made by erstwhile tax free zones. Accordingly, the goods cleared from erstwhile tax free zones would be subjected to GST from the appointed day (01st July, 2017).
Question 13 : What is the effect of non-payment of consideration in respect of taxable supplies received by the recipient?
Answer : If the recipient fails to pay to the supplier 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, theamount of input tax credit availed proportionate to the amount of consideration not paid would be added to his output tax liability along with interest thereon. The ITC so reversed can be reclaimed by the recipient after payment of consideration along with tax payable there on subsequently. This provision is not applicable in respect of deemed supplies made without consideration in terms of Schedule I to the CGST Act, 2017.
Question 14 : Whether separate sequence numbers can be maintained for invoices issued by the Registered Person in respect of supplies made under GST?
Answer : In terms of Rule 46(b) of the CGST Rules, 2017 single or multiple series of invoices can be raised by the Registered Person for the supplies made under GSTas long as such invoice numbers are unique for a financial year.
Question 15 : Which is the document required to be issued by the Registered Person for supply of goods from one premises to another premises under the same registration number?
Answer : In terms of Rule 55(1)(c) of the CGST Rules, 2017 such movements have to be effected under the cover of a delivery challan along with any other document that may be prescribed in lieu of the e-way bill.
Question 16: Whether discounts can be claimed as an abatement from the price for assessing GST?
Answer : In terms of Section 15(3) of the CGST Act, 2017, the value of supply for charging GST shall not include any discount which is given before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply. The value of supply shall also not include any discount which is given after the supply has been effected, if such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices and ITC attributable to such discount has been reversed by the recipient of the supply.
Question 17: What are the relevant provisions for movement of transitional goods lying at the premises of contract manufacturer on or after appointed day?
Answer: The procedure for movement of transitional goods lying at the premises of Contract Manufacturers/ Loan Licencee is governed by the provisions under Section 141(1), (2) & (3) of the CGST Act, 2017.
Note: Reference to CGST Act, 2017 includes reference to SGST Act, 2017 and UTGST Act, 2017 also.
Question 1: What is Electronic Commerce ?
Answer: Electronic Commerce has been defined in Sec. 2(44) of the CGST Act, 2017 to mean the supply of goods or services or both, including digital products over digital or electronic network.
Question 2: Who is an e-commerce operator?
Answer: Electronic Commerce Operator has been defined in Sec. 2(45) of the CGST Act, 2017 to mean any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
Question 3: Is it mandatory for e-commerce operator to obtain registration?
Answer: Yes. As per Section 24(x) of the CGST Act, 2017 the benefit of threshold exemption is not available to e-commerce operators and they are liable to be registered irrespective of the value of supply made by them.
Question 4: Whether a person supplying goods or services through e-commerce operator would be entitled to threshold exemption?
Answer : No. Section 24(ix) of the CGST Act, 2017 lays down that the threshold exemption is not available to such persons and they would be liable to be registered irrespective of the value of supply made by them. This requirement is, however, applicable only if the supply is made through such electronic commerce operator who is required to collect tax at source under section 52 of the CGST Act, 2017.However, where the e-commerce operators are liable to pay tax on behalf of the suppliers under a notification issued under section 9 (5) of the CGST Act, 2017, the suppliers of such services are entitled for threshold exemption.
Question 5: Will an e-commerce operator be liable to pay tax in respect of supply of goods or services made through it, instead of actual supplier?
Answer : Yes, but only in case of services notified under Sec. 9(5) of the CGST Act, 2017. In such cases tax shall be paid by the electronic commerce operator if such services are supplied through it and all the provisions of the Act shall apply to such electronic commerce operator as if he is the supplier liable to pay tax in relation to the supply of such services. A similar provision for inter-State supply is provided for in Sec. 5(5) of the IGST Act, 2017. (Refer to Notification No. 17/2017- Central Tax (Rate) and 14/2017- Integrated Tax (Rate) dated 28.06.2017).
Question 6: Will threshold exemption be available to electronic commerce operators liable to pay tax on notified services?
Answer: No. Threshold exemption is not available to e-commerce operators who are required to pay tax on notified services supplied through them.
Question 7: What is Tax Collection at Source (TCS)?
Answer: The e-commerce operator is required to collect an amount at the rate of one percent (0.5% CGST + 0.5% SGST) of the net value of taxable supplies made through it, where the consideration with respect to such supplies is to be collected by such operator. The amount so collected is called as Tax Collection at Source (TCS). (Refer to Section 52(1) of the CGST Act, 2017).
Question 8: It is very common that customers of e-commerce companies return goods. How these returns are going to be adjusted?
Answer : An e-commerce company is required to collect tax only on the net value of taxable supplies. In other words, the value of supplies which are returned are adjusted in the aggregate value of taxable supplies. (
Refer to Explanation to
Sec. 52(1) of the CGST Act, 2017).
Question 9: What is meant by “net value of taxable supplies”?
Answer : The “net value of taxable supplies” means the aggregate value of taxable supplies of goods or services or both, other than the services on which entire tax is payable by the e-commerce operator, made during any month by all registered persons through such operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month. (Refer to Explanation to Section 52(1) of the CGST Act, 2017).
Question 10: Is every e-commerce operator required to collect tax on behalf of actual supplier?
Answer : Yes, every e-commerce operator (other than an operator required to pay tax under section 9(5) of the CGST Act, 2017) is required to collect tax where consideration with respect to a taxable supply is collected by such e-commerce operator. (Refer to Section 52(1) of the CGST Act, 2017).
Question 11: What time should the e-commerce operator make such collection?
Answer: The e-commerce operator should make the collection during the month in which the consideration amount is collected from the recipient.
Question 12: What is the time within which such TCS is to be remitted by the e-commerce operator to Government?
Answer: The amount collected by the operator is to be paid to the government within 10 days after the end of the month in which amount was so collected. (Refer to Section 52(3) of the CGST Act, 2017).
Question 13: How can actual suppliers claim credit of this TCS?
Answer: The amount of TCS paid by the operator to the government will be reflected in the GSTR-2 of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the operator. The same can be used at the time of discharge of tax liability in respect of the supplies made by the actual supplier. (Refer to Section 52(7) of the CGST Act, 2017).
Question 14: Is the e-commerce operator required to submit any statement? What are the details that are required to be submitted in the statement?
Answer: Yes, every operator is required to furnish a statement, electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount collected by it as TCS during a month within ten days after the end of such month. The statement will be filed in
FORM GSTR-8. The operator is also required to file an annual statement by 31st day of December following the end of the financial year in which the tax was collected. (Refer to Section 52(4) and Section 52(5) of the CGST Act, 2017).
Question 15: What is the concept of matching in e-commerce provisions and how it is going to work?
Answer: The details of supplies furnished by every operator in his statement for the month will be matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return for the same month or any preceding month. Where the details of outward supplies declared by the operator in his statement do not match with the corresponding details declared by the supplier, the discrepancy shall be communicated to both persons. (Refer to Section 52(8) and Section 52(9) of the CGST Act, 2017).
Question 16: What will happen if the details remain mismatched?
Answer : The amount in respect of which any discrepancy is communicated and which is not rectified by the supplier in his valid return or the operator in his statement for the month in which discrepancy is communicated shall be added to the output liability of the said supplier in his return for the month succeeding the month in which the discrepancy is communicated. The concerned supplier in whose output tax liability any amount has been added, shall be liable to pay the tax payable in respect of such supply along with interest on the amount so added from the date such tax was due till the date of its payment. (Refer to Section 52(10) and Section 52(11) of the CGST Act, 2017).
Question 17: Are there any powers given to tax officials under the GST Act to seek information on supply/stock details from e-commerce operators?
Answer: Yes. Any officer not below the rank of Deputy Commissioner may issue a notice to the electronic commerce operator to furnish such details within a period of 15 working days from the date of service of such notice. (Refer to Section 52(12), (13) and (14) of the CGST Act, 2017).
Question 18: The sellers supplying goods through e-Commerce operators (ECO) may have common places of business, especially if their goods are stored in a shared facility operated by the ECO. This will result in the same additional place of business being registered by multiple suppliers. Is this allowed?
Answer: Yes, this is allowed. Any registered person can declare a premises as a place of business if he has requisite documents for use of the premises as his place of business (like ownership document, agreement with the owner etc.) and there is no restriction about use of a premises by multiple persons. The registered person shall have to comply with the requirements of maintaining records as per section 35 of the CGST Act, 2017 and Rules 56 to 58 of the CGST Rules, 2017.
Question 19: Do travel agents providing services through digital or electronic platform qualify as ECOs? Will they be required to collect tax at source as per the provisions of Section 52 of the GST Act?
Answer: Online travel agents providing services through digital or electronic platform will fall under the category of ECOs liable to deduct TCS under Section 52 of the CGST Act, 2017.
Question 20: There are transactions in which two or more ECOs are involved. In such cases who would deduct the TCS?
Answer: In such cases, each transaction needs to be treated separately and examined according to the provisions of Section 52 of the CGST Act, 2017. The TCS will be deducted accordingly.
Question 21: There are cases in which the ECO does not provide invoicing solution to the seller. In such cases, invoice is generated by the seller and received by the buyer without ECO getting to know about it. The payment flows through the ECO. In such cases, on what value is TCS to be collected? Can TCS be collected on the entire value of the transaction?
Answer: Section 52(1) of the CGST Act, 2017 mandates that TCS is to be collected on the net taxable value of such supplies in respect of which the ECO collects the consideration. The amount collected should be duly reported in GSTR-8 and remitted to the Government. Any such amount collected will be available to the concerned supplier as credit in his electronic cash ledger.
Question 22: GST requires a dealer to maintain a consecutive serial number for invoices. If we are supplying from multiple locations, do we need to centrally maintain the invoice numbers serially?
Answer : Section 46 of the CGST Rules, 2017 provides that invoice may have “a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year”. Therefore, a supplier can have multiple series for the same year, so long as the same series is not used across financial years. Therefore, you may have a different invoice series for each location having consecutive serial numbers running across that series.
Question 23: There are sellers who are selling exempted or zero-tax goods like books through ECOs. Will marketplaces be required to collect TCS on such supplies?
Answer: As per Section 52(1) of the CGST Act, 2017 TCS is to be collected on “the net value of taxable supplies” made through an ECO. When the supply itself is not taxable, the question of TCS does not arise.
Question 24: I am a supplier selling my own products through a web site hosted by me. Do I fall under the definition of an “electronic commerce operator”? Am I required to collect TCS on such supplies?
Answer: As per the definitions in Section 2 (44) and 2(45) of the CGST Act, 2017, you will come under the definition of an “electronic commerce operator”. However, according to Section 52 of the Act ibid, TCS is required to be collected on the net value of taxable supplies made through it by other suppliers where the consideration is to be collected by the ECO. In cases where someone is selling their own products through a website, there is no requirement to collect tax at source as per the provisions of this Section. These transactions will be liable to GST at the prevailing rates.
Question 25: We purchase goods from different vendors and are selling them on our website under our own billing. Is TCS required to be collected on such supplies?
Answer: No. According to Section 52 of the CGST Act, 2017, TCS is required to be collected on the net value of taxable supplies made through it by other suppliers where the consideration is to be collected by the ECO. In this case, there are two transactions – where you purchase the goods from the vendors, and where you sell it through your website. For the first transaction, GST is leviable, and will need to be paid to your vendor, on which credit is available for you. The second transaction is a supply on your own account, and not by other suppliers and there is no requirement to collect tax at source. The transaction will attract GST at the prevailing rates.
Note: Reference to CGST Act, 2017 includes reference to SGST Act, 2017 and UTGST Act, 2017 also.
Source: CBEC India
Grant of Unique Identification Number(UIN)
- Any specialized agency of the United Nations Organization or
- any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947),
- Consulate of
- Embassy of foreign countries ;
- Any other person or classes of person notified by the Commissioner shall obtain Unique Identification Number
The structure of the said ID would be uniform across the States in conformity with GSTIN structure and the same will be common for the Centre and the States.
This UIN required for claiming a refund of taxes paid by them and for any other purpose as may be prescribed in the GST Rules.
Responsibility of the taxable person supplying to UN bodies
The taxable supplier supplying to these organizations is expected to
- mention the UIN on the invoices and treat such supplies as supplies to another registered person (B2B) and
- the invoices of the same will be uploaded by the supplier.
Registration for Govt. organization
A unique identification number (ID) would be given by the respective state tax authorities through GST portal to Government authorities / PSUs not making outwards supplies of GST goods (and thus not liable to obtain GST registration) but are making inter-state purchases.
What is Debit Note and Credit Note?
When goods supplied are returned or when there is a revision in the invoice value due to goods (or services) not being up to the mark or extra goods being issued a Debit Note or Credit Note is issued by the supplier and receiver of goods and services.
A debit note or a Credit Note can be issued in 2 situations –
- When the amount payable by the buyer to seller decreases –There can be a change in the value of goods after the goods are delivered and invoice is issued by the seller. This can be due to a return of goods or due to the bad quality of the goods delivered, etc.In this case, the value of goods decreases due to which a Debit Note is issued by the purchaser to the seller. The Debit Note provides details of the amount of money debited from the sellers’ account and also states the reason for the same.The reason behind this – In the purchaser’s books of account the seller will have a credit balance. When a debit note is issued the credit balance of the Sellers account decreases, thus reducing the seller’s balance. It means that that lesser amount is required to be paid by the buyer to the seller to settle his liability. Thus debit note reduces the liability for the buyer.The seller issues a Credit Note as a response or acknowledgment to the Debit Note
- When the amount payable by the buyer to seller increases-When the value of invoice increases due to extra goods being delivered or the goods already delivered have been charged at an incorrect value a Debit Note is required to be issued.The Debit Note, in this case, is issued by the seller to the buyer. And the buyer as an acknowledgment of the receipt of Debit Note issues a Credit Note.The reason behind this – In the seller’s books of account the buyer will have a debit balance. When a debit note is issued the debit balance of the buyer’s account increases. It means that more amount is required to be paid by the buyer to the seller to settle his liability. Thus, credit note increases the liability for the buyer.
Debit Note under GST
Cases when Debit note is to be issued by supplier:
|Cases Where Debit note has to be issued by the Supplier|
|A.||Original tax invoice has been issued and taxable value in the invoice is less than actual taxable value.|
Original tax invoice has been issued and tax charged in the invoice is less than actual tax to be paid.
|Note||Debit note will include a supplementary invoice.|
Credit Note under GST
Cases when Credit note is to be issued by supplier:
|Cases Where Credit note has to be issued by the Supplier|
|A||Original tax invoice has been issued and taxable value in the invoice exceeds actual taxable value.|
|B||Original tax invoice has been issued and tax charged in the invoice exceeds actual tax to be paid.|
|C||Recipient returns the goods to the supplier|
|D||Services are found to be deficient|
|Note:||Credit note will include a supplementary invoice|
We have extensive experience in developing optimal tax structures for both inbound investments and outbound investments. The structuring of inbound and outbound investments starts with an understanding of expansion plans and objectives of the business. And, then a careful analysis of the applicable tax rules and rates for the home country and foreign jurisdictions is required.