There is once again fear has attained out for the traders because of the new Delhi goods and service system (GST) as per section 36(4). There is anger for the same rule among the traders as it is called an anti-trade rule from its start. Due to covid-19 from February to August, it was stopped, and there was peace all about. But because of the coming of the auto-generated input tax credit (ITC) again the fear arises between the traders.
Despite Providing Benefits the Govt is Giving Fear
The businessman once again seemed to be in trouble as per section 36(4) said by the Chamber of Trade and Industry (CTI) chairman Brijesh Goyal. In the pandemic times, the traders sought in hope that the government would give them assistance but on the opposite, the 36 (4) law of the GST (Goods and Services Tax) is generating fear. The ordinary businessman working with restricted means was not able to take the strain. In this condition, the demand for CTI is to refuse 36 (4) completely.
What is 36 (4)
There is a purpose to raise the tax collection excluding the GST rate last year, says tax expert CA Rakesh Gupta and is known in the name of GST 36(4). How much tax is to get furnished every month? Now it does not depend on how much tax is built but additionally relies on whether your supplier has GSTR-1 quarter or monthly and supplier has filed their GSTR-1 time. If the supplier has filed the tax post 11 or its return is filed quarterly and not monthly, then the assessee needs to furnish the GST on the sale along with the GST of goods or services received from the supplier. Now there is procurement to provide GST ITC on the month in which it will appear in GST return 2B Check out the main features of the new GSTR 2B form under the current GST return filing system. The taxpayers will file GSTR 2B from 1st October 2020. read more. GSTR 1B of the dealer is made from the GSTR 1 furnished through the supplier on the 11th date.
As per the CA Rakesh Gupta, Vishal Gupta motors is engaged in doing the business related to motor parts on which 28% GST is applicable. In November they sold items worth Rs 50 lakh in which Rs 14 lakh GST is made. In November they had made the purchase of Rs 45 lakh on which an input tax credit of Rs 12 lakh 60 thousand will be received. Accordingly, a GST of 1 lakh 40 thousand rupees is needed to be made in November. On 12th Dec their CA tells him that they have to give Rs 14 lakh instead of Rs 1,40,000 for November month. The purpose for this was that till December 11, their supplier didn’t furnish the GSTR1 or unable to do so even aspiring to be quarterly.
The GST portal warns them to furnish the return and prompt that you are doing wrong, you are breaking the law and you will have to face the outcomes when they try to file the GST payment Check out due dates of payment under GST for general and composition taxpayers in India. We have included penalty charges on late payment with interest of Rs 1,40,000.
Rule 36(4) is Now Provoking Which is Older by a Year
Section 36(4) is older than a year but this month is provoked by it. The auto-generating ITC on the portal is displayed in a red box. A warning is to be given to furnish the 3B with respect to the 36(4) section if the Income-tax credit exceeds 10% of the auto-generated ITC, says a tax expert. No one is stooping to file the return. The return is also filed for the individual who claims for more ITC.
There are nearly about 54 lakh 63 thousand monthly dealers out of 1 crore 8 lakh regular dealers. Important for 15 lakh 30 thousand GSTR1 of the month of October 36 (4) was filed till 11 November. In other words, for the month of October, ITC was burdened with 36 (4) visits from 93 lakh dealers. That is, only purchases made from 1 supplier in 7 survived from 36 (4). When so few taxpayers file their GSTR1 time, the loss from 36 (4) increases even more.
Effect of QRMP will be Carried on after Arrival of Rule 36(4)
Rule 36(4) is to be carried on in the new system QRMP appearing in GST from January 1, there will be a difference i.e quarterly dealers who appear in it, if IFF is furnished by them then for the first two months by 13th of the upcoming month then the other party will receive the ITC of the similar month.
Trader do Business or follow back Supplier to File Returns
The tax expert Sachin Agarwal suggests that from 36(4) the traders are in a situation of fear. The business is already not giving good results. Even filing the tax on the buying, as per not getting the complete advantages of ITC, a double tax is used to get paid.
Published by Arpit Kulshrestha
Arpit Kulshrestha seeks higher interests in financial services, taxation, GST, I-T, etc. Writes articles with depth knowledge and is extensive for the same. The resources provide effective articles for the products of SAG infotech which provides taxation and IT software. Writing from observations and researching makes his articles virtuous.View more posts
It is further clarified that consequent to insertion of clause (aa) to sub-section (2) of section 16 of the CGST Act and amendment of rule 36(4) of CGST Rules w.e.f. 01.01.2022, no ITC shall be allowed for the period 01.01.2022 onwards in respect of a supply unless the same is reported by his suppliers in their FORM ...
Penalty Amount: If you have wrongly availed and utilised the ITC, the penalty can range up to 100% of the ITC amount availed or INR 10,000, whichever is higher. Interest Component: Following the retrospective amendment in Section 50 of the CGST Act from 1.7.
The new changes now auto-populate ITC in table 4 of GSTR-3B as the net of credit notes, instead of considering them as reversals as previously done. This alteration in logic will ensure the amounts auto-populated in table 6A of GSTR-9, “Total amount of ITC availed through GSTR-3B,” match with the GSTR-3B returns.
The ITC to be reversed has to be added to output liability. This has to be mentioned in column 2. Also, the amount of ITC to be reversed should be further segregated into IGST, CGST, SGST and Cess and entered in column 3, 4, 5 and 6.
ITC will not be available in the case of any tax paid due to non-payment or short tax payment, excessive refund or ITC utilised or availed by the reason of fraud or willful misstatements or suppression of facts or confiscation and seizure of goods.
As per this Rule, the Commissioner or any officer authorized by him can block the ITC available in the electronic credit ledger of the taxpayer if he has 'reasons to believe' that he has fraudulently availed ITC.
Penalty Amount - In case you have availed of ITC by mistake and also utilized it, the penalty amount can go up to 100% of the ITC amount availed or Rs. 10,000, whichever is higher.
A voluntary disclosure can be made by sending an electronic request for GST F7 (Disclosure of Errors on GST Return) via myTax Portal and e-Filing the GST F7 within 14 days from the date of request.
ITC can only be claimed for tax invoices and debit notes which are less than a year old. In any other case, the last date to claim ITC is the earlier of the following: Before filing valid GST returns for month of September following the end of the financial year applicable to that invoice.
It is a well known fact that if during a financial year eligible ITC has not been claimed (i.e. it has not been reflected in GSTR-3B as “All other ITC”) then it can be taken in the subsequent months during that financial year. This ensures that the cumulative effect at the end of the year remains unchanged.
The impact of credit note & their amendments is auto-populated in Table 4(A) Earlier, credit notes were auto-populated in Table 4B(2), as ITC reversal. ...
Taxpayers may report negative values in Table-4A. ...
Negative amounts now allowed in GSTR-3B Table 4D(2)
The recipients can claim provisional ITC in GSTR-3B to the extent of 5% instead of earlier 10% of the total ITC available. ITC shall be available as per the invoices uploaded by respective suppliers either in their GSTR-1 or by using the Invoice Furnishing Facility (IFF).
10,000 or 100% of ITC wrongly availed, whichever is higher + 24% Interest from date of availment to date of reversal Input Tax Credit (ITC) is backbone of GST structure.
To get refund of ITC on account of exports without payment of Tax, you may comply with the activities as specified below: 1. You have to file refund application in Form GST RFD-01 at GST Portal. You can file for refund of multiple tax periods in one refund application.
The interest is charged as per Section 50 of the CGST Act, at 24% per annum for excess ITC claimed and utilised from the date of such utilisation until the date of payment.
recipient would be allowed to avail ITC, only to the extent of 20% of eligible ITC. Eligible ITC means ITC is reconciled with Form GSTR- 2A net of ineligible credit u/s 17(5). About Balance Unreconciled Eligible ITC Steps while filing GSTR 3B:- 1.
The capital goods must be used for business purposes. The ITC claim should be in proportion to the business or non-business use of the capital goods. ITC cannot be claimed for goods used exclusively for non-business purposes.
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