First Steps after obtaining GST Registration

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In our articles, we have elaborated when to obtain GST Registration and the basic threshold turnover limit applicable for obtaining the GST Registration.

In this article, let’s discuss all the immediate steps that one must take to stay compliant under GST after obtaining the GST registration certificate.

The registration shall be effective from the date on which a person becomes liable to registration where the application for registration has been submitted within a period of thirty days from such date. But where the application is submitted beyond the 30 day period, then registration shall be effective from the date of the grant of registration.

Please note, that where business is being carried out in different States, every such business must be registered separately under GST. Hence, each of such GSTIN must comply with these GST rules separately.

 

Display GST Registration details in place of business

Every business must display the GST Registration certificate at a prominent or noticeable place inside the premise of the principal place of business and every other place of businesses.

Once the GST identification number(GSTIN) is obtained, every registered business must display this number on the name-board placed at the entry of its registered office or factory.

 

Identify the place of supply to decide whether to charge CGST & SGST or IGST

Identify the nature of transaction- whether the supply if within the State or outside the State. To identify this, place of supply provisions of GST law must be referred. Depending on whether the place of supply is within the State or across the State, CGST & SGST or IGST will be charged respectively.

The rules for the place of supply vary for goods and services.

 

Start issuing the GST compliant invoices

The GST invoice issued will form the basis for a buyer to ultimately claim the correct input tax credit. Hence, every business on obtaining the GST Registration must start issuing a valid invoice that is complying all the invoicing rules.

After obtaining GST registration, a business must issue revised invoices against those invoices that were already issued for the period starting from the effective date of registration till the date of issuance of GST registration certificate. The time limit to complete this task is one month from the date of issuance of the certificate of registration.

GST invoice has to be issued in case of effecting taxable supplies whereas bill of supply must be issued by a composition dealer or effecting exempt supplies. A single Invoice-cum-bill must be issued in case of supply of both taxable and exempt supplies to an unregistered person.

Certain fields in an invoice must be filled. Following are some of those mandatory fields for an invoice as stipulated by the CGST rules:

  • Serial number of up to 16 characters that are alphanumeric along with special characters, unique for a financial year,
  • GSTIN of the supplier,
  • Date of issue,
  • GSTIN of a GST registered recipient, along with name and address of the recipient and for delivery,
  • Description of goods or services
  • Quantity,
  • Value,
  • Rate of tax,
  • Amount of tax for taxable supplies as CGST, SGST/UTGST or IGST
  • HSN code
  • Place of supply along with the name of the State in case of inter-State trade.
  • Whether or not the tax is payable on a reverse charge basis
  • Signature of supplier

There is time limit stipulated under the law to issue GST invoice. In the case of goods, a tax invoice must be issued at the time of removal of goods and in case of services, it must be issued within 30 days from the service is rendered.

 

Charge and collect GST on all taxable sales made

Start charging GST on all the taxable supplies being affected at the rates specified in the law. Currently, four GST rates of 5%, 12%, 18% and 28% are fixed for different classes of goods or services, depending upon the unique HSN code assigned to each of such class.

Taxpayers registered under GST must note the tax rates and declare this in the GST invoice raised by them. Any failure to do so can attract penalties.

GST is charged and collected from the buyers in all cases except in case of sale by a composition dealer. Hence, the price paid by buyers to a GST registered seller is inclusive of GST.

The GST so collected by supplier must be deposited with Government by paying it online through challan, before filing GSTR-3B. An exception to this would be the reverse charge cases, explained in the section to follow.

 

File ITC-01 to claim the input tax credit on the stock of goods lying

File form ITC-01 before the 30 days of becoming eligible to claim the Input tax credit (ITC) i.e., 30 days from the grant of GST registration.

ITC-01 is filed to claim the input tax credit of CGST & SGST or IGST paid on the purchase of inputs or input services that are used in manufacturing the finished goods.

Apart from the stock of raw materials, the stock of finished goods will also consist of consumables and raw materials used. Accordingly, the GST paid on these purchases that now forms part of finished goods lying in stock will also be eligible for ITC claim.

 

Begin to avail input tax credit on purchases

All the purchases made after the effective date of GST registration shall be eligible for ITC claims. Claim such ITC on purchase in GSTR-3B filed every month, on a provisional basis. Businesses can also check and reconcile with the GSTR-2A that is available on GST portal, before claiming ITC in GSTR-3B. This will ensure that no excess or short ITC is claimed.

Note that a composition dealer is not eligible to claim the ITC on the purchases made by him.

The amount of ITC declared will be accumulated in the electronic credit ledger for the particular GSTIN. The amount of ITC available can be used to pay off the GST liability.

There are conditions attached for availing ITC. Keep the tax invoice or debit note issued by your supplier in possession, goods must be delivered, GSTR-1 must be filed by the supplier.

Availing ITC helps reduce the prices through the supply chain and the ultimate consumer will benefit the most by the reduced price.

 

Maintain proper accounts & records as per GST law

GST law strictly outlines maintenance of certain documents and records that affirms the transactions carried out by a business registered under GST. For a particular financial year, accounts or records must be kept at least for 72 months from the date of due date of filing annual returns in GSTR-9 or GSTR-9A for such a financial year.

Some of the records business must start compiling are:

  • Production of goods
  • Outward and inward supply of goods and services
  • Stock register
  • ITC availed
  • Output tax payable and paid

Businesses can maintain books of accounts in the electronic mode like ERP application or cloud-based software, valid under the law.

 

File GST Returns: GSTR-1 and GSTR-3B or GSTR-4

On obtaining the GST registration, taxpayers must note the particular GST returns that applies to them. They must start filing it within the stipulated due dates to avoid interest and penalties. All GST returns can be filed on the GST portal, common for all taxpayers across India. Normal taxpayers must file GSTR-1 for sales details and GSTR-3B returns for reporting summary of sales and ITC. Pay tax and then file GSTR-3B.

All composition dealers have a single return in GSTR-4 to be filed once in a quarter.

There are other additional returns stipulated under the act to be filed under special circumstances. For instance, GSTR-6 must be filed by an input service distributor to allocate the ITC amounts to each of its branches/units across India who have used the particular goods or services against which ITC is available.

Some taxpayers may have to periodically file forms with the department. Form ITC-04 is one such form. It is filed on a quarterly basis by the manufacturer to declare the status of goods sent on job work. Additionally, the taxpayer must also declare whether any reversal of ITC is needed, due to delay in return of goods.

Apart from these, special types of registrations have particular GST returns to be furnished.

Read more about different types of GST returns and who must file.

 

Know that you may be subject to reverse charge 

Once the GST registration is obtained, there are certain rules not to be missed!

For most of the transactions, GST is collected from the recipients and deposited with the government by the supplier himself. Whereas, under the reverse charge mechanism, a GST registered recipient must deposit GST with the government. CBIC has notified the list of goods and services for which tax is paid on reverse charge basis by the recipient instead of the supplier. Apart from this, any purchase from unregistered suppliers can attract reverse charge rule, starting from 1st February 2019. However, in this case, the list of specified goods or services is yet to be notified.

 
ClearTax offers a FREE integrated tool for GST registered businesses to track and check their compliance level for GST Returns filed. Every GSTIN can now access the GST Health Check tool to get the following result in an excel form:

Try out the GST health check tool and check your GSTIN’s health now!