Essential Actions After Receiving Your GST Registration

This article outlines the crucial immediate steps businesses must take to ensure Goods and Services Tax (GST) compliance once their GST registration is successfully acquired. Previous discussions have covered the criteria for obtaining GST registration and the applicable turnover thresholds.

GST registration becomes effective from the date a person is liable for registration, provided the application is submitted within 30 days of that date. If the application is filed after this 30-day window, the registration takes effect from the date it is granted.

It is important to note that businesses operating in multiple states are required to register separately under GST in each state. Consequently, each distinct GSTIN must adhere to the GST regulations independently.

Display GST Registration Details at Business Premises

Every registered entity is mandated to prominently exhibit its GST registration certificate within the principal place of business and all other business locations.

Upon receiving the Goods and Services Tax Identification Number (GSTIN), businesses must also display this number on their main name-board at the entrance of their registered office or factory.

Determine Place of Supply for Correct Tax Application (CGST, SGST, or IGST)

It is essential to identify the nature of each transaction to determine if the supply occurs within a state or across state borders. This requires referring to the place of supply provisions within GST law.

Depending on whether the place of supply is intrastate or interstate, either CGST and SGST, or IGST, will be applied respectively. The specific rules for the place of supply differ for goods and services.

Issue GST-Compliant Invoices

The GST invoice serves as a critical document for buyers to accurately claim their input tax credit. Therefore, every business must begin issuing valid invoices that comply with all invoicing regulations immediately after obtaining GST registration.

For the period between the effective date of registration and the actual issuance date of the GST registration certificate, businesses must issue revised invoices for any supplies already made. This task must be completed within one month from the date the registration certificate is issued.

A GST invoice is mandatory for taxable supplies, while a bill of supply is issued by composition dealers or for exempt supplies. When supplying both taxable and exempt goods to an unregistered person, a single Invoice-cum-Bill of Supply should be issued.

Certain mandatory fields stipulated by the CGST rules must be included in an invoice:

• A unique serial number, up to 16 alphanumeric characters, for each financial year.
• The supplier's GSTIN.
• Date of invoice issuance.
• The GSTIN of a registered recipient, along with their name, address, and delivery address.
• A description of the goods or services provided.
• Quantity of goods or services.
• Value of the supply.
• Applicable tax rate.
• Tax amount for taxable supplies, clearly distinguishing CGST, SGST/UTGST, or IGST.
• Harmonized System of Nomenclature (HSN) code.
• Place of supply, including the state name for inter-state transactions.
• Indication of whether tax is payable under the reverse charge mechanism.
• Supplier's signature.

GST law specifies a time limit for issuing invoices. For goods, a tax invoice must be issued at the time of goods removal. For services, it must be issued within 30 days of the service being rendered.

Collect GST on All Taxable Sales

Businesses must begin charging GST at the legally specified rates on all taxable supplies. Currently, four GST rates (5%, 12%, 18%, and 28%) are set for various goods and services, based on their unique HSN codes.

Registered taxpayers are required to accurately note and declare these tax rates on the GST invoices they issue. Failure to do so can result in penalties. GST is collected from buyers in all instances, except when the sale is made by a composition dealer. Consequently, the price paid by buyers to a GST-registered seller includes GST.

The GST collected by the supplier must be remitted to the government electronically via a challan before filing GSTR-3B. An exception applies to reverse charge cases, which are explained further below.

Submit ITC-01 for Input Tax Credit on Existing Stock

Form ITC-01 must be filed within 30 days of becoming eligible to claim Input Tax Credit (ITC), meaning 30 days from the grant of GST registration. This form is used to claim the input tax credit of CGST, SGST, or IGST paid on the purchase of inputs or input services utilized in manufacturing finished goods.

This claim can extend beyond raw materials to include consumables and raw materials that are part of the finished goods currently in stock. The GST paid on these purchases, which are now integrated into the finished goods, is also eligible for an ITC claim.

Start Claiming Input Tax Credit on Purchases

All purchases made after the effective date of GST registration qualify for ITC claims. This ITC on purchases should be provisionally claimed in the monthly GSTR-3B filing. Businesses can also review and reconcile their claims with GSTR-2A, available on the GST portal, to prevent over-claiming or under-claiming ITC.

It should be noted that composition dealers are not eligible to claim ITC on their purchases. The declared ITC amount will accumulate in the electronic credit ledger for the specific GSTIN and can be utilized to settle GST liabilities.

However, certain conditions must be met to avail ITC:

• Possession of the tax invoice or debit note issued by the supplier.
• Goods must have been delivered.
• The supplier must have filed GSTR-1.

Availing ITC effectively reduces prices throughout the supply chain, ultimately benefiting the end consumer through lower costs.

Maintain Accurate Accounts and Records as per GST Law

GST law mandates strict maintenance of specific documents and records to substantiate transactions conducted by a GST-registered business. For each financial year, these accounts and records must be preserved for a minimum of 72 months from the due date of filing the annual returns (GSTR-9 or GSTR-9A) for that financial year.

Some essential records businesses must begin compiling include:

• Records of goods production.
• Details of outward and inward supply of goods and services.
• A stock register.
• Information on ITC availed.
• Data on output tax payable and paid.

Businesses are permitted to maintain their books of accounts in electronic formats, such as ERP applications or cloud-based software, provided they comply with legal requirements.

File Applicable GST Returns: GSTR-1, GSTR-3B, or GSTR-4

Upon obtaining GST registration, taxpayers must identify and regularly file the specific GST returns that apply to their business by the stipulated due dates to avoid interest and penalties. All GST returns can be submitted via the common GST portal, accessible to all taxpayers across India.

Normal taxpayers are required to file GSTR-1 for sales details and GSTR-3B for a summary of sales and ITC. Tax payment must precede the filing of GSTR-3B.

Composition dealers, conversely, file a single quarterly return, GSTR-4.

The Act also mandates additional returns under special circumstances. For example, GSTR-6 must be filed by an Input Service Distributor to apportion ITC amounts among its branches or units across India that have utilized the goods or services for which ITC is available.

Certain taxpayers may also need to periodically submit other forms to the department. ITC-04, for instance, is filed quarterly by manufacturers to declare the status of goods sent for job work. Taxpayers must also indicate if any ITC reversal is necessary due to delays in the return of goods. Furthermore, specific GST returns are required for special types of registrations.

For more details, refer to information on different types of GST returns and their filing requirements.

Understand Potential Reverse Charge Liability

Once GST registration is acquired, it's crucial not to overlook specific rules. In most transactions, the supplier collects GST from the recipient and remits it to the government. However, under the reverse charge mechanism, a GST-registered recipient is responsible for depositing the GST with the government.

The Central Board of Indirect Taxes and Customs (CBIC) has notified a list of goods and services where tax is paid by the recipient under reverse charge instead of the supplier.

Additionally, purchases from unregistered suppliers may trigger the reverse charge rule, effective from February 1, 2019. However, the specific list of goods or services subject to this rule in such cases has yet to be notified.