13 Aug 2019Posted By: Mudit Handa


5 Important things to remember on GST during this Raksha Bandhan

We all know that the festive season is back again! The Auspicious Festival of Raksha Bandhan has arrived. Like every year, this time too, the retail outlets across India will be flocked with the extensive range of gift hampers comprising of attractive gift items. 

People all over India are really excited about the celebration of this auspicious festival and are deeply involved in the preparations of Raksha Bandhan. 

At their abode in heaven, Lord Krishna & Arjun were peacefully watching the lively preparations of Raksha Bandhan and were discussing the impact of GST on this festival. 

 

Krishna: Raksha Bandhan is all about the commemoration of the purest love and strongest bond of brothers and sisters. On this day, sisters tie the sacred Rakhi, the most precious amulet to their brothers’ wrist. To the utmost joy of all sisters, the GST council in its 28th meeting has exempted Rakhis from GST.

 

Arjun: O Madhav! Can please you tell me…

 

1. How GST exemption has benefitted the Rakhi sellers?

Krishna: Of course Parth! The decision of exempting Rakhis from GST has benefitted the Rakhi sellers a lot. 

  • Last year, GST on glass beaded Rakhi was 18% while on brocade, nylon and silk Rakhi, GST was 12%. 
  • These GST rates were fixed as per the raw material or availability of input tax credit rather than any fixed GST slab. This system had many drawbacks. 
  • Now this year, all kinds of Rakhis are exempt from GST. This has made the trade more uniform and clear. 
  • The Rakhi manufacturers have used glass, beads, gems and other embellishments liberally. As a result, the Rakhi sales have gone up as compared to last year.

However, the taxpayers having GST registration have to consider one more important aspect during this Rakshabandhan. 

 

Arjun: What is that?

Krishna: It is the detection and correction of mismatches of ITC of the suppliers and the recipients occurring while GST return filing.

GST ITC

To this Arjun asks-


2. Why is the correction of mismatches of ITC important?

Krishna: O wise Parth! During Raksha Bandhan, sisters tie the sacred Rakhi, on their brothers’ wrist in return of the promise by the brothers of their safety. Similarly, in GST, the matching of purchase and sale invoices has to be done to ensure the promise of claiming ITC between suppliers and recipients. This will protect them from the risk of blockage of ITC while GST return filing procedure.


3. How to detect the mismatches in ITC?

Krishna: This can be easily done by matching the details of GSTR-2A return with the purchases as entered into the Books of Accounts.


4. What details shall be verified from GSTR-2A?

Krishna: The taxpayers need to match the details of their purchase with the details of the sale of their supplier. During this process, the taxpayer shall match ITC already claimed by him with ITC as appearing in the GSTR-2A return. In case of any mismatch, the taxpayer shall claim such unutilized ITC thereof.


5. What if the supplier has not uploaded the GST invoice?

Krishna: There are many instances where the supplier has not furnished the GST invoice or has entered incorrect details in GSTR-1. As a result, the mismatch of ITC arises in GSTR-2A of the recipient. 

  • In such a case, the supplier must report such mismatch its required rectification in his GSTR-1 return of next month/quarter.
  • O wise Arjun! As per the CGST Act 2017, taxpayers having GST registration can’t avail ITC with respect to any invoices, in case a mismatch arises. Hence, it is important to detect an report such mismatches well in advance.

Moreover, it is very crucial to furnish the correct GST invoices in order to avoid any such mismatch, just as-

“Prevention is better than cure” yes

The Taxpayers can, however, instantly create GST Tax Invoice through the InstaBill Software.

instabill app

If you require any further assistance regarding GST registration, or new GST return filing procedure, feel free to contact our business advisor at 8881-069-069.

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