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Summary

Standard GST rate: 18%
E-Invoicing: mandatory for B2B from April 2020
Reporting: yes, real time via IRP system
Digital service tax: yes, called OIDAR

Compliance and rates

 

GST number format

GST number is also known as a GSTIN (GST Identification Number). Each Entity registered under GST is assigned a unique 15 digit GSTIN. The GSTIN is derived primarily from the PAN(Permanent Account Number of the entity).

 

GST rates

The standard GST rate in India is 18%, with reduced rates of 12% and 5% on certain goods and services, but also with higher rate of 28% on some goods and services. Some goods and services are exempt from Indian GST such as postal services, existential food and books.

18% (Standard) – Applies to all taxable supplies, with certain exceptions

28% (Higher) – Luxury goods (cars), air conditioning, cement, chocolate

12% (Reduced) – Some foodstuffs (frozen meat and dried fruit), restaurants without air conditioning, construction, mobile phones and some accommodation  

5% (Reduced) – Some foodstuffs (sugar, tea, cooking oil), advertising

0% (Zero) – Some existential foodstuffs, books, newspapers and periodicals, postal services

 

GST payments and returns

India is currently in a transition to new tax return system that is expected to be fully implemented by Oct 2020(Initially, April 2020, but this deadline has been postponed due to Covid-19 crisis). General/main type of GST return, cosisted of 2 annexures called GST ANX-1 and GST ANX-2. There is a prototype of the tool available for downlaod in GSTN portal for future users to get familiar with its functionalities and share feedback.

GST Returns frequency

Returns generally need to be filed on a monthly basis. Small taxpayers are allowed to file it quarterly(Small taxpayers are considered as the ones earning up to INR 10M). As the system changes, deadlines are a subject to CBIC notifications.

Penalties in case of late filings and misdeclarations

There are over 20 offences put in place for failing to comply with GST requirements. Penalties are summed up for both CGST and SGST. Main ones are noted below:

  • Late filing  – INR 100 per day, totalling to INR 200 per day. Max. amount that can be charged is is INR 5000, with 18% interest per annum
  • Non filing – can trigger accumulated late filing penalties, or in specific cases. For over 21 non paid or non fully paid amount, taxpayer will be liable for 10% of the tax amount due (minimum being INR 10,000, max. 10% of the unpaid amount). If the intention was tax invasion or fraud, taxpayer is liable for 100% of the unpaid amount with the highest penalty being jail sentance up to 5 years.

 

Invoice requirements

Required fileds for GST compliant invoice are as follows:

  • date of invoice issuance
  • a unique number of the invoice
  • supplier / issuer data (company name, address, tax number)
  • customer data (address and other data if available, GSTIN)
  • Place of supply
  • HSN code/ SAC code
  • full description of goods and services provided (quantity, unit, total value)
  • the net, taxable value of the invoice
  • any discounts if applicable
  • rate and amount of taxes i.e. CGST/ SGST/ IGST
  • if GST is payable on reverse charge basis, signature of the supplier

 

E-Invoicing

All invoices that need to be submitted for tax reporting will have to be uploaded via GST portal as of January 2020(applies to B2B only).

Limit for the applicability of e-invoicing is currently set at INR 1B(as of Dec 2019). 

 

Real-time reporting (invoice registration portal – IRP)

The IRP acts authentificates electronic invoices and serves a register for e-invoices. Systems can interact with the IRP portal in many ways, including via APIs, mobile apps etc.

IRP ystem validates required fields of B2B electronic invoices based on pre defined parameters and generates an invoice reference number if that hasn’t been done by the issuing system already. After invoice reference number has been generated, the system creates digital signature and a QR code in JSON for the supplier. IRP also sends authenticated payload to GST portal for returns. GDT ANX-1 and 2 also get auto-filled for the relevant tax period.

Invoice can still be printed. System only requires invoices in electronic format for validation.

 

OIDAR (Digital Service Tax – DST) 

The IGST Act defines OIDAR to mean services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as:

  • advertising on the internet
  • providing cloud services
  • provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet
  • providing data or information, retrievable or otherwise, to any person in electronic form through a computer network
  • online supplies of digital content (movies, television shows, music and the like)
  • digital data storage
  • online gaming

This tax is paid by the supplier, even if the supplier is located outside of India.

GST tax rate of 18% will apply for such services. E-books have lower tax rate of 5%.

Turnkey invoice compliance.

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