GST Update - To-do list for March end
15 Things to do before March End -
1. Reversal of Input tax credit – As per the rules of Input tax credit, after issuance of tax invoice if receiver does not made the full payment of amount within 180 days then the credit taken on that invoice is to be reversed. And whenever the payment is made, the receiver can take the credit of the amount. Therefore the aging analysis of the debtors and creditors is to be done. all old invoices issued before 1st October, 2017, should be paid before 31st March 2018.
Ex. Suppose the fees Rs. 10000 is payable to the Chartered Accountant on 15th September, 2017, and the credit on that of Rs. 1800 has been taken in the return of that month, then the fees should be paid before 31st Marsh, 2018. Otherwise the extra payment of Rs. 1800 is to be made in the month of March.
2. E-way bill – It is compulsory to issue E way bill from 1st April, 2018 for inter-state Supply. In case of inter-state supply, the goods are in transit as on 1st April, 2018, it is compulsory to generate e way bill for them. Therefore, it is necessary to take the registration under E way bill system before 31st March.
3. Reconciliation – All the taxpayers should reconcile the cash ledger, credit ledger and liability ledger with their books of accounts. All the entries should be done before the year end. Also debit note, credit note, rate difference, discount, etc also to be reconciled.
4. HSN Code in the Invoice – Before preparing first invoice in the new financial year, taxpayers should check the turnover for the year 2017-18. Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2-digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4-digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices.
5. New series for tax invoice – If anyone wants to change the series for billing in the new year, then he can do that from 1st April. New numbering should be started form 1st April.
6. Composition scheme – If any taxpayer wants to register under composition scheme then he can apply in Form GST CMP – 02 before 31st March. Similarly, those who wants to cancel the registration under composition scheme, they have to apply in Form GST CMP – 04 before 7th April. They have to calculate the effects of ITC on closing stock.
7. Due dates of the returns – There are various due dates in the April month for filing the returns relating to 31st march. Such as GSTR 3B for March is to be filed up to 20th April. GSTR 1 for February is to be filed up 10th April. GSTR 4 is to be up to 18th April and GSTR 6 is to be filed up to 13th April.
8. Monthly/ Quarterly returns – Taxpayers should check the turnover for the year 2017-18. If the aggregate turnover is above Rs. 1.5 Crore then the taxpayers have to file monthly return. If the aggregate turnover is below Rs. 1.5 Crore then the taxpayers have an option to file the quarterly GST returns. Taxpayer can choose any of the option.
9. Form GST TRAN 2 – The taxpayers who have filed the TRAN 1 and have taken the credit of Excise duty paid, without any documents, they have to file the details of outward supplies for six months in TRAN 2 before 31st March 2018 for availing 40%/ 60% credit.
10. GSTR 6 – Input service distributor has to file GST return in form GSTR 6. So 31st March is the due date to file GSTR 6 from July 2017 to February 2018.
11. ITC Carry forward – Excess Input Tax credit needs to be carried forward. It will not lapse after the close of Financial Year.
12. GSTR 2 – Details of purchases are reflecting on the portal in the form GSTR 2A. All the taxpayers should check the details of purchases before 31st March to reconcile it with books.
13. Valuation of the closing stock – At the time of valuation of closing stock as on 31st March, the input tax credit taken on raw material, consumables, semi finished goods is to be calculated. In Excise, there was a concept of making provision for the tax payable on the finished goods as on 31st March, no such concept is introduced in the GST.
14. Depreciation on the capital asset – At the time of calculating depreciation on the capital goods (other than building), if ITC has been claimed, then the tax amount needs to be ignored at the time of calculating depreciation.
15. Anti profiteering – Do the comparative check of the gross profit earned for March 2018 with the gross profit of financial year 2016-2017 or gross profit for April 2017 to June 2018. If the gross profit ratio for the March 2018 is higher, then taxpayer should check whether he is trapped in the Anti profiteering or not?
I hope you find the same helpful.
Please verify the details before implementation
Bookkeeping
Penalty on Late Filing of Income Tax Return – Section 234F (A.Y. 2018-19)
March 18, 2018
New penalty for late filing of Income Tax Return under section 234F is introduced in Budget 2017. Although this penalty is applicable only for income tax return of Financial Year 2017-18 and onwards. If a person who is compulsorily required to file Income Tax Return (ITR) doesn’t file return on time then he is liable to a penalty as follows
Amount of Penalty
For person with Total Income of more than Rs. 5,00,000
- If ITR is filed on or before 31st December following the last date – Rs. 5,000
- If ITR is filed after 31st December – Rs. 10,000
For person with Total Income of less than Rs. 5,00,000 – Rs. 1,000
Penalty is not applicable if ITR is filed before due date but verification is done after the due date.
In addition to the penalty interest under Section 234A is also levied on late filing of Income Tax Return.
Due Dates for filing ITR
Due date for filing return for person required to gets accounts audited under Section 44AB – 30th September
For all other persons – 31st July
Persons for whom it is mandatory to file Income Tax Return
The following persons are mandatorily required to file income tax return
- Company
- Firm (In Income Tax Act Firm means a Partnership Firm, Sole proprietor firms are considered as an individual)
- Any other person whose total income exceeds the maximum amount which is not chargeable to income tax.
- A person is required to file ITR if total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax.
Business
PNB detects another fraud of Rs 9 crore at same branch involved in Nirav Modi case
March 16, 2018The new alleged fraud of around Rs 9.1 crore involves officials of a little-known company called Chandri Paper and Allied Products Pvt Ltd, the Central Bureau of Investigation said in the complaint.
Punjab National Bank (PNB) has detected another fraud of Rs 9.09 crore at its Brady House branch in Mumbai, which is at the centre of the Rs 12,600 crore fraud involving billionaire jeweller Nirav Modi and his uncle, Mehul Choksi.
The latest fraud involves a little-known company called Chandri Paper and Allied Products Private Limited that was issued two letters of undertaking (LoUs), according to the FIR registered by the Central Bureau of Investigation on March 9 on the complaint of PNB. This is fourth CBI FIR against the Brady House branch.
Two branch employees, Gokulnath Shetty, a retired deputy manager, and Manoj Kharat, a single window operator, have been named as accused along with Chandri Papers and its two directors Aditya Rasiwasia and Ishwardas Agarwal.
Shetty and Kharat are already in custody in Modi and Mehul Choksi cases. The two conspired to issue two letters of undertaking to Chadri Papers’ directors in or around April, 2017 by fraudulent means, the FIR says.
Following the Modi fraud, the Reserve Bank of India on March 13 barred banks from issuing LoUs, a move that could deal a blow to trade financing in India and raise credit costs for importers.
The central bank also barred lenders from issuing letters of comfort as trade credit for importing goods into India with immediate effect.
Importers prefer taking loans based on LoUs as they are denominated in foreign currency and are cheaper than rupee credit. A letter of credit, on the other hand, is used to establish the creditworthiness of the buyer in the purchase of goods.
(Source: Hindustan Times)
Business
Minimum Alternate Tax (MAT) - Section-115JB - Applicability, Computation & Understanding
March 08, 2018
MAT (Minimum Alternative Tax) is a tax payable under Income-tax Act. The concept of MAT was introduced to target those companies that make huge profits and pay the dividend to their shareholders but pay no/minimal tax by taking advantage of the various deductions, and exemptions allowed under income tax act. But with the introduction of MAT, the companies have to pay a fixed percentage of their profits as Minimum Alternate Tax.MAT is applicable to all the companies including foreign companies.
MAT is calculated u/s 115JB of the income tax Act. Every company should pay higher of the tax calculated under the following two provisions:
- Tax liability as per the Normal provisions of income tax act(tax rate 30% plus 3% Edu cess plus surcharge (if applicable)
- Tax liability as per the MAT provisions are given in Sec 115JB(18.5 % of Book Profits Plus 3 % edu cess plus surcharge if applicable)
How to Calculate MAT?
MAT is equal to 18.5% of Book profits(Plus Surcharge and cess as applicable). Book profit means the net profit as shown in the profit & loss account for the year as increased and decreased by following items:
Additions to the Net Profit (If debited to P/l A/c):
- Income Tax paid or payable if any calculated as per normal provisions of income tax act.
- Transfer made to any reserve
- Dividend proposed or paid
- Provision for loss of subsidiary companies
- Depreciation including depreciation on account of revaluation of assets
- Amount/provision of deferred tax
- Provision for unascertained liabilities e.g. provision for bad debts
- Amount of expense relating to exempt income u/s 10,11,12 (except sec 10AA and 10(38) (It means income u/s 10AA & long-term capital gain exempt u/s 10(38) are subject to MAT).
Deletions to the Net Profit (If credited to P/L A/c)
- Amount withdrawn from any reserves or provisions
- The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
- Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of an asset.
- Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However, the loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
- Amount of Deferred Tax, is any such amount is credited to the profit & loss account
- Amount of depreciation debited to P/l A/c (excluding the depreciation on revaluation of Assets)
What is MAT CREDIT?
When any amount of tax is paid as MAT by the company, then it can claim the credit of such tax paid in accordance with the provision of section 115JAA.
Allowable Tax Credit = Tax paid as per MAT calculation — Income tax payable under the normal provision of Income-tax Act, 1961.
(However, no interest shall be paid on this Tax credit by the Department.)
- Actual tax payable = Higher of Tax Payable under MAT OR Tax Payable as per normal provisions.
- MAT credit set off is allowed only if tax payable as per normal provisions is greater than tax payable as per MAT and also to the extent of the difference between the two.
- MAT Credit Available u/s 115JAA = Tax Payable under MAT — Tax Payable as per normal provisions
Applicability of other provisions of Income-tax Act:-Section 115JB(5) states that save as otherwise provided in this section, all other provisions of this act shall apply to every company, mentioned in this section.
Therefore the company to which MAT applies shall be liable to pay Advance Tax, interest u/s 234A, 234B & 234C. The company shall also be liable to pay penalty for concealment of income.
Furnishing of the Report:-Every company to which this section applies shall furnish a report from a Chartered Accountant in the Form-29B certifying that the book profit has been computed in accordance with the provisions of the section 115JB and such report shall be furnished along with the return of income.
(Source: Income Tax Act India and adaptation from books of various authors on Taxation)
