If the turnover exceeds the threshold limit mentioned in the GST Act, then the person is mandatory to take GST registration. In some cases, people are mandatory to take GST registration like in case of the interstate supply of goods, reverse charge, selling on e-commerce portal, etc.

Many times taxpayers take GST number but he doesn’t know what to do after GST registration. GST registration comes with new responsibilities. Now, we will discuss the responsibilities and penalties for ignoring these responsibilities.

GST Registration

1. Display of registration certificate and Goods and Services Tax Identification Number on the name board

The first step after taking GST registration, every registered person must display the GST Registration certificate at a prominent location at his principal place of business and at every additional place of business.

Every registered person must display Goods and Services Tax identification number (GSTIN) on the name board placed at the entry of its principal place of the business and at every additional place of the business.

In case of Composition dealer, the registered person must mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place of business.

Penalty for not displaying the registration certificate and goods and service tax identification number on the board: Any amount up to Rs. 25,000/-

2. Start issuing the GST invoices

The buyer claims the input tax credit on the basis of the GST invoice. After obtaining GST registration, the taxpayer must start issuing the valid invoice that is complying all the invoicing rules. GST invoice is issued in case of taxable supplies whereas the bill of supply is issued for exempt supplies. A single Invoice cum bill of supply may be issued in case of the supply of both taxable and exempt supplies to an unregistered person.

Invoice issued by the registered person must contain the following particulars as per CGST rules:

  • Name, address and GSTIN of the supplier;
  • Invoice Number (up to 16 characters), unique for a financial year;
  • Date of Invoice;
  • Name, address and GSTIN or UIN, if registered, of the recipient;
  • HSN code for goods or services;
  • Description of goods or services;
  • Quantity in case of goods;
  • Total value of the supply of goods or services;
  • Taxable value of the supply of goods or services or both taking into account discount, if any;
  • Rate of tax;
  • Amount of tax for taxable supplies as CGST, SGST/UTGST or IGST;
  • 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 or digital signature of the supplier or his authorised representative.

In the case of composition dealer, a bill of supply is issued by him. He must be mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply.

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.

A registered person may not issue a tax invoice if the value of supply is less than Rs. 200 and subject to the following conditions:

  • Recipient is not a registered person
  • Recipient does not require such invoice

However, a consolidated tax invoice for such supplies shall be issued at the close of each day in respect of all such supplies.

Offences related to tax invoice

As per the CGST Act, the following are the offences related to tax invoice:

  • Supplies any goods or services or both without any invoice.
  • Issues a false invoice for supply of any goods or services or both.
  • Issues any invoice or bill without supply of goods or services or both in violation of the provisions of GST Act or Rules.
  • Issues any invoice or document using the registration number of another registered person.

All the above offences are subject to penalty provisions of section 122 of CGST Act and the amount of penalty is higher of the following:

  • 100% of the tax due
  • 10, 000/-

3. Identify the place of supply

Place of supply keeps an important role in GST. Based on the place of supply, the registered person is able to charge CGST, SGST/UTGST or IGST. If supply is within the state then CGST or SGST will be charged. In case of Interstate supply means the supply in another state, IGST will be charged.

4. Charge, collect and deposit the GST

After obtaining the registration, the registered person is liable to charge GST on all taxable supplies and declare the same in GST invoice raised by them. Every goods have a separate GST rate and HSN code.

GST collected by the supplier from the buyer is to be deposited to the government on or before filing the GSTR-3B. The supplier can deposit the GST to the government by online or through bank counter.

Composition dealer is not eligible to charge GST. He shall be liable to pay GST on aggregate turnover.

Offences related to the collection of tax

  • Not paying tax collected to the government beyond a period of three months

The penalty amount for the above offence is the higher of the following:

  • 10,000
  • The amount equivalent to the tax evaded or fraudulently obtained as refund or availed as credit.

5. Eligible for availing input tax credit

After the registration, the registered person shall be eligible to input tax credit claim. For claiming input tax credit, Invoice and debit note issued by the supplier must be in possession of the registered person. For availing input tax credit, goods or services should be received by the registered person. Claim such input tax credit in GSTR-3B filed every month. The businessman can check and reconcile the input tax credit with the GSTR-2A. The amount of ITC available can be used to pay off the GST liability.

A composition dealer is not eligible to claim the input tax credit on the purchases made by him.

Offences related to Input tax credit

  • Availing/utilizing input tax credit without actual receipt of goods or services or both either fully or partially

The penalty amount for the above offence is the higher of the following:

  • 10,000
  • The amount equivalent to the tax evaded or fraudulently obtained as refund or availed as credit.

6. Maintain proper accounts & records

As per the GST Act, every registered person shall keep and maintain at his registered place of business, a true and correct account of –

  • Production of goods
  • Inward and outward supply of goods or services or both
  • Stock of goods
  • Input tax credit availed
  • Output tax payable and paid
  • Goods or services exported or imported
  • supplies attracting payment of tax on reverse charge

For a financial year, accounts maintained by the registered person supply shall be preserved for a period of 72 months from the due date of filing of annual return in GSTR-9 or GSTR-9A for such a financial year.

The records may be maintained in electronic modes like Tally, ERP, and SAP.

Penalty for failure to keep, maintain or retain books of accounts and other documents in the manner specified in the Act/Rules: Rs. 10,000/-

7. File GST Returns

After obtaining GST registration, taxpayers should know about the applicable GST returns on them. Returns should be filed on time to avoid late fees 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 a summary of sales and ITC. Pay tax and then file GSTR-3B.

GSTR-4 is for composition dealers.

8. Know the applicability of Reverse Charge

Normally, GST is collected by the supplier from the buyer and deposited to the government. Under the reverse charge mechanism, there are some transactions for which tax is submitted to the government by the registered buyer.

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.

For more details on reverse charge mechanism under GST:  https://taxguru.in/goods-and-service-tax/reverse-charge-mechanism-goods-services-tax.html

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