As you are aware, that the closure of FY 2019-20 is fast approaching. Please find below the list of major activities to be carried out by the Company on or before 31 March 2020 from an Indirect Tax perspective.
Note: Even though law permits to have extra character or alpha numeric in practical while doing reconciliation, it is not advisable to have other than unique numeric numbers.
To avoid all the above mentioned errors, maintain the unique numbers for each category of transactions as given below:
10 Digit Invoice numbering system:
First 4 digit indicates year 2020, every financial year this 4 digit will be unique. (Apr to Mar).
5th Digit for Type of transaction.(Eg: Domestic/Exports etc.,)
Remaining 5 digits based on the number of documents required for each transaction refer previous year completed transaction.
|Sl. No.||Transaction||No. Starts From||Year||Group||From|
|1||Tax Invoice ( Domestic)||2020100001||2020||1||00001|
|2||Tax Invoice ( Export) w/o payment of GST – LUT||2020200001||2020||2||00001|
|3||Tax Invoice (Export with payment of GST)||2020300001||2020||3||00001|
|4||Stock Transfer Intra State( Bill of supply) No Tax.||2020400001||2020||4||00001|
|5||Stock Transfer Inter State||2020500001||2020||5||00001|
Input tax credit (ITC):
Reverse ITC on instances where the Company has not paid the consideration to the Supplier within 180 days from the date of supplier’s invoice. As per Creditors reconciliation keep your records audited for the above 180 days Invoices.
Restricted ITC as per 36(4):
Ensure availing credit as per the 36(4) of CGST Rule 2017,though you might have received goods or services along with Invoice copy but the 90% restricted credit, depends on the number of Invoices uploaded in portal. Eg. Your 100% credit is eligible only when your supplier has uploaded the invoices to the extent of 90% in portal for the particular month.
Since the new return date extended till Sep’2020, restricted credit is applicable till new return is going to come.
Keep monthly reconciliation between Purchase ledger Vs Portal to provide this information during department audit or query from Tax dept.
Section 17(5)(h) requires reversal of credit in the case of goods lost, stolen, destroyed, written off etc. The companies are likely to decide about the writing off any inventory, if any during the year end closing by March 31, 2020. In such cases, ITC attributable to such goods shall be reversed.
Ensure that the inputs sent out for job work activity have been received back within one year from the date of being sent out.
Material delivered directly to Job work premises, or Direct supply from Job work etc., needs to be looked into.
Job work material delivered directly to Customer, after process, needs to be looked into.
ITC-04 Return will be important one for the year 2019-20 towards job work transactions. (First return post GST implementation)
Reconciliation with books of accounts:
It is advisable to reconcile the GSTR-1 & 3B, cash ledger and credit ledger as per GSTN portal with the books of accounts.
Reconciliation between Invoice Vs e-way bill, and Purchase Ledger Vs Portal 2A should be matched. Any mismatch should be recorded, if required necessary Debit note or Credit has to be raised to keep our records for the purpose of department audit trial.
Provisions for expenses with respect to import / domestic services with associated entities would have possible GST implications under reverse charge mechanism (RCM). The accounting entries need to be analyzed in detail with supporting workings.
Decision not as per the state wise different AAR’s. re-visit the nature of transaction to decide on the case to case basis, to avoid future litigation with Tax department.
Re-visiting the ERP Master,as per e-schema released by Government.
In order to ease of migrating to e-invoicing each and every organization should ensure to re-visit their existing ERP system MASTER data updated during legacy period ie. Supplier (Vendor) Master, Customer Master, Item Master, HSN Master.
Starts from Address with 64 characters, Pin code with 6 digits without space, etc., needs to checked and corrected so that part of the e-invoicing preliminary work is completed, before end of May’2020.
Customer Master: Starts from Address with 64 character, Pin code with 6 digit without space, etc., needs to re-visited and correct the same to migrate the e-invoicing. Bill to Ship to , Ex-Factory commercial conditions should be aligned with e-invoicing.
Item master towards Purchase & Sales to be aligned with Tax Invoice & HSN Description to reduce classification dispute at a later date.
HSN, SAC & Rate Master:
6 Digit mandatory for e-invoicing, 8 digit mandatory for Imports & Exports,. In order to keep future requirements, migrate with the existing 4 digit to 8 digit, so that all the Tax compliance covered with applicable tax rates in future.
Goods & Service Imports:-
As per the new e-return concept each and every Import Bill of Entry HSN wise, value and tax amount needs to be uploaded in Anx-1. New challenge for all importers.
RCM Invoice preparation was not mandatory till now, we pay RCM based on our workings. From 01.10.2020 each RCM transaction RCM Invoice is mandatory to create liability and avail ITC. Which includes, Debit/Credit Notes.
Login to the GST portal, select Tab Service and go to User Services then, select “Furnishing Letter of Undertaking”
Select the Financial year 2020-2021 for which you want to renew the LUT
We provide our Reco-G software for e-Invoicing, e-Reconciliation & e-Return, which includes Annual Return filing requirements.
Trust the same is useful.