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Other Forms: Payment and Refund of Tax, Input Tax Credit, GST Practitioner

Goods and Services Tax has been counted as one of the major achievements of the Narendra Modi government. However, it has been questioned by many owing to its complexities. This article tries to deal with various aspects of GST, most importantly job work under GST, GST practitioner, online mode of payment.
Written by:
Mehak Sharma
Published on
27-Aug-19

Goods and Services Tax (hereinafter GST) is an indirect tax which has replaced many indirect taxes in India. The Goods and Service Tax Act was passed by the parliament on 29th March 2017 and came into effect on 1st July 2017. GST is a comprehensive, multi-stage, destination based tax that is levied on every value addition.

Job Work under GST

Job work basically happens when one outsources any part of its production. According to Section 2(68) of Central Goods and Services Tax Act 2017 (CGST Act), job work means any treatment or process undertaken by a person on goods belonging to another registered person. 

The person undertaking the job work is known as a Job Worker and the person on whose behalf the job work is undertaken is known as the Principal. The job worker is required to carry out the process specified by the principal on the goods supplied by him. The ownership of the goods does not transfer to the job worker but it rests with the principal manufacturer. As per section 143(2) of CGST Act, the responsibility for keeping proper accounts of inputs or capital goods sent for job work lies with principal manufacturer. 

 

Registration under GST

Where a Job Worker provides services of value greater than Rs. 20 lakh, he is required to be registered under section 22 of CGST Act 2017. Since job work forms an important part of Indian economy; the CGST Act provides certain benefits to the job workers. As a natural consequence, the job worker may register himself voluntarily under section 25(3) of the CGST Act 2017.

However, the job workers making interstate supply of services have been exempted from the requirement of registration under the CGST Act unless they fall under any of the following categories:

  • The job worker has voluntarily registered itself under section 25(3) of the CGST Act or the limit of 20 lakhs has been crossed making it mandatory for the job worker to be registered under the CGST Act, or;

  • The job worker provides services in relation to goods such as- jewellery, goldsmiths and silversmiths wares and other articles as mentioned in Chapter 71 of the CGST Act.

Procedure and Return of Job Work Under GST

Upon fulfilling certain conditions, a person who is registered under the Act can send inputs/capital goods without payment of tax to a job worker and thereafter to another job worker; and upon completion of job work, bring back such goods without payment of tax.

To send the inputs or semi-finished goods without payment of duty or reversal of input tax credit to a job worker, a proper procedure is required to be followed. The principal is required to prepare a ‘Delivery Challan’ in the prescribed format. The Delivery Challan should contain the following details:

  • Date and number of Delivery Challan

  • Name, Address and GSTIN (GST Identification Number) of the consignor and consignee

  • HSN code (Harmonized System of Nomenclature Code), description and quantity of goods

  • Taxable value, tax rate, tax amount- CGST, SGST, IGST, UTGST separately

  • Place of supply and signature

Details of the Challans must be reflected in Form GSTR-1. The details of Challan must also be filed through Form GST ITC-04. Form GST ITC -04 must be submitted on a quarterly basis by the 25th day of the month succeeding the quarter. Under the GST ITC -04, following details should be provided:

  • Goods dispatched to job worker

  • Goods received from job worker

  • Goods sent from one job worker to another job worker

The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner, namely:

  • The original copy being marked as the Original for Consignee

  • The duplicate copy being marked as Duplicate for Transporter

  • The triplicate copy being marked as Triplicate for Consignor

The E-Way Bill

As per CGST Act, the e-way bill must be generated by every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees (including movements for reasons other than for supply). Thus, even in case of movement of goods to the job worker, e-way bill must be generated. In case of inter-state movement of goods, e-way bill would be generated either by the principal manufacturer or by the registered job worker irrespective of the value of the consignment.

Return

As per section 19 of the CGST Act, 2017, inputs and capital goods after processing shall be returned back to principal within one year or three years respectively of their being sent out.  Further, the provision of return of goods is not applicable in case of moulds and dies, jigs and fixtures or tools supplied by the principal to job workers.

After processing the goods, the job worker may clear the goods to –

  • Another job worker for further processing

  • Dispatch the goods to any of the place of business of the principal without payment of tax

  • Remove the goods on payment of tax for export outside India on fulfilment of conditions

The facility of supply of goods by the principal to the third party directly from the premises of the job worker on payment of tax in India and likewise with or without payment of tax for export may be availed by the principal on declaring premises of the job worker as his additional place of business in registration. In case the job worker is a registered person under GST, even declaring the premises of the job worker as additional place of business is not required.

Wastage under GST

The job work charges by job worker shall be treated as supply of service and accordingly GST is applicable. Pursuant to section 143(5) of the CGST Act, waste generated at the premises of the job worker may be supplied directly by the registered job worker from his place of business on payment of tax or such waste may be cleared by the principal, in case the job worker is not registered.

GST Tax Rate on Job Works

Job Work GST Rate (CGST + SGST or IGST)
Cultivation of plants and rearing of animals 0
Printing of Newspapers 5
Textile and Textile Products 5
Printing of Books or journals and Periodicals 5
Products under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 5
Processing of Hides, Skins and Leather 5
Manufacture of Leather Goods or Foot Wear 5
Manufacture of Handicraft Goods 5
Manufacture of Umbrella 12
Printing of all goods falling under Chapter 48 or 49 12
All other job works not specified elsewhere 18

Input Tax Credit

Mechanism of Input Tax Credit under GST is one of the most talked about provisions. Input Credit means at the time of paying tax on sales, you can reduce the tax you have already paid on purchases. In other words, Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output. When any supply of services or goods is supplied to a taxable person, the GST charged is known as Input Tax.

Input Tax Credit is the backbone of GST and for registered persons is a major matter of concern. This is majorly in line with the pre-GST regime. These rules are quite stringent and particular in their approach. 

Input Tax Credit can be availed by a registered taxable person in a specific manner and within a specified time frame. The table below shows the different situations wherein the inputs can be claimed for semi-finished goods or stock or finished goods:

Situation ITC Claimed Day for Semi Furnished Goods/Stock/Finished Goods (Held on Immediate Preceding Day)
If a person has applied for registration or is liable to register or is granted registration Day from when he is liable to pay
When a person takes voluntary registration Registration Day
When a taxable registered person stops paying taxes in composition levy scheme Day from when he is liable to pay tax normally under section 7

Following documents are required by each applicant to claim ITC under GST:

  • An invoice issued by the supplier for the supply of goods and services or both as per GST law

  • The debit note issued by the supplier to the recipient in case of taxable value or tax payable mentioned in the invoice is less than the taxable value or tax payable on such supply of goods and services or both.

  • Bill of entry

  • An invoice issued under certain circumstances like the bill of supply issued instead of tax invoice if the amount is less than Rs. 200 or in situations where the reverse charge is applicable as per GST law

  • An invoice or credit note to be issued by the Input Service Distributor (ISD) as per the invoice rules under GST

  • A bill of supply issued by the supplier of goods and services or both as per the invoice rules under GST. 

All the above applicable documents prepared as per the invoice rules under GST are to be furnished at the time of filing Form GSTR-2.

Refund of Tax Under GST

Under GST a standardized system has been set up for making GST refund claims. The GST refund claims are made on GST Portal. A GST refund claim can arise on account of:

  • Export of goods or services

  • Supplies to SEZs units and developers

  • Refund of taxes on purchases made by UN or embassies

  • Refund arising on account of judgment, decree, order or direction of the appellate authority, appellate tribunal or any other court

  • Refund of accumulated Input Tax Credit on account of inverted duty structure other than Nil rated or fully exempts supplies.

  • Refund of pre-deposit

  • Excess payment due to mistake

  • Refund to international tourists of GST paid on goods in India and carried abroad at the time of their departure from India

  • Refund on account of issuance of refund vouchers for taxes paid on advances against which goods or services have not been supplied

  • Refund of CGST and SGST paid by treating the supply as intra state supply which is subsequently held as inter-state supply and vice versa.

Under GST, all GST refund claims must be filed in Form RFD-1 within 2 years from the relevant date. The form should also be certified by a Chartered Accountant. If the claim is in order, the claim has to be sanctioned within a period of 60 days from the date of receipt of claim. Interest on the withheld refund is paid at the rate of 6%, for the first 60 days. After that, the interest is paid at the rate of 9% per annum.

If a GST fund claim is less than Rs 2 Lakhs, then a self declaration of the applicant must be submitted to the effect that the incidence of tax has not been passed to any other person along with other documents.

GST Practitioner

The Government has introduced the concept of GST practitioners to assist the taxpayers in GST compliances keeping in view the complexities of the GST law. GST practitioner is a person approved by the Central or State government to perform one or more of the activities mentioned below, on behalf of the taxpayers:

  • Registration – GST practitioner can assist in making application for GST registration on behalf of the taxpayers or make amendment/cancellation of GST returns

  • Returns – GST practitioner can assist in filing monthly/quarterly/annual GST returns such as Form GSTR-3B, Form GSTR-1 and Form GSTR-9.

  • Refunds/Payment – GST practitioner can file refund claims or pay taxes on behalf of the registered persons

  • Authorized representative – GST practitioner would be allowed to appear as an authorized representative before any officer of the GST department, Appellate Authority and the Tribunal.

Eligibility

Rule 24 and 25 of Return Rules provide for the eligibility, qualification, duties and obligations, manner of removal and other conditions of functioning. The basic qualifications are as follows:

  • He must be a citizen of India

  • He is of sound mind

  • He must be an individual who has not been adjudged as insolvent

  • He must not have been convicted at any time by a competent court for any offense which may have resulted in his imprisonment for more than two years of imprisonment.

The person must enrol himself on GST Portal as GST Practitioner in From PCT-01 and obtain the enrolment number in Form PCT-02 from the concerned officer after due enquiry. Once enrolled as a GST practitioner, he must pass the GSTP Examination within two years of enrolment. However, for the persons enrolled as GST practitioner before 1st July 2018, he shall get three years to pass the examination. After the examination, the GST practitioner is issued a certificate, only after that he can start his own practice.

Procedure for Payment of GST

The step by step procedure for payment of GST online is as follows:

  1. Set off the tax liability by using the credit available in Electronic Credit Ledger

  2. Deposit money in the Electronic Cash Ledger to pay the balance tax liability –

  • Generate challan for making the GST payment - Challan for the payment can be generated from the GST payment portal using form GST PMT-06. The details of the amount to be deposited towards tax, interest, penalty, fees or any other amount should be entered in challan. The challan generated will be valid for 15 days.

  • GST payment can be made in the following modes-

        i. Internet banking through authorized banks         ii. Credit or debit card through authorized banks         iii. National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) from any bank         iv. Over-the-Counter (OTC) payment through authorized banks for deposits up to Rs. 10,000 per challan per tax period, by cash, cheque or demand draft

  • Generation of CIN and credit to Electronic Cash Ledger – Once the amount paid by a dealer is credited to the concerned government account, a Challan Identification Number (CIN) will be generated and the same will be mentioned in the challan in the GST portal. On receipt of the CIN, the amount paid will be credited to the person’s Electronic Cash Ledger.

Forms and their Description

Form Description
Form GST ITC-04 Details of goods/capital goods sent to job worker and received back
Form GSTR-02 Return filing, format, eligibility and rule
Form RFD-01 Refund filing by a taxpayer
Form PCT-01 Application for enrolment as GST practitioner
Form PCT-02 Enrolment certificate for GST practitioner
Form GST PMT-06 Challan for deposit of GST