ICAI BBSR Newsletter March 2020
The country is in complete lockdown mode for the last
30 days and relaxed manner in few pockets of the
country from 20th April 2020. The business has come
to a standstill, the cash inflows have stopped for the
business, the employees have received salaries for
March 2020, and April is a question for many as most of
the organizations do not have sufficient cash balances
and the working capital limits have exhausted.
Another challenge they are facing amid the crisis is the
transportation of finished goods, availability of raw
materials for starting the operations and shortage of
labor due to the reverse migration. All these are
business challenges, but the compliances cannot be
taken for granted; they have to be followed to ensure
the continuity of business, especially with GST, as per
the current provisions e-waybill cannot be issued if the
returns are not filed for more than two months.
Extension of due dates has been provided through
various notifications based on the address by our
Honourable Finance Minister, Smt Nirmala
Sitharaman, on 24th March 2020.
The due dates have been extended for filing of the
returns, payment of GST, and also an exemption of late
fee and reduction of interest for delayed payments in
certain cases. Due to the uncertain business
conditions, there will be some cancellation of orders or
deferment of orders or returning of advances, etc.,
Taxation is one of the areas through which working
capital can be channelized more effectively during the
hour of crisis especially when there is a lockdown. Let's
discuss some of the areas which can be planned and
executed effectively
1. If you are a service provider and customer is asking to
return the advance paid during the pre-COVID-19
period on which GST has been paid?
If tax has been at the time of receipt of advance from
customersbefore lockdown and reported in GSTR – 1 in
Table 11 and Receipt Voucher is issued.
In such cases, if supply is not made, issue a Refund
Voucher and report the same while filing GSTR – 1
without fail. Also, adjust the same in GSTR – 3B; this
process will ensure that tax liability is reduced to that
extent, and you need not pay additional cash.
2. The tax amount which I am reversing is more than
the liability I need to pay for April 2020. What should I
do in such cases?
If the tax liability to be paid is lesser than then the
amount adjusted through the refund voucher, then
you can claim the excess tax liability by filing Form RFD
– 01 and selecting the category as Refund of excess
payment of tax.”
3. The goods are still in transit, and the customer has
requested the order to be canceled? Tax invoice has
already been issued, what should be done in such
cases?
You can ask your transporter to bring the goods back
and issue a credit note against the invoice issued for
the supply of goods before the lockdown. Report the
credit note accordingly in GSTR – 1 and GSTR – 3B
without fail during the month in which the credit note is
issued. In case if you do not issue the credit note
immediately, this will have an impact on your cash
flows. This will ensure that the liability is reduced in the
month during which credit note is issued and also save
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“Behind Every Successful Business Decision, there is always a CMA”
the cash outflow. Normally we delay in accepting the
return of goods, but in this case, it should be handled
immediately so that the tax amount can be utilized for
new liability.
4. After the issue of the credit note, the tax liability is
not running to a negative amount, what should I do?
Can i get the amount back as it will help in payment of
salaries to my workers?
Yes, you can claim it as a Refund in case if the tax
liability amount is running into a negative amount. For
this, you need fileForm GST RFD – 01 and selecting the
category as a Refund of excess payment of tax.”
5. I am a registered taxpayer in GST and file my returns
every month, and my part-time accountant maintains
my accounts and file the returns every month on time.
He visits my shop and takes the data around the 15th of
every month, and for March 2020, we could not file the
return due to the lockdown. I am already having a
shortage of funds and becoming difficult to pay
salaries to my staff, do I need to file the returns with
late fee and interest?
The Government is aware of these challenges and has
relaxed the due dates for filing of returns as well as
exempted for payment of interest. So you can use
these funds for payment of salaries but do not forgot to
file the returns before the new dates else you will end
up paying interest and late fee, which will be
expensive.
The due dates for filing of GSTR – 3B Sl. NoAggerate
Turnover Interest Return Periods Due Date 1Above Rs
5 during the previous financial year Interest is
exempted for filing within 15 days of the due date and
after that interest is levied at a lower rate of 9?b –
April 2020By 24th June 20202Turnover between Rs
1.50 crores and Rs 5.00 Crores in the previous financial
year Nil Feb and March 2020
April 202029th June 2020
30th June 20203Turnover up to Rs 1.50 crores during
the previous financial year NilFeb – 2020
March – 2020
April – 2020 30th June 2020
3rd July 2020
6th July 2020
This extension is only for filing of GSTR – 3B, GSTR – 1
has to be filed on time. The Government of India has
taught of these challenges and hasshortlisted free
accounting and billing software's which are GST
compliant, and they are free till 31st March 2021 for
taxpayers having a turnover of less than Rs 150 lacs.
6. In February 2020, my accountant has wrongly
deposited tax amount of Rs 1.25 lacs into IGST account
for SGST Account, now I do not have any interstate
sales in March 2020, and in April my sales is Zero due to
lockdown, can I get the tax amount wrongly deposited
in IGST account and not utilized it.
Yes, you can withdraw the same by filing the Form GST
RFD – 01 with the reason as Excess balance in electronic
cash ledger.
7. While making payment for March, the account has
deposited in the wrong tax account; he has deposited in
CGST account instead of IGST account, I don't want to
withdraw the same but transfer the same from CGST
account to IGST account, is it possible to do it else I
need to break my fixed deposit and remit the tax.
Transfer from one tax ledger account to another tax
ledger account is enabled now. This transfer can be
done by using the Form GST PMT – 09. Previously this
was not possible, and taxpayers had to deposit the cash
again, causing a lot of hardships.
8. I have deposited the interest amount of Rs 14,258 for
January 2020 into late fee account, can I transfer the
same to interest account from late fee account else I
need to borrow cash and deposit the same to file my
return?
Yes, you can transfer the amount of Rs14,258 from the
late fee account to an interest account using the Form
GST PMT – 09 and file your returns without borrowing
cash from the market.
9. I am registered as a composition dealer under GST. I
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“Behind Every Successful Business Decision, there is always a CMA”
not having any cash now to pay the taxes as the
available cash has been used to pay salaries for my
staff, is there is any relaxation for filing of returns or I
need to file it immediately or if I delay the same, do I
need to pay interest on it?
Relaxation is also provided for the composition
taxpayers as this will give some legroom for the traders
for payment of salaries and other fi xed
establishments. The due dates for filing of the returns
are Sr.NoForm Period Last date for filing 1Form GST
CMP – 08January 1st to 31st March7th July 20202Form
GSTR – 4 April 1st, 2019 to 31st March 202015th July
2020
10. I am worried a lot like many of my suppliers who are
in MSME, impacted badly due to lockdown will not be
able to file the returns on time and as result of it I will
not be able to take the input tax credit, it is going to
impact my working capital very badly especially in the
current market conditions. Is there any relaxation for
matching for taxpayers like me?
Yes, the Government has provided relaxation and it has
deferred the provisional matching by max 10% till
September 2020. Which means that you can take the
credit of all the invoices which are reflected in GSTR – 1,
but for this, you need to ensure the following points
a) Your supplier must file the returns, follow up with
your suppliers and ensure they file the returns
b) This exemption is available from Feb to August 2020,
and while filing the September return, it has to be
considered 10% on a cumulative basis.
Every sector and every registered taxpayer and daily
wage earners are impacted due to the lockdown, and
the Government has taken this drastic measure to save
lives over the live hood. Still, at the same time, various
measures have been announced from time to time to
support the trade and industry. The above-said process
and business process, if implemented effectively, will
give some lifeline to the business and help them to tide
over the crisis. The GST measures announced to date
will provide the much-needed cash flows to the
taxpayers and help them to meet their business
expenses. Working capital is the lifeline for the
business; cash is not the only component, but
optimizing inventory, aggressive follow up with
debtors, and realizing them at the earliest, along with
adopting the GST measures, will help the taxpayers to
survive the aftermath shocks of COVID – 19.
Disclaimer
Any views or opinions represented above are personal
and belong solely to the author and do not represent
those of people, institutions or organizations that the
author may or may not be associated with in
professional or personal capacity unless explicitly
stated. Any views or opinions are not intended to
malign any religion, ethnic group, club, organization,
company, or individual
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