Contents

Introduction

  • Food Processing Industry has had a severe impact on its functioning after the changes brought about in the new taxation regime under the GST policy in India.
  • As you already know that GST launched in India in 2016 with the aim of “One Nation, One Tax”.
  • By replacing all the central taxes like VAT, CST, etc., GST emerges as a single tax that will be levied at every stage of the production distribution chain.
  • It is so by giving the benefit of  Input Tax Credit (ITC) of the tax remitted at a previous stage.
  • Here we are providing all the questions you might have in your mind regarding e-commerce under GST.

Do I have to register all my companies separately if I have multiple manufacturing units in a state/UT?

You have an option here to register your business verticals separately and the authorities will grant you a single registration in the state/ UT.

Payment of tax for sending semi-cooked food from Gurgaon to Delhi

If you are a registered person, then you have to pay Integrated goods and services tax (IGST) as it is inter-state supply and branches in different states are considered as a distinct person.

Payment of Transport charges by the recipient resulting in added value of supply.

If instead of the supplier who is manufacturing the food products, the recipient is paying the transport charges, it will form part of the transaction and thus add to the value of supply.

A registered person who has rental premises manufacture taxable food items. Is he/she eligible to claim ITC on tax charged on the rental amount?

Yes

Whether the supplier can reduce the tax elements against goods returned to him?

The supplier will issue credit notes to his recipient to reduce the tax liability in case the recipient returns the goods only if the recipient reduces the claim of ITC if it is available by him

What is the rate of tax on cold drinks(non-alcoholic) and ice creams when served in non-AC Restaurant along with food?

  • Non-AC Restaurant – 12%
  • A-C Restaurant- 18%
  • If composition scheme(if ice-cream is not manufactured by the restaurant) is availing by the restaurant, the rate of tax shall be 5% of the Aggregate Turnover.

The supplier has sold machinery for hotel industry on 28-06-2017. The purchaser has received the invoice and machinery on 05-07-2017.  Whether claim on ITC of Duty/ VAT allowed under existing law?

  • Such credit is not admissible in case of machinery, being capital goods.
  • The credit of eligible duties and taxes in respect of only inputs/input services in transit during the transition from Pre-GST to Post-GST is allowable only when you pay the tax under the existing law and record this receipt in your books of accounts within thirty days

Contents like Atta/ Maida/ Besan supplied in bulk liable to tax under GST

If the outward supply is made under a registered name and put up in a unit container then it would be liable to pay tax-  5%

These are the following questions a rice dealer might have who deals with both branded and un-branded rice and purchase them within the state (locally) and also from outside (inter-state purchase). 

In case of turnover more than 5.5 crores, shall an un-registered person under VAT register now?

  •  You have to register yourself in the state/ UT from where you make a taxable supply of goods and services:
    • If your Aggregate Turnover in a financial year exceeds INR 20 lakhs
  • In your case, the liability to get registration accrues:
    • From the date the Aggregate Turnover in the current financial year exceeds INR 20 lakhs

Registration compulsory to avail ITC in case of suppliers charging 5% IGST on basmati rice.

  • A registered brand name of basmati rice is taxable at the rate of 5%.
  • The suppliers of branded basmati rice located in other states charge IGST at the rate of 5%, whose credit is availed only when the recipient is registered under the CGST Act, 2017.
  • You must register yourself if you want to avail input tax credit(ITC).
  • If you are making inter-state purchases then you do not mandatorily required to register yourself.

In case of turnover of 90% un-branded and 10% branded rice. Can I sell both of them in one invoice?

  • You can include both Branded and Unbranded rice in one invoice.
  • If you are a supplier,then you have to issue a tax invoice.
  • In case of exempted goods, you have to issue a bill of supply.
  • Thereafter, you shall issue a separate bill of supply in case of the exempt component as all the contents of the bill of supply are present in the tax invoice.

Issue of Tax Invoice for all sales after registration?

  • A registered brand name is taxable at the rate of 5%.
  • A tax invoice is issued for supply of taxable goods
  • A bill of supply is issued in case of exempted goods i.e. unbranded rice.

Furnishing of information like HSN, place of supply, taxable value, etc. in the invoice in case of an un-registered taxable person necessary? 

  • In case you register yourself, you have to record in the tax invoice the place of supply, HSN codes, taxable value.
  • You cannot issue a tax invoice unless you register yourself.

If a person owns a restaurant cum bar anywhere in India and has successfully migrated to GST. The first-floor area of the restaurant is air-conditioned and supplies food as well as liquor (food processing), the ground floor serves only an is non-air-conditioned. The restaurant owner may want to know the following things

Whether they will charge GST @ 12% on supplies made from the ground floor or 18%?

  • They will charge 18% GST irrespective of the place of supply.
  • Any part of the property which is having a facility of air-conditioning, they will charge at a rate of 18% for all the supplies.

Whether they can raise one tax invoice for both food and liquor or not?

For food- Tax Invoice

Liquor – Bill of supply

Rate of tax for supplies of food made from their takeaway counter

Chargeable tax is 18%

Items used like crockery in the restaurant can claim ITC of CGST and SGST?

These materials can claim and get credit of even IGST where such goods are from outside the State against a tax invoice.

Eligibility for ITC on crockery items purchased locally in the month of March 2017 and paying VAT of Rs.72,500/-. The goods are business assets

  • If the State VAT law allowed ITC on such goods, the credit was available on the date of purchase.
  • The SGST Act, 2017 allows it to carry forward the credit on account of VAT.

If a person applies for voluntary registration and obtains GST registration:

Will I get ITC on the IGST paid on branded rice lying in stock on the date prior to the date of my liability?

Yes, if you voluntarily register yourself you can take credit of input tax held in stock on the day immediately preceding the date of grant of registration.

From when I shall start charging tax i.e. from the date I apply for registration or only I have got my registration number?

  • Only from the date, they grant the registration.
  • You can also issue the tax invoice from that particular date.
  • Prior to it neither you can issue tax invoice nor charge any tax on the invoice.

Is it compulsory to show the tax amount separately on the face of the tax invoice?

Yes, it is mandatory.

I have three shops in the city, can I issue tax invoices using a prefix for these different locations?

Yes, you shall ensure that the invoice conforms to the requirements.

Is it necessary to mention the place of supply in the tax invoice for local sales?

  • For local sales, you do not need to mention the place of supply.
  • If it is inter-state, you shall mention it in the tax invoice.

Will I get ITC on CGST & SGST paid on packing materials, office stationery, computer and accounting software purchased and lying with me as stock as business assets on the date preceding the date of which I have become liable to pay tax under GST?

  • If you voluntarily register yourself, you can take credit of inputs held in stock and inputs in semi-finished goods held in stock on the day immediately preceding the date of grant of registration
  • There are 2 important things to keep in mind that:
    • goods in stock must qualify as “input” and
    • tax paid at the time of its purchase must qualify as “input tax” under GST.
  • If you do not capitalize the goods in the books of account, it will not be treated as an input.
  • Therefore, Credit on the availability of computers will not be there if the value of the same has been capitalized in the books of accounts.
  • If you acquire an accounting software before you register and pay taxes on it, credit in respect of such taxes is not available.
  • In case you are paying CGST/ SGST on packing materials, credit is available to you.

Conclusion

You can get comprehensive assistance on GST Registration and GST Return Filing. You can also use our GST software for doing end-to-end GST compliance.