Is Your GSTIN Updated ?
By : CA Alok Krishan
Yes you have been efficient. You migrated well in time received ARN and yes you went beyond it kudos to the team which also got GSTIN without much ado. But I am not talking about this process. As per latest statistics, majority of the taxpayers have already successfully migrated and you are one of them.
But this is not what I wish to bring to your notice with this write up. I presume that you have successfully taken the first steps. But are we taking the subsequent steps? I would here like to draw your attention to certain sections of the CGST Act
Section 2(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-section (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-section (3) and sub-section (4) of section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-section (3) and sub-section (4) of section 7 of the Union Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
Section 2(63) “input tax credit” (ITC) means the credit of input tax;
Section 16(1) Entitles registered person to take credit of ITC charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business.
Section 16(2) Prescribes the following four preconditions to availment of ITC :
(a) Claimant is in possession of a tax invoice or debit note or such other prescribed tax paying documents as may be issued by a registered supplier.
(b) He has received the goods or services or both.
(c) Tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of available ITC; and
(d) He has furnished the return under section 39:
This ITC may be limited or not be permissible as per other conditions prescribed under law. ITC will become a major component of your tax payment and that is the intention of law… the unbreakable chain of ITC till consumption. And to claim your genuine ITC you need to be in procession of a valid Invoice or Debit Note prescribed taxpaying document (Not still prescribed). And for these to be valid we will have to refer to the rules for issue of an invoice or a debit note. Going through these rules amongst other essentials is the mention of GSTIN of the seller and the buyer (else the chain cannot be linked).
So when I say “Is your GSTIN updated” I wish to draw your attention to updation of your GSTIN with your vendors. Yes their invoice has to carry your GSTIN and you need to ensure its updated for your credit.
Vendors, just do not think of your material vendors.. think beyond that as the credit is not only for goods purchased it is for ITC charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. These services for furtherance of business include Telephone and Mobile Services, Internet and Broadband Services, Consultants and Chartered Accountants, Hotel & Restaurant Bills (subject to conditions and place), Travel Tickets, Cab bills, Stationery purchased from the corner vendor or tea served to employees, your canteen contractors in factories et ell subject to conditions of eligibility of ITC or prescribed negative list. All these which never counted earlier are your ITC contributors now and we need to update our GSTIN with them also.
I suggest, scan your expense side, identify all expenses where ITC is available, list out their vendors and update your GSTIN with them. Let this chain continue. The chain of taking GSTIN of suppliers and providing GSTI to vendor and the vice versa will help in seamless credit, the crux of GST. Of course materiality and ease of operation are to be considered but ignorance is not bliss here.
CA Alok Krishan is a practicing Chartered Accountant with a professional degree in law at Chandigarh. He has a strong 22 years post qualification experience out of which around 10 years has been with corporate sector and the balance as a practising Chartered Accountant with specialisation in Indirect Taxes. The views expressed are his personal views and source of law should be referred to before relying on the same.