These changes mainly focus on technology-driven compliance, stricter monitoring of Input Tax Credit (ITC), expansion of e-invoicing, and improved refund mechanisms. In this article, we explain the latest GST changes from April 2026, their practical impact on businesses, and what taxpayers must do to remain compliant.

New GST Rules 2026: Key Updates for FY 2026-27

1. Mandatory Filing of LUT for FY 2026–27

Every financial year, exporters are required to furnish a fresh Letter of Undertaking (LUT) to export goods or services without payment of IGST.

• The LUT filed for FY 2025–26 expired on 31st March 2026
• Exporters must file a new LUT in Form RFD-11
• Without LUT: –
  • IGST must be paid at the time of export
  • Refund must be claimed later

Practical Impact: –
Failure to file LUT on time can block working capital, especially for businesses with frequent exports. Therefore, exporters should prioritise LUT filing at the beginning of the financial year.

Exporters must file a new LUT in Form RFD-11 through the GST portal. Businesses can also consult professionals for GST LUT filing services.

2. Removal of ₹1,000 Minimum Refund Threshold

Earlier, GST provisions restricted refund claims below ₹1,000. This condition has now been removed.

• Refund claims can now be filed for any amount
• Applies across all categories of eligible refunds

Practical Impact: –
This change benefits small businesses, freelancers and startups, ensuring that even minor refund amounts are not lost. It also promotes fairness in the tax system.

3. New Invoice Series Requirement

As per GST compliance norms, businesses must start a fresh invoice numbering series from 1st April 2026.

• Applicable to: –
  • Tax invoices
  • Debit notes
  • Credit notes
• Invoice numbers must be unique for the financial year

Practical Impact: –
Using the previous year’s invoice series may create reconciliation issues and could trigger system errors during return filing. Proper invoice structuring ensures smooth compliance and audit readiness.

4. Expansion of e-Invoicing Applicability

E-invoicing continues to expand as part of GST digitisation efforts.

• E-invoicing is mandatory for businesses whose aggregate turnover exceeded ₹5 crore in any financial year from FY 2017-18 onwards.
• Additional compliance: –
  • Businesses above a certain threshold (e.g., ₹10 crore) must upload invoices within a prescribed time (typically 30 days)

Practical Impact: –

• Enhances real-time tracking of transactions
• Reduces fake invoicing and tax evasion
• Requires businesses to upgrade accounting systems and processes

Non-compliance with e-invoicing rules may result in invoices being treated as invalid, impacting Input Tax Credit (ITC).

5. Stricter ITC Monitoring through ECRS

The GST portal now places stronger emphasis on Electronic Credit Reversal and Reclaimed Statement (ECRS).

• Tracks ITC reversals and reclaims in detail
• Detects mismatches and irregularities
• Negative balances may trigger system warnings or restrictions

Practical Impact: –
Businesses must ensure: –

• Accurate and proper reconciliation between GSTR-2B and purchase records
• Proper documentation for ITC claims
• Timely reversal and reclaim entries

This change significantly reduces the scope for ITC-related errors.

6. Changes in GTA (Goods Transport Agency) Compliance

GST provisions relating to Goods Transport Agency (GTA) services have been clarified.

• GTA service providers can opt for: –
  • Forward charge mechanism
• However, a declaration must be provided by the transporter

If the declaration is not available: –

• The liability shifts to the recipient under the reverse charge mechanism (RCM)

Practical Impact: –
Businesses must: –

• Verify transporter declarations
• Maintain proper records
• Ensure correct tax treatment

Failure to do so may lead to unexpected tax liability and compliance issues.

7. Strengthening of Invoice Management System (IMS)

The Invoice Management System (IMS) has become more robust and active.

• Businesses must respond promptly to: –
  • Credit notes
  • Invoice modifications
• Rejected or ignored credit notes may: –
  • Increase tax liability
  • Affect ITC claims

Practical Impact: –
This change promotes better communication between suppliers and recipients. It also ensures accurate reporting and reduces disputes.

8. Relaxation under GST Rule 14A

A positive change has been introduced for small taxpayers under Rule 14A.

• Earlier requirement: Minimum 3 tax periods of return filing
• New requirement: Only 1 tax period

Practical Impact: –
This provides small businesses with flexibility, allowing them to exit certain schemes or compliance requirements more quickly.

9. Stability in GST Rate Structure

From 1st April 2026, no major changes have been made to GST rates.

The existing structure and framework broadly continue: –

• 0% – Essential goods
• 5% – Daily-use items
• 12% & 18% – Standard categories
• 28% and above – Luxury and sin goods

Practical Impact: –
Stable tax rates help businesses with: –

• Pricing strategies
• Financial planning
• Long-term contracts

It also reduces classification disputes and confusion.

10. Increased Reliance on System-Based Compliance

GST compliance is now increasingly technology-driven.

Key developments include: –

• Blocking of returns for: –
  • ITC mismatches
  • Unpaid liabilities
  • Incorrect filings
• Restrictions on filing very old returns
• Mandatory updates of business details, such as bank accounts

Practical Impact: –
The GST portal itself acts as a compliance enforcement mechanism. Businesses must ensure real-time accuracy in GST filings to avoid disruptions.

11. Focus on Ease of Doing Business

The broader policy direction behind these changes is to: –

• Simplify the tax compliance.
• Reduce litigation
• Improve refund timelines
• Enhance transparency

Practical Impact: –
While compliance requirements are stricter, the system is becoming more predictable and streamlined, benefiting honest taxpayers.

12. Rising GST Collections Reflect Improved Compliance

Recent trends show steady and stable growth in the GST collections, indicating: –

• Better compliance
• Increased economic activity
• Stronger enforcement

Practical Impact: –
Higher collections reflect the success of digitisation and compliance measures, strengthening the overall tax ecosystem.

13. 30-Day Time Limit for E-Invoice Reporting

Businesses with a turnover above ₹10 crore must report invoices to the IRP within 30 days.

If not:

• IRN will not be generated
• The invoice becomes invalid for ITC

Key Takeaways

Conclusion

The GST changes effective from 1st April 2026 highlight the government’s focus on technology-driven compliance, stricter ITC monitoring, and greater transparency in tax reporting. Businesses must now pay close attention to e-invoicing rules, LUT filing, invoice management, and ITC reconciliation to avoid penalties and system restrictions. Companies that adopt automated accounting systems and maintain accurate GST records will find it easier to comply with the evolving GST framework.

FAQs

1. Is filing LUT mandatory every year under GST?

Yes, businesses engaged in exports or supplies to SEZ without payment of IGST must file a fresh LUT every financial year. The previous year’s LUT automatically expires on 31st March.

2. What happens if I do not follow the new e-invoicing rules?

If e-invoicing provisions are applicable and not followed:

• The invoice may be treated as invalid
• The buyer may not be able to claim Input Tax Credit (ITC)
• Penalties may also be imposed under the GST law

3. Can I claim a GST refund for a small amount below ₹1,000?

Yes, from 1st April 2026, the minimum refund limit has been removed, and you can claim refunds for any eligible amount, even below ₹1,000.

4. What is the importance of starting a new invoice series every year?

Starting a new invoice series helps: –

• To maintain the proper records for each financial year
• Avoid duplication or any mismatch in GST returns
• Ensure smooth and hassle-free reconciliation during audits

5. How do the new GST changes impact small businesses?

The impact is mixed: –

• Positive: Easier refund claims, flexibility under Rule 14A
• Challenging: Stricter ITC tracking, increased compliance requirements

Overall, small businesses need to be more careful with timely filing and accurate reporting.

The post GST Changes from April 2026: New GST Rules and Updates for FY 2026-27 appeared first on Kanakkupillai Learn.

What is the GST Welcome Kit?

Once a business receives its GST registration, the GST department might send a “welcome to the GST family” letter to the registered principal place of business. These welcome kits typically include:

• A letter from the GST department welcoming you
• Information about how to comply with GST
• Confirmation of your GSTIN and registration details

Although receiving this letter is not a requirement for complying with the tax laws, it has become part of the GST Department’s verification process to verify that the registered address exists and the business is conducting operations at that location. In the event that a welcome letter cannot be delivered and is returned to the GST Department, this may raise red flags about the accuracy of the address provided on the GST Registration application.

What Causes GST Registration to be Suspended?

GST registration may be suspended for several reasons, including incorrect address details, non-delivery of official communication, or failure to comply with GST regulations.

A GST registration may be suspended or cancelled by GST authorities under the powers provided in Section 29 of the Central Goods and Services Tax (CGST) Act, 2017, along with Rules 21 and 21A of the CGST Rules, 2017.

Under these provisions, authorities may suspend or cancel a GST registration if they believe the business is not operating from the declared principal place of business.

GST registration may also be suspended if the welcome letter sent by the tax authority is returned as “undelivered.” This may lead authorities to suspect one of the following issues with the registered address:

1. The taxpayer’s registered address is incorrect.
2. The registered premises do not exist.
3. The taxpayer is not conducting business from the declared premises.

If such concerns arise, the Proper Officer may suspend the taxpayer’s GST registration under Rule 21A of the CGST Rules and issue a notice seeking clarification or proof of the business address.

In recent years, such cases have increased following the introduction of faster GST registration procedures that use Aadhaar authentication and PAN verification. To ensure compliance, GST authorities now conduct post-registration address verification, which may include sending a welcome letter to the registered business address.

Who is at Risk?

While not all registered GST businesses will encounter these situations, various circumstances make it more likely for the GST-registered business to have its suspension proceedings commenced against it.

• Businesses that have changed offices – If you move your office and do not change your principal place of business on the GST portal, any mail sent to the business will be sent to the old address and returned.
• Home-based startups or freelancers – Many new businesses and freelancers begin working out of their homes, and delivery services do not usually deliver mail during office hours.
• Newly registered businesses – Businesses that register for GST before establishing their office could register for GST and then be unable to fully use that office location.
• Shared or co-working space – If your business name is not posted clearly at the location, the mail may not be delivered.
• Other address issues – Small issues such as incorrect building numbers and missing floors, in addition to errors or incorrect pin numbers, will cause a delivery failure.

Step-by-Step Guide: What to Do If You Receive a Suspension Notice

Receiving a GST suspension notice can be stressful, but in many cases, the issue can be resolved by responding properly and providing address verification documents.

Step 1: Check the notice on the GST portal

Log in to the GST portal and review the notice issued by the proper officer. The notice usually explains the reason for suspension and requests clarification.

Step 2: Identify the reason for suspension

Confirm whether the issue is related to:

• Address verification
• Non-delivery of communication
• Discrepancies in GST returns

Step 3: Prepare supporting documents

If the suspension is due to address verification, you may need to submit documents such as:

• Rent agreement or lease deed
• Property ownership documents
• Electricity bill or utility bill
• Photographs of the business premises

These documents help prove that the business operates from the declared location.

Step 4: Reply to the notice online

The GST notice reply must usually be submitted through the online portal within the time limit mentioned in the notice. Provide a clear explanation along with supporting documents.

Step 5: Update the address if required

If the address is incorrect or the business has shifted premises, you should file an amendment application for the principal place of business on the GST portal.

Step 6: Wait for verification

After reviewing the reply, the GST officer may:

• Revoke the suspension, or
• Conduct a physical verification of the business premises
• Once the officer is satisfied, the GST registration can be restored.

How to Check GST Suspension Status

Taxpayers can easily check whether their GST registration is active, suspended, or cancelled through the GST portal.

Follow these steps to check your GST status:

• Visit the GST portal.
• Go to Search Taxpayer → Search by GSTIN/UIN.
• Enter your GSTIN number and captcha code.
• Click Search.

The system will display your GST registration details, including:

• Active status
• Suspended status
• Cancelled registration

If your registration has been suspended, you may also see details of the notice issued by the GST officer in your dashboard under Services → User Services → View Notices and Orders.

Regularly checking your GST portal notifications helps ensure that you respond to any notices within the specified time.

Documents Required for GST Address Verification

If GST authorities suspend your registration due to address verification issues, you may need to submit documents that prove your business operates from the declared premises.

Commonly accepted documents include:

• Rent agreement or lease deed
• Property ownership documents
• Latest electricity bill or utility bill
• No Objection Certificate (NOC) from the property owner
• Photographs of the business premises
• Business name board displayed at the location

In some cases, the GST officer may also conduct a physical verification of the premises to confirm that the business is operating from the registered address.

How Long Does GST Suspension Last?

GST registration suspension is usually temporary and remains in effect until the GST officer completes the verification process.

The duration depends on several factors, such as:

• The reason for the suspension
• The time taken by the taxpayer to respond to the notice
• Whether additional verification or physical inspection is required

Generally, if the taxpayer submits the required explanation and supporting documents promptly, the GST officer may revoke the suspension within a few days to a few weeks.

However, if the taxpayer fails to respond or the explanation is unsatisfactory, the GST authorities may proceed to cancel the GST registration under Section 29 of the CGST Act.

Tips To Prevent GST Registration Suspension

A few basic compliance measures can prevent GST registration suspension from occurring for businesses.

1. Update Business Address on GST Portal

Always provide the GST Portal with your principal place of business as soon as it changes.

2. Ensure Accessibility Of The Premises

Premises registered with the GST must be accessible by post and able to be inspected by way of:

• The premises registered under GST should be accessible for postal communication and inspection during normal business hours.

3. Display Business Name

Display business names and GST Identification number(s) in a prominent position. This can be particularly important if other businesses exist within the same premises.

4. Monitor GST Portal Communication

Monitor the following for receipt of GST notices:

• GST notices on the GST portal;
• GST notices sent via your registered email address; and
• Any GST notices sent to your business address.

5. Keep Proper Documentation

Ensure you have documents supporting your business address, such as a lease agreement, utility bills, etc.

Implementing the measures above will greatly reduce the chances of the GST registration being suspended.

Why are GST Authorities Doing This?

The GST department has increased scrutiny of registrations in recent years to tackle fake firms and fraudulent input tax credit claims.

One common method used by fraudulent entities is obtaining GST registration using fake or temporary addresses. Such entities may issue fake invoices to claim or pass on input tax credit without actual business activity.

To combat such practices, authorities have introduced multiple verification mechanisms, including:

• Aadhaar authentication during registration
• Post-registration verification
• Physical address checks

Sending a welcome letter to the registered address is one of the simplest methods to verify whether a business actually operates from the declared premises. If the letter is returned undelivered, it may indicate that the address is incorrect or that the business does not exist at that location.

These measures aim to protect the integrity of the GST system and reduce tax fraud.

Conclusion

Many businesses in India are increasingly concerned about GST registrations being suspended due to undelivered welcome letters. This may seem serious, but essentially, it is a step taken by GST authorities to verify that the address provided by the business for its GST registration is real.

The best course of action when your GST registration has been suspended is to take prompt action by confirming the registered location and supplying evidence through the GST portal.

By having accurate registration information, ensuring the registered business is accessible and monitoring communication to/from the GST authority, companies can minimise unnecessary interruptions to their business and continue to comply with GST.

Frequently Asked Questions (FAQs)

1. What does GST registration suspension mean?

GST registration suspension means that the tax authorities have temporarily deactivated your GST registration while verification or cancellation proceedings are ongoing.

2. Why was my GST registration suspended?

GST registration may be suspended if authorities suspect that the business is not operating from the registered address, if returns are not filed, or if discrepancies are found in GST filings. Suspension usually occurs during verification or cancellation proceedings.

3. How to activate suspended GST registration?

To activate or restore a suspended GST registration, the taxpayer must identify the reason for suspension, rectify the issue, and submit a reply or supporting documents through the GST portal. Once the tax officer is satisfied with the explanation, the suspension may be revoked.

4. How do I reply to a suspended GST notice online?

You can reply to a GST suspension notice by logging into the GST portal, accessing the notice under the “Services → User Services → View Notices and Orders” section, and submitting a reply with supporting documents before the deadline specified in the notice.

Need Help Restoring Your GST Registration?

If your GST registration has been suspended due to address verification issues, our GST experts can help you respond to notices, update your registration details, and quickly restore your GST status. Talk to Kanakkupillai GST Experts

The post GST Registration Suspended for Undelivered Welcome Kit? Here’s What to Do appeared first on Kanakkupillai Learn.

GST has opened up fresh prospects for MSMEs, including access to the broader Indian market and the advantages of input tax credit, and has also highlighted the necessity of greater compliance through digital tax submissions and financial record-keeping.

What is an MSME?

The Government of India recognises a category of business known as a Micro, Small, and Medium Enterprise (MSME), defined by its annual revenue and investment levels. Job creation and industrial growth depend on MSMEs, which are therefore essential to the nation’s economic progress.

Meaning:

A small company involved in production, processing, or service delivery is known as an MSME. Though they operate on a smaller scale than bigger businesses, these companies significantly contribute to the economy.

MSME categories:

Three separate classes of MSMEs are defined under the Micro, Small, and Medium Enterprises Development Act, 2006:

• Micro Businesses.
• Small companies.
• Medium-sized Businesses.

Classification Guidelines:

• Annual revenue statistics, together with plant, machinery, or equipment investments, define MSMEs.
• Micro businesses have the lowest investment and turnover ceiling.
• Small businesses run on a modest scale.
• Although still smaller than larger businesses, medium-sized companies have higher investment and turnover.

Importance of MSMEs:

• MSMEs help to increase exports, support industrial output, and create jobs.
• They support local economic growth and encourage entrepreneurship.

Government Aid:

The government provides MSMEs with many benefits, including financial aid, tax incentives, improved access to credit, and support initiatives designed to boost competitiveness and growth. Businesses that complete MSME Udyam registration online can easily access these benefits and government support programs.

Impact of GST on MSMEs in India

The functioning of Micro, Small, and Medium Businesses (MSMEs) in India has been greatly affected by the Goods and Services Tax Act 2017. While GST has simplified the tax structure, it also brings some problems and possibilities for MSME companies.

1. Effective Tax System

• Before GST was introduced, MSMEs had to negotiate a variety of indirect levies, including service tax, excise tax, and VAT.
• By combining several taxes into a unified, coherent tax structure, GST has streamlined taxation and improved MSMEs’ openness.

2. Improved Market Access

• By eliminating interstate tax barriers, GST allows MSMEs to sell their products and services across many states without having to follow intricate tax rules.
• Businesses that complete online GST registration for MSMEs can easily conduct interstate trade and expand their market reach.

3. Benefits of Input Tax Credit

• Under GST, MSMEs can apply for Input Tax Credit for taxes paid on business-use items and services.
• This helps to lower the total tax liability and lessens the cascading tax impact, hence increasing cost efficiency.

4. Greater Adherence Requirements

• Businesses must keep accurate records and submit periodic returns online as required by GST.
• Many MSMEs have found it difficult to adjust to digital compliance systems and the frequency of return submissions, which could add to administrative duties.

5. The Impact on Working Capital

• GST might affect MSMEs’ working capital since tax responsibilities typically arise along the supply chain.
• Companies may have to pay taxes before they get customer payments, which might cause a short-term revenue stop.

6. Composition Scheme for Small Firms

• With lower compliance requirements, GST offers qualified MSMEs a composite strategy permitting taxes at a lower rate.
• This program reduces complicated calculations and filings.

7. Encouragement of Formalisation

• GST has encouraged many MSMEs to enter the established economy.
• Businesses that formerly conducted operations informally are now registering for GST to take advantage of input tax credits and get better market access.

Though it has simplified taxation and increased market access, it has also increased compliance duties, hence making good financial management and adherence to GST rules vital for the success of MSMEs.

Challenges Faced by MSMEs under GST in India

Although GST has streamlined the tax system and increased openness, MSMEs are still finding it difficult to adapt to the new system.

1. Increased compliance requirements

• MSMEs are expected to file many returns and maintain precise digital records of their transactions under the GST system.
• For small-scale businesses with limited accounting expertise, it is time- and effort-inefficient to comply with the many return requirements and documentation under the GST system.

2. Technology dependence

• The GST system is technology-dependent, and companies are expected to register, pay taxes, and file returns online.
• Lack of technology expertise and/or inadequate and fluctuating internet connectivity are causing difficulties for many MSMEs, especially in rural and semi-urban areas.

3. Pressure on working capital

• MSMEs are expected to pay taxes under the GST system at the time of sale, even if they have not received payments from their customers.
• This is causing difficulties for many MSMEs, especially those with longer credit periods.

4. Complex Input Tax Credit System

• GST has great benefits in the form of the Input Tax Credit (ITC), yet claiming it calls for painstaking documentation and matching of bills with supplier statements.
• If suppliers fail to properly file their returns, MSMEs may struggle to get the credit, hence possibly incurring financial losses.

5. Increased administrative costs

• To follow GST rules, many MSMEs have to engage expert accountants or consultants.
• Small companies with restricted finances may find this rise in operating costs onerous.

6. GST regulations change often

• GST rules and compliance procedures are updated from time to time.
• For MSMEs, staying current with these often-changing changes might be difficult since it calls for constant awareness and flexibility.

7. Late refunds for some companies

• MSMEs involved in exports or those qualified for tax rebates may have difficulties in getting such reimbursements.
• This event could cause cash flow to be blocked, hence impeding their capacity to properly run daily business activities.

8. Lack of training and awareness

• Many small business owners lack enough information about GST procedures, compliance requirements, and tax advantages.
• Filing errors and more compliance difficulties could follow from a lack of knowledge and training.

In short, although GST has improved India’s tax system, MSMEs still struggle financially and operationally. Tackling these problems through better knowledge, simplified compliance procedures, and technical aid will enable MSMEs to get more benefits from the GST system.

Frequently Asked Questions

1. What are the GST changes for MSMEs?

GST has created a unified indirect tax system that has supplanted several levies, including VAT, excise duty, and service tax. Simplified tax systems, electronic compliance solutions, and perks, including Input Tax Credit, have been made available to MSMEs. Moreover, it has launched initiatives, including a composition plan for small businesses, that allow them to pay taxes at a lower rate and streamline the return filing process.

2. Is GST necessary for  MSMEs?

If their yearly revenue exceeds the government-stipulated threshold, MSMEs have to register for GST. Some small companies choose to register voluntarily to obtain Input Tax Credit and participate in interstate trade even in cases when registration is not required. Additionally, GST registration improves credibility and lets MSMEs collaborate with bigger firms that favour partnering with registered suppliers.

3. What is the GST exemption limit for MSME?

If their annual turnover is under the statutory limit, small enterprises do not need to register for GST. Most states provide exemptions for service providers at ₹20 lakh and for product suppliers at ₹40 lakh. For unique category states, however, this restriction could change. Unless they choose to register voluntarily, companies running under this level can engage in trade without GST registration.

4. How does GST 2.0 aim to benefit  MSMEs?

GST 2.0 refers to the proposed adjustments to the GST system that aim to make it easier for companies and taxpayers and reduce the burden. Through a digital platform, the main goals for MSMEs are to streamline return filing, hasten refund realisation, and increase efficiency and effectiveness in Input Tax Credit matching.

5. How does GST help MSMEs to expand their business?

GST has eliminated several hurdles in the form of taxes for MSMEs in many states of India; they may now grow their business and sell their goods and services throughout several states, free of complicated taxes and meeting various laws and rules of various states.

6. What challenges do MSMEs face under GST?

Under the GST regime, MSMEs are sometimes required to file returns; thus, they must maintain transaction logs and abide by the digital rules of GST. Small-scale companies and MSMEs have great difficulty in following the GST framework, but with enough information and support, MSMEs may easily surmount these hurdles and profit from the GST system.

Empower Your MSME With Kanakkupillai

At times, business owners find it challenging to navigate MSME compliance, registration, and regulatory requirements. From MSME registration services to dealing with legal documents, government submissions, and compliance issues, seeking help from experts can make a big difference in making these processes easier for you. And this is where KANAKKUPILLAI can help you as your trusted business partner.

At KANAKKUPILLAI, we offer a wide range of support services for MSME registration, compliance, documentation, and more. We help businesses understand all MSME compliance requirements and make the most out of MSME schemes available in the market.

At KANAKKUPILLAI, our organisation is dedicated to offering precise, prompt, and efficient services for businesses in India. Whether you want to establish a new business or run a well-established MSME business, we can help you at every stage of MSME compliance services.

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The post Impact of GST on MSMEs in India appeared first on Kanakkupillai Learn.

The GST system has classified exports as zero-rated supplies. This shows that the products and services exported from India are exempt from domestic taxes.

To facilitate the refund of taxes paid on inputs and Integrated GST (IGST) on exported products and services, the GST system has introduced provisions to help exporters. This will greatly benefit businesses’ cash flow, which, in turn, will increase India’s global business competitiveness.

What is GST Export Refund?

The refund of Goods and Services Tax (GST) paid on goods or services exported from India is known as a GST export refund. Under GST, exports are treated as zero-rated goods, hence free from taxes, enabling exporters to recoup any taxes paid.

Meaning: The process by which exporters reclaim taxes paid on inputs or Integrated GST (IGST) connected with exported products or services is known as the GST export rebate. This method guarantees that internationally competitive exports stay tax-free.

GST’s zero-rated supply: The Integrated Goods and Services Tax Act of 2017 defines exports as zero-rated supplies. This categorisation lets exporters either pay IGST at the time of sending items and then request a refund, or export without paying tax under a bond or Letter of Undertaking (LUT) and then seek a refund of the input tax credit.

Types of Export Refunds: Exporters have two ways of asking for refunds:

• Refund for IGST paid on goods or services exported.
• Refund of unutilised Input Tax Credit (ITC) pertaining to zero-rated goods.

Refund Applications: Refund applications must be filed online through the GST portal together with relevant supporting documents, including shipping bills, invoices, and export information.

Aim: The main goal of GST export refunds is to guarantee that taxes do not weigh down exported goods and services. This project improves Indian businesses’worldwide competitiveness and supports exports.

Claim Refund under Rule 96 of The CGST Rules, 2017

Rule 96 of the CGST Rules, 2017 controls the refund procedure for Integrated Goods and Services Tax (IGST) levied on exported products. It describes the process by which Indian exporters should request a refund for goods sent out.

1. Automatic Refund Mechanism

• Rule 96 offers an automatic mechanism to get refunds of IGST paid on exported products.
• The shipping bill is seen as a refund request of the IGST charged on exports once the exporter submits the shipping bill together with the appropriate GST return.

2. Apply for refunds using the Shipping Bill

Provided the exporter has also filed the required GST returns, including GSTR-1 and GSTR-3B, the shipping invoice presented to Customs is considered the authorised refund application.

3. Requirements for refund processing

Specific requirements must be met in order to handle the return:

• The person in charge of transportation has to show an export manifest or report.
• The exporter must have filed accurate GST returns.
• The GST filings should match the information on the shipment invoice.

4. Expatriate Data Transfer

• The Customs system sends the export details to the GST portal after validation.
• Faster refund application processing is made possible by this link between the GST Network (GSTN) and Customs.

5. Give credit for the refunded sum

The IGST amount is electronically credited to the exporter’s bank account registered with the GST system after the refund is approved, therefore guaranteeing a simple and transparent refund procedure.

6. Withholding of Refund

The regulation allows withholding refunds in specific circumstances, such as when the GST department makes such a request in light of ongoing investigations, suspected fraud, or non-compliance with GST regulations.

7. Importance to Exporters

Rule 96 is significant because it makes the refund process easier for exporters. The regulation aligns with the principle of zero-rated supply under GST, thereby facilitating the prompt refund of IGST for exports.

Claim GST Refund under Rule 89 Of The CGST Rules, 2017

The processes to be followed while requesting GST refunds are given in Rule 89 of the CGST Rules, 2017.

1. Submission of refund application

• Under Rule 89 of the CGST Rules, 2017, an individual wanting to claim a refund under the GST Act can complete an application in the designated format and upload it digitally through the GST portal.
• To demonstrate the validity of the refund request, the application has to be supported by pertinent papers.

2. Who qualifies to seek a refund?

• This regulation offers several categories of taxpayers the chance to claim GST refunds.
• These comprise foreign companies or their respective embassies, applicants seeking refunds for overpayment of GST, and exporters of goods and services.

3. Supporting Documents

• Evidence of the refunds demands calls from invoices and statements.
• These papers assist the authorities in evaluating the veracity and veracity of the refund requests.

4. Refund for unused Input Tax Credit (ITC)

• As stated under Rule 89 of the CGST Rules, a person has the right to request GST Act refunds for input tax credit.
• When goods are exported under the zero-rated supply policy, the input tax credit applies.

5. Deadline for submitting refund requests

• The application for refund is required to be submitted within two years from the relevant date, as prescribed in the GST regulations.
• This ensures the application is made in a timely and accurate manner by the tax authorities.

6. Determining the refund amount

The regulation has also prescribed formulas and criteria for determining the refund amount, particularly in the case of zero-rated goods and inverted duty structures.

7. Review and Processing

• The tax authorities review the refund application and the supporting documents submitted by the taxpayer.
• Once the refund application is found to be legitimate, the refund is sanctioned and credited into the bank account of the taxpayer.

Conclusion

GST refunds for exports help exporters by ensuring that the services or goods being exported from the country do not incur taxes.

GST has been designed to promote zero-rated supply by providing exporters with refunds on the Integrated GST levied on exports, as well as on input tax credit. This not only improves exporters’ cash flow but also makes them more competitive in international markets.

Frequently Asked Questions

1. How to claim a GST refund on exports?

The exporter must first file the relevant GST returns—including GSTR-1 and GSTR-3B—making sure the export information is correct in order to get a GST refund on exports. The shipping bill submitted to Customs acts as a refund request if the export entails the payment of IGST. For exports made under a Letter of Undertaking (LUT) without tax payment, the exporter must file a refund claim on the GST site.

2. How is the GST refund for exports calculated?

The GST refund for exports is calculated based on either the tax paid on exported goods or the unused Input Tax Credit (ITC) related to zero-rated supplies. The value of the items exported, the applicable tax rates, and the qualified ITC will determine the refund amount. In cases of exporting without tax payment, GST rules provide a specific formula for determining the refundable amount of accumulated ITC.

3. How long does it take to get a GST refund for exports?

The length for processing GST export rebates can vary depending on the correctness of documents and compliance with GST return filing requirements. Usually, tax agencies’ confirmation of refunds will be followed in a reasonable time. Usually, if all data on the shipping bill, invoices, and GST returns is correct, the refund is automatically added to the registered bank account of the exporter.

4. How can exporters check their GST Export Refund status?

Exporters just need to log into the GST Portal with their registered username and password to obtain their GSTExport Refund status. The GST Portal will include many processes included in the application for GST Export Refund, as well as its status. If the Export Refund is connected with the Shipping Invoices issued during the Export process, exporters may also get the status of their GST Export Refund from the Customs Portal.

5. What documents are required to get the GST Export Refund?

Exporters must submit GST Export Refund documents, including Export Invoices, Shipping Bills, Bank Realisation Certificates (for Services), and GST Returns. The tax department needs the papers to quickly check the legitimacy of the Export Refund claim. The GST Export Refund application must be processed smoothly, and the documents are also needed.

Solve Your GST Challenges Only With Kanakkupillai

The GST regulations, GST filing, and GST compliance can be quite perplexing and time-consuming for businesses. Whether you are dealing with GST registration, GST return filing, refund, or GST compliance, the right kind of help can make the experience not only easy and hassle-free for you but also more efficient. And that is exactly where KANAKKUPILLAI can help you with your GST-related queries, challenges, and compliance.

KANAKKUPILLAI is here to provide you with the most reliable help with all your GST-related queries and challenges, drawing on the expertise of our team of professionals and tax consultants. At KANAKKUPILLAI, we are committed to helping businesses with new GST registration and GST compliance in the most efficient and effective manner.

Get started today with your GST compliance and make the experience not only easy and efficient for you but also hassle-free.

The post GST Refund on Export – Process, Eligibility & Documents appeared first on Kanakkupillai Learn.

What Is Working Capital?

Working capital refers to the financial resources needed for a business to meet its day-to-day operating expenses and near-term financial obligations. It captures the difference between a company’s present assets and current liabilities, therefore indicating the company’s operational efficiency and liquidity.

1. Meaning: Working capital refers to the money a company has on hand to pay workers, buy raw materials, pay operating expenses, and manage short-term debts, among other daily operations.
2. Formulas for working capital: Using the following formula, one calculates working capital: Working capital is the current assets minus the current liabilities. WC = CA – CL
3. Components of Current Assets: Cash and cash equivalents, accounts receivable, inventory, short-term investments, and other assets that can be changed into cash within a year make up current assets.
4. Components of Current Liabilities: Short-term obligations include accounts payable, short-term loans, accrued expenses, and taxes due within one year—that is, current liabilities.
5. Significance of Working Capital: Sufficient operating capital helps companies to run effectively, pay suppliers quickly, control inventory efficiently, and handle unforeseen expenses.
6. Indicators of Financial Health: A good working capital means that a firm can satisfy its short-term debt; low working capital may point to financial problems.

Impact of GST on the Working Capital of Businesses

The management of working capital among Indian enterprises has been greatly impacted by the implementation of the Goods and Services Tax Act, 2017. Working capital is the money needed to cover daily operations like buying inventory , settling supplier payments, and managing operational expenses.

1. Mechanics of input tax credit

• GST allows companies to claim Input Tax Credit (ITC) on taxes paid on items and services utilised in their operations.
• By removing the cascading effects of taxes, this clause lowers the total tax burden and improves working capital efficiency.

2. Revenue tax payment

• Under GST, the tax liability accrues at the point of goods or service supply rather than when payment is made.
• Particularly for companies who offer credit to their clients, this might result in a temporary working capital constraint.

3. Expedited refunds for exporters

• GST considers exports as zero-rated supplies, which helps exporters to reclaim refunds for input taxes or IGST levied on their exports.
• Quicker refund systems help exporters recover money faster, therefore strengthening their working capital position.

4. Filing and compliance requirements

• Businesses must keep orderly financial records to ensure the prompt filing of GST returns, backed by sufficient documentation.
• This may raise administrative costs and somewhat deplete working capital even if it increases openness.

5. Modifications to Inventory Management

• The elimination of several interstate tax obstacles by the GST has allowed businesses to restructure their supply networks.
• Companies may now reduce the number of warehouses and maximise inventory management, hence affecting working capital use favourably.

6. Effects on small companies

• Upfront tax payments and compliance requirements could cause small businesses to have problems with working capital.
• Still, programs like the composition scheme help eligible companies simplify compliance and reduce the taxload.

6. Digital Tax Structure

Mostly driven through an online platform, the GST system improves efficiency and accelerates processes such as tax credit claims and refunds, thereby helping with better working capital management.

GST ultimately has both positive and negative effects on companies’ working capital. Though compliance standards and initial tax payments might temporarily deplete liquidity, rewards such as input tax credit, simplified logistics, and faster rebates help enhance financial efficiency in the long run.

Tips to Manage the Working Capital with GST

The way companies handle their finances and tax obligations has changed as a result of the passage of the Goods and Services Tax Act, 2017 (GST). GST can affect working capital and cash flow; as such, businesses must employ suitable methods to preserve financial stability.

1. Effective ITC management

• Companies should track and declare qualified ITC on business-related acquisitions of products and services.
• Proper records and timely returns filing guarantee that ITC is not hampered, hence lowering tax obligations and improving the availability of working capital.

2. Ensure GST returns are submitted on schedule

• Filing GST returns, including GSTR-1 and GSTR-3B, on schedule is really critical. Late-filed submissions may result in penalties or interest and could limit the availability of input tax credits.
• Early adherence relieves needless financial pressure and helps tax credits run smoothly.

3. Keep records of receivables and payment schedules

• Because GST is payable upon supply, companies should carefully track their receivables and ask clients to pay promptly.
• Reducing the amount bound up in unpaid invoices helps to maintain working capital by means of limiting extended credit terms.

4. Efficient stock control

• To avoid excessive stock and needless tax expenditures, companies should keep inventory levels at ideal levels.
• Effective inventory control helps businesses control cash flow and prevents funds from being tied up in unsold products.

5. Consistent account reconciliation

• Regularly matching purchase records with GST returns ensures that all qualified input tax credits are correctly declared.
• This helps companies to claim the whole tax credits authorised under GST and lowers the likelihood of error.

6. Plan refunds under GST

• Businesses eligible for GST rebates and exporters should keep meticulous records and file refund claims on time.
• Prompt refunds help to free frozen funds and boost liquidity.

7. Incorporate systems for digital accounting

• Using dependable accounting software helps companies keep precise records, automatically compute GST, and track tax obligations in real time.
• This enhances financial planning as well as working capital management.

Strong GST compliance, good tax credit management, and wise financial planning can finally help companies to lessen the impact of GST on working capital while guaranteeing seamless business operations.

Frequently Asked Questions

1. How does GST affect working capital?

GST affects working capital because companies must pay tax upon delivery of products or services, even if they haven’t yet been paid by their clients. Particularly when companies provide credit to their customers, this might temporarily limit cash flow. Still, the availability of Input Tax Credit (ITC) under GST helps to reduce the overall tax load and improve working capital management.

2. Is GST a part of the working capital?

Although not considered working capital, GST significantly impacts its management. Businesses are required to pay GST on both sales and purchases, which can temporarily disrupt cash flow until the Input Tax Credit is claimed or refunds are processed. Effective application of tax credits and prompt filing of GST returns helps companies reduce the impact of GST on their available working capital.

3. What is the impact of GST on businesses?

By combining several taxes into a single, consistent tax system, GST has streamlined India’s indirect tax structure. It has improved supply chains, reduced the cascading impact of taxes, and increased transparency. Regular returns and correct record-keeping are required of businesses, though, which can raise administrative responsibilities and call for sound financial planning.

4. What is the impact of GST on the working capital management of a business?

Working capital management is significantly influenced by GST, as companies often have to remit taxes before receiving customer payments. This scenario could result in temporary cash flow difficulties. But when compliance and financial planning are done well, components like input tax credit, simplified logistics, and lower tax cascading might help companies to better manage their working capital.

5. How does the input tax credit help businesses to manage their working capital?

Businesses may claim credits for GST paid on the acquisition of goods and services utilised in their operations, thanks to the Input Tax Credit. Double taxation incidents are avoided, and the total tax burden on sales is lowered by this mechanism. Reducing total tax due lets ITC enable companies to save more capital for operational expenses, therefore improving general working capital efficiency.

6. Why is proper GST compliance important for managing working capital?

Companies must ensure they comply with GST to claim the necessary input tax credits while avoiding penalties or interest charges. Promptly submitting GST returns with thorough paperwork reduces the chance of delays. This helps to guarantee a steady flow of money and lowers the risk of working capital being needlessly stuck due to compliance problems.

Your Trusted Partner For GST Solutions – Kanakkupillai

Particularly in light of changing legislation, regular return filings, and strict compliance, GST requirements can be a significant difficulty for companies in many situations. Rather than handling these complexities by itself, you should think about KANAKKUPILLAI, a well-known professional firm that provides GST support and services.

Our team of experts provides effective management of GST questions or concerns, registration, return filing, refund applications, and assistance to companies. Our objective at KANAKKUPILLAI is accuracy, quick service, and trustworthy advice to ensure your business is GST-compliant.

Partner with KANAKKUPILLAI to get dependable expert advice, GST compliance, and trustworthy professional service. Begin the process right away, and our professionals will guarantee that your GST issues are resolved with confidence.

The post Impact of GST on Working Capital for Businesses in India appeared first on Kanakkupillai Learn.

Under the Goods and Services Tax (GST) regime, transactions between the landowner and the developer are treated as taxable supplies, making GST compliance an important consideration in JDAs. However, many landowners are unaware of the GST implications involved in such arrangements. Seeking professional GST advisory and compliance services at the outset of a JDA can help both parties understand their tax obligations clearly and structure the agreement in a compliant and tax-efficient manner.

Therefore, understanding the tax treatment of JDAs is essential to avoid future disputes and compliance issues. This article explains the concept of a Joint Development Agreement and its GST implications in India.

Joint Development Agreement

As the name suggests, a Joint Development Agreement (JDA) is an agreement between landowners and developers who jointly develop the property. It is commonly mistaken that the land on which construction is performed belongs to the developer, but this is not always the case; sometimes the land belongs to one party, and the developer enters into agreed terms to develop the building on that land with that party.

How Does a Joint Development Agreement Work?

Let’s assume you plan to build a residential property for sale, but you do not have any land. You will now approach various landowners to procure the land for construction. The landowner will agree to provide the land and the right to construct the property over his land. But what does he want in return? Well, every contract demands the flow of consideration, so do the JDAs. In return, the landowners will require a share in the land, either an area share or a revenue share. But let’s keep in mind that ownership of the land parcel will be held only by the landowners.

Importance of JDAS

Though the term JDA may seem simple, it involves significant complexity, as it clearly lays out the terms and conditions of an investment between parties.

1. It facilitates faster development of land.
2. Developers may reduce upfront costs associated with land acquisition and stamp duty.
3. The landowners provide the builder with encumbrance-free property, and they manage all clearance issues.
4. No initial investment is required by the developer.
5. It helps the developer obtain loans or create a charge over land that forms part of the JDA.
6. It refers to the share ratio of landowners’ land post-construction, as mentioned in the JDA. Given the complexity of these arrangements, seeking proper GST advisory for your business before entering into a JDA can help both parties avoid costly tax errors and ensure full compliance from the outset.

Typical Terms of the JDAs

A common JDA will cover the following terms and conditions:

1. Details of both parties- the developer and the landowners
2. Details of the land premises
3. Tracing of the title on the land premises
4. Rights/responsibilities of both parties- this will cover
5. License rights
6. Development rights
7. The right to seek approvals from third parties
8. Right to take legal action.
9. Revenue share/Area share details
10. General clauses
11. Details of the security deposit
12. Sharing ratio-post construction
13. Project timeline
14. Project specifications: annexures cover construction terms, materials, quality standards, and necessary licenses.
15. Legal clauses- indemnification, NDAs, registration details, compensation clauses, etc
16. Termination clause
17. Taxation clause- GST, TDS, RERA compliances, capital gains. Both the developer and the landowner must ensure they register a GST if their transactions under the JDA cross the applicable threshold, as non-registration can lead to penalties and compliance issues.

For further information regarding JDAs or assistance in preparing a JDA, please contact our experienced team.

Types of JDA Models

There are three types of JDA.

Implications of GST on The Joint Development Agreement

Under GST, the transfer of development rights (TDR) by the landowner to the developer is treated as a supply of service. In most cases, the developer is liable to pay GST under the reverse charge mechanism (RCM). Both parties must also ensure timely Gst return filing online to accurately report these transactions and remain compliant with GST regulations.

To analyse the implications of GST on a joint development agreement, it is necessary to address the topic methodically:

1. Projects intended for sale – residential and commercial
2. Projects not intended for sale – commercial.

Projects intended for sale- residential property

Projects intended for sale- commercial property

Projects not intended for sale- commercial property (area share)

GST on Transfer of Development Rights (TDR)

Residential Property

• Before April 2019 – 18% GST applicable
• From April 2019 onwards:
  • 1% GST for affordable housing
  • 5% GST for non-affordable housing

Commercial Property

• GST rate remains 18%, both before and after April 2019.

Conclusion

Understanding GST implications in Joint Development Agreements is essential for both developers and landowners to ensure proper tax compliance and avoid legal complications. Professional guidance can help structure the agreement correctly and manage GST obligations efficiently.

How Can Kanakkupillai Assist?

Kanakkupillai offers expert assistance in drafting Joint Development Agreements and ensuring GST compliance for real estate transactions. Our team supports developers and landowners with GST registration, GST return filing, and understanding tax liabilities, applicable GST rates, and documentation requirements to ensure smooth and compliant project execution.

Frequently Asked Question

1. Is it mandatory to register a Joint Development Agreement (JDA)?

Yes. A Joint Development Agreement must generally be registered under the Registration Act to make it legally valid and enforceable.

2. When do we have to pay GST on JDA?

As per the notifications and based on the models—area, revenue, or hybrid. In all cases, GST must be paid before or on the date of issuance of OC/CC as per the JDA.

3. Can the owner sell property in JDAs?

Yes, it depends on which JDA you choose. Contact us to learn more.

4. Who is the absolute owner of the land in case of JDA?

The landowner remains the legal owner of the land unless ownership is transferred through a registered conveyance.

5. What is the consideration paid to the landowner?

Area share or revenue share as per the agreed terms.

6. Do we need expert help drafting the JDA, or can I do it myself?

It is always advisable to get expert help.

The post GST on Joint Development Agreements (JDA): Tax Rules, Rates and Compliance appeared first on Kanakkupillai Learn.

While both ISD and Cross Charge intend to spread expenses incurred at the Head Office or the central team. However, the way they are documented, applied, and treated for tax purposes is significantly different. If these mechanisms are applied incorrectly, it might result in interest charges, tax notices, and problems when claiming Input Tax Credit (ITC). Seeking professional GST compliance advisory support is therefore essential for businesses navigating these complex intra-company tax arrangements.

This blog explains what GST on Cross Charge and ISD Transactions entails, their key differences, how they affect your business, and how to remain compliant.

Overview of ISD in GST and How It Works

Input Service Distributor (ISD) under GST permits businesses to share input tax credit from seller invoices across diverse GST registrations under the same PAN. When your head office receives invoices for third-party services such as cloud software, legal consultancy, or marketing agencies that support branches across various states, ISD distributes credits using a specified formula.

The ISD mechanism operates exclusively for external vendor bills. It cannot manage internal service assignment, which is where confusion starts, and working capital may get blocked.

Use ISD if:

• Your HO receives invoices for services such as advertising, consulting, auditing, or HR support utilised by multiple branches.
• You wish to ease compliance by filing just the ISD return (GSTR-6).
• You desire to distribute ITC without generating tax invoices.
• RCM-paid facilities, such as legal or security services, are distributed among branches.

As per CBIC guidelines, ISD is wholly for credit distribution and not for the supply of services.

Comprehending Cross Charge Under GST Rules

Cross charge in GST concerns internal service distribution, which ISD cannot manage. When your Gujarat IT team offers tech support to your Bangalore branch, or Mumbai HR handles Chennai recruitment, there is no vendor invoice. These internally provided services have actual expenses but no external billing document for ISD distribution.

Cross-charge pertains to internal invoicing between branches or units (with identical PAN but separate GSTINs) for goods or services internally. It’s a mechanism utilised to recover expenses but isn’t administered by ISD-specific provisions.

The cross-charge mechanism generates internal invoices that shift expenses to locations where output tax is created. This ensures input credits align with tax liabilities across state registrations, avoiding the working capital constraint that affects multi-location businesses.

Use GST cross charge if:

• There’s a real supply of services between branches, such as IT support from the HO to another unit.
• The branch receiving the service is located in a separate state, triggering an interstate supply.
• Employees at the HO work for another branch, and their salary expense is recharged.
• Services or goods are delivered internally (e.g., equipment, IT support) and billed between units.
• Recovery of expenses is wholly internal, with relevant documentation and valuation.

The cross-charge includes tax invoicing and can be more documentation-heavy. Nevertheless, it ensures correct valuation and taxability under the GST regulation.

Key Differences between ISD and Cross Charge

In summary. Now, when a vendor submits an invoice, it exactly matches the ISD distribution, but for internal services, this is typically treated as cross charge allocation at work. This isn’t just a GST thing. Income tax types and transfer pricing rules scrutinise your internal cost allocations closely, so you need to be able to provide paperwork for both mechanisms.

• In cross-charge, GST is levied on goods or services between separate persons. Whereas, in ISD under GST, there is a shift of input tax credit ascribable to the exclusive beneficiary, a distinct person.
• In a cross-charge, goods or services are moved/ offered by one unit to another (not including a third party). Whereas, in the input service distributor, the services are offered by a third party.
• Cross-charge pertains to the shifting of both goods and/ or services. Whereas ISD pertains only to services.
• Cross-charging facilitates cost assignment, whereas ISD facilitates only ITC distribution.

ISD vs Cross Charge

Compliance

Regarding ISD, the compliance burden is increased by monthly GSTR-6 filings, monthly distribution operations, etc. In the event of the cross charge, there is a grant of tax invoices for the supply of services in an identical manner as supplies by a third person.

Time restriction for the assignment of expenses or the distribution of ITC

Under ISD, the ITC obtained in a month must be shared in that same month. On the contrary, cross-charge invoices can be generated based on the supply of services, i.e., quarterly, monthly, or annually, according to the arrangement between the separate persons.

So, the time restriction for utilisation of credit for the recipient unit, regarding ISD, will begin on the date the invoice was published by the original supplier. Nonetheless, such a time restriction, in the event of cross-charge, will begin from the date of the cross-charge invoice.

Assignment of Ineligible ITC

Under cross-charge, a cost with an ineligible ITC also needs to be assigned. GST needs to be levied on a cross-charge invoice, even though ITC for the input service is not available. Whereas under the ISD system, ineligible credit must also be spread as is, and it will remain ineligible for the recipient unit as well.

Non-equivalent GST rates

Invoices obtained from third parties may have different GST rates. By selecting the ISD mechanism, ITC can be shared, as it equals the amount received. On the contrary, if the allocation is implemented through cross-charge, the GST rate on the inward supply will be separate from the rate prevalent on cross-charge invoices. This scenario demands a correct valuation at the moment of cross-charging.

User Concerns

Confusion on Applicability

• Businesses struggle to determine whether a transaction should be directed through ISD or cross-charged.
• Example: Audit fees (popular input service) → ISD; IT support offered by HO team → Cross charge. Numerous companies mix them up.

Valuation Challenges

• For cross charge, deciding the “value” of internal services (like IT or HR support) is complex – should it be cost-oriented, nominal, or market value?
• Risk of conflict with the tax officers.

Audit Risks

• Authorities more often than not question the proper utilisation of ISD by businesses or the evasion of cross-charges to reduce GST liability.
• Misclassification can lead to penalties and to ITC being disallowed.

Compliance Burden

• ISD requires a separate registration, invoice format, and GST return filing.
• Cross-charge necessitates the valuation of internal services, which is most often subjective and is contested by authorities.

Double Effort

• Companies with multiple GST registrations often require both ISD and cross-charge, resulting in duplication of compliance work.

Process & System Complexity

• ERP systems frequently don’t distinguish between ISD invoices and cross-charge invoices, leading to reconciliation jitters.

How Kanakkupillai Assists with ISD and Cross Charge

Kanakkupillai is a tax advisory and compliance platform that helps businesses with GST-associated complexities. Their role in ISD and Cross Charge comprises:

• Assists businesses with mandatory ISD registration and compliance.
• Handles monthly GSTR-6 filing and reconciliation
• Suggests on valuation methods for internal services (cost-related, allocation models)
• Sets out when to utilise ISD vs. cross charge (preventing misclassification)
• Support for ISD
• Aids set up processes for ITC sharing across branches.
• Cross Charge Support
• Assures GST payment and ITC flow without conflicts.
• Makes compliant tax invoices for cross-charge dealings.
• Provides audit-compliant documentation to decrease litigation risk.
• Furnishes bundled compliance deals for SMEs and enterprises.

Bottom Line

While cross-charge and ISD registration might appear related, they actually apply to different tax and operational situations. Since the GST requirement for ISD registration takes effect from April 2025, businesses can’t afford to wait — they need to register properly, submit GSTR-6 on time, and make sure the Input Tax Credit is distributed correctly. Keeping on top of these steps not only helps with tax recovery but also keeps things compliant and protects against penalties down the line.

FAQs

1. Can businesses continue to utilise Cross Charge after ISD becomes mandatory?

Yes, both Cross Charge and ISD will coexist. Cross-charge will still be utilised for internally created services offered by the HO to its branches.

ISD will be utilised to share ITC on eligible/ineligible input services acquired from external vendors, helping diverse GSTINs under the same PAN.

2. How to distinguish between services that should be distributed through ISD vs those requiring cross-charge?

ISD is for externally devised services where the invoice is obtained at one location, but the advantage is availed by other separate persons.

Cross-charge is for services provided by one distinct person to another within the same legal entity.

3. How to transfer prevailing cross-charge arrangements to the ISD system post-April 2025?

You need to evaluate which services presently under cross-charge are really prevalent input services from external vendors. For these, you’ll need to procure ISD registration, tell vendors to invoice the ISD, and begin distributing the ITC via the ISD system. Internally created services will remain cross-charged.

4. After an ISD registration is procured, is cross-charging still allowed, or does the registration need to be discontinued?

According to clarification published by CBIC, cross-charge is not binding for internally generated services where there is a free flow of ITC, and only businesses with exempt supplies are required to pursue cross-charge for such services. Moreover, ISD is needed for the distribution of third-party facilities. After April 1, 2025, both cannot be used interchangeably.

5. What is the difference between an Input Service Distributor (ISD) and a cross-charge?

Cross charge is utilised for transactions involving the deemed supply of services between separate entities. An Input Service Distributor (ISD) is a system that allows businesses to spread input tax credit (ITC) across offices or branches. While cross-charge is mandatory in specific cases, ISD registration is optional and used mainly for centralised credit distribution.

The post Difference Between ISD and Cross Charge Under GST appeared first on Kanakkupillai Learn.

This article presents an overview of the process and requisites for responding to a GST ASMT-10 notice.

Taxpayers need to reply within 30 days using the GST ASMT-11 form. They can either accept the discrepancies and pay the indicated amount or provide explanations and calculations to the Relevant Officer. The GST portal allows users to submit their responses online, with two authentication methods: Digital Signature Certificate and Electronic Verification Code.

If the Proper Officer is satisfied with the explanation provided, the proceedings will be concluded by issuing Form GST ASMT-12. Nevertheless, if the reply is not satisfactory, the Proper Officer may initiate further action under separate sections of the CGST/SGST Act, including audits and inspections.

Overview of a GST Scrutiny Notice

GST scrutiny is a procedure in which the tax department (either Central or State GST) reviews your GST returns to ensure everything is correct.

The officials will issue a GST Scrutiny Notice to you if they find any discrepancies or inconsistencies in your GST filings.

The notice is normally issued under Section 61 of the CGST Act 2017. It orders you to provide an explanation or supporting documents for the period in question. Understanding the grounds of the notice thoroughly is the first step to preparing an effective reply to GST scrutiny notice that addresses all discrepancies raised by the tax authorities.

The GST Scrutiny Notice Reply Letter Format

[Date]

To,

The Proper Officer,

[Address of the Authority],

Subject: Response to Notice No. [Insert Notice Reference Number] dated [Date] for FY [Year] – For (Your Name/ Trade Name) – [GSTIN]

1. Acknowledgement & Introduction

The notice ASMT-10, which you issued on [Date], requests a review of the returns that were filed during the period from [e.g., April 2022 to March 2023]. The notice was received through the GST portal/email on [Date].

2. Response Point-wise / Explanation

Discrepancy 1: [e.g., The ITC difference between two elements, GSTR-3B and GSTR-2A]

Explanation: The difference happened because the supplier either didn’t submit the GSTR-1 on time or made a mistake with the invoice date.

Reconciliation: Invoice-wise details are attached as Annexure-1.

Discrepancy 2: Variations in Liability.

Explanation: Give justification.

Action Taken: e.g., The tax amount of Rs. ______ has been paid through DRC-03 (Challan Number: _____ dated ______).

3. Documents Submitted

Annexure 1: GSTR-3B Vs 2A/2B: Reconciliation Statement on Differences.

Annexure 2: ledger copies and supporting invoices.

Annexure 3: DRC-03 form copy.

4. Conclusion and Request

We respectfully ask that you take our explanation and drop the proceedings launched against us. If necessary, we are available to attend an oral hearing.

Yours sincerely;

[Name of Entity]

[Signature]

[Name and Title of Authorized Signatory]

[Designation]

Helpful Tips:

• Reply Timeline: Don’t forget to send in your reply within 30 days. Seek an extension of up to 15 days if one needs more time.
• Submission Method: Please reply electronically via the GST portal under “View Additional Notices/Orders”.
• Documents Required: The response must be brief and include proof from ledgers, invoices, and e-way bills.
• Reconciliation: The complete reconciliation table needs to be included whenever the case involves different numbers.
• Professional Support: If the discrepancies are complex or the potential tax demand is significant, availing GST advisory services before submitting your reply ensures that all explanations are legally sound, factually accurate, and strategically drafted to prevent further proceedings.

Filing Reply in Form GST ASMT-11 to the Notice Issued for Scrutiny of Returns

To see or insert your reply in Form GST ASMT-11 to the notice granted in Form GST ASMT-10, adopt the specified steps:

• On the Case Details page for that taxpayer, select the REPLIES tab. This tab will show the replies you will submit against the Notices published by the Tax Official. To include a reply, select NOTICE.

Click Notice

• The REPLY page is shown.

Reply Page

• Key your response in the reply field.
• Enter the Amount accepted and paid particulars, if any.
• Scroll right using the scrollbar to fill in more details.
• Select the ADD button to include more details.

The notice issued by the tax authority may signal discrepancies noted during its scrutiny of the return. If, owing to any of the suggested discrepancies, the taxpayer is subject to pay differential tax, and he accepts the discrepancy and pays the tax owed on this count, he may cite the said amount paid and enter the payment details in his reply to the notice in Form GST ASMT 11.

If he is still to pay the acknowledged amount, he can pay it either by utilizing Form DRC-03 or he may present the outward supply invoice/ amended debit note/ amended invoice/ debit note, in Form GSTR-1, or by paying tax or reverse ITC if applicable, according to the case, at the time of filing Form GSTR-3B, in response to the notice.

Select Replies

• Select Choose File to upload your reply and upload any backing document (s) connected to your reply, if any.
• Choose the Verification check-box and choose the name of the endorsed signatory.
• Key in the Place where the form is filed.
• Choose PREVIEW to download and inspect your reply.
• Reply to the show cause notice is downloaded in PDF format.
• Select FILE.
• The Submit Application page is shown. Select ISSUE WITH EVC or ISSUE WITH DSC.

Select Issue with DSC/ EVC

• A success message is shown with the created Reference number. Choose OK.

Success message.

• The updated REPLIES tab is shown, with the submitted reply recorded in a table, and the status upgraded to “Reply furnished, pending for order by tax officer”.

You can also select the documents in the Attachments segment of the table to download them.

Once you file your reply effectively, specified actions occur on the GST portal:

You will receive an acknowledgement via your registered email and SMS, along with the generated RFN.

Your reply will be present on the Tax Official’s dashboard.

• Perform action using the ORDERS tab of the Case Details screen: View Order Issued Against Your Case.

To download the order issued against your case, undertake the following steps:

• On the Case Details page of that specific taxpayer, choose the ORDERS tab. This tab lets you view the issued order, including all attached documents, in PDF format.
• Choose the View link in the Action column of the table to download and see them.

How Kanakkupillai Assists with GST Scrutiny Notice Replies?

Kanakkupillai assists businesses and individuals in managing GST scrutiny notices by providing structured, expert assistance in drafting and filing replies

Here’s a typical way their support works;

1. Expert Review of Notice

• They assess the scrutiny notice (ASMT-10) issued by the GST department.
• Recognise the discrepancies identified (such as a mismatch between GSTR-1 and GSTR-3B, turnover vs books, and ITC claims vs GSTR-2A).

2. Preparation of Reply Letter

• Write a response of a formal and compliance nature as per the GST requirements.
• Ensure that the reply is professional and factual, polite, and corroborated by documentary evidence.
• Format is aligned with ASMT-11 filing requisites on the GST portal.

3. Supporting Documentation

• Aids help in reconciling differences between books of accounts and returns.
• Prepare annexures such as reconciliation statements, ledgers, and invoices.
• Attach all required documents to strengthen the reply.

4. Timely Filing

• Ensure replies are filed to avoid penalties.
• Direct clients through the online submission procedure on the GST portal.

5. End-to-End Compliance

• Offer advice on avoiding future notices by boosting return accuracy.
• Offer continuing compliance support for GST filings, assessments, and audits.

Briefly, Kanakkupillai works as a compliance partner, ensuring your GST scrutiny reply is not just legally sound but also strategically drafted to prevent further proceedings.

Wrapping Up

A well-drafted reply to a GST scrutiny notice is not only a procedural requisite – it is a compliance security. The format should always be structured, evidence-based, professional in tone and timely.

Essentially, the reply letter format ensures that your reply is organised, legally compliant, and persuasive, helping tax officials understand your position clearly and thus minimising the likelihood of further conflict.

FAQs

1. What is the general format for giving a reply to a GST Scrutiny Notice (ASMT-10)?

While the formal reply is filed electronically through Form ASMT-11 on the GST website, a structured written reply (cover letter) should include;

Header – Name/ address of the taxpayer, GSTIN, date and notice reference number.

Subject: Acceptance of the notice and date of receipt.

Point-wise Reply: Definite answers to each discrepancy enumerated in the notice.

Upholding Documents: References to invoices, reconciliation statements, and GSTR-2B/3B.

Conclusion/ Request: A request to drop proceedings and terminate the case.

2. What documents should be attached?

• Detailed reconciliation statements (e.g., GSTR-1 vs. GSTR-3B).
• Genuine invoices for input tax credit (ITC) verification.
• Bank statements, e-way bills and ledgers as proof of transaction.
• Turnover reconciliation as per financials and GST returns.

3. How to frame the ‘Point-wise Reply’ section?

Discrepancy 1: “Notice states ITC mismatch of Rs. A

Explanation: “The difference is on account of invoice D, which is in the list in the subsequent period.”

Evidence: “Refer Annexure E (copy of ledger and invoice).”

4. Can the response deadline be extended?

Yes, deadline extension is probable. Authority may allow an additional 15-30 days on an exclusive request before the deadline expires.

The request must include a valid justification and supporting evidence.

The extension request should be filed before the deadline. Authority has discretion to permit or refuse extension.

5. What is the purpose of issuing a GST scrutiny notice?

The GST scrutiny notice serves multiple purposes, including validating return accuracy, identifying discrepancies during compliance assessments, stopping tax evasion, and safeguarding government revenue. The GST department verifies the accuracy of returns, ITC claims, and tax liability to ensure compliance with GST regulations. Scrutiny aids in recognising tax liability mistakes and ensuring correct tax payment. A cooperative response results in a favourable assessment.

The post GST Scrutiny Notice Reply Letter Format appeared first on Kanakkupillai Learn.

With unique codes, there is no scope for error, which helps with matching and reconciliation, which is essential for smooth Input Tax Credit matching and GST compliance across the country.

What is a Unique Quantity Code (UQC) Under GST?

The Unique Quantity Code (UQC) is a term associated with the Goods and Services Tax (GST) system, which refers to a standardised quantity code established for expressing the quantity of services provided within India. The standardised quantity code is a pre-defined code applied for expressing the quantity of services provided within India using a GST invoice, return filing (GSTR-1), etc.

Taxpayers must use a GST-approved quantity code as opposed to local quantity code usage. KGS (Kilograms), MTR (Meters), LTR (Litres), NOS (Numbers), PCS (Pieces), DOZ (Dozens), HRS (Hours), etc., are a few quantity code standards applied within the GST system for expressing quantity code standards for various services provided within India. These quantity code standards are applied to avoid confusion while using quantity code standards for various services provided within India.

The Unique Quantity Code is a vital term for accurate tax calculation purposes while reconciling outward and inward supplies using Input Tax Credit (ITC), while applying GST standards within India. The use of a proper Unique Quantity Code is essential for avoiding return mismatches while applying GST standards within India.

List of Unique Quantity Codes (UQC) Under GST

Under India’s Goods and Services Tax (GST) system, Unique Quantity Codes (UQC) are standard measuring units used in GST returns for reporting both incoming and outside supply. By guaranteeing consistent values reported across invoices, refunds, and compliance papers, UQCs help to avoid uncertainty caused by different local measurement vocabularies.

Following accepted UQC standards, the GST structure nearly matches the international measurement criteria. Commonly used UQCs under GST are listed in great detail below:

1. Weight-based universal quality control (UQCs)

These codes are used when weights determine the value of items.

• KGS – Kilograms
• GMS – grams
• MGS – Milligrams
• TON – Tons
• QTL – Quintals

Often employed to categorise commodities, including industrial raw materials, metals, chemicals, and food grains, these codes also help to define products.

2. UQC based on Length

Suitable in cases when length serves as the basis of product measurement. MTR, meters:

• CMS – Centimetres
• KME – kilometers
• YDS – yards
• FT – Feet
• INH – Inches

This technology is used extensively in businesses, including furniture, building, pipes, cabling, and textiles.

3. Area-based UQCs

This is usually applied when goods are sold on an area basis.

• SQM – Square meters
• SQF – Square Feet
• SQY – Square yards
• ACR – Acres
• HEC – Hectares.

This is normally applied to real estate, flooring, tiles, glass, and land.

4. Volume-based UQCs

This is normally applied to liquid and gas-based goods.

• LTR – Liters
• MLT – Millilitres
• CUM – Cubic meters
• CCM – Cubic centimetres.

This is normally applied to petroleum-based goods, chemicals, beverages, paints, and pharmaceuticals.

5. Number-based UQCs

This is normally applied to counting goods.

• NOS – Numbers
• PCS – Pieces
• BOX – Boxes
• PKG – Packages
• PRS – Pairs
• DOZ – Dozens
• SET – Sets

This is normally applied to retail, electronics, textiles, machinery, and consumer goods.

6. Time-based UQCs

This is normally applied to service-based documents.

• HRS – Hours
• DAY – Days
• MON – Months
• YRS – Years

This is normally applied to services, rentals, labour, and consultancy services.

Importance of UQC in GST

The proper use of UQC is not merely a matter of process; it is a vital component of compliance with India’s GST structure, which ensures precision, uniformity, and efficiency within tax administration.

1. Standardisation throughout India

• UQC ensures uniformity within measurement languages across various states and businesses within India.
• Rather than using various local measurement systems, businesses are required to use standardised codes to ensure uniformity within GST returns and invoicing.

2. Facilitate precise tax reporting

• The use of UQCs is vital for accurate tax reporting within India.
• The use of UQCs is essential for ensuring accurate tax reporting for businesses within India.

3. Essential for GST Returns and E-Invoicing

• The use of UQCs is essential for submitting GSTR-1 returns and for generating E-Invoices through the GST Portal.
• The use of incorrect UQCs will result in validation failures for returns.

4. Promotes accurate reconciliation

• The use of accurate UQCs is vital for reconciling returns to ensure uniformity within supplier and receiver returns.
• Accurate reporting of quantities minimises inconsistencies between external and internal supplies.

5. Facilitates smooth ITC claims

• Quantities reported correctly ensure that the Input Tax Credit (ITC) claims made by the beneficiaries do not create any issues.
• If there are any discrepancies in the reported quantity data, it may create complications in the ITC reconciliation process.

6. Improves transparency and readiness for audits

• Standardised reporting of quantities helps improve transparency.
• The proper use of UQC while undergoing GST audits or any other departmental examinations helps in a smooth verification process.

7. Aids the Digital Compliance System

GST operates as a digital tax system. UQC codes are part of the GSTN validation process, which helps in a smooth compliance process.

8. Minimises human error

The use of UQC codes instead of manual entry of measurement units helps in reducing errors that may occur due to typing mistakes.

9. Broad Industry Application

• UQC has wide industry applicability, including manufacturing, trade, commerce, service industries, etc.
• This makes UQC a global necessity for GST compliance.

Common Mistakes to Avoid While Using UQC in GST

Avoiding these common mistakes facilitates seamless GST compliance, accurate reporting, and reduces the likelihood of receiving notices or incurring fines. When preparing GST returns or generating e-invoices, it is essential to utilise the correct Unique Quantity Code (UQC).

1. Utilising an incorrect UQC for the product – Selecting the wrong measurement code (for instance, “NOS” instead of “KGS”) can lead to discrepancies between invoice information and actual supply records.
2. Opting for Custom or Non-Standard Units – GST exclusively recognizes predefined UQC codes. Employing local terminology such as “bags,” “cartons,” or abbreviations not included in GST regulations may result in validation complications.
3. Inconsistent UQC across invoices – Using different UQCs for the same product on successive invoices (for example, “PCS” on one and “NOS” on another) creates reconciliation challenges and confusion during audits.
4. Discrepancy between invoice and return submission – The UQC indicated in e-invoices must align with the data recorded in GSTR-1. Any inconsistency may lead to validation failures of the return.
5. Incorrect decimal or quantity reporting – Inaccurate quantity figures and UQC (such as improper decimal placement) can affect taxable value and ITC claims.
6. Overlooking UQC in E-Invoicing – Certain businesses concentrate solely on taxable value and GST rate, neglecting the appropriate selection of UQC, which can result in rejection by the Invoice Registration Portal (IRP).
7. Failing to Update Accounting Software – Neglecting to set up GST-compliant UQC codes in billing or ERP systems heightens the risk of manual errors.
8. Assuming UQC is Optional – UQC is compulsory for goods and is a required field in return submissions. Leaving it blank or using placeholders can lead to compliance challenges.

Frequently Asked Questions

1. What is UQC?

UQC stands for the Unique Quantity Code. GST requires this standard measurement unit for reporting the quantity of products or services in GST returns, e-invoices, and invoices. It lessens ambiguity resulting from varied local measurement terminology and guarantees consistent reporting across India.

2. What are the examples of UQC in use?

Typical instances include KGS (kilograms), GMS (grams), MTR (meters), LTR (litres), NOS (numbers), PCS (pieces), DOZ (dozens), BOX (boxes), SQM (square meters), and HRS (hours). These codes are determined by the measurements and delivery methods of goods or services.

3. What is a UQC error in an eWay Bill?

When the quantity code entered is out of line with the GST-prescribed list or is incongruous with the invoice details, a UQC error on an eWay Bill occurs. Such mistakes might cause the eWay Bill to be rejected or call for changes before successful creation.

4. What is UQC import?

Reporting imported goods in GST returns calls for choosing the right unit code, which is known as the UQC import. Using the right UQC that matches customs records and invoice details helps to avoid problems during reconciliation and ITC claims.

5. Is UQC mandatory under GST?

UQC is required for reporting quantities in GST returns, including GSTR-1 and e-invoices, in fact. Ignoring the correct code can cause compliance difficulties and validation failures.

6. Can businesses create their own UQC?

Companies are not permitted to create custom quantity codes. Only the predefined UQCs specified under GST may be utilised. Employing non-standard units could result in the rejection of Returns.

7. Why is the correct UQC important for ITC claims?

Accurate UQC is vital for ensuring the proper alignment of supplier and recipient records. Any discrepancies in quantity reporting may hinder or complicate the reconciliation of the Input Tax Credit.

Stay GST Compliant Only With Kanakkupillai

GST compliance needs precision, accuracy, and knowledge of the ever-changing laws. This is precisely where we at KANAKKUPILLAI come in. We possess extensive knowledge of GST registration, GST returns, GST reconciliation, e-invoices, e-way bills, audits, and advisory services. We ensure you remain GST-compliant without hassle.

Do not let the chances of penalties, notices, and fines due to errors and delays cause you any more stress. Join hands with us at KANAKKUPILLAI for efficient, accurate, and comprehensive GST compliance solutions that suit your unique business needs.

Get started now!

The post Unique Quantity Code (UQC) under GST appeared first on Kanakkupillai Learn.

Sometimes, taxpayers can’t pay taxes due to financial difficulties, such as cash flow issues or demand recovery issued under Sections 73 or 74 of the CGST Act. In such cases, the law provides flexibility by allowing payment in instalments or at a later date, rather than a lump sum, offering relief to taxpayers.

What is Deferred Payment?

Under Section 80 of the CGST Act, 2017, the GST law allows taxpayers facing financial difficulties to pay confirmed tax dues in instalments or at a later date. When the taxpayers are unable to pay the taxes in one go, they can file an appropriate application under Form GST DRC-20. The officer may allow payment in instalments for a maximum period of 24 months.

Who Can File an Application Under Form GST DRC-20?

A registered taxpayer who has a confirmed demand under the GST Act. A confirmed demand basically occurs when, following an audit, investigation, or scrutiny, tax authorities issue an order (e.g., FORM GST DRC-07) finalized under Section 73 or 74, declaring an outstanding liability for unpaid tax, interest, or penalties. Taxpayers must pay this confirmed amount within 3 months to avoid recovery proceedings.

When Can You File an Application Under Form GST DRC-20?

A taxpayer can file this application under one of the following two reasons:

• When the payment due is deferred to a later stage.
• When the due is paid in instalments.

Timeline for Filling the Application Under Form GST DRC-20

The application must be filed after a demand order (DRC-07) is issued and before recovery proceedings are initiated. All you need are valid login credentials to file this application.

Step-By-Step Procedure to Apply for Deferred Payment

An Application for Deferred payment or payment in instalments can be made by filing an appropriate application under Form GST DRC-20 before the Officer.

Before filling out the Application, the applicant has to keep the following documents handy:

1. Details of the Applicant- if an individual- Aadhaar card, PAN card, and any other relevant document. If a company, then provide company details, authorised person details, and verification correspondence details.
2. Demand ID
3. Details of payment
4. Financial records, statements, reconciliation statement, profit and loss statement, balance sheet, proof of future profitability of business and any other relevant records.

Step 1: Visit the GST Portal

Log in to the GST Portal using your existing credentials.

Step-2: Fill Application Form GST DRC-20 for Deferred Payment of GST

Registered taxpayers can now fill out Form GST DRC-20 on the GST Portal itself.

To fill out the application, the applicant must click the “services tab,” then the “user services” tab. The drop-down will have the option “My Application.” The Applicant is to click on the “New Application” option.

Select ‘Application for Deferred Payment/Payment in Instalment’ as the application type.

The Applicant must enter the Demand ID. Keep the Demand ID handy. Once the Demand ID is entered and the search button is clicked, the outstanding demand gets displayed.

Note: To check the Demand Id, go to Dashboard > Services > user services > View Notices and Orders. In the list of notices and orders, the applicant can easily see the Demand Order Id.

• Enter the Taxation Period details and the Type of Payment. The taxation period is auto-calculated. In the type field, choose Monthly Instalments or the Deferred Payment option. If Deferred Payment is selected, select the appropriate “Due Date of Payment” from the calendar.
• Supporting Documents: The Applicant/taxpayer has to upload supporting documents. The Applicant can upload up to 4 documents at a time. The Applicant has to enter a brief description of the document.
• Reasons: Enter the reason for filing the application. Though not mandatory, it is advisable to include reasons to improve the chances of application acceptance.
• Verification: The applicant must check the box to confirm that all information in the application is accurate and complete.
• Signature: The last step is to enter the name and details of the authorised person of the applicant, as well as the place where the applicant is filing the application.

Step-3 Preview and Submit

Upon successful completion of all the above-mentioned steps, the Applicant must click the Preview tab at the bottom-right corner of the page. Once clicked, the applicant can review the application and make any required changes.

Upon final review of the application, the applicant has to click the submit button.

Step-4: Verification and Authentication

After the applicant submits the Application, the applicant must either digitally sign it or verify it with a verification code. Once the application is submitted, the applicant/taxpayer is given two options to sign the application:

1. Sign with DSC
2. Sign with EVC

Note: DSC and EVC are both used for authentication, but they differ slightly in security and usage. If you are an individual taxpayer/proprietor or an MSME business holder, it is advisable to use EVC, but if you are a company, LLP or someone who files frequent tax refunds, it is better to use DSC. If you are confused about which method is beneficial, feel free to call our Kanakkupillai experts for better assistance.

Step-5: Acknowledgement

Upon successful application authentication, the page will display a Provisional Acknowledgement slip. The Applicant will also receive an SMS and an email regarding the generation of the ARN.

Step 6: Download the Application

The final step is to download the application, then save it for future reference.

How to view the submitted application and orders passed in the application?

1. Log in to the portal.
2. In the dashboard, click on services.
3. Then click on user services.
4. Select the My application tab and
5. Click on case details: Once the applicant clicks on my cases,
6. To view the filed application, click the application tab on the left side of the display. All filed applications will be displayed, along with all supporting documents filed at the time of filing.
7. To view orders, click on the orders tab on the left side of the display screen.

How Can Kanakkupillai Help?

Facing difficulty in paying GST dues? Our experts can assist you. At Kanakkupillai, we aim to simplify legal compliance and help you prevent late payments and scrutiny by offering end-to-end, customised, and customer-centric support so you can relax and focus on expanding your business and achieving greater profits.

To understand how deferred tax payments can benefit your business and how to improve the chances of your application being accepted without any modifications or issues, reach out to us today for a better tomorrow.

Wrap Up

The deferred tax payment scheme allows taxpayers to defer tax payments to a future period. The concept of deferred payment has helped many taxpayers to financially plan their business by enhancing liquidity and supporting capital investments. This strategic financial planning helps businesses retain cash for immediate use, which is a boon for start-ups and small business owners. The procedure for filing an application for deferred payments is simple, easy, and straightforward. However, it is also advisable to adhere to the government guidelines and pay taxes on time.

Related Services

• GST Registration
• GST Return Filing Online
• Respond to GST Notice

Frequently Asked Questions

1. Which form to file for applying for Deferred Payments

FORM GST DRC-20

2. Should I register to apply for Deferred tax benefits?

Yes, only registered taxpayers are allowed to claim the benefit of Deferred tax payments.

3. What documents are required to file the Application?

Valid login credentials, demand Id details, audited financial statements, reconciliation statement, tax computation statement and sufficient proof to show the future profitability of the business.

4. What are the chances of my application for deferred tax payment being accepted?

A: It is solely the discretion of the officer in charge to accept the application based on the documents and reasoning submitted by the applicant. Ensure that all your documents and financial records are accurate and up to date to avoid further queries and rejection by the officer. We at Kanakkupillai strive to ensure that your application has minimal scrutiny issues.

5. Can I file more than one application for Deferred tax payment?

No, only one application can be maintained against one Demand Id.

6. How do I know if my application is processed/accepted/rejected?

You will receive an SMS or an email with the status, and the order passed in your application. The order passed in the application can also be viewed on the portal.

7. What will happen if my application is accepted, but I’m unable to make a payment in the future?

In such cases, the entire outstanding payment will become due and payable, and the taxpayer will be liable for recovery without any further notice.

The post Deferred Payment of GST – How to Apply Online? appeared first on Kanakkupillai Learn.