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GST Input Tax Credit (ITC) | ITC as Claimed Under GST

Leave a Comment / Income Tax / By Lipsa Bhut / November 19, 2023 November 20, 2023

GST Input Tax Credit?: A tax credit implies that a manufacturer was able to compensate against a tax liability. In other words, the taxpayer is given an opportunity to skip a particular portion of the amount of tax he owes to the concerned authority.

What exactly is the Input Tax Credit or the ITC?

An input tax credit is a phenomenon that permits the taxpayer to reduce a certain amount of tax payable on the inputs with respect to the tax paid on output.

The taxpayer will be eligible to deduct and claim Credit for the amount of the input tax in the course of settling the output tax. To put it in simple words, if any supply of services or goods is offered to an individual who is considered for taxation, the GST imposed is termed as the Input Tax.

What are the SGST, UTGST, CGST and IGST

The State Goods and Services Tax commonly referred to as the SGST, is the taxation system that is categorized under the individual state governments. Therefore, sales or purchases carried out within the jurisdiction of a state are liable to implementing the SGST.

The rate of SGST is the same as that of the CGST and applied simultaneously with it.

The Central Goods and Services Tax, commonly referred to as the CGST, is a tax issued by the government regarding indirect tax.

It is an intrastate tax, i.e., it is liable for transactions within the boundaries of a particular state.

The central government depository is responsible for the collection of the tax amount under CGST.

The CGST is levied in place of other previously implemented taxation systems under the government, which include the-

Central Excise Duty,
Service Tax,
Duties of CustomS

The UTGST or the Union Territory Goods and Services Tax (UTGST) is almost synonymous with the State Goods and Services Tax.

However, there is one difference- the tax collected is delivered to the depository of the government of the union territories, which is the location of the use of the service or the goods which have been assessed under the tax.

UGST is charged under equal rates as that of CGST. It is assessed together with the CGST. However, one should note that only the UGST or the SGST are issued one at a time along with the CGST.

The Integrated Goods and Service Tax or the IGST is a taxation system applicable for interstate transactions.

The main difference it has with the other tax systems is that contrary to IGST, all the other taxes are intrastate.

The IGST rate is roughly an estimated equal to the sum of the CGST and the SGST rates.

Which Category Of Individuals Fall Under Input Tax Credit Scheme?

Adhering to the rules as specified in Section 18(1) of the CGST Act, 2017, the following group of individuals are considered under the Input Tax Credit scheme-

The clause under Section 18(1)(a)) mentions that any person or company who had an existing business before the implementation of the GST and who are required to enrol for GST
The clause under Section 18(1)(b) mentions that an individual who willingly opts for registration choice
As per Section 18(1)(c), any person who stops paying tax under the composition scheme and opts for the standard system of taxation
Under Section 18(1)(d), any transactions which were previously categorized under exempt supply converts to a taxable supply

Any licensed individual shall be entitled to take credit for input tax charged on any supply of products or services used or intended to be used in their company centred on some of the tax-paying records mentioned below:

A tax invoice has been released.
Notice of debit
Bill of entry
Invoice produced on a reverse charge basis.
Input Service Distributor issues a document for credit delivery.

Therefore, ITC charged in one state should not be identified with an available individual’s organization in another state, despite the fact that the individual in question is the same person considered for taxation.

Persons That Are Not Eligible for the Input Tax Credit

Individuals who have not been registered under the GST scheme
Those who have enrolled themselves for the composition scheme

The Time Deadline To OPT for Input Tax Credit

Suppose a person has applied for registration or is liable to register or is granted registration. In that case, the concerned person can claim the Input Tax credit from the immediate day when he is liable to pay taxes.
When a person takes voluntary registration, his claim for ITC starts from the registration day itself.

The input tax credit will be inquired for the previously mentioned circumstances only if it doesn’t surpass one year from the tax invoice date of issue relating to supply.

In all other instances, ITC must be asserted prior to the earliest of the following-

Furnishing of yearly return or
Deadline of documenting the month-to-month return (GSTR-3) for the following monetary year’s September month

Prerequisites for Claiming the Input Tax Credit

The consumer must have paid the invoice’s sum, as well as the taxes, to the provider of goods or services, or both, as the situation demands, within 180 days of the invoice’s issue date.
The tax collected via tax invoice must be deposited into the government’s record by the concerned taxpayer.
The tax invoice information must mandatorily file the GST return.
In case the tax payable or taxable value listed in the invoice is less than the tax payable or taxable value on those goods, the seller must essentially give a debit notice to the receiver.
Bill of entry.
A credit note or invoice needs to be issued by the ISD (Input Service Distributor) as indicated by the GST invoice guidelines.
An invoice must be given similar to a bill of supply alternatively to a tax invoice in some circumstances. If the sum is less than INR 200, or if the reverse charges are valid under GST legislation, this is applicable.
According to the GST invoice law, a supplier submitted a bill of supply for goods and services or both.

The Following Situations Do Not Qualify for an Input Tax Credit under section 17 (5).

The application of motor vehicles and other modes of transportation is prohibited under GST: The ITC on motor vehicles paid will not be compensated against the output tax duty under the GST Law. As such, you will not have the option to claim the Credit for your vehicle or other means of transportation.
Membership in a club, fitness club, or wellness center: If you have prepaid for an exercise pass, yoga classes, or association in a club for a sport or other practice, you will not stand for the ITC credit.
Travel opportunities offered to employees in the form of Leave or home travel concessions: In the event that you have booked any travel package, you won’t guarantee ITC the payment of the travel package. Be that as it may, suppose you booked the travel package for business purposes, claim of ITC would be permitted.
Goods, services, or a combination of the pair that are accepted for private purposes: The ITC isn’t qualified whether the items or offices are utilized for individual use. ITC is just accessible where taxation is charged or charged on the outside conveyance of merchandise or administrations, as per the law’s essential guidelines.
Circumstances when contract services are granted for constructing a mobile house: This is possibly the most controversial aspect of ITC. Taxpayers and the IRS have long had a dispute over job contract suppliers. Regardless, the works contract issue has relatively brought under control after the implementation of the GST norms.
ITC with respect to the Composition Levy: The ITC isn’t material on items or regimes on which the composition distributor has already paid tax.
ITC on lost, stolen, burnt, written about things or given away as presents or free specimens: ITC would be useless to claim ITC if the objects were lost, broken, or destroyed, or in case they were distributed as free samples.
ITC with respect to real estate developer-supplied goods or facilities: Goods or services except the required machines obtained by an available individual for the construction of a fixed property on their own, even where those products or services (or both) are utilized in the course or assistance of activity, do not qualify for ITC.
In the case of a nonresident person who is considered for taxation, an ITC is available: ITC will not be qualified if the nonresident taxing person acquires any goods or services. On the off chance that an NRTP obtains any goods or services, nonetheless, they will be liable for the ITC. Furthermore, the IGST rate applies to all imports and exports.
ITC claim for food and beverages, outdoor catering, health care: Food and beverages, outside cooking, magnificence medicines, dental consideration, and corrective and plastic medical procedures would not qualify for the ITC. Be that as it may, the ITC is appropriate whether an authorized resident requires an interior supply of items, services, or both to make an available outer stock of similar sort of merchandise, services, or both, or as a feature of a taxable scheme.
In the event of deliberate theft: The input tax credit will be ineligible in the case of fraud.

What is the qualification for the claim of the input tax credit on inputs in funds for a taxpayer in case they opt for voluntary registration?

The individual who obtains voluntary registration is allowed an input tax credit for input tax on stock, semi-finished goods, and finished goods in stock.

The primary condition that needs to be followed is that the goods need to be stored precisely on the day preceding the registration request.

Input Tax Credit

In what Way can one Utilize the Input Tax Credit?

An eligible taxpayer should only practise input Tax Credit obtained from the CGST, SGST, and IGST taxation system to pay separate taxes in a particular way.

When ITC is obtained from CGST
The principal inclination is to pay CGST.
The taxpayer can utilize the excess sum to pay IGST.
The taxpayer cannot use CGST ITC to pay SGST.
When ITC is obtained from SGST
The principal inclination is to pay SGST.
The taxpayer can utilize the excess sum to pay IGST.
The taxpayer cannot use CGST ITC to pay CGST.
When ITC is obtained from IGST
The principal inclination is for the payment of IGST.
The next choice is to pay CGST.
If there is some extra amount, the taxpayer can apply it to pay the SGST.

The ITC has the assumption that only worth additions at various points can be assessed. This essentially excludes the taxation’s cost cascading consequence. Therefore, the input tax credit (ITC) is the very basic building block of the GST management and one of the GST framework’s primary sources.

Explain the phrase the Reversal of Input Tax Credit

The object of credit reversal under GST is the same as it is under the current tax system. In plain English words, credit reversal pertains to the Reversal of an earlier conferred credit.

Reversal of Credit refers to Credit taken out and used when the final product is taxable but is only reversed as the final product becomes excluded.

The Reversal of Input Tax Credit can be claimed as per the following-

Inability to pay provider within 180 days from the date of invoice.
Goods and services, whether inputs or capital goods applied for individual purpose.
Goods and facilities used in the production or provision of exempted goods or services.
An input tax credit that one earned on the selling of goods or plant and machinery.
Section 17(5) of the Act also makes a particular group of supplies ineligible.
Change from a licensed regular dealer to a composite dealer.

Demand for ITC when GST is Calculated on Reverse Charge

The service consumer can claim Input Tax Credit on the tax balance paid under reverse charge on goods and services. The only GST ITC law is that the products and services must be used or benefited by the company or organization which is taking part in the transactions.

In the event that the composite distributor is dependent upon the reverse charge system, the person would be ineligible to get any ITC.

The concerned authorities would collect the tax at the ordinary rates, not the composition rates.

ITC as it relates to Capital Goods and the Reversal of sale

It is feasible to make it beneficial; tax credit for capital products can be adjusted with one installment.

On the off chance that the individual has declared depreciation under the Income Tax cat pertaining to the GST section, an input tax credit for the part included for taxation of capital products isn’t allowed.

An individual may request deterioration on the expense bit or take a GST input tax credit on the capital products in different terms.

In the event that an available individual purchases capital products on which an ITC was asserted, the concerned taxpayer is fitted to meet GST needs at a higher rate from the accompanying sources:

ITC acquired those capital goods at a 5% discount from the invoice cycle per quarter or half-year.
GST average compounded by selling price of the capital goods

When refractory bricks, moulds and dies, jigs and fixtures are sold as waste, the taxable individual may be required to pay tax on the transaction value of the product.

Refund of Input Tax Credit under GST Taxation System

Refund of Input Tax Credit under GST comes in three patterns, i.e., there are three possible scenarios in which a taxpayer has deemed fit to demand the ITC refund in their electronic credit/cash ledger.

The three circumstances in which taxpayers will seek an ITC-refund are as follows.

Refund of unspent Input Tax Credit (ITC) on record of Exports without the adjustment of integrated tax.
Refund of unspent Input Tax Credit (ITC) in case of goods or services provided to SEZ Unit/ SEZ Developers without advancing integrated taxes.
Refund of unutilized ITC on account of accumulation due to the reversal tax structure, where the input tax exceeds the outward tax liabilities.

Procedure to claim Credit when the Tax Has Been Paid Under Reverse Charge Mechanism or the RCM

When tax is charged on a reverse charge basis, the taxpayer may claim an input tax credit in the same month as the bill, providing the following requirements are met:

(1) Liability has been settled through modes of cash
(2) Goods or service has been essentially utilized for business transactions and purposes
(3) Self-invoicing has been implemented on such transactions since an unregistered supplier can issue no tax invoice under this scenario

What is the course of action or the recovery mechanism for wrongly claimed Credit by a taxpayer?

The concerned authorities would recover the wrongly availed Credit from the registered taxable person as per the guidelines mentioned in section 73 and 74 of the CGST Act.

Filing of return

To claim or refund the Credit of ITC, a registered person has to mandatorily file the return under section 39 of the Income Tax Act.

In a situation where the depreciation is asserted on the tax portion, claiming ITC would be ineligible.

In case a particular registered taxpayer has asked for depreciation to be implemented on the price of capital goods under the guideline’s ad mentioned in the Income Tax Act of 1961, the ITC claim on the part that is considered for taxation would be denied.

Consequently, we may conclude that the government would not permit any taxpayer with a double profit on the tax elements.

According to the rules laid down by the government, a taxpayer cannot demand both depreciation and ITC under GST law to be calculated on a segment included for taxation.

This implies that the registered taxpayer has two options from which they can opt for only one

Demand depreciation on the tax part
ITC on the tax levied

No taxpayer can avail both the options as mentioned earlier simultaneously.

EveryThing You Need To Know About Bank Locker

Bank Locker | Availing a Bank Locker, Sizes, Opening a Locker, Rent, Safety, Alternatives

Leave a Comment / Finance / By Lipsa Bhut / November 19, 2023 November 20, 2023

What is a Bank Locker?: Customers are given access to a bank locker to secure valued items such as gold jewelry, jewels, and other essential documents and certificates such as a will or property documents at the Bank. The bank lockers are safe and trustworthy for the items which are dear to you.

Bank lockers are often stored in an ample space at the Bank, guarded with solid steel doors.

This service is not free of cost and provided in return for a nominal charge. The rent of each locker differs based on size. For instance, in SBI, it ranges from Rs.1500 per year (small locker rural branch) to Rs 8000 annually (extra-large locker in urban unit).

Lockers are not available at every branch of a bank. It is, therefore, best to opt for a bank with a locker near your house.

RBI Rules and Regulations

A bank has a provision that entitles it to request a locker hirer an FD equal to three years’ rent plus a sum for breaking the locker as a last resort due to inevitable circumstances (the interest on the FD pays the rent).
A bank cannot request an FD from current lock hirers. Furthermore, no bank links locker recruiting to FD or spending in a sum more significant than a fair amount.
Banks should continue to include locker facilities while keeping economic viability under check and considerations. Customers who apply to rent a locker at a bank should be placed on a waiting list. Per applicant will be allocated a waitlist number.
The hirer must mandatorily give proof in the form of a hard copy of the agreement contract between the Bank and the hirer.
After determining the risk connected with the hirer, banks essentially conduct KYC checks. The Bank must follow this for new and as well as pre-existing clients.
In case the client has not been operating the locker in recent times, the risk is considered medium for a period of more than three years and higher in the case of more than one year.

In this scenario, the Bank must contact the locker hirer to either operate the locker or surrender it, despite the fact that the locker hirer has effectively paid the rent.

The Bank should request a written response to know the explanations behind the locker not being managed.

If there is no response and the locker is not being used, the Bank can open the vault persuasively in the wake of giving formal notification to the hirer. If the locker is to be opened forcefully, a point-by-point protocol must be followed by the bank authorities.

The Bank should devise a plan for coercively opening the locker.
Keys should be stamped with the bank/branch id code to help to recognize the proprietor of keys.
The Bank will take every necessary safety precaution to guard the bank locker and ensure that top security norms are adopted.

Laws and Criteria as Prescribed for Nominations

Banks are required to develop policies based on the accompanying laws:

Banking Nomination guidelines as of 1985
Section 45 ZC to 45 ZF of the banking regulation act of 1949

The guidelines under the Banking Nomination rules 1985 are:

A single person may only be chosen.
During the time that the locker is under hire, nominations may be withdrawn or renewed.
In case of choosing a minor, another guarantee needs to be affirmed to help a minor.
There are various ways and different categories of nominations.
SL1
SL1A
SL2
SL3
SL3A

The guidelines under Section 45ZE of the banking regulation act 1949 are:

In the event of the locker hirer’s demise, a person may be named by the locker hirer to unlock the locker and retrieve the contents and the documents.
When the vault is hired jointly and can only be run together if one of the locker hirers dies, the candidate and the remaining joint hirer can reach and delete the locker’s contents.
Prior to actually withdrawing the belongings, the claimant or the nominee and the remaining locker hirer must organize and confirm a catalogue of the locker content material.
The Bank bears no accountability following the candidate’s withdrawal of locker individual components.

What is a Bank Locker

Section 45 ZF of Banking Regulation Act Guidelines

Except for a competent jurisdiction judge, no one other than the hirer or hirer can see a bank for claiming locker contents. In that case, the Bank should take such a pronouncement into consideration.

Safe deposit lockers must meet the following requirements:

The locker facility is also called ‘safe custody’, and to hire this locker with a bank in India, a client must follow these guidelines-

The applicant has to be greater than equal to 18 years of age.
Certain banks demand the individual to have an account with them in order to utilize this assistance.
The lockers available come in various sizes, and a customer can determine the extent of his locker as per their needs.
In the beginning, the customer may likewise be required to deposit some money as security. This may incorporate rent for a locker for a set period (say, three years) and an amount for crises where the Bank has to break open the locker (say, if the customer has lost the key).
Nomination and/or shared possession of a locker has become an obligatory need while employing a locker. The Bank indicates the conditions where the client recruiting the storage will be given a choice to name a replacement for their locker.
On the off chance that there are joint holders, each joint holder must expressly state the type of ownership arrangement they are entering into (like either survivor, former or survivor, etc.).
If a security deposit is placed while the locker is employed, the client will receive a confirmation.
The Bank also includes a guide in which the Bank expresses the subtleties of the vault apportioned to clients. This paper is known as the “memorandum of letting”. It is delivered to the customer when the locker is employed.

Who Will Take Accountability for Bank Locker Theft?

As per the rules distributed by RBI, banks are not at risk for the resources in the Bank if the vault is undermined because of civil war, theft, or other unforeseen situations.

Customers are responsible for storing valuables in the locker in their danger.

Locker Key Details

Regardless of whether the locker is taken in joint name, banks give simply one key to the locker hirer. The key must be kept very cautiously by the hirer because it is an essential part of the locker contract.

If the key is missing, the bank will break the locker, and the customer will have to pay for the entire process. To retrieve the missing key, several legal procedures must be followed.

A new lock is placed on the locker, and consumers will be given a new key.

There are some Do’s and Don’ts for Bank Lockers that a Client should be aware of

A locker should not be located in a deserted region, neither should it be placed in a region with a dense population, such as a bus stop, taxi stand, train station, and so on. You don’t want to transport your valuable items over town, and they should be conveniently near to your home.
You likewise need to keep a documented list of your contents in the locker. If there should arise an occurrence of robbery, at any rate, you will realize what was taken.
In the event that you are holding certificates and other important documents in the locker, it is astute to get them laminated for better protection.
It also makes perfect sense to run lockers in a joint-holding or nomination-based format. This guarantees that one can in any case run the locker and hand it over to the legitimate beneficiaries if there should arise an occurrence of death of the individual.

Valid Grounds That Might Be Considered for Locker Breaking

On the occasion of any of the subsequent emergencies, the locker can be broken open

At the behest of the hirer, if the key is lost

If the client misplaces the key, it is advised to notify the bank authorities right away without any delay. Typically, a well-documented application siting valid reason is addressed to the Branch Manager.

The client in question will be held liable for all the expenses of unlocking the locker, replacing the lost key, and getting the lock fixed. Some banks include the fee in the initial security deposit, while other banks charge it separately.

Failing to pay locker rent charge

Non-compliance with rental arrangement contract terms at the Bank’s disposal, including not using a locker for like a year.

Size of the Locker Opted for

Safe Deposit Lockers are accessible in various sizes. In light of the requirements, a client can pick the size of the locker needed.

Locker dimensions are quite often categorized as Small, Medium, and Large in simpler terms. Strictly speaking, the sizes of the lockers are defined by the letters A and B. Most banks have several locker sizes, including A1, A2, and so forth.
The locker sizes commence with small ones, frequently known as A-class, with dimensions in inches generally range from 4.5 X 5.875 X 20.75.
As the size increases chronologically, the L/K class is typically the biggest.
The measurements of an L-size locker are roughly 15.5 X 19.9375 X 20.875.
The rent increases in sync with the size of the locker, i.e., the rent is directionally proportional to the size of the vault for which the rent is being paid.

What is the Difference Between Leasing a Locker and Surrendering a Locker?

Locker services in a bank are usually reserved for a period of one or three years. This renting is referred to as the leasing of a locker.
As the locker’s lease period comes to an end, the locker’s hirer may either get the lease renewed for a further period of one / three years or may surrender/vacate the locker. The situation in which the bank authorities vacate the vault by the hirer before the lease period’s expiry is termed as the Surrendering of the Locker.

Points to Bear In Mind Before Surrendering Over The Locker

The hirer(s) can forfeit the locker at any point whenever during the contract term.

They will just have to forfeit it if they decide to transfer their locker from one branch to another or swap banks in which they avail the locker services.

The hirers may likewise close it on the off chance that they need to consolidate their lockers. Indeed, even the bank can demand to forgive up by offering a prior formal notification.

Clearing the contents of the locker: The hirer should guarantee that the components of the locker are taken out prior to starting the procedures for surrendering the locker.
The surrender program is a well-documented application: The hirer should send a letter to the division manager where the locker is stored. The concerned client must refer to the storage number and individual subtleties, like name, address and telephone number. The letter must be signed by the locker possessor, i.e., the client.
Returning the key of the recently had locker: The hirer is essentially and solely responsible for returning the locker key to the branch manager. Under the circumstances that the key has been lost, the bank engages in a protocol for issuing duplicate keys and any penalties before proceeding with the process of shutting the locker services.
Acknowledgment note subsequent to surrendering the locker: Following the finishing of every one of the conventions, the branch manager of the bank will give an acknowledgment, acknowledging that the locker has been effectively surrendered. Further considerations which should be dealt with:
- Both holders must sign applications for the closing of mutually-owned lockers.
- At the point when the locker is returned at the request of the hirer, the charges for the unutilized period, assuming any, are discounted for the excess complete quarters as it were.

Bank Locker

Making Use of a Bank’s Locker Facilities

Caretakers are officers assigned from each division to control Safe Deposit Lockers. To unlock the locker, a key pair is necessary, one which is possessed by the bank (commonly the Custodian) and the other with the client.

To unlock the locker, the client must use all keys simultaneously.

A few banks, as IDBI, have now begun offering 24×7 locker access benefits at select branches; however, this service is not free.

Lockers should be used at times defined at the branches. One needs to visit the bank with a locker key during the official opening hours of the bank.
The applicant for the locker has to meet the Custodian and carry out the required paperwork and documentation.
In case when there is no locker vacant at the given time, the applicant is expected to wait for their number in the waiting list to arrive.
The locker holder, along with the Custodian, visits the deposit vault. After the Custodian inserts the bank key, the consumer inserts their key, and the locker unlocks after a perfect match without any discrepancy. The Custodian exits the deposit area leaving the customer with utmost secrecy. The customer then carries out the required work in the locker. After completion of the work, the customer left the place.
It is advised to check for any extra fees which the bank can levy. Some banks can charge a fee if the client uses the locker more than a certain amount of times per year; for example, SBI charges a fee if the locker is used more than 12 times a year.
The customer must unlock the lockers at least once half-yearly. If the locker is not used for more than a year, the user may be given a note for doing so. If the customer does not respond, the bank has the legal right to bust open the locker in police presence. In case the client fails to pay the locker rent charge, in the same way, the bank has all the right to break open the locker.

The client must use the locker with caution and discretion, and before shutting it, it is always a good practice to take a look around to ensure that nothing significant has been left out.

To carry out the checking, a client should carry along with them a list containing all the objects kept by them in the locker.

Often, no one should be allowed inside the locker when the client is working with it since there are many valuable personal belongings of the client in question.

In reality, going to the locker with near family members such as a son, daughter, partner, or wife is usually a smart idea, as long as the vault also contains their name.

Rent Charges for Renting a Locker in the Bank

Like paying the rent charges while residing in a rented house, a hirer of the locker services must pay the amount.
Locker fees differ between banks and divisions based on demographics (metropolis or semi-urban environment, busy business area, etc.). The lending rates of public and private sector banks vary significantly.
For example, the rental costs for medium-sized storage (F class) in a private bank may go up to Rs 20,000 every year, whereas the same can be availed in a government bank at almost one-sixth the rate.
The rate likewise relies upon the kind of record you have with the Bank. For example, HDFC Bank will forgo half of the lease on the off chance that you are an exemplary client; that is, with an average quarterly balance of Rs 1 lakh,
The cheapest lockers are the smaller ones, also identified as A-class. The size expansions in sequential requests, so the L/K class are usually the biggest and the costliest storage spaces.
It is necessary and read the fine print to prevent expensive errors. For example, numerous banks require a base record equilibrium to be kept up, which can be a costly recommendation on the off chance that you select a bank where the breaking point is set at Rs 25,000-50,000 a quarter.
It is likewise pivotal to realize how your Bank characterizes a year while ascertaining the rate of locker rentals. Most banks consider the day of the contract to be the baseline, and the corresponding annual rent is due on that day. Be that as it may, a few banks have a predefined timetable as per the scheduled year or financial year. It is vital to realize the example in order to pay the rent on time.

GST Accounting Entries | Accounting Entries by Composition Dealer

Leave a Comment / GST / By Lipsa Bhut / November 19, 2023 November 20, 2023

GST Accounting Entries: Under the regime of GST, the taxpayer has to maintain the following accounts:

CGST A/C: The CGST A/C is further divided into two Output CGST and Input CGST.
SGST A/C: The SGST A/C is further divided into two Output SGST and Input SGST.
IGST A/C: The IGST A/C is further divided into two Output IGST and Input IGST.
e-Cash Ledger or Electronic Cash Ledger: The taxpayer maintains this ledger on the GST Portal to pay GST.

Accounting Entries by Composition Dealer

Persons registered under the composition scheme are not allowed to take an input tax credit of tax paid and not charge GST from the customer. They also cannot make interstate sales.

Hence, they are not needed to maintain accounts for input and output of GST. They have to make straightforward entries as follows:

On the sale of goods
Cash A/c Dr 5,000
To Sale A/c 5,000
On Purchase of goods
Purchase A/c Dr 4,000
To Cash A/c 4,000
On purchase of a Capital asset
Furniture A/c Dr 1,500
To Cash A/c 1,500
Payment of Composition Fees
Composition Fees A/c Dr 25
To Bank A/c 25

Influence on Profit and Loss Account and Balance Sheet

Composition fees are an expense and hence show as indirect expense in the profit and loss account. The balance sheet will be impacted. All the capital assets are shown at cost, including GST.

GAAP is applicable compulsorily on GST. So, all principles following revenue recognition etc. will be useful.

Accounting Entries for the Transactions made under Reverse Charge

At the time of purchasing such goods or services:

Purchase A/c Dr
Input CGST A/c Dr
Input SGST A/c Dr
To Output SGST RCM A/c
To Output CGST RCM A/c
To Creditor A/c

In the cases of purchase of assets or expenses, the particular account will be debited. The output SGST RCM A/c is used in place of the normal Output SGST A/c for differentiating both taxes since taxes under RCM cannot be adjusted against the input taxes and paid in cash.

At the Time of Payment of GST

Output SGST RCM A/c

Output CGST RCM A/c

To Cash/Bank A/c

Accounting Entries Made by Businesses apart from those Registered Under the Composition Scheme

The Accounts to be maintained by a regular dealer are

Input CGST A/c
Input SGST A/c
Input IGST A/c
Output CGST A/c
Output SGST A/c
Output IGST A/c
GST Payable

The person registered in Union Territory has to pay and maintain a UTGST account instead of an SGST account. So for the entries and examples which are stated below, such individuals must replace UTGST with SGST simply.

Intra State Sales (Sales within the same state or union territory)

Purchase made by X from Z, who is in the same condition for Rs. 8,000 and GST rate of 18% (CGST@9% & SGST@9%) Purchase A/c of Dr 8,000
Input SGST A/c Dr 720
Input CGST A/c Dr 720
To Z A/c 9440
Sales made by X to Y who is in the same state for Rs. 25,000
To Sales A/c 25,000
Y A/c Dr 29,500
To Output SGST A/c 2,250
To Output CGST A/c 2,250
He paid a consultation fee to CA of rs. 5,000
Consultation Fees A/c Dr 5,000
Input CGST A/c Dr 450
Input SGST A/c Dr 450
To CA A/c 5,900
Purchased furniture worth Rs. 3,000
Furniture A/c Dr 3,000
Input CGST A/c Dr 270
Input SGST A/c Dr 270
To Cash A/c 3,540
Total Inputs and Output taxes
The Input SGST = 720 + 450 + 270 = 1,440
The Input CGST = 720 + 450 + 270 = 1,440
Output CGST = 2,250
Output SGST = 2,250
On month end for GST Payable
Output CGST A/c Dr 2,250
Output SGST A/c Dr 2,250
To Input CGST A/c 1,440
To Input SGST A/c 1,440
To GST Payable A/c 1,620

Please note that some rules and regulations on input tax credit and the above entries will be made only for those purchases on which ITC is allowed. For e.g., GST paid on the purchase of a motor car is not permitted except for certain persons. For an individual to whom ITC is not permitted, accounting entry will be

Car A/c Dr 5,00,000

To Bank A/c 5,00,000

Inter-State Sales (Sales outside the state or union territory)

Purchase by X from Z, who is the indifferent state for Rs. 8,000 and rate of GST at 18% (CGST@9% & SGST@9%)
Purchase A/c Dr 8,000
Input IGST A/c Dr 1,440
To Z A/c 9,440
Sales made by X to Y, who is the indifferent state for Rs. 25,000
Y A/c Dr 29,500
To Output IGST A/c 4,500
To Sales A/c 25,000
Consultation Fees A/c Dr 5,000
He paid a consultation fee to CA of rs. 5,000
Input SGST A/c Dr 450
Input CGST A/c Dr 450
Sales made by X to B who is in the same state for Rs. 30,000
To CA A/c 5,900
Y A/c Dr 35,400
To Sales A/c 30,000
To Output CGST A/c 2,700
To Output SGST A/c 2,700
Total Inputs and Output taxes
Input CGST = 450
Input SGST = 450
Input IGST = 1,440
Output CGST = 2,700
Output SGST = 2,700
Output IGST = 4,500
On month end for GST Payable
Output CGST A/c Dr 2,700
Output SGST A/c Dr 2,700
Output IGST A/c Dr 4,500
To Input CGST A/c 450
To Input SGST A/c 450
To Input IGST A/c 1,440
To GST Payable A/c 7,560

Note that some rules and restrictions on input tax credit and the above entries will be made only for those purchases on which ITC is allowed.

Impact on the Profit and Loss Account and the Balance Sheet

All the tax accounts are not in the nature of direct/indirect expenses or income. Hence there will be no significant impact on the Profit and Loss account. However, if any GST is paid for, which input tax credit is not allowed, it should be booked as an expense and thus reduce the profit. (In case of payment is made for an expense)

The positive input tax credit or tax liability is shown as asset or liability in the balance sheet. The fixed assets on which input tax credit is permitted and taken are shown as costs excluding GST.

Freedom 251 – Specifications, How to Book and Concerns and The Most Significant Ponzi Scheme Of The Decade?

Leave a Comment / Finance / By Lipsa Bhut / October 26, 2023 November 28, 2023

Freedom 251: In a country where smartphones are priced at Rs. Seven thousand are regarded as the essential volume generators; imagine the uproar if an Rs. 251 smartphone is published.

Freedom 251 had sparked a massive hysteria in the region, considering the low price of Rs 251.

The Ringing Bell Freedom 251 is by far the most affordable Smartphone on the market. Its actual implementation and architecture are remarkable, and the pre-installed software is also convenient. The phone’s price point makes it a very attractive product.

The Ringing Bell Freedom 251 cellphone was formally introduced to the public in New Delhi at an event attended by Dr. Murli Manohar Joshi, who is a Member of the Parliament hailing from BJP.

The concepts of Digital India, Ability India, and Make in India were given a ton of significance at the launch event, as were the phone’s potential future usage cases to encourage people who live in rural and semi-urban locations.

Benefits of Purchasing the Smartphone

Low-cost phone
Excellent setup
Expandable Memory as per the needs
Apps that come pre-installed, all of which are useful

Drawbacks to Buying the Smartphone

The inadequate quality front-facing camera
Bog standard battery backup

Complete Detailed Parameters of the Smartphone Freedom 251 by the Ringing Bells

Basic Parameters of the device

Ringing Bells is the name of the company that makes the phone.
The model’s name is Freedom 251.
This one was launched in February 2016 and housed a touchscreen, as do most smartphones on the marketplace.
The phone provides an average battery life of about 1450 mAh. It also has a removable lithium-ion battery that has an hour of talk time on the scale.

Specifications for Display

The Freedom 251 has a 4.00-inch screen and an IPS LCD monitor.
The handset has a touchscreen with a screen resolution of 540 x 960 pixels and a pixel density of 275ppi.

Specification details for the hardware of the phone

The Freedom 251 is backed by a 1.3GHz quad-core processor, which is supported by1GB of RAM.
The handset has up to 8GB of internal capacity.
It has expandable storage with a microSD card with a maximum capacity of 32GB

Image quality

The phone has a 3.2-megapixel camera on the back with autofocus, a LED flash, and image stabilization capabilities.
The front monitor has a remarkably low resolution of around 0.3 megapixels. Nevertheless, the customer can use it for video calls with acceptable performance.

Software Development

The operating system on the Freedom 251 is Android 5.1 Lollipop.

Connectivity

It has Wi-Fi connectivity, which ensures high-quality web browsing.
Even though it lacks GPS, it also has some Bluetooth functionality.
It also lacks a USB OTG jack.
The device uses 3.5mm headphones and other electronic devices with the same connector, and it does have an FM radio.
The Freedom 251 has two SIM card slots and operates on a 3G network.
That being said, in India, it does not support 4G/LTE or 4G. (Band 40).
You can improve your internet experience by connecting to Wi-Fi hotspots in your city.
Allows one to use their internet access on a laptop that has been Wi-Fi internet.

Sensors Included Inside The Device

The Freedom 251 lacks the following sensors:

compass and magnetometer.
Accelerometer
Light sensor for the environment
Barometer and Gyroscope
Temperature detector

The Proximity sensor is the only sensor on the handset.

Special Features

The Freedom 251 smartphone comes pre-installed with many typical applications of daily use, including Women Safety, Swachh Bharat, and Fisherman, to name a few
A default one-year warranty will back the handset.
“This warranty of the Product lasts for 12 months for the central server, six months for battery and charger, and three months for earphones beginning from the date of purchase,” based on the current company’s website.

Background History of Ringing Bells

Ringing Bells Pvt. Ltd., was founded in 2015 and is centered in Noida, offers the Freedom 251 smartphone. Three cell phones and one power bank are for sale on the ringing bell website, and every one of them is now out of stock.

Ringing Bells has released numerous other smartphones, including the Smart 101, Master, and 4U cell phones and a 5600mAH power bank called Kiwi.

Some media organizations tested the Freedom 251 smartphone, which Ringing Bells sent, and reported that perhaps the manufacturer sent them Adcom devices with white paint over the iPhone-like device’s emblem.

Aspects to Consider Prior to Ordering the Freedom 251

A common hypothesis in nature is when something appears to be too perfect; to be honest, it probably is.
Ringing Bells is an inexperienced company with no record of success in appliances, so it’s impossible to determine the final product’s output, including after service, at this time.
Your unit might take up to four months to process, as per the company website.
The website seems to have no refund policy. However, it does mention that a one-year guarantee supports your Freedom 251 device.

Freedom 251- A Scam

Freedom 251 is a hoax! The least expensive mobile scheme is spinning out to be another decade’s greatest con.

However, only a few days after ‘Freedom 251′ hit the market, and it had become completely obvious that the product was solely a principle instead of just an operating device.

Despite the fact that Ringing Bells “launched” the device with much pomp and circumstance on February 17, 2016, the organization had not produced even a single unit of the Smartphone to be sold on the day before the internet marketing began.

The finished product is a questionable redesigned blatant copy

The Hindustan Times examined a prototype device of the Freedom 251 and discovered that it is a fraudulent, renamed money-making scam of a smartphone sold by Adcom, a Delhi-based producer and exporter of gadgets and electronic goods. And Adcom’s Marketing Executive mentioned, “We have no idea why our product has been used on the Freedom 251.”

The phone that is reportedly being rebranded (without their consent) is the Adcom A400, which was released prior to the Freedom 251—as a result, Ringing Bells maybe now simply selling the existing stock at a cheaper profit.

The most ironic component is that a whitener replaces Adcom’s branding. Hardly any legitimate smartphone supplier or dealer would do such a thing. Never, ever!

Adcom, on the other hand, sells the renamed Smartphone for Rs 4000. How is a business venture planning to rebrand it and market it for Rs 251?

This is indeed a huge warning sign for a fraudulent alarm.

Lies And deceit

According to the predictive analytics on their homepage, this Smartphone will come pre-loaded with a wide range of applications like Swachh Bharat, Women Safety App, Facebook, WhatsApp, and plenty of others. That being said, there was no such application on the evaluation system.

Furthermore, the device purchased by HT differs significantly from the handset seen on their website and in full-page newspaper advertisements.

In reality, the icons and browser appear to be identical duplications of the iOS icons and Safari browser.

Pricing that is unreasonable or impossible to achieve

Mobile Industry Association the Indian Cellular Association (ICA) communicated to Telecom Minister Ravi Shankar Prasad, recommending that he investigate the incident. No manufacturer can sell such a smartphone for less than Rs 2700, even after accounting for all concession criteria.

“For your understanding, the bill of material (BOM) value for a commodity like this and when sourced from the poorest supply chain costs approximately USD 40 (Rs 2,700),” said ICA President.

Assuming that this Smartphone has a 4-inch touchscreen, a Qualcomm 1.3-GHz quad-core processor, and 1 GB of RAM, the expense of each feature alone would have been much more than Rs 251.

Not Government Ratified

Ringing Bell, the holding company behind the compelling bid, isn’t really recognized under the Bureau of Indian Standards (BIS), which suggests they are not authorized to distribute any commodity in India.

This is a significant warning sign, signaling that it is a hoax. Even so, there is no handle mentioned on their official site; the copy they have written highlighting the features and benefits is all unimpressive, and the Tweets they are posting are downright obnoxious.

The owner has indeed been convicted.

In 2017, Goel intended to sell ‘Freedom 251′ smartphones for Rs 251, advertising them as the most affordable mobile available on the market. Additionally, mobile delivery did not work according to the plan, and Goel was arrested in 2017 for fraud.

In 2018, he was detained in an extortion event. After the owner of Ghaziabad-based Ayam Enterprises filed an FIR claiming that Ringing Bells “swindled” it of Rs. 16 lakh, Indian police detained Goel. Ringing Bells’ customer support agent, Cyfuture, has also accused the company of fraud and repossession of payments.

The website has currently expired and has been offered for sale off by GoDaddy. The current owner revamped it into a Tech blog on March 24, 2019.

Ringing Bells challenges to have already delivered 5,000 Freedom 251 units by July 9, 2016 and claims to be supplying another 65,000 units to clients.

It is not really a ‘Make in India’ initiative.

Though the company initially claimed that Freedom 251 was a part of the Make in India campaign, proper investigation and actual time product subsequently proved this statement to be completely misleading.

Ringing Bells has received requests and money for the first 30,000 smartphones.

These smartphones, nonetheless, are also not made in India. In truth, the company may not even have finished devices on deck.

Furthermore, since there is no production unit in India, Ringing Bells will produce the remaining units of the Smartphone outside of the region.

There is little assurance about where to get a full refund

Thirty thousand people paid for the Freedom 251 mobile directly up to the close of the registration deadline. Even then, if the units shipped to them are not appropriate, the consumers will inevitably return the product and apply for a refund.

Nevertheless, there are no specific rules for receiving a rebate for disappointing elements in the project.

The Akash tablet’s resemblance to the Freedom 251

Freedom 251 is similar to the Aakash Tablet. Accordingly, what was the final result of the Aakash Tablet?

The Government of India encouraged Aakash, an Android-based tablet, to link 25,000 colleges and 400 universities in an e-learning initiative. DataWind, a British-Canadian agency, created it.

On October 5, 2011, the concerned authorities finally opened the Aakash tablet in New Delhi. Aakash’s consumer version was advertised as UbiSlate 7. On November 11, 2012, the Aakash 2, named UbiSlate 7C initially, was officially confirmed. The official site of the Akash tablet company was www.akashtablet.com.

The Aakash tablet was one of the year’s most significant errors of judgment. Rather than just a home-grown computer that could provide more considerable support to students, we received a tablet with an undependable touchpad and latency and one that was so poor that most applications wouldn’t operate correctly.

The worst-case scenario was that it required to be entirely updated after just a few hours of perceived usefulness.

The concept was moved to IIT Bombay in April 2012. Consequently, it was announced in mid-2013 that the Department of Electronics and IT would proceed with this now.

The New Controversy of The Owner of Ringing Bells

The owner of Ringing Bells, Mohit Goel, has been accused of defrauding dry fruit merchants in a recent controversy.

Noida Authorities caught the Freedom 251 perpetrator in the Rs 200-crore racket.

Dubai Dry Fruits and Spices Hub is the branding of his startup company.

According to the police, Goel would purchase dried fruits at higher-than-average prices from merchants through India. In comparison, he would make prompt payments in an attempt to acquire their respect and confidence and trust.

Subsequently, however, he would put bulk orders and make a 40% advance payment through bank transfers or other modes of online payment.

The rest he would settle for post-dated paychecks, which would potentially get rejected at the bank.

According to the police, Goel and his coworkers started a business from Gurugram in 2017. Later on, they terminated and shifted to Noida in 2019.

Fill Aadhaar Card Enrolment Form | Content, Steps To Fill and How To Track?

Leave a Comment / Finance / By Lipsa Bhut / March 7, 2023 March 7, 2023

Fill Aadhaar Card Enrolment Form: The Aadhaar Card is an essential document one must possess in recent times. It is a proof of identity and proof of address, and most importantly, it is proof to identify an individual as an Indian citizen.

This article guides you on how to proceed if you want to fill the Aadhaar Card Enrolment Form and the related proceedings.

Contents of an Aadhaar Enrolment Form
Steps to follow to fill the Aadhaar Card Enrolment Form
How can I track the Aadhaar Enrolment Form status?
Frequently Asked Questions (FAQs)

Contents of an Aadhaar Enrolment Form

In the Aadhaar Enrolment Form, the following fields are present, which are required to be filled by the applicant –

Pre-Enrolment ID: This is given by the enrolment centre.
NPR Receipt/TIN Number: This field is not mandatory. But, if you have NPR (National Population Register) receipt or survey slip, the number form same is required to be mentioned here. Otherwise, if you have TIN (Tax Identification Number), the same can also be submitted.
Full Name: Enter your full name – first name, middle name, and last name. The name entered here must match with the name mentioned on your proof of identity.
Gender: Specify your gender correctly – male, female, or transgender.
Age or DOB: Provide your date of birth in the format DD/MM/YYYY (date-month-year). If you are not sure of the correct date of birth, you can specify an approximate age in this field. If there is no proof for DOB, tick the box with the label ‘Declared’. If you have supporting documents, tick the box with the title ‘Verified’.
Address: Enter the postal address on the form as mentioned in the address proof. The card will be then delivered to the same address you provided in this field. Also, provide with your email address and mobile number within the same field.
Details of Father/Mother/Guardian (mandatory for children below 5 years of age): You can provide the name and Aadhaar number of your family members in this field.
Details of submitted documents: Document-Based – mention the documents you submit as proof of POI, POA, DOB, POR, Introducer Based, Head of Family Based. Introducer and HOF details are only required if you do not have Identity Proof or Address Proof of yourself.
Applicant’s Signature/Thumb Imprint: Sign the document at the designated area on the form to show your consent. Otherwise, you can also place and submit your thumb impression.

Steps to Follow to Fill the Aadhaar Card Enrolment Form

The Aadhaar Enrolment Form can be filled in both offline and online modes. The offline form is required to be filled at the enrolment centre only, but the online enrolment form can be downloaded from the UIDAI website and submitted to the centre with the required documents.

Step 1: Download the Aadhaar enrolment form from the UIDAI website, or visit your nearby Aadhaar centre to get the form.
Step 2: Fill in the form with the necessary details in the relevant fields. Follow the instructions given in the form itself to avoid any errors.
Step 3: Attach the relevant supporting documents to prove your DOB, identity and address. These documents must be valid and accepted by the UIDAI. If you use an introducer or Head of Family (HoF), provide with a relevant proof of relationship with the member.
Step 4: Visit your nearby Aadhaar centre and submit the form along with the required documents.
Step 5: The staff at the centre will take a photograph of yours and capture the biometric data, which are iris and fingerprint. This data will be added to the database along with the details provided in the form.
Step 6: Collect the acknowledgement slip that has your details, the date and time of enrolment and enrolment ID.
Step 7: You can then track the status of your Aadhaar card with the enrolment ID provided.

How To Correct or Update Aadhar Card Online?

How can I Track the Aadhaar Enrolment Form Status?

After you have enrolled for Aadhar through its enrolment centres, you can easily track the application status online. To check the enrolment status, follow the process given below –

Visit the home page of the UIDAI website.
Select My Services and click on Check Aadhaar Status.
After this, a page opens up where you need to mention your enrolment ID as mentioned on the acknowledgement slip, followed by the date and time of enrolment. Next, enter the security code as shown in the image.
Finally, click on Check Status, and your Aadhaar status will be reflected.

FAQ’s on Fill Aadhaar Card Enrolment Form

Question 1.
Can I update my details after enrolment or submission of the application?

Answer:
Yes, you can update your biographic and demographic details in the Aadhaar after enrolment within 96 hours of enrolment, absolutely free of cost.

Question 2.
Is it mandatory to use only capital letters while applying for Aadhaar?

Answer:
The Aadhaar Enrolment Form or correction form has mentioned filling up the form in capital or uppercase letters. It is then easier to read and distinguish, and hence there are fewer chances of error.