GST

GSTR-9: GSTR 9 refers to the GST annual return form that the regular taxpayers must pay yearly with all the essential details, including CGST, SGST, and IGST paid in the year. This content includes all the essential and related details of GSTR-9 annual procedures, eligibility, format, and rules.

Latest Updates about GSTR-9

The deadline for filing GSTR-9 has been extended a few times for numerous reasons, including the complexity in filling the form. For the businesses and CAs, the last year has been a lot confusing and a complex duration where they tried understanding the complicated GSTR-9 form when they continued tallying the monthly and quarterly filed returns with the account books.

GSTR-9 updates as on various dates are mentioned here:

• As of 28th February 2021: The due date for filing GSTR-9 and GSTR 9C for the financial year 2019-20 got further extended up to 31st March 2021.
• As of 1st February 2021: GST audit requirements by the professionals like CMAs and CAs got removed from the GST law. For this, Sections 35 and 44 were also amended. According to the amendment, on the GST portal, only GSTR-9 annual returns requires filling based on self-certification by the taxpayers. It entirely removed the need for a GSTR 9C reconciliation statement. The government has not yet clarified the date for applicability of this removal.
• As of 30th December 2020: The due date for filing GSTR-9 and GSTR 9C for the financial year 2019-20 got extended up to 28th February 2021.
• As of 28th October 2020: The due date for filing GSTR-9 and GSTR 9C for the financial year 2018-19 got further extended till 31st December 2020.

Reasons for GSTR- 9 Extensions

Here is a list of some reasons that led to the extension for the due date of filing GSTR-9:

The Mismatch of ITC Between GSTR-2A and GSTR-9’s Table 8A

This area caused immense pain for the taxpayers due to the mismatch between the input tax credit that appeared in the auto-generated GSTR-2A return and the input tax credit that was auto-filled in table 8A of GSTR-9. Some primary reasons for this mismatch are as follows:

• There is no chance for the input tax credit on supplies for the financial year 2017-18 to get auto-populated in GSTR-9 if the same got declared beyond 20th April 2019.
• After considering the amendments, the final figures reported in GSTR-9 were found to be against the gross value that appeared in GSTR 2A.
• For the time when the recipient taxpayer was under Composition Scheme, the input tax credit related to the invoices failed to appear in GSTR-9.
• Where the supply places lie in the supplier taxpayer’s state instead of the recipient taxpayer, the input tax credits on the invoices got excluded from GSTR-9.

Bifurcation of Input Tax Credit Required in GSTR-9 and GSTR 9C

For GSTR-9, there was a need for bifurcation of all the input tax credit availed from the capital goods, inputs, and input services. Therefore, the form thus requires a complete thorough analysis of a taxpayer’s account books along with the verification by the concerned auditor. As not all taxpayers keep a record of this bifurcation, it leads to undue stress of obtaining the details later for avoiding misreporting it.

Some Input Tax Credits Were Claimed But Are Not Reflecting in GSTR 2A:

For the financial year 2017-18, while filing GSTR 3B returns, some taxpayers claimed the input tax credit to be eligible under the CGST act. A significant part of the input tax credit is not reflecting in GSTR 2A for numerous taxpayers. With this scenario, the question that arises is whether that input tax credit will be considered ineligible and will the taxpayers start receiving notices from the tax department with a fair chance to prove the authenticity of those credits.

Some Goods Got Imported In The Financial Year 2017-18, But Itc Only Claimed In The Financial Year 2018-19

There is no separate field for reporting the input tax credit claimed in the financial year 2018-19 over the goods that previously got imported in the financial year 2017-18. Even though the government clarified that such input tax credit must be reported in table 6(E) of GSTR-9, that will be for the full credit availed between 2017 July and 2019 March. As the auditors are required to prepare the reconciliation statement based on this information, it is easier for the taxpayers to report it accurately and separately.

Overlaps in the Figures of Table 6(B) and 6(H)

Table 6(B) requires the reporting of the inward supplies and income tax credit availed during the financial year, apart from the imports and the inward supplies liable for reversing the charges. In contrast, in table 6(H), a reporting of input tax credit availed, reversed, and then reclaimed in the same financial year. This resulted in the figures’ overlaps in table 6(B) and 6(H) of GSTR-9. Even though the government issued a clarification to caution the taxpayers about both fields’ meaning, there is a need for more clarification, including the examples and redressal of accounting challenges.

RCM Liability’s Disclosure in GSTR-9

CBIC released a clarification for disclosing the liability under RCM due for the financial year 2017-18 but was paid in the financial year 2018-19, but that was unclear. This is mainly because on 4th June 2019, the press release used the words “additional outward supply” and did not mention RCM. However, on 28th June 2019, the Central Tax notification was released with the words “additional liability.” As the taxpayers have to report the total of these undisclosed liabilities under table 4(G) of GSTR-9, the equivalent tax portion of these liabilities requires to get declared under the ‘Tax payable’ section in Table 9.

Declaration of HSN Summary for Inward And Outward Supplies

HSM summary details must be disclosed by the suppliers having a turnover of more than 1.5 crores INR. This is an essential requirement for the inward and the outward supplies. It caused some essential hassles for the taxpayers who failed to maintain this data previously and are now required to spend more time and effort obtaining and reporting these details.

No Clarity for Filling GSTR-9’S Table 4F

Table 4F of GSTR-9 discloses all the advances on which the tax is paid without issuing the invoices. Clarification for filling this table states that the information source must be table 11A of GSTR1 returns. This is good only for the monthly level as annually; the entire year’s adjustments must be considered. This signifies that the data must also be sourced from table 11B of the GSTR1 returns.

Strenuous Process of Uploading GSTR 9C

The entire process of uploading GSTR 9C is hectic and involves various steps that the auditors find time-consuming, unnecessary, and complex. Apart from the involved procedure, there are some other issues while filing GSTR 9C where the statutory auditor’s address details do not get accurately captured. The auditor cannot entirely enter the qualifications due to the word limit.

Other Issues Faced in Filing GSTR 9

Along with the issues mentioned above, some taxpayers also faced some other issues while filing GSTR-9, like:

• Negative values copy-pasted in GSTR 9 and GSTR 9C offline utilities are only allowed in tables 5M, 5N, and 5O. Negative values can also be copied elsewhere, and JSON gets generated, but the GSTN does not process similarly.
• Even after no error detection, the JSON file does not get uploaded.
• There are two final PDF copies of GSTR filed returns in some cases, and the GSTN portal has not yet resolved the issue.
• Set-off is completed under DRC-03, but the taxpayers still cannot file it.
• In some cases, the DRC-03 is not getting reflected on the common portal.
• The bifurcation or splitting of the expense ledger in GSTR 9C is a time-consuming process and does not has any known relevance.

GST on Rent: Indians are taxed by the government under GST. Different companies’ goods and services are taxed under four different slabs of 5%, 12%, 18% and 28% under GST. In this article, we will particularly discuss GST on rent of shops, offices, flats, lands, etc. We will get a clear overview of how GST is charged on the rental income that is earned by renting commercial property as well as residential property. After completing this article, the reader will be well aware of different facts that are related to GST, such as registration and payment requirement, reverse charge on rent under GST, place of supply, intra-state transaction and inter-state transaction.

Applicability of GST on Rent

When a person rents his/her property to another person, it is believed that the landlord is providing one kind of service to the latter; thus, he/she needs to charge a certain amount in exchange for the service provided. The amount charged is considered as an income for the landlord, which gets charged under GST. Renting an immovable property is a chargeable income under GST. As per the GST Act, the following types of rental services are charged under GST:

• Any type of lease, tenancy, easement, license in order to occupy the land.
• Any lease or giving out a building which can be a commercial or residential property which is used for business and commercial purposes.

The above types of renting come under the category of supply of services; thus, GST gets charged on these services. According to the notification 12/2017, rent that is received by a person when he/she rents a dwelling unit for residential purposes gets exempted from GST.

In simple words, the GST act gives a clear hint that GST will get charged on the rent of a commercial property only if that property is getting used for commercial purposes. When one rents his/her residential property for residential purposes, he/she gets exemption from GST. Still, if the residential property gets rented for commercial purposes, then the rental income gets charged under GST. This clearly shows that the purpose for which the property is being used clearly decides whether to charge GST or not.

On the other hand, the rental income earned by a registered charitable trust or the religious trust gets exempted from GST where:

• Rent of rooms cost Rs 1000 or less than that for a single day.
• Rent on shops, business units, and community halls of these charitable trusts cost Rs 10,000 or less than that for a single day.
• Rent on the open area or community halls gets charged for Rs 10,000 or less than that for a single day.

Registration and Payment Requirement

When the landlord of a residential property or a commercial property offers different services, and the total value of all the services cost around Rs 20 lakhs or less than that for a single year, then he/she doesn’t need to register for GST as he/she is exempted from GST. When the calculation of total services offered is getting executed, the landlord must include the income of all the rental houses he/she owns and the income from other suppliers of services. Let’s understand this matter with the help of different examples:

Example – 1

Mr. Arjun owns three properties which have been given on rent for the last three years. Rental income earned by Mr. Arjun in a year is as follows:

Particulars	Rental Income Per Year ( in Rs )
Property 1	6,00,000
Property 2	7,00,000
Property 3	8,00,000
Total	21,00,000

In this case, Mr. Arjun is bound to make a GST registration because his total income that is coming from all the properties is exceeding Rs 20 lakhs. Even though he earns less than Rs 20 lakhs from each property but the total income is more, so he has to register for GST.

Example – 2

Mr. Karan owns two commercial properties and does some side business that includes the supply of certain goods that are taxable under GST. The income earned by Mr. Karan from various sources is as follows:

Particular	Income Per Year ( in Rs )
Property 1	5,00,000
Property 2	5,00,000
Business of supply of certain goods	12,00,000
Total	22,00,000

In this case, also Mr. Karan is bound to get registration under GST because his income from the rent of his commercial properties and supply of goods exceeds Rs 20 lakhs.

For some selected states, the limit of taxation is Rs 10 lakhs. These states are Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

It is not mandatory to register in the state where the immovable property is located. One can do the registration under GST in whichever state he/she wants; the location can be different from the location of the immovable property. For example, if a landlord got himself registered in Mumbai, but he has a property in Gujarat, then he doesn’t need to register under GST again at Gujarat.

Reverse Charge on Rent Under GST

According to the GST Act, if an immovable property is offered for rent by the government or any local authorities to a person who is registered under GST, here the rent has to be paid by the tenant under the reverse charge mechanism. In this case, only a reverse charge on rent under GST is applicable. In case the tenant is an unregistered person, then the government will plan for collecting GST under the forward charge mechanism.

Computation of GST on Rent

GST gets charged on the rental income of a registered person at a rate of 18%. If the landlord is collecting the rent by himself/herself, then he/she needs to collect the rent, including the GST amount as below:

Intra-state Transaction

Monthly Rent Collected By Landlord	Rs 3,00,000
Add: CGST@9%	Rs 27,000
SGST@9%	Rs 27,000
Total Invoice Amount	Rs 3,54,000

Inter-state Transaction

Monthly Rate Collected By Landlord	Rs 3,00,000
Add: IGST@18%	Rs 54,000
Total Invoice Amount	Rs 3,54,000

Conclusion on GST on Rent

From this article, we got a detailed overview of GST charged on rental income, reverse charge on rent under GST, computation of GST and payment method of GST. Thus, it is now easy for a person who owns commercial and residential property to deal with the GST complications related to his/her rental income.

GST On Commission: As defined under the Central Goods and Service Tax (CGST) law, an agent carries on the business of supplying goods or services on behalf of another person known as the Principal. An agent includes a broker, commission agent, del credere agent, arhatia, auctioneer, factor, or even a mercantile agent. He takes part in all the activities under the principal-agent relationship.

Categories of Agents

According to the purpose of applicability of GST rules, there are mainly three categories of agents. These are mentioned as below:

Commission Agent

Commission Agent is defined as any person who acts on behalf of another person and is involved in the transaction or sale or purchase of goods or provision or receipt of services. Commission agents, while working on behalf of another person, deals with goods or services or documents of title to such goods or services, collect payment of sale price of such goods or services, assures the collection or remuneration for such goods or services and is directly associated with such activities involving sale or purchase of such goods and services.

If a person works as an estate broker, he gets a commission of 1% on the sale price. He is thus considered a commission agent. Del credere agent is also considered a commission agent.

Carry and Forwarding Agent (C&F)

C & F agents receive a specific commission only if the transaction is routed through them. If a Fast-Moving Consumer Goods (FMCG) company hires a C&F agent, the company must supply the goods to him on issuing an invoice. Thereby, the agent distributes the goods to other retailers by issuing invoices of their own company’s name.

Whether the agent is a commission agent or a C&F agent is determined by the basis of an authorization of title of transaction of goods and services on behalf of the Principal. A C&F has complete authority over such trade. The name of the Principal might or might not be a secret to the final buyer.

Pure Agent

A pure agent, as discussed in the CGST act, is a person who receives and incurs expenditure on some other supply on behalf of the recipient and claims reimbursement for such supplies from the recipient of the main supply while involved in a transaction. While the relationship between the provider of service and recipient of service, in terms of the leading service, is on a principal-to-principal basis, the relationship between them is that of a pure agent in case of other ancillary services.

A pure agent is associated with a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both. He does not hold any title to the goods or services or both, thus procured or provided as a pure agent of the recipient of the supply. A pure agent does not have his interest in such goods or services so procured only receives the original amount as incurred to procure such goods or services along with the amount received for the supply he provides on his account.

GST Rate and Service Code

The general rate of GST on Commission is 18%. Services of commission agents in wholesale trade fall under section 99611, whereas commissioning agent services in retail business fall under 99621. Services of Clearing and Forwarding Agent (C&F) are not considered under this.

Requirement for Registration Of Various Agents

For Commission Agent – Commission agents will get registered in GST only if the commission amount is more than Rs’ threshold limit. 20/10 lakhs.

For C&F Agent – As discussed under Section 24(vii) of the CGST law, a person making a taxable supply of goods or services or both on behalf of other taxable persons as an agent, in this case, C&F agent, is required to get registered even if turnover is less than the threshold limit.

In the case of a person being a commission agent in some transactions and a C&F agent in other transactions, the aggregate turnover will be determined as per the mentioned rules.

Schedule 1: Regarding supply of goods without consideration

Goods transferred by a principal to an agent or vice versa with consideration are treated as supply, and an invoice is mandatory to be raised for the consideration. Whereas, if the goods are to be transferred without consideration between agent and Principal, it is also treated as supply according to Point number 3 of Schedule I.

The agent in his name is issuing the invoice for further supply. Any provision of goods from the Principal to the agent would fall within Schedule I. It may be noted that in cases where the agent issues the invoice to the customer in the name of the Principal, such agent shall not fall within the ambit of Schedule I of the CGST Act. Similarly, where the goods being procured by the agent on behalf of the Principal are invoiced in the name of the agent, then further provision of the said goods by the agent to the Principal would be covered in Schedule I. Therefore, it is crucial whether or not the agent has the authority to pass or receive the title of the goods on behalf of the Principal.

Value of Goods Supplied as Transacted through an Agent

According to Rule 29 of CGST Rule, when the goods are provided without consideration and covered under Schedule I, the value shall be the supplied goods’ open market value. Thus, 90% of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person.

If a principal deals with supplies groundnut to his agent, the agent supplies groundnuts of the same kind and quality in subsequent supplies for five thousand rupees per quintal on the supply day. Another supplier also provides groundnuts of like type and quality to the said agent at the price of four thousand five hundred and fifty rupees per quintal or equivalent quantity. The value of the supply determined by the Principal shall be four thousand five hundred and fifty rupees per quintal or where he exercises the option; the matter shall be 90 percent of five thousand rupees, i.e., four thousand five hundred rupees per quintal. The value has been defined as per rule 30, which states that value shall be one hundred and ten percent of the cost of production or manufacture or the cost of acquiring such goods.

Rule 29 covers only C&F Agents who store and sell goods on behalf of the Principal. This rule does not cover distributor or selling agents who purchase goods from the Principal and then sell on their own. Here, their relations are on a Principal-to-Principal basis.

Concept of a Pure Agent

A person associated with the payment on behalf of another person and takes the only remuneration in accordance with that payment is called a pure agent. Suppose a person hires a chartered accountant to open a private company. This chartered accountant makes payment to MCA for registration fees on the client’s behalf and does all the monetary transactions. After that, he invoices or accounts for the actual amount made to MCA, along with his payment. In this case, the C.A. is working as a pure agent in payment made to MCA.

GST Cannot be Applied to Such Reimbursement of the Amount

A person associated with the transaction can be termed as a ‘Pure Agent’ under the necessary conditions thus followed:

• The transaction made by the pure agent on behalf of the recipient of supply has been separately shown or is reflected clearly in the invoice that the pure agent has issued to the service recipient.
• The supplies as acquired by the pure agent from the third party as a pure agent of the supplied recipient are added to the services he supplies on his account.
• The person does not use for his interest such goods or services as acquired.
• He receives only the actual amount sustained to procure such goods or services in addition to the amount received for supply he provides on his account.

Example: A tour operator gives a package of Rs. 50,000 to Mr. X. The tour operator provides only one invoice or transaction bill of Rs. 50,000. The accommodation and transport cost has not been shown separately, and the tour operator earns a profit. Therefore, he is not considered a pure agent, and GST will be applicable to a total amount of Rs. 50,000. Similarly, if the tour operator charges Rs. 10,000 for a cab to be paid to the owner of the cab and Rs. 40,000 for other additional services and show such R.S. 10,000 as a separate item in the invoice, he is considered a pure agent. If he pays only Rs. 9,000 to the cab driver but charges Rs. 10,000, then GST is chargeable on the entire amount of Rs. 10,000.

A similar example is Stamp duty and Security Transaction Tax (STT) collected from the buyer, and stockbroker pays it acting as a pure agent of the customer. These are not includible in the taxable amount for GST.

In GST, ITC is available only if the tax invoice contains the GSTIN of the recipient and the invoice is uploaded. The pure agent must ensure that the supplier invoices are in the Principal’s name with his GSTN number.

Air Travel Agent

The value of the services supplied concerning booking of tickets for travel by air provided by an air travel agent shall be deemed an amount calculated at the rate of five percent of the basic fare in domestic bookings. Whereas international bookings, the rate is ten percent of the basic fare of passage for air travelling.

For this sub-rule, the expression “basic fare” means that part of the airfare on which Commission is usually paid to the airlines’ air travel agent.

GST applicable on an Exporter in India Paying Commission to a Foreign Commission Agent

Suppose an exporter in India pays Commission to a foreign commission agent, the place of supply is out of India, mainly in that foreign country. Therefore, GST would not be applied and also, no reverse charge is applicable to Indian exporter. This has been broadly discussed under Frequently Asked Questions (FAQ) on GST Chapter 21 Q No. 25 that CBI&C has issued on 15th December 2018.

Important Case Law

There has been a case in 2018 in K.K. Polymers (Prop. Advantage Agency (P.) Ltd.), Rajasthan, where an applicant was working as del credere agent (DCA) of Principal. The Principal supplier gave the del credere agent an extra discount for an early payment passed on by a del credere agent (DCA) to the final customer. It was conditioned that such passing on of additional discount will be done as a pure agent of Principal and no GST is payable. However, any amount commissioned by the DCA on account of early payment is like a supply made to the Principal. This is because of business support services on which the DCA is already paying GST.

Maintaining or Managing the Accounts and Records

Every agent must maintain or keep track of the accounts which will reflect the: –

A detailed account of authorization as received by him from each Principal on receiving or supplying goods or services on behalf of such Principal individually.

Particulars dealing with the description, value and quantity (if applicable) of traded goods or services as received on behalf of every Principal separately.

Particulars with description, value and quantity (if applicable) of traded goods or services as supplied on every Principal’s behalf.

Details of accounts furnished to every Principal.

Tax paid on receipts or bills or supply of goods or services effected on behalf of every Principal.

A person having custody of goods in the capacity of a C&F agent shall maintain accurate and correct records regarding goods handled by him on behalf of another person.

FAQ’s on GST On Commission

Question 1.
Is GST payable on Commission?

Answer:
As per the rules, GST is to be charged on Commission at the rate of 18%. If a person is registered under GST charges commission for a transaction in his ancillary business, then also GST is applicable.

Question 2.
Are commission agents required to register under GST?

Answer:
Commission agents must get registered under GST if the total amount of Commission in a financial year is more than the threshold value of Rs. 20 lakhs, whereas this limit is Rs. 10 lakhs for selected states.

Question 3.
Is GST chargeable even on real estate commission?

Answer:
Yes. GST is chargeable on real estate commission at the same rate.