FAQs

GST (Goods and Services Tax) is a comprehensive, indirect tax levied on the supply of goods and services in India. It replaces multiple indirect taxes like VAT, excise duty, and service tax, simplifying taxation and promoting a unified market across the country.

In GST (Goods and Services Tax) in India, various types of returns need to be filed by taxpayers, depending on their registration type, turnover, and business activities. Some important and common GST returns include:

1. GSTR-1 (Outward Supplies)

• What it covers: Details of outward supplies (sales) made by the taxpayer.
• Frequency: Monthly/quarterly (depending on turnover).
• Due date:
  • Monthly: 11th of the following month.
  • Quarterly: 13th of the month following the quarter (for taxpayers under QRMP scheme).

2. GSTR-3B (Summary Return)

• What it covers: Summary of outward supplies, input tax credit (ITC), and net tax payable.
• Frequency: Monthly/quarterly.
• Due date: 20th of the following month (monthly filers) or 22nd/24th (quarterly under QRMP).

3. GSTR-9 (Annual Return)

• What it covers: Consolidated details of outward and inward supplies made during the financial year.
• Frequency: Annually.
• Due date: 31st December of the following financial year.

4. GSTR-4 (Composition Scheme)

• What it covers: Return for taxpayers registered under the Composition Scheme.
• Frequency: Annually.
• Due date: 30th April of the following financial year.

5. GSTR-9C (Reconciliation Statement)

• What it covers: Reconciliation between audited financial statements and annual GST return (applicable for taxpayers with turnover exceeding ₹5 crore).
• Frequency: Annually.
• Due date: Along with GSTR-9.

6. CMP-08 (Statement for Composition Dealers)

• What it covers: Payment of self-assessed tax for composition dealers.
• Frequency: Quarterly.
• Due date: 18th of the month following the quarter.

7. GSTR-2A and GSTR-2B (Auto-Generated Returns)

• What it covers:
  • GSTR-2A: Dynamic return for inward supplies (purchases), auto-generated for reference.
  • GSTR-2B: Static return that helps in availing ITC.

8. GSTR-7 (TDS Deductor Return)

• What it covers: Return filed by persons who deduct TDS under GST.
• Frequency: Monthly.
• Due date: 10th of the following month.

9. GSTR-8 (E-commerce Operators)

• What it covers: Return filed by e-commerce operators regarding the tax collected at source (TCS).
• Frequency: Monthly.
• Due date: 10th of the following month.

Commonly Filed Returns:

• GSTR-1 (for sales details).
• GSTR-3B (for tax payment summary).
• GSTR-9 (annual return).

These are the primary returns, and taxpayers must file the relevant ones based on their registration and business activities.

In the Indian Income Tax system, Capital Gains refer to the profit earned from the sale of a capital asset, such as property, stocks, bonds, etc. Capital gains are categorized into two types based on the holding period of the asset:

1. Long-Term Capital Gains (LTCG)

Definition:

• Long-term capital gains arise when a capital asset is held for a specified long duration before being sold. The duration required to classify the gain as long-term varies depending on the type of asset.

Holding Period for LTCG:

• Listed equity shares and equity mutual funds: More than 12 months.
• Unlisted shares: More than 24 months.
• Immovable property (like land, building, house): More than 24 months.
• Debt mutual funds, jewelry, other capital assets: More than 36 months.

Taxation on LTCG:

• Listed equity shares and equity mutual funds:
  • LTCG exceeding ₹1 lakh is taxed at 10% without the benefit of indexation (as per Section 112A).
• Other long-term assets (property, debt funds, etc.):
  • Taxed at 20% after providing the benefit of indexation, which adjusts the purchase price of the asset for inflation.

Indexation:

• Indexation allows the taxpayer to adjust the purchase price of the asset using the Cost Inflation Index (CII), which helps reduce the tax liability by accounting for inflation over the period of holding the asset.

2. Short-Term Capital Gains (STCG)

Definition:

• Short-term capital gains arise when a capital asset is sold after being held for a shorter period, as specified by the tax laws.

Holding Period for STCG:

• Listed equity shares and equity mutual funds: Held for 12 months or less.
• Unlisted shares: Held for 24 months or less.
• Immovable property (like land, building, house): Held for 24 months or less.
• Debt mutual funds, jewelry, other capital assets: Held for 36 months or less.

Taxation on STCG:

• Listed equity shares and equity mutual funds:
  • STCG is taxed at 15% under Section 111A.
• Other short-term assets (property, debt funds, etc.):
  • Taxed as per the taxpayer’s income tax slab rates. These gains are added to the total income and taxed according to the individual’s applicable tax rate.

Key Differences Between LTCG and STCG:

Exemptions on Capital Gains:

• Section 54: Exemption on capital gains from the sale of a residential property if reinvested in another residential property.
• Section 54EC: Exemption on capital gains from the sale of a property if reinvested in specified bonds (such as NHAI or REC bonds) within 6 months.
• Section 54F: Exemption on capital gains from the sale of any asset (other than a residential property) if reinvested in a residential property.

Capital gains tax can vary based on the type of asset and holding period, so proper planning can help reduce tax liabilities.

There are several legitimate ways to save taxes under the Indian Income Tax Act. Here are some of the most common and effective methods:

1. Invest in Tax-Saving Instruments (Section 80C)

Section 80C allows deductions of up to ₹1.5 lakh from your taxable income by investing in certain instruments:

• Public Provident Fund (PPF).
• Employees’ Provident Fund (EPF).
• National Savings Certificate (NSC).
• Equity-Linked Savings Scheme (ELSS).
• Tax-saving Fixed Deposits (FDs).
• Sukanya Samriddhi Yojana (for girl child).
• Life Insurance Premium (for self, spouse, and children).
• Principal repayment on a home loan.
• Tuition fees (for up to two children).

2. National Pension System (NPS) (Section 80CCD)

• Section 80CCD(1B): An additional deduction of ₹50,000 is available for contributions to NPS. This is over and above the ₹1.5 lakh limit under Section 80C.
• Employer Contribution to NPS: Employer contributions up to 10% of the salary (basic + DA) are also deductible under Section 80CCD(2), without the limit of ₹1.5 lakh.

3. Health Insurance Premium (Section 80D)

You can claim deductions for health insurance premiums paid for self, family, and parents:

• Self, spouse, and children: Up to ₹25,000.
• Parents under 60: Additional ₹25,000.
• Parents above 60: Additional ₹50,000.
• Preventive health check-ups: Deduction up to ₹5,000 is included within the overall limit.

4. Interest on Home Loan (Section 24 and Section 80EEA)

• Section 24: You can claim a deduction of up to ₹2 lakh on the interest paid on a home loan for a self-occupied property.
• Section 80EEA: An additional deduction of ₹1.5 lakh is available on home loan interest for first-time home buyers, provided certain conditions are met (loan taken between April 1, 2019, and March 31, 2022, and property value within limits).

5. Tax Benefits on Education Loan (Section 80E)

• The interest paid on an education loan for higher studies (self, spouse, or children) is eligible for deduction under Section 80E. There is no upper limit on the deduction, but only the interest component qualifies, and the deduction is available for up to 8 years from the year the repayment begins.

6. Savings Account Interest (Section 80TTA & Section 80TTB)

• Section 80TTA: Interest earned on a savings account is eligible for deduction up to ₹10,000 for individuals and HUFs.
• Section 80TTB: For senior citizens, interest earned on savings accounts and fixed deposits is deductible up to ₹50,000.

7. Leave Travel Allowance (LTA)

LTA received from your employer can be claimed as a deduction for travel expenses within India, provided you actually incur travel costs for yourself and family. This benefit is available for two trips in a block of four years.

8. House Rent Allowance (HRA) (Section 10(13A))

If you live in a rented house and receive House Rent Allowance (HRA) as part of your salary, you can claim a deduction for the rent paid. The deduction is calculated based on:

• 50% of salary (if residing in a metro city) or 40% of salary (non-metro).
• Actual rent paid minus 10% of salary.
• The HRA received from the employer. You can claim the least of the above amounts.

9. Donations to Charity (Section 80G)

Donations made to certain charitable organizations are eligible for tax deductions under Section 80G. The deduction can be 50% or 100% of the amount donated, depending on the organization. Some donations have an upper limit (maximum 10% of adjusted gross total income).

10. Deductions for Disabled Individuals (Section 80U) or Medical Treatment (Section 80DD, 80DDB)

• Section 80U: Individuals with disabilities can claim a flat deduction (₹75,000 for 40% or more disability, and ₹1.25 lakh for severe disability).
• Section 80DD: Deduction for dependent family members with a disability (₹75,000 or ₹1.25 lakh depending on severity).
• Section 80DDB: Deduction for medical treatment of specific diseases for self or dependents (₹40,000 or ₹1 lakh for senior citizens).

11. Standard Deduction

A flat deduction of ₹50,000 is available to salaried employees and pensioners without the need for any documentation.

12. Tax Benefit on Gratuity (Section 10(10))

Gratuity received by employees is tax-exempt up to a certain limit, provided the conditions under the Payment of Gratuity Act are met. The current exemption limit is ₹20 lakh.

13. Voluntary Retirement Scheme (VRS) Benefits (Section 10(10C))

Compensation received under a Voluntary Retirement Scheme (VRS) is tax-exempt up to ₹5 lakh if the retirement meets certain conditions.

14. Set Off Capital Losses

If you have capital losses (either short-term or long-term), they can be set off against capital gains of the same type. For instance, long-term capital losses can only be set off against long-term capital gains, but short-term losses can be set off against both short- and long-term gains. This helps in reducing your taxable capital gains.

15. Opt for New Tax Regime (Optional)

Under the new tax regime (introduced in FY 2020-21), you can opt for lower income tax rates without claiming exemptions or deductions. This may be beneficial if you don’t have many deductions to claim. Compare both regimes to decide which is more favorable.

By carefully utilizing these deductions and exemptions, you can effectively reduce your taxable income and lower your overall tax liability.

Yes, you can claim Input Tax Credit (ITC) on the purchase of a new vehicle under GST, but there are certain conditions and restrictions. ITC on motor vehicles is not always allowed and depends on the type of vehicle and the nature of your business.

Conditions for Claiming ITC on Vehicle Purchase:

1. Vehicles Allowed for ITC

• ITC on motor vehicles is allowed only in specific cases when the vehicle is used for:
  • Further supply of the vehicle (i.e., if you are in the business of buying and selling vehicles).
  • Transportation of passengers (such as in the case of a taxi service, cab operators, or buses used for public transportation).
  • Training: If the vehicle is used for providing training on driving, flying, or navigating.
  • Transportation of goods: ITC is allowed if the vehicle is used solely for the transportation of goods (such as trucks, delivery vans, etc.).

2. Vehicles Not Allowed for ITC

• For most other businesses, ITC cannot be claimed on the purchase of motor vehicles designed to carry passengers (e.g., cars, bikes) if the vehicle is for personal use or general business use (such as company-owned cars for executives).

3. ITC on Other Expenses Related to Vehicles

Even if you cannot claim ITC on the vehicle itself, you may still be able to claim ITC on other vehicle-related expenses if the vehicle is used for business purposes, such as:

• Vehicle insurance premiums.
• Maintenance and repair services.
• Fuel expenses (if used for furtherance of business).

Example Scenarios:

1. You run a car rental business:

   • If you buy a vehicle to be used for renting out (transportation of passengers), you can claim ITC on the GST paid on the vehicle purchase.

2. You run a logistics company:

   • If you purchase a vehicle for transporting goods (e.g., trucks or delivery vans), you are eligible to claim ITC.

3. You run a general business (non-transport related):

   • If you purchase a car for your company’s directors or employees to use, you cannot claim ITC on the vehicle purchase, as the car is designed for passenger use and not directly for furtherance of business operations related to supply of goods or services.

Relevant GST Provisions:

• As per Section 17(5) of the CGST Act, ITC is blocked on motor vehicles used for passenger transportation unless they fall under the specified exceptions like further supply, transportation of passengers, goods, or training services.

Conclusion:

• You can claim ITC on vehicle purchases only if the vehicle is used for specific business purposes like transportation of goods or passengers, or if you are in the business of selling or renting vehicles.
• You cannot claim ITC on motor vehicles meant for passenger use in regular businesses (e.g., company cars) unless they meet the above exceptions.

Make sure to evaluate whether your business qualifies for ITC on vehicles based on your specific use case and the nature of your business.

Late fees in GST are imposed when a taxpayer fails to file their GST returns within the prescribed due dates. The late fees are charged for each day of delay, and there are different late fees for different types of returns (e.g., GSTR-1, GSTR-3B, GSTR-9, etc.).

Here’s a breakdown of the late fees applicable for different types of returns:

1. Late Fees for GSTR-3B (Monthly Return for Tax Liability Payment)

• Late Fee for Nil Return (if no tax liability):

  • ₹20 per day (₹10 CGST + ₹10 SGST) for each day of delay.

• Late Fee for Other than Nil Return (if tax liability exists):

  • ₹50 per day (₹25 CGST + ₹25 SGST) for each day of delay.

• Maximum Late Fee:

  • The maximum late fee is capped at ₹5,000 (₹2,500 CGST + ₹2,500 SGST) for a return filing period.

2. Late Fees for GSTR-1 (Monthly/Quarterly Return for Outward Supplies)

• Late Fee for Nil Return (if no outward supplies):

  • ₹20 per day (₹10 CGST + ₹10 SGST) for each day of delay.

• Late Fee for Other than Nil Return (if outward supplies exist):

  • ₹50 per day (₹25 CGST + ₹25 SGST) for each day of delay.

• Maximum Late Fee:

  • The maximum late fee for GSTR-1 filing is also capped at ₹5,000.

3. Late Fees for GSTR-9 (Annual Return)

• Late Fee for Delay in Filing GSTR-9:
  • ₹200 per day (₹100 CGST + ₹100 SGST) for each day of delay.
  • Maximum Late Fee: The late fee is capped at 0.5% of the turnover in the relevant financial year (0.25% for CGST and 0.25% for SGST).

4. Late Fees for GSTR-4 (Return for Composition Scheme Dealers)

• Late Fee for Nil Return:

  • ₹20 per day (₹10 CGST + ₹10 SGST) for each day of delay.

• Late Fee for Other than Nil Return:

  • ₹50 per day (₹25 CGST + ₹25 SGST) for each day of delay.

• Maximum Late Fee: Capped at ₹5,000.

5. Late Fees for GSTR-7 (TDS Return under GST)

• Late Fee for Delay in Filing GSTR-7:
  • ₹200 per day (₹100 CGST + ₹100 SGST) for each day of delay.
  • Maximum Late Fee: Capped at ₹10,000.

Important Points:

1. IGST Late Fee: In the case of IGST, there is no specific late fee for IGST as it is covered under CGST and SGST (or UTGST).

2. Waiver or Reduction of Late Fees: The government sometimes announces relief measures in the form of waiver or reduction of late fees during specific periods, usually during the year-end or post-pandemic, to encourage compliance.

3. Interest on Late Payment: Apart from late fees, if there is any tax liability and the return is filed late, interest at 18% per annum is also charged on the outstanding tax amount.

Summary of Late Fees:

Ensure timely filing of returns to avoid late fees and interest charges.