ITC ON SERVICES IN FINSYS
With the GST, the Government has allowed every business to take ITC (Modvat) of every business expense that carries the ITC.
The Government has set only two conditions
a) The Vendor must issue a invoice / Debit Note etc
b) He must upload it on the Governments Portal in Form GSTR-1 ( which automatically becomes your GSTR-2 )
Note for Finsys Clients:
1) The Govt wants the vendor to record the required 17 points in his invoice. There is no condition for you to record all those 17 points in your ERP.
2) Suppose the Vendor is a Hardware Store, and sends you V Belts, Oil, Loose Cloth, Ball Bearings, Grease, Bolts, Alley Key, Hex Nuts and 20 other items, on 1 bill,. All these items have different HS Codes. And they also have different Duty Rates.
So, What to do ?
Step 1 : Make PO properly
Step 2 : Make Gate Entry and MRR properly as usual
Step 3 : Make QC properly
Step 4 : Take the GST Credit, in the Excise/GST module of Finsys ERP
Step 5 : Pass the Financial Voucher ( Purchase Voucher in due course)
FAQ 1 : Do I have to mention all 27 rows of the vendor’s bill during the “GST Credit” icon entry in Finsys?
Answer : No, the Finsys ERP will work with any SAC code or GST code of the first item of the MRR. This is similar to as you used to do in Excise regime (in Finsys ERP upto 30-6-2017)
Question 2 : Why do I have to enter “GST Credit” icon in Finsys at all ?
Answer: GST credit is allowed on receipt of Goods + ITC requirements as aforesaid. So, suppose, MRR is made on 29th July 2017, but bill is not passed due to any Quality problem or rate problem till 15th of next month, still you can take the GST credit on that bill. Since he has sent the material , material has reached you, and he has filed his GSTR1, and you can ( or have ) approved of that bill in your GSTR-2. Hence even if the Vendors rate is not ok, yet till that time you can take the GST- ITC ( Modvat ). for all that you need a via media.
Question 3 : Will I get a “GST credit” vs “Accounts” Credit reconciliation ?
Answer : Yes, it will be available, same as during Excise regime.
Question 4 : I have received a Job Workers bill. I do not make any PO. But I make a MRR(Jobwork). So, how to take the credit ? Do I have to mention the SAC code on MRR ? Do I mention SAC code in the Item Master ?
Answer: No, You can get the Credit of ITC as soon as the vendors bill is reflecting on your GSTR-2. and you approve it.
His SAC code is relevant for his own GST return only.
It is not relevant for your GST Return ( except you are “approving” his entry in your GSTR2
Basically, the reco is of 4 items : His Name, His GST number, His invoice number invoice data, invoice value and GST value.
So, irrespective of the SAC code, you will get the ITC credit on the Govt’s portal.
Question 5 : I have understood the above. What should i further remember in Job worker’s bill in Finsys data entry ?
Answer: During the GST Credit entry, you can/must enter the SAC code of the first item / main item on the Job worker’s bill.
Example : You sent 1000 Steel shafts for Heat Treatment. The HS code for Steel Shaft is say 73401010, So, your RGP ( Delivery challan) is for HS Code 73401010. Fine. The vendor may make his bill on lumpsum or anything, and he mentions his SAC code say 995466 It is ok and fine, just let it be
Your MRR will be for “Steel Shaft” HS Code 73401010 only.
And later, during the GST entry (earlier called Excise entry in Finsys), you will replace the Automatic HS code with the vendor’s sent SAC Code ( 995466). This will be done manually by the person seeing the GST in your company.
Question 6 :Same “Steel Shaft” is sent for Three Different Job workers
1. First to Job Worker A for Cutting,
2. Later to Job worker B for Machining,
3. Later to Job worker C for Heat Treatment.
So, do I have to mention SAC code at ITem code level ?
Answer : No, your RGP and your MRR will carry the same Standard HS code only, unless the item has itself changed too substantially that legally it is not the same item. Otherwise you continue using the same HS Code.
And only during the GST entry screen, you can put the SAC directly at the GST credit routine.
Source of LAW
Law as per Govt’s Notification
Input Tax Credit
1. Documentary requirements and conditions for claiming input tax credit
(1) The input tax credit shall be availed by a registered person, including the InputService Distributor, on the basis of any of the following documents, namely:-
(a) An invoice issued by the supplier of goods or services or both in accordance withthe provisions of section 31;
(b) An invoice issued in accordance with the provisions of clause (f) of sub-section(3) of section 31, subject to payment of tax;
(c) A debit note issued by a supplier in accordance with the provisions of section 34;
(d) A bill of entry or any similar document prescribed under the Customs Act, 1962 orrules made thereunder for assessment of integrated tax on imports;
(e) An ISD invoice or ISD credit note or any document issued by an Input ServiceDistributor in accordance with the provisions of sub-rule (1) of rule invoice.7.
(2) Input tax credit shall be availed by a registered person only if all the applicable particulars as prescribed in Chapter —- (Invoice Rules) are contained in the said document,and the relevant information, as contained in the said document, is furnished in FORMGSTR-2 by such person.