GST Tax Payable To Govt. For A Retailer & Other Queries

kidrow

kidrow

Adept
Hi all,

I'm a small retailer involved in the sale of automotive batteries to the end consumer. (So a b2cs?). I'd like help in understanding how much tax is payable under the GST regime in various situations, & about how things such as invoices & returns should be set up.

Section 1-

1a) Say the MRP of 1 battery is 5000, would my Sales Invoice to the end consumer express the price as:
Rs. 3906 + SGST Rs. 547 (@14%) + CGST Rs. 547 (@14%) = 5000?
Thus in effect, is it only a breakdown of the price?
Correct me if I'm wrong, but I'm assuming the GST cannot be added on top of the MRP, given that it is supposed to be all inclusive.

1b) Say the Purchase Invoice states the price for the same battery as:
Rs. 3125 + SGST Rs. 437 (@14%) + CGST Rs. 437 (@14%) = Rs. 4000.

In such as scenario, what is the amount that I'm liable to pay to the Govt? How is the calculation done? I've read about 'Input Tax Credit' but I'm not sure what it means, & what bearing it has on the calculation.

2a) Now, suppose I opt for the Composition scheme. Would my Sales Invoice to the end consumer express the price as 3906 only? I've read that one cannot charge GST when under the Composition scheme.

2b) In the Composition scenario then, what is the amount that I'm liable to pay to the Govt? Is it 0.5% of Rs. 3906?

3a) If a discount is given to the consumer, would it change the tax payable to the Govt. in any way?

3b) Does profit get affected if one opts for the Composition option?

Section 2-

Now, onto another aspect. It is standard practice to buy back the old battery from the consumer.

4) So say I buy back a scrap battery from the consumer for Rs. 500. & sell it for Rs. 600 to a local scrap dealer.
What would the tax payable to the Govt be in this particular instance, since it involves buying from & selling to unregistered entities?
I've encountered a term 'reverse charge' in the context of unregistered entities. Would that have any bearing here?

5) What would my Sales Invoice to the scrap dealer look like?
Rs. 600 + SGST Rs. 84 (@14%) + CGST Rs. 84 (@14%) = Rs. 768.?
Or will it be broken down into components as it was with the MRP?
i.e. Rs. 468 + SGST Rs. 66 (@14%) + CGST Rs. 66 (@14%) = Rs. 600?

6) Could there be any difference in the GST rate applicable, given that this is purchase & sale of a scrap battery & not a new product?

7) Would the situation change if the scrap dealer is registered under GST?

8) How would the situation with respect to the scrap battery buy back & sale change if I opt for Composition?

Many thanks for your patience & taking the time. Much appreciated. Good day!
 
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The silence speaks volumes about how convoluted and poorly implemented this whole fiasco is.

I'm sorry I can't help you either.
 
I can only help with a few things as I am neither a practising CA, nor a business owner currently having to deal with GST.

1) Your invoice examples are correct. GST is applied at every stage, but only on the value added. This is ensured by the Input Tax Credit system. You have to pay GST only on your profit. It would have been cumbersome to invoice by showing all the various GSTs added at every different stage to the end customer, so the system of input tax credit has been used instead. You can claim an Input Tax Credit of the amount you have already paid as tax in the purchase invoice and have to only submit the remaining amount of the tax claimed from the buyer . So in your example you will only pay Rs. 547-437 = 110 to the govt. You will show the whole value as 547 and claim an Input Tax Credit of 437.

In case you offer discount to the customer, you will create an invoice amounting to the discounted price as created for the original price and then the same process will follow as above.


5&6) GST is only applicable on the value added part.
If you bought it for 500 and sold for 600, you will calculate and apply GST on only Rs. 100 as their is no input tax credit to be claimed in this scenario aa the owner of the battery is selling a used battery at a loss to you. You should either search online or ask a CA on how to create an invoice in such a scenario.


Composition scheme -

1) You cannot claim Input tax credit if opting for Composition.
2) Yes, your invoice will read 3906 as you can't charge tax.
3) You will be facing losses since you would have paid Rs. 4000 and then sell the same for 3906 and then also pay 1%GST (0.5% SGST and 0.5% CGST) on 3906.
4) Registering under GST composition would only work for you if you were purchasing from someone who was himself registered under Composition scheme. It would not work in your favor if your supplier is a normal GST payer.
 
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about points 5 & 6, i read elsewhere that there is no GST on 2nd hand items. Is this only for online or applies to local markets too?
 
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