The last date for filing ITC-03 is around the corner and it is sprouting out an immediate need for clarification on many issues.
Beyond the shadow of a doubt, the real estate sector is one of the crucial cornerstones of our National economy with its contribution of around 6-8% in the Gross Domestic Product (GDP) of India.
To combat the downturn phase of the economy the GST council brought down the GST rates on under-construction flats and affordable homes to 5 and 1%, respectively. The slashed GST rate became effective from April 1, 2019, through Notification No. 03/2019 – CT(R) dated 29th March 2019 to encourage the demands for properties.
This notification arrived along with a condition which states that when the builders & developers have used the beneficial option of paying taxes at a lower rate on the projects which are ongoing i.e. not yet completed, he shall be liable to reverse Input Tax Credit (ITC), by applying the formula stated in Annexure of notification, prior to the last date of GST ITC 03. The due date comes within 60 days of commencement of the financial year.
The formula mentioned in the annexure is just the beginning, main issues emerge when the time to report the reversal arrives.
According to the notification, a registered person shall pay the amount either in cash or utilizing the accumulated ITC and fill the details in FORM GST ITC- 03.
The FORM GST ITC 03 can be Filed in two Instances which are as Follows:
- When taxpayer opts for GST composition scheme,
- When taxpayer supplies fully exempt goods or services.
Goods Related Data has to be Uploaded in one of the two Tabs in Form: The Two Tabs Are:
- Tab for furnishing details of goods with Invoices
- Tab for furnishing details of goods without Invoices
And the Types of Goods are Classified into the Following Categories:
- Inputs held in stock
- Inputs held in semi-finished
- Finished goods & Capital Goods Held in stock
Furnishing data in Form ITC 03
An assessee needs to calculate GSTIN/ Invoice wise total reversal amount, to furnish data in Form ITC 03. After that, he needs to furnish invoice-wise details in the utility, this is a tiresome job for big traders with many invoices and bulk data.
The Solution about the Input Service Credit still remains behind the curtain. Form GST ITC -03 has no columns for the ITC reversal. Input services contain a major share of ITC for builders but the absence of appropriate column for Input Services in Form GST ITC -03 will confuse the builders.
FORM GST DRC – 20
A builder can file an application in FORM GST DRC – 20 seeking permission to pay the taxes in installments (if the option is available) or time extension for the payment of taxes if he is facing financial crisis.
Option for paying off the liability via Form DRC-20 is not available in Form ITC-03.
Deadline for filing ITC – 03 is coming nearer as the days are passing and so the clarity on some unanswered questions is needed on an urgent basis. Unanswered questions such as: Are GST ITC- 03 the right form for furnishing the ITC reversal? How should Invoices reversal for Input Services be reported? Do we need to upload Form ITC 03 on every partial payment if we are allowed to pay the taxes in installments?
The GST Council have been taking prompt decision to sort out the legal & procedural challenges faced by traders. The simplicity & clarity on this issue is also anticipated to be given very soon by the GST council. Traders are not expecting the postponement in the due dates, but they are looking forward to the simplification of reporting needs, like a single reversal figure instead of multiple invoice-wise figures.
