08 July 2022
We are doing business in many state & having different gst registration no.in each state. We have purchased 10 No. of cupboard (capital asset ) in Kolkata unit .Purchases invoice is addressed to our Kolkata unit & supplyer is also located in Kolkata city.
But same
accounted in Maharashtra state (HO) gstn books of account. While accounting we are not take gst input. In above case can it is treated as supply due to distinct person. Can it is inferenced that supply to Maharashtra distinct person from Kolkata distinct person. Please guide in detail
06 July 2024
In your scenario, where your business operates with multiple GST registrations in different states and you've purchased capital assets (cupboards) in Kolkata but accounted for it in Maharashtra (HO) without claiming GST input, here’s how it can be interpreted:
### Understanding Distinct Persons under GST:
Under GST, each registration of a business in different states is considered a distinct person. This means transactions between different GST registrations of the same entity in different states are treated as supplies. Here’s how it applies to your situation:
1. **Purchase of Cupboards in Kolkata:** - You purchased 10 cupboards in Kolkata, and the invoice is addressed to your Kolkata unit. The supplier is also located in Kolkata.
2. **Accounting in Maharashtra (HO):** - You've accounted for this purchase in Maharashtra (HO) GSTN (GST registration number) and did not claim GST input credit.
3. **Treatment as Supply:** - According to GST rules, transactions between distinct persons (different GST registrations of the same entity in different states) are considered supplies. - Since you've accounted for the purchase in Maharashtra and not claimed GST input credit, this can be interpreted as a supply from your Kolkata unit (distinct person) to your Maharashtra HO (distinct person).
### Implications and Considerations:
- **Input Tax Credit (ITC):** By not claiming GST input credit on the purchase made in Kolkata, you cannot offset the GST paid against your output tax liability in Maharashtra. This affects your cash flow and increases your cost.
- **Documentation and Compliance:** Ensure proper documentation of the transaction, including invoices, delivery challans, and accounting entries, to support the treatment of this transaction as an inter-state supply between distinct persons.
- **GST Compliance:** Review GST laws and regulations regarding the treatment of transactions between distinct persons. Ensure you comply with GST requirements for input tax credit, especially for capital assets.
### Steps Going Forward:
1. **Consult with GST Expert:** Given the complexity of inter-state transactions and GST compliance, it’s advisable to consult with a GST expert or tax consultant. They can review your specific situation, advise on compliance requirements, and help rectify any potential issues related to input tax credit.
2. **Documentation Review:** Ensure all documentation related to the purchase of cupboards in Kolkata and its accounting in Maharashtra is in order. This includes verifying invoices, delivery challans, and GST treatment in your books of accounts.
3. **Rectification (if necessary):** If there are any errors in claiming GST input credit or accounting for the transaction, take necessary steps to rectify them under GST provisions. This may involve filing amendments or corrections as per GST laws.
By understanding the concept of distinct persons under GST and ensuring compliance with input tax credit rules, you can effectively manage inter-state transactions and avoid potential compliance issues.
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