TaxSavvy

TaxSavvy for kirana or retail shop, shop with GST

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Shop registered under GST, regular or composition

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  • Compliance Pack onboarding
  • Quarterly CMP-08 statement and payment
  • GSTR-1 and GSTR-3B monthly filing
  • GSTR-2B ITC reconciliation and IMS
  • Late GSTR-3B filing with late fee and interest

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  • GST returns
  • Invoices
  • Bank statement
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Facts, Provisions and law, Analysis, Conclusion.

  • Composition Scheme: Rates, Eligibility, Filing, Exit
    Facts
    For small businesses below ₹1.5Cr turnover, pay GST at a flat lower rate on turnover instead of the standard 18/12/5% structure. No ITC, no B2B GST invoices, simplified compliance. Two returns a year instead of 24+ monthly filings. But once you cross ₹1.5Cr or make inter-state supply, you must exit.
    Provisions and law
    Sec 11 (old 10(1)); Sec 11 (old 10(2)); Sec 11 (old 10(5)); Rule 7; Sec 10(3)
    Analysis
    Who benefits most from composition scheme: Small retailers, kirana shops, small restaurants, local manufacturers, where most customers are B2C (end consumers). Since composition taxpayer cannot issue tax invoices, your B2B corporate clients cannot claim ITC, so if you primarily serve corporates, composition is not ideal. Tax payment under composition: No monthly tax computation on invoice-by-invoice basis. Just pay a fixed % of quarterly turnover. Pay via CMP-08 quarterly (by 18th of month after quarter). Annual return GSTR-4 by April 30. Much simpler than monthly GSTR-1 + GSTR-3B + quarterly GSTR-9. What composition taxpayer cannot do: Cannot collect GST from customer (tax comes from your own pocket on your turnover). Cannot issue a GST tax invoice, only "bill of supply" without GST. Cannot make inter-state sales. Cannot supply exempt goods without exiting.
    Conclusion
    • Check eligibility: aggregate turnover in preceding FY ≤ ₹1.5Cr (₹75L for services)
    • Confirm no inter-state supplies made or planned in the FY
    • Confirm not selling on Amazon/Flipkart/Meesho (e-commerce aggregator = not eligible)
    • Apply for composition: GST portal → Services → Registration → Application to opt for Composition → Form CMP-02
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  • GSTR-2A / 2B mismatch notices: ITC reversal demands
    Facts
    The most common GST notice: your GSTR-2B shows less ITC than what you claimed in GSTR-3B. Reasons: vendor didn't file GSTR-1, vendor filed after your return date, invoice uploaded incorrectly.
    Provisions and law
    CGST Act, Sec 16(2)(aa), 16(4) | Rule 36(4)
    Analysis
    Sec 16(2)(aa): ITC is available only on invoices appearing in GSTR-2B. If not in GSTR-2B, ITC must be reversed with interest (18% per annum). Defence: Get vendor to file/amend their GSTR-1. Once vendor files, the invoice appears in your GSTR-2B and ITC can be claimed. Chasing vendors is now a mandatory compliance activity.
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  • Advance tax for freelancers: quarterly self-assessment and payment
    Facts
    Freelancers have no employer to deduct TDS. Your foreign clients pay you gross. You are entirely responsible for advance tax payment on a quarterly schedule.
    Provisions and law
    IT Act, Sec 207-209 | Sec 424, 425 (old 234B, 234C) interest
    Analysis
    Schedule: Q1 (Jun 15), 15%. Q2 (Sep 15), 45%. Q3 (Dec 15), 75%. Q4 (Mar 15), 100%. If you miss or underpay: 1% per month simple interest under Sec 424, Income-tax Act 2025 (old Sec 234B; underpayment) and Sec 425 (old Sec 234C; quarterly shortfall). On ₹5L annual tax liability, missing Q2 means ₹22,500 in interest (45% of ₹5L = ₹2.25L unpaid × 1% × 10 months). Under Sec 58 (old Sec 44ADA) simplification: Sec 58 (old Sec 44ADA) filers pay advance tax in one shot on March 15 (100%), no quarterly requirement. This is a major simplification benefit of Sec 58 (old Sec 44ADA).
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  • Tax Harvesting: Save ₹15,600 Every Year Doing Nothing
    Facts
    Section 198, Income-tax Act 2025 (old Sec 112A) gives you ₹1.25 lakh of equity LTCG tax-free every year. Most investors let this exemption expire unused. Tax harvesting: sell and rebuy on the same day. You reset your cost basis, book the exempt gain, and stay invested. Repeat every year.
    Provisions and law
    Sec 198 (old 112A); Budget 2024; No wash sale rule; Sec 11 (old 10(38))
    Analysis
    The annual saving: ₹1,25,000 exempt × 12.5% tax rate = ₹15,625 saved every year. Spouse does the same = ₹31,250/year. Over 20 years = ₹3.1L+ tax saving (excluding growth on saved tax). How to do it (same day, same fund): In February or March: sell units with > 12 months holding equal to ₹1.25L gain. Immediately rebuy same fund same day. Net transaction cost = 2× exit load (usually 0 on equity after 1 year) + 2× STT (0.1% each). Cost ≈ ₹250 on ₹1.25L. Tax saving: ₹15,625. Net gain: ₹15,375. When NOT to harvest: If holding period is less than 12 months → STCG at 20%. Harvesting STCG makes it worse. Only harvest LTCG (held > 12 months). Joint account tip: Sell in spouse's account too. Each gets ₹1.25L exemption separately. Total ₹2.5L exempt = ₹31,250 saved per year.
    Conclusion
    • Identify holdings with LTCG (held > 12 months): check MF statement for purchase dates
    • Calculate LTCG: (current NAV − average buy price) × units
    • If LTCG < ₹1.25L: sell all of those units (full exemption unused)
    • If LTCG > ₹1.25L: sell enough units to book exactly ₹1.25L gain
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