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Embracing GST : Quick Guide For Partners

Embracing GST : Quick Guide For Partners

Mr. Mohammadali Saiyed

Mohammadali Saiyed is responsible for the Finance Function at NJ. He is a member of the ICAI and has an experience of nearly 9+ years at NJ.

Who has to register under GST?

The following persons are liable for registration under GST

  • Partners earning having pan-India total turnover / revenues in a financial year exceeding Rs.20 lakh

  • Partners having multiple places of business in different states /UT irrespective of the threshold limits

  • Partners previously registered under existing laws i.e. Service Tax etc.

  • Any person making an inter-state supply in any goods or services. No IGST will be applicable to NJ Wealth Partners as NJ has obtained registration in every state with NJ branch presence and where the partner is being serviced at.

While registration is mandatory for above persons, any person can opt for registering voluntarily under GST. However, every registered person would be required to pay GST and threshold of Rs.20 lakhs will not be available to such registered person.

* Note, the threshold is of Rs. 10 lakhs in case of special category states

If I am not liable to register, what will happen?

You are not liable to register if (a) your place of business is within one state /UT (b) the total turnover / revenues are below the threshold limits and (c) you are not already registered under Service Tax, etc. Under GST provisions, if unregistered person (you) provides service / goods to a Registered person (NJ), GST will be paid by such Registered person on Reverse Charge basis as the recipient of service / goods. Thus, NJ will be required to pay the applicable GST dues on your commissions under reverse charge mechanism. However, a person without GST registration can neither collect GST from his customers nor can claim any Input Tax Credit (ITC) of GST paid by him.

What should I do after GST registration?

After successful registration with GST, we urge you to provide your GSTN details to NJ on priority and get your self registered with NJ too for GST reimbursement. For this you need to provide details in the document format emailed to you along with self-attested copy of your GST Registration certificate / Application Reference Number (ARN) Acknowledgment received by you from GSTN portal and mail the same to This email address is being protected from spambots. You need JavaScript enabled to view it..

Once the same is done, you will be required to do the necessary compliance and returns filling exercise at your end. Further, you will also be required to make payment of GST dues as per the law. All rates with NJ will be exclusive of GST. Registered partners will be required to raise invoice to NJ post which the GST amount will be reimbursed. This is similar to existing service tax reimbursement process. Further, on his part for any other income or business expenses, the Partner should check with all manufacturers /vendors regarding the applicability of IGST and other GST provisions on the income he is receiving or expenses he is paying.

As a Partner, what will be my place of supply/business?

The place of supply for services provided by Partners would be the location of service recipient, which in our case will be NJ. GST requires that one premise in each state needs to be declared as principal place of business for that state. At NJ, we have identified specific branches in all states where we have presence as the principal place of supply / business for Partners of that state. This branch will be auto populated for Partner at the time of invoice generation.

How will GST impact my business revenues?

There won't be much of the impact except the marginal increase in rates as already service tax of 15% is applicable on commissions. The commission rates normally declared by us are exclusive rates which will not include the GST component. Let us see with the help of an example: (a) If you are not registered: If Rs.100 is your commission, you will receive Rs.100 from us and we will pay Rs.18 under reverse charge mechanism (b) If you are registered: If Rs.100 is your commission, you will receive Rs.100 from us and also the Rs.18 of GST after you raise the invoice. You will then need to pay Rs.18 GST. In either case, you will receive Rs.100 and Rs.18 will be paid on your service.

However, for registered persons, there will now be an added advantage of claiming Input Tax Credit (ITC) against the GST paid on goods & services used in business. For those not liable to register, will need to make a choice between

  1. getting registration and benefitting from ITC but following compliance or

  2. forget all about compliance and ITC on GST already paid for other goods & services used in business.

Please explain how would the Input Tax Credit (ITC) provisions work for my business?

The taxes you pay on input goods/services can be used as an ITC against output tax liabilities. ITC is available for legitimate business expenses like purchase of computers, laptops, office rent, software purchases, consultant fees, office supplies, etc. This is how the GST provisions will work in practice.

Assume a supplier S who supplies goods worth Rs 100 to a Partner P who is registered under GST.

  • If S is registered under GST, he would charge Rs.100+ GST (assuming @ 18%) in his invoice. P would take ITC of GST of Rs.18 if the credit is admissible and cost for him would remain Rs. 100. This is a convenient and smooth scenario.

  • If S is not registered under GST, he would charge only Rs.100 in his invoice. P will then be required to pay Rs.18 GST under reverse charge mechanism and take ITC of Rs.18. The cost to P will remain at Rs.100 but he will need to do certain additional compliances as per laws.

Now let us assume that the Partner P is not registered under GST. In such a case, NJ would have already paid GST in reverse charge mechanism.

  • If S is registered under GST, he would charge Rs.100+ GST (assuming @ 18%) in his invoice. P will not be able to take ITC of GST of Rs.18 and the actual cost to him will be Rs.118.

  • If S is not registered under GST, he will charge only Rs.100 in his invoice. P will not be required to do anything further and cost to P will be Rs.100. But he will not get any advantage of ITC against GST paid by NJ.

How will be the Input Tax Credit provisions be applied?

The above example was a simplistic example but in actual, the GST is made up of three different components...

1. Central GST (CGST), paid on all transactions, collected by the Central Government

2. State GST (SGST), paid on all transactions within a State, collected by the State Government and

3. Integrated GST (IGST), aid on all inter-state transactions, or import of goods into India, collected by the Central Government

Between these three components, the following are rules for setoff of credit...

  • CGST input tax credits can only be used to pay CGST and IGST

  • SGST input tax credits can only be used to pay SGST and IGST

  • IGST input tax credits can be used to pay IGST, CGST and SGST

How is NJ going to help Partners?

For the purpose of the GST laws, the Partner will be considered as a “supplier” (providing distribution services) to NJ India Invest Pvt. Ltd. who will be the “recipient”. NJ India Invest has obtained GST registration in every state where it has presence and has also designated a principal place of business in every state.

In terms of the facilities to be provided, NJ is developing a system wherein invoices can be generated from the system as is the current practice. This will make it very easy for Partners as the cumbersome process of preparing invoices can be avoided. We are also exploring ways to extend more services to Partners to ease more compliance responsibilities.

How is the transition to GST planned?

  • The brokerage for the month of June 2017 was processed before 30th June 2017 on provisional basis (i.e. considering your brokerage for the month of May 2017 paid in June) and also the invoice generated from Partner Desk will have the invoice date as 30th June 2017.

  • W.e.f. July 2017, the “Invoice Generation for Service Tax” utility on Partner Desk will have changes related to GST. We will separately communicate to you once the changes go live in this utility.

  • We recommend you to generate your entire pending Service Tax invoice and submit the same to NJ on or before 10th August 2017.

For any further information, please look out for our email communication for same. In case of any GST related issues, you can mail us on This email address is being protected from spambots. You need JavaScript enabled to view it.

GST is a historic, landmark and the biggest tax reform ever undertaken in India and probably in the entire world. It will take some time for all the systems and processes to settle down and all gaps to be filled up. As citizens of India, we must embrace the change and take this opportunity to not only accept it but also help, spread the awareness about it. At NJ, as always, we are committed to do whatever is required in the best interest of our Partners.