GST Hold feature

[Ankur8848]

We propose to introduce a new feature of GST Hold in ERPNext

Background and context - In general parlance we purchase goods from the supplier and we release the payment for the taxable supplies of goods or services or both along with the GST within the due date of the invoice. The GST paid is claimed by us as ITC in the subsequent month, provided the supplier has filed the necessary returns (GSTR-1 in most cases) within the due time period (11th of the Subsequent month of the invoice for GSTR-1). 

Utility - In case the supplier has not filed GSTR-1 within the due time period, we would not be able to see the ITC available in the GSTR-2A/2B return and neither we will be able to claim it until the supplier shows the respective supply in the relevant return.

Since we have made the payment towards the said invoice and are still unable to claim the ITC within due time, this will result in blockage of our working capital and unfavourable extension in our working capital cycle.

Execution - In order to prevent this we propose a feature which lets the user stop the payment of GST for supplier invoices until manually allowed which he can do post receiving the proof of timely submission of necessary GST return by the supplier. This will help in reducing working capital cycles and more liquidity in business.

Example -

• Supplier invoice received for Rs.118/- (100 + 18% GST) dated 1st of April, 2024

• Payment is made on 2nd of April, 2024 for Rs.100 (Amount exclusive of GST)

• The supplier will file GSTR-1 within 11th of May, 2024 and submit proof of submission.

• The ITC available to us will be shown to us will be shown in our GSTR 2A/2B by 15th of May, 2024

• We will release the payment of Rs.18 post ITC availability is assured.

Execution in ERPNext –

1. Create a checkbox in Supplier master to be called ‘GST Hold Applicable’ right below the Reverse Charge Applicable checkbox.

The checkbox is editable at the transaction level.

(Note: Only one checkbox can be selected between GST Hold Applicable and Reverse Charge Applicable)

2. The implication of this check box will be that the payment entry so created will exclude the GST Amount

3. The GST Amount Held will show up in the new doctype so created called ‘GST Withheld’ will have a table as follows

Reference Number and date options would be at invoice level and other fields from payment entry.

Sr No | Invoice No | Invoice Date | Posting date | Taxable value | CGST | SGST | IGST -- | -- | -- | -- | -- | -- | -- | --   |   |   |   |   |   |   |  

At the document level it will also have the option to Submit. On submission a payment entry for each line item will be created.

Note: 

Scenario:

• A purchase invoice has been created for Rs.100 and Rs.18 GST has been applied on it and GST Withheld has been enabled.

• The payment entry so created will be of Paid Amt Rs.100

• The Grand total and Outstanding will be Rs.118 and allocated will be Rs.100

If the user  wants to increase the allocated amount over Rs.100 up to Rs.118, We need to place a pop up which gives the warning “This will result in the elimination of GST Hold. Do you still want to continue?”

If the user says clicks yes, accordingly the GST hold should be eliminated from that GST Withheld doctype and the payment entry shall proceed.

[yatishdarji]

Approved and raised as FR, Hence closing