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GST – FAST TRACK NOTES – CHAPTER 1

CA EXAM SERIES – YOUR SUCCESS BEGINS HERE 1

What Is Tax?

Tax is nothing but money that people have to pay to the

Government, which is used to provide public services.

Taxes are broadly classified into direct and indirect taxes.

1. Direct Taxes

2. Indirect Taxes

Direct Taxes: A direct tax is a kind of charge, which is imposed

directly on the taxpayer and paid directly to the Government by the

persons (juristic or natural) on whom it is imposed.

Indirect Taxes: If the taxpayer is just a conduit and at every stage the

tax incidence is passed on till it finally reaches the consumer, who

really bears the brunt of it, such tax is indirect tax.

In Simple Terms,

Direct Tax Means

The person paying the tax to the Government directly bears the

incidence of the tax.

Progressive in nature – high rate of taxes for people having higher

ability to pay.

Indirect Tax Means

The person paying the tax to the Government collects the same

from the ultimate consumer.

Thus, incidence of the tax is shifted to the other person.

Regressive in nature - All the consumers equally bear the burden,

irrespective of their ability to pay.



Major Direct & Indirect Taxes

DT – Tax On Income, Interest Tax / Expenditure Tax

IDT GST & Customs Duty

Features Of Indirect Taxes

An important source of revenue

Tax on commodities and services

Shifting of burden

No perception of direct pinch

Inflationary

Wider tax base

Promotes social welfare

Regressive in nature

Birth Of GST In India

It has now been more than a decade since the idea of national

Goods and Services Tax (GST) was mooted by Kelkar Task Force in

2004.

Subsequently, the then Union Finance Minister, Shri P. Chidambaram,

while presenting the Central Budget (2007-2008), announced that

GST would be introduced from April 1, 2010.

The talks of ushering in GST, however, gained momentum in the year

2014 when the NDA Government tabled the Constitution (122nd

Amendment) Bill, 2014 on GST in the Parliament on 19th December,

2014.

Subsequent to ratification of the Bill by more than 50% of the States,

Constitution (122nd Amendment) Bill, 2014 received the assent of the

President on 8th September, 2016 and became Constitution (101st

Amendment) Act, 2016, which paved the way for introduction of

GST in India.



GST is a path breaking indirect tax reform which will create a

common national market. GST has subsumed multiple indirect taxes

like excise duty, service tax, VAT, CST, luxury tax, entertainment tax,

entry tax, etc.

Concept Of GST

Before we proceed with the finer nuances of Indian GST, let us first

understand the basic concept of GST.

GST is a value added tax levied on manufacture, sale and

consumption of goods and services.

GST offers comprehensive and continuous chain of tax credits from

the producer's point/service provider's point upto the retailer's

level/consumer’s level thereby taxing only the value added at each

stage of supply chain.

The supplier at each stage is permitted to avail credit of GST paid on

the purchase of goods and/or services and can set off this credit

against the GST payable on the supply of goods and services to be

made by him. Thus, only the final consumer bears the GST charged

by the last supplier in the supply chain, with set-off benefits at all the

previous stages.

Since, only the value added at each stage is taxed under GST, there

is no tax on tax or cascading of taxes under GST system. GST does

not differentiate between goods and services and thus, the two are

taxed at a single rate.



Deficiencies in the existing value added taxation

Non-inclusion of several local levies in State VAT such as luxury tax,

entertainment tax, etc.

Cascading of taxes on account of

levy of Non-VATable CST and

inclusion of CENVAT in the value for imposing VAT

No CENVAT after manufacturing stage

Non-integration of VAT & service tax

Double taxation of a transaction as both goods and services

FRAMEWORK OF GST AS INTRODUCED IN INDIA

Dual GST:

India has adopted a dual GST which is imposed concurrently by the

Centre and States, i.e. Centre and States simultaneously tax goods

and services. Centre has the power to tax intra-State sales & States

are empowered to tax services. GST extends to whole of India

including the State of Jammu and Kashmir.

CGST-SGST- U T GST - IGST

GST is a destination based tax applicable on all transactions

involving supply of goods and services for a consideration subject to

exceptions thereof. GST in India comprises of Central Goods and

Service Tax (CGST) - levied and collected by Central Government,

State Goods and Service Tax (SGST) - levied and collected by State

Governments/Union Territories with State Legislatures and Union

Territory Goods and Service Tax (UTGST) - levied and collected by

Union Territories without State Legislatures, on intra-State supplies of

taxable goods and/or services. Inter-State supplies of taxable goods

and/or services are subject to Integrated Goods and Service Tax

(IGST). IGST is approximately the sum total of CGST and SGST U T GST

and is levied by Centre on all inter-State supplies.



Legislative Framework

There is single legislation – CGST Act, 2017 - for levying CGST. Similarly,

Union Territories without State legislatures are governed by U T GST

Act, 2017 for levying UTGST. States and Union territories with their own

legislatures [Delhi and Puducherry] have their own GST legislation for

levying SGST.

Classification of goods and services

HSN (Harmonised System of Nomenclature) code is used for

classifying the goods under the GST. A new Scheme of Classification

of Services has been devised wherein the services of various

descriptions have been classified under various sections, headings

and groups. Each group consists of various Service Codes (Tariff).

Chapters referred are the Chapters of the First Schedule to the

Customs Tariff Act, 1975.

Registration

Every supplier of goods and or services is required to obtain

registration in the State/UT from where he makes the taxable supply if

his aggregate turnover exceeds 20 lakh during a Financial Year.

Composition Scheme

In GST regime, tax (i.e. CGST and SGST UT GST for intra-State supplies

and IGST for inter-State supplies) is payable by every taxable person

and in this regard provisions have been prescribed in the law.

Exemptions

Apart from providing relief to small-scale business, the law also

contains provisions for granting exemption from payment of tax on

essential goods and or services.



Manner of utilization of ITC

Input Tax Credit (ITC) of CGST and SGST UT GST is available

throughout the supply chain, but cross utilization of credit of CGST

and SGST UT GST is not possible, i.e. CGST credit cannot be utilized for

payment of SGST UT GST and SGST UT GST credit cannot be utilized

for payment of CGST.

GST Common Portal

Resultantly, Common GST Electronic Portal – www.gst.gov.in – a

website managed by Goods and Services Network (GSTN) [a

company incorporated under the provisions of section 8 of the

Companies Act, 2013] has been set by the Government to establish

a uniform interface for the tax payer and a common and shared IT

infrastructure between the Centre and States.

Primarily, GSTN provides three front end services to the taxpayers

namely registration, payment and return through GST Common

Portal.

The functions of the GSTN include:

Facilitating registration

Forwarding the returns to Central and State authorities;

Computation and settlement of IGST;

Matching of tax payment details with banking network;

Providing various MIS reports to the Central and the State

Governments based on the taxpayer return information;

Providing analysis of taxpayers' profile; and running the

Matching engine for matching, reversal and reclaim of input tax

credit.



GSPs/ASPs

GSTN has selected certain IT, ITeS and financial technology

companies, to be called GST Suvidha Providers (GSPs). GSPs develop

applications to be used by taxpayers for interacting with the GSTN.

BENEFITS OF GST

GST is a win-win situation for the entire country. It brings benefits to all

the stakeholders of industry, Government and the consumer. It will

lower the cost of goods and services, give a boost to the economy

and make the products and services globally competitive.

Creation of unified national market

Mitigation of ill effects of cascading

Elimination of multiple taxes and double taxation

Boost to ‘Make in India' initiative

Buoyancy to the Government Revenue

CONSTITUTIONAL PROVISIONS

Article 265: Article 265 of the Constitution of India prohibits arbitrary

collection of tax. It states that “no tax shall be levied or collected

except by authority of law”. The term “authority of law” means that

tax proposed to be levied must be within the legislative

competence of the Legislature imposing the tax.

Article 245: Part XI of the Constitution deals with relationship

between the Union and States. The power for enacting the laws is

conferred on the Parliament and on the Legislature of a State by

Article 245 of the Constitution.

Article 246: It gives the respective authority to Union and State

Governments for levying tax. Whereas Parliament may make laws for

the whole of India or any part of the territory of India, the State

Legislature may make laws for whole or part of the State.



Seventh Schedule to Article 246: It contains three lists which

enumerate the matters under which the Union and the State

Governments have the authority to make laws.

LIST – 1 - UNION LIST

LIST – II - STATE LIST

LIST – III - CONCURRENT LIST


GST – FASTTRACK NOTES – CHAPTER 2

Taxable Events (Supply)

Supply with consideration in course or furtherance of business

Import of services with consideration whether or not in course

furtherance of business

Supply without consideration

Activities treated as Supply of goods or Supply of services

Activities neither the supply of goods nor the supply of services

Composite and Mixed Supplies

The incidence of tax is the foundation stone of any taxation system. It

determines the point at which tax would be levied, i.e. the taxable event.

Broadly, the controversies related to issues like whether a particular process

amounted to manufacture or not, whether the sale was pre-determined sale,

whether a particular transaction was a sale of goods or rendering of services

etc.

The GST laws resolve these issues by laying down one comprehensive taxable

event i.e. “Supply” - Supply of goods or services or both.

In the GST regime, the entire value of supply of goods and or services is taxed in

an integrated manner, unlike the earlier indirect taxes, which were charged

independently either on the manufacture or sale of goods, or on the provisions

of services.

CONCEPT OF SUPPLY [SECTION 7 OF CGST ACT]

Section 7 Meaning and scope of supply

Section 8 Taxability of composite and mixed supplies

Schedule I Matters to be treated as supply even if made without consideration

Schedule II Matters to be treated as supply of goods or as supply of services

Schedule III Matters or transactions which shall be treated neither as supply of

goods nor as supply of services.



Section – 7

The meaning and scope of supply taxable under GST can be understood in

terms of following parameters, which can be adopted to characterize a

transaction as supply:

1. Supply should be of goods or services. Supply of anything other than goods or

services like money, securities etc. does not attract GST.

2. Supply should be made for a consideration.

3. Supply should be made in the course or furtherance of business.

4. Supply should be made by a taxable person.

5. Supply should be a taxable supply.

Some exceptions have been carved out where a transaction is deemed to be a

supply even without consideration. Similarly, import of services for a

consideration, whether or not in the course or furtherance of business is treated

as supply.

there are also cases where a transaction is kept out of scope of supply despite

the existence of the above parameters, i.e. a list of activities shall be treated as

neither supply of goods nor supply of services. In other words, they are outside

the scope of GST.

Government is also empowered to notify transactions that are to be treated as

a supply of goods and not as a supply of services, or as a supply of services and

not as a supply of goods.

Includes

Supply for consideration in course or furtherance of business [Section 7(1)(a)]

Importation of services for consideration whether or not in course or furtherance

of business [Section 7(1)(b)]

Supply without consideration [Section 7(1)(c) + Schedule 1 ]

Activities to be treated as supply of goods or supply of services [Section 7(1)(d) +

Schedule II]

excludes

Negative list of services [Section 7(2) + Schedule III]



MODES OF SUPPLY

Supply includes all forms of supply of goods or services or both. Supply of

anything other than goods or services does not attract GST.

Goods - Every kind of movable Property

Service - Anything other than goods

Excludes Money and securities

Sale and Transfer:

Earlier, VAT was levied by the State on the sale of goods which was defined

under most State VAT laws as transfer of property in goods for consideration.

Under the CGST Act, although sale has been treated as a form of supply

leviable to GST, the definition of ‘sale’ has not been provided.

Barter and Exchange:

While barter may deal with a transaction which only includes an exchange of

goods/services, exchange may cover a situation where the goods are partly

paid for in goods and partly in money. When there is a barter of goods or

services, same activity constitutes supply as well as consideration.

License, Lease, Rental etc.:

Licenses, leases and rentals of goods were earlier treated as services where the

goods were transferred without transfer of right to use (effective possession and

control over the goods) and were treated as sales where the goods were

transferred with transfer of right to use.

CONSIDERATION

One of the essential conditions for the supply of goods and/or services to fall

within the ambit of GST is that a supply is made for a consideration. However,

consideration does not always means money. It covers anything which might be

possibly done, given or made in exchange for something else. Further, a

consideration need not always flow from the recipient of the supply. It can also

be made by a third person

Any transaction involving supply of goods and/or services without consideration

is not a supply unless it is deemed to be a supply under law [as deemed in



Schedule 1 of the CGST Act].

IN COURSE OR FURTHERANCE OF BUSINESS

any activity or transaction which is incidental or ancillary to the afore mentioned

listed activities. In addition, any activity undertaken by the Central Govt. or a

State Govt. or any local authority in which they are engaged as public authority

shall also be construed as business.

SUPPLY BY A TAXABLE PERSON

A supply to attract GST should be made by a taxable person. Hence, a supply

between two non-taxable persons does not constitute taxable supply under

GST.

It is important to note that supply can be made to a non-taxable person also.

even an unregistered person who is liable to be registered is a taxable person.

Similarly, a person not liable to be registered, but has taken voluntary registration

and got himself registered is also a taxable person.

TAXABLE SUPPLY

For a supply to attract GST, the supply must be taxable. Taxable supply has been

broadly defined and means any supply of goods or services or both which, is

leviable to tax under the GST Law

Supply without Consideration – Deemed Supply

I. Permanent Transfer/Disposal of Business Assets

II. Supply between related person or distinct persons

III. Principal – Agent:

IV. Importation of services:

Activities to be treated as Supply of Goods or Supply of Services

Transfer

Land and Building

Treatment or Process

Transfer of Business Assets

Renting of immovable property

Construction of complex, building, civil structure, etc.

Works contract services.



Negative List Under GST

1. Activities/transactions specified under Schedule III in the CGST Act

2. Activities/transactions notified by the Government

COMPOSITE AND MIXED SUPPLIES

Section 8 Tax liability on composite and mixed supplies A a composite supply

comprising two or more supplies, one of which is a principal supply, shall be

treated as a supply of such

principal supply; and B a mixed supply comprising of two or more supplies shall

be treated as supply of that particular supply that attracts highest rate of tax.

In order to determine whether the supplies are ‘composite supplies’ or ‘mixed

supplies’, one needs to determine whether the supplies are naturally bundled or

not naturally bundled in ordinary course of business.

in a composite supply, goods or services or both are bundled owing to natural

necessities. The elements in a composite supply are dependent on the ‘principal

supply’. Principal supply means the supply of goods or services which constitutes

the predominant element of a composite supply and to which any other supply

forming part of that composite supply is ancillary.

Works contract and restaurant services are classic examples of composite

supplies.

determination whether the services are bundled in the ordinary course of

business

The perception of the consumer or the service receiver Majority of service

providers in a particular area of business provide similar bundle of services.

nature of the various services in a bundle of services Other illustrative indicators

Mixed supply means:

• two or more individual supplies of goods or services, or any combination

thereof, made in conjunction with each other by a taxable person

• for a single price where such supply does not constitute a composite supply A

supply can be a mixed supply only if it is not a composite supply. As a corollary it

can be said that if the transaction consists of supplies not naturally bundled in

the ordinary course of business then it would be a mixed supply.



mixed supply comprising of two or more supplies shall be treated as supply of

that particular supply that attracts highest rate of tax.

Composite Supply Vs. Mixed Supply

•Consist of two or more Supplies

•Consist of two or more supply

•Naturally bundled

•Not naturally bundled

•In conjunction with each Other

•Though can be supplied independently, still supplied together

•Tax liability shall be rate of principal supply

•Tax liability shall be the rate applicable to the supply that attracts highest rate

of tax

•Example: Charger supplied along with mobile phones.

•Example: A gift pack comprising of chocolates and sweets.



The very basis for the charge of tax in any taxing statute is the taxable event i.e.

the point on which the levy of tax gets attracted. As discussed earlier, the

taxable event under GST is SUPPLY. CGST and SGST/UT GST are levied on all intra-

State supplies of goods and/or services while IGST is levied on all inter-State

supplies of goods and/or services.

Intra – State Supply

Where the location of the supplier and the place of supply of goods or services

are in the same State/Union territory, it is treated as intra-State supply of goods

or services respectively.

Inter – State Supply

Where the location of the supplier and the place of supply of goods or services

are in

(1) two different States or (ii) two different Union Territories or

(iii) A State and a Union territory, it is treated as inter-State supply of goods

Or services respectively.

EXTENT & COMMENCEMENT OF CGST ACT/SGST ACT/UT GST ACT

Central Goods and Services Tax Act, 2017 extends to the whole of India

State GST law of the respective State/Union Territory with State Legislature [Delhi

and Puducherry] extends to whole of that State/Union Territory.

Union Territory Goods and Services Tax Act, 2017 extends to the Union territories

of the Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli,

Daman and Diu, Chandigarh and other territory, i.e. the Union Territories without

State Legislature [Section 1 of the UT GST Act].

LEVY & COLLECTION OF CGST [SECTION 9 OF THE CGST ACT]

A tax called the Central Goods and Services Tax (CGST) shall be levied on all

intra-State supplies of goods or services or both.

The tax shall be collected in such manner as may be prescribed and shall be

paid by the taxable person. However, intra-State supply of alcoholic liquor for

human consumption is outside the purview of CGST.



Value for levy: Transaction value under section 15 of the CGST Act.

Rates of CGST: Rates for CGST are rates as may be notified by the Government

on the recommendations of the GST Council [Rates notified are 0%, 0.125%,

1.5%, 2.5%, 6%, 9% and 14%]. Maximum rate of CGST will be 20%.

CGST on supply of the following items has not been levied immediately. It shall

be levied with effect from such date as may be notified by the Government on

the recommendations of the Council:

Petroleum crude

High speed diesel

Motor spirit (commonly known as petrol)

Natural gas and

Aviation turbine fuel

Reverse charge –

Tax payable by recipient of supply of goods or services or both

CGST shall be paid by the recipient of goods or services or both, on reverse

charge basis

Electronic Commerce Operators

As per the FDI guidelines on E-commerce released on March 29, 2016 E-

commerce means buying and selling of goods and services including digital

products over digital and electronic network. Essentially it has two elements:

1. Digital Products

2. Digital Distribution.

The Different market categories are :B2C,B2B,C2C,C2B.

The different business models are:

1. Inventory model

Inventory maintained by online retailer. Example: Big Basket

2. Marketplace model

Product directly shipped by seller to customer Example: E bay

3. Fulfilment center

Fast moving goods held on consignment, some products also sold at

marketplace by sellers

Example: Amazon,Flipkart.

4. Aggregator



Selling services under its own brand. Service provider continues to be owner of

the services provided

Example: Uber, Ola, Oyo Rooms

ECO Operation

Display products as well as services which are actually supplied by some other

person to the consumer, on their electronic portal. The consumers buy such

goods/services through these portals. On placing the order for a particular

product/service, the actual supplier supplies the selected product/service to the

consumer. The price/consideration for the product/service is collected by the

ECO from the consumer and passed on to the actual supplier after the

deduction of commission by the ECO.

The Government may notiFinancial Year specific categories of services the tax

on intra-State supplies of which shall be paid by the electronic commerce

operator (ECO) if such services are supplied through it. Such services shall be

notified on the recommendations of the GST Council

It is important to note here that the above provision shall apply only in case of

supply of services.

1. If the ECO is located in taxable territory - Person liable to pay tax is the ECO

2. If the ECO does not have physical presence in the taxable territory Person

liable to pay tax is the person representing the ECO.

3. If the ECO has neither the physical presence nor any representative in the

taxable territory - Person liable to pay tax is the person appointed by the ECO for

the purpose of paying the tax

GST Rates prescribed for various goods: Broadly, six rates of CGST have been

notified for goods, viz., 0.125%, 1.5%, 2.5%, 6%, 9% and 14%. Some items have

been kept at Nil rate. Equivalent rate of SGST/UT GST will also be levied.

GST Rates prescribed for various services: Broadly, four rates of CGST have been

notified for services, viz., 2.5%, 6%, 9% and 14%. Equivalent rate of SGST/UT GST

will also be levied. A new Scheme of Classification of Services has been devised

wherein the services of various descriptions have been classified under various

sections, headings and groups.

COMPOSITION LEVY [SECTION 10 OF THE CGST ACT]



The objective of composition scheme is to bring simplicity and to reduce the

compliance cost for

the small taxpayeRupees Small taxpayers with an aggregate turnover in a

preceding financial year up to Rupees 75 lakh shall be eligible for composition

levy.

Suppliers opting for composition levy need not worry about the classification of

their goods or services or both, the rate of GST applicable on the same, etc.

They are not required to raise any tax invoice, but simply need to issue a Bill of

Supply

Turnover limit for Composition Levy [Section 10(1)]

Section 10 of the CGST Act provides the turnover limit of Rupees 50 lakh for

composition levy. However, proviso to section 10(1) empowers the Government

to increase the said limit of Rupees 50 lakh upto Rupees 1 crore, on the

recommendation of the Council.

While computing the threshold limit of Rupees 75 lakh, inclusions in and

exclusions from ‘aggregate turnover’ are as follows

Includes

Value of all outward supplies

--Taxable supplies

--Exempt supplies

--Exports

--Inter-State supplies

of persons having the same PAN be computed on all India basis.

Excludes

--CGST

--SGST

--UT GST

--IGST

--Cess

--Value of inward supplies on which tax is payable under reverse charge.

Who can opt for the composition levy scheme?

A registered person, whose aggregate turnover in the preceding FINANCIAL

YEAR does not exceed Rupees 75 lakh, may opt to pay an amount calculated at

the prescribed rates during the current FINANCIAL YEAR, in lieu of the tax

payable by him.



Intimation of opting for composition levy

(i) Intimation by person applying for registration:

(ii) Intimation by a registered person

Conditions and restrictions for composition levy [Rule 5]

Person opting for composition levy has to comply with the following conditions:

he is neither a casual taxable person nor a non-resident taxable person

the goods held in stock by him have not been purchased from an unregistered

supplier and where purchased, he pays the tax under reverse charge under

section 9(4).

he shall pay tax under section 9(3) 9(4) (reverse charge) on inward supply of

goods or services or both.

he was not engaged in the manufacture of goods as notified under section

10(2)(e), during the preceding FINANCIAL YEAR.

he shall mention the words “composition taxable person, not eligible to collect

tax on supplies” at the top of the bill of supply issued by him; and he shall

mention the words “composition taxable person” on every notice or signboard

displayed at a prominent place at his principal place of business and at every

additional place or places of business.

Who are not eligible to opt for composition scheme?

Supplier of services other than supplier of food articles.

Supplier of goods which are not taxable under the CGST Act/SGST Act/UT GST

Act

Supplier of inter- State outward supplies of goods

Person supplying goods through an electronic commerce operator

Manufacturer of icecream, panmasala and tobacco

EXTENT AND COMMENCEMENT OF IGST [SECTION 1 OF IGST ACT]

Integrated Goods and Services Tax Act, 2017 extends to the whole of India.

IGST is levied on the inter-State supply of goods or services or both.



tax called the Integrated Goods and Services Tax (IGST) shall be levied on all

inter-State supplies of goods or services or both. The tax shall be collected in

such manner as may be prescribed and shall be paid by the taxable person.

However, inter-State supply of alcoholic liquor for human consumption is outside

the purview of IGST.

Value for levy: Transaction value under section 15 of the CGST Act

Rates of IGST: IGST is approximately the sum total of CGST and SGST/UT GST.

Maximum rate of IGST will be 40%.

IGST rate= CGST rate + SGST rate (more or less)

IGST Rates prescribed for various goods:

Broadly, six rates of IGST have been notified for goods, viz., 5%, 12%, 18%, 28%, 3%

and 0.25%.

IGST Rates prescribed for various services:

Broadly, four rates of IGST have been notified for services, viz., 5%, 12%, 18% and

28%. CGST Rates for services have already been discussed in earlier paras. IGST

rates for such services can be computed on the basis of the same.

GST – CHAPTER 4 – FAST TRACK NOTES


Exempt supply has been defined as supply of any goods or services or both

which attracts nil rate of tax or which may be wholly exempt from tax and

includes non-taxable supply.

Essential goods/services, i.e. public consumption products/services, have been

exempted. Items such as unbranded Atta Maida Besan, unpacked food grains,

milk, eggs, curd, lassi and fresh vegetables are among the items exempted from

GST.

The Government is empowered to grant exemption from tax, if it is necessary in

public interest so to do, on recommendation of the GST council, by way of

issuance of-

(i) Exemption from payment of tax:

a. Notification

b. Special order

(ii) No need to pay tax on goods and/or services on which absolute exemption

granted

(iii) Explanation inserted within 1 year to have retrospective effect

GOODS EXEMPT FROM TAX

Items such as unbranded Atta Maida Besan, unpacked food grains, milk, eggs,

curd, lassi and fresh vegetables are among the items exempted from GST.

SERVICES EXEMPT FROM TAX

1. Services by Government or a local authority excluding the following

services:

Services by the Department of Posts by way of speed post, express

parcel post, life insurance, and agency services provided to a

person other than Government;

Services in relation to an aircraft or a vessel, inside or outside the

precincts of a port or an airport;

Transport of goods or passengers; or

2. Services by the Reserve Bank of India

3. Services by a foreign diplomatic mission located in India



4. Services relating to cultivation of plants and rearing of all life forms of

animals, except the rearing of horses, for food, fiber, fuel, raw material or

other similar products or agricultural products

5. Service by way of access to a road or a bridge on payment of toll

charges

6. Transmission or distribution of electricity by an electricity transmission or

distribution utility

7. Services by way of renting of residential dwelling for use as residence

8. Services by way of:

Extending deposits, loans or advances in so far as the consideration

is represented by way of interest or discount (other than interest

involved in credit card services);

Inter se sale or purchase of foreign currency amongst banks or

authorised dealers of foreign exchange or amongst banks and such

dealers;

9. Services by way of transportation of goods

By road except the services of:

1. A goods transportation agency;

2. A courier agency;

By inland waterways;

10. Services provided to the United Nations or a specified international

organization.

11. Services provided by operators of the Common Bio-medical Waste

Treatment Facility to a clinical establishment by way of treatment or

disposal of bio-medical waste or the processes incidental thereto;

12. Services by a veterinary clinic in relation to health care of animals or birds;

13. Services by an entity registered under section 12AA of the Income tax Act,

1961 (43 of 1961) by way of charitable activities;

14. Services by a specified organisation in respect of a religious pilgrimage

facilitated by the Ministry of External Affairs of the Government of India,

under bilateral arrangement;

15. Services provided by:

An arbitral tribunal to

A partnership firm of advocates or an individual as an advocate

other than a senior advocate, by way of legal services to-

A senior advocate by way of legal services to

16. Services provided,

By an educational institution to its students, faculty and staff;

To an educational institution, by way of, Transportation of students,

faculty and staff etc. ;

17. Services provided by the Indian Institutes of Management, as per the

guidelines of the Central Government, to their students, by way of the



following educational programmes, except Executive Development

Programme,

18. Services provided to a recognized sports body

19. Services by an artist by way of a performance in folk or classical art forms

of music, or dance, or theatre,

20. Services by way of collecting or providing news by an independent

journalist, Press Trust of India or United News of India;

21. Services by way of giving on hire

22. Transport of passengers, with or without accompanied belongings

23. Services of life insurance business provided by way of annuity under the

National Pension System regulated by Pension Fund Regulatory and

Development Authority of India (PFRDA) under the Pension Fund

Regulatory And Development Authority Act, 2013 (23 of 2013)

24. Services of life insurance business provided or agreed to be provided by

the Army, Naval and Air Force Group Insurance Funds to members of the

Army, Navy and Air Force, respectively, under the Group Insurance

Schemes of the Central Government

25. Services provided by an incubate up to a total turnover of fifty lakh rupees

in a financial year

26. Service by an unincorporated body or a non- profit entity registered under

any law for the time being in force, to its own members by way of

reimbursement of charges or share of contribution

27. Services by an organizer to any person in respect of a business exhibition

held outside India;

28. Services by way of slaughtering of animals;

29. Services received from a provider of service located in a non- taxable

territory

30. Services of public libraries by way of lending of books, publications or any

other knowledge-enhancing content or material;

31. Services by Employees’ State Insurance Corporation to persons governed

under the Employees’ Insurance Act, 1948 (34 of 1948);

32. Services by way of transfer of a going concern, as a whole or an

independent part thereof;

33. Services by way of public conveniences such as provision of facilities of

bathroom, washrooms, lavatories, urinal or toilets;

34. Services by government, local authority or governmental authority by way

of any activity in relation to any function entrusted to a municipality under

Article 243 W of the Constitution.

35. Services received by the Reserve Bank of India, from outside India in

relation to management of foreign exchange reserves;

36. Services provided by a tour operator to a foreign tourist in relation to a

tour conducted wholly outside India.



37. Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail

packing, labelling of fruits and vegetables which do not change or alter

the essential characteristics of the said fruits or vegetables;

38. Services by way of admission to a museum, national park, wildlife

sanctuary, tiger reserve or zoo;

39. Services provided by Government or a local authority to a business entity

with a turnover up to rupees twenty lakh (ten lakh rupees in a special

category state) in the preceding financial year.

40. Services provided by Employees Provident Fund Organisation to persons

governed under the Employees Provident Funds and Miscellaneous

Provisions Act, 1952

41. Services provided by Insurance Regulatory and Development Authority of

India (IRDA) to insurers under the Insurance Regulatory and Development

Authority of India Act, 1999

42. Services provided by Securities and Exchange Board of India (SEBI) set up

under the Securities and Exchange Board of India Act, 1992 by way of

protecting the interests of investors in securities and to promote the

development of, and to regulate, the securities market;

43. Services provided by National Centre for Cold Chain Development under

Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold

chain knowledge dissemination;

44. Services by way of transportation of goods by an aircraft from a place

outside India up to the customs station of clearance in India.

45. Services provided by Government or a local authority to another

Government or local authority:

46. Services provided by Government or a local authority by way of issuance

of passport, visa, driving license, birth certificate or death certificate.

47. Services provided by Government or a local authority by way of tolerating

non-performance of a contract for which consideration in the form of

fines or liquidated damages is payable to the Government or the local

authority under such contract;

48. Services provided by Government or a local authority by way of-

Registration required under any law for the time being in force;

Testing, calibration, safety check or certification relating to

protection or safety of workers, consumers or public at large,

including fire license, required under any law for the time being in

force;

49. Services provided by Government or a local authority by way of

assignment of right to use natural resources to an individual farmer for

cultivation of plants and rearing of all life forms of animals, except the

rearing of horses, for food, fiber, fuel, raw material or other similar

products;



50. Services by Government, a local authority or a governmental authority by

way of any activity in relation to any function entrusted to a Panchayat;

51. Services provided by Government or a local authority by way of

assignment of right to use any natural resource where such right to use

was assigned by the Government or the local authority before the 1st

April, 2016: Provided that the exemption shall apply only to service tax

payable on one time charge payable, in full upfront or in installments, for

assignment of right to use such natural resource;

52. Services provided by Government or a local authority by way of allowing

a business entity to operate as a telecom service provider or use radio

frequency spectrum during the period prior to 1st April, 2016, on payment

of license fee or spectrum user charges, as the case may be;

53. Services provided by Government by way of deputing officers after office

hours or on holidays for inspection or container stuffing or such other

duties in relation to import export cargo on payment of Merchant

Overtime charges (MOT).

54. Services by an acquiring bank, to any person in relation to settlement of

an amount upto two thousand rupees in a single transaction transacted

through credit card, debit card, charge card or other payment card

service.

55. Services of leasing of assets (rolling stock assets including wagons,

coaches, locos) by Indian Railways Finance Corporation to Indian

Railways

56. Services provided by any person for official use of a foreign diplomatic

mission or consular post in India or for personal use or for the use of the

family members of diplomatic agents or career consular officers posed

therein. This exemption is available on reciprocal basis based on a

certificate issued by MEA;

57. Taxable services, provided or to be provided, by a Technology Business

Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP)

recognized by the National Science and Technology Entrepreneurship

Development Board (NSTEDB) of the Department of Science and

Technology, Government of India or bio-incubators recognized by the

Biotechnology Industry Research Assistance Council, under Department of

Biotechnology, Government of India;

58. Taxable service provided by State Government Industrial Development

Corporations/ Undertakings to industrial units by way of granting long term

(thirty years, or more) lease of industrial plots from so much of tax leviable

thereon, as is leviable on the one time upfront amount (called as

premium, salami, cost, price, development charges or by any other

name) payable for such lease.

59. Services provided to the government by way of transport of passengers

with or without accompanied belongings, by air, embarking from or



terminating at a regional connectivity scheme airport, against

consideration in the form of viability gap funding (VGF).

60. Services provided by cord blood banks by way of preservation of stem

cells or any other service in relation to such preservation;

61. Services by way of training or coaching in recreational activities relating

to,

Arts or culture. or

Sports by charitable entities registered under section 12AA of

Income tax Act, 1961;

62. Any services provided by:

The National Skill Development Corporation set up by the

Government of India;

A Sector Skill Council approved by the National Skill Development

Corporation;

An assessment agency approved by the Sector Skill Council or the

National Skill Development Corporation;

63. Services of assessing bodies empanelled centrally by Directorate General

of Training, Ministry of Skill Development and Entrepreneurship by way of

assessments under Skill Development Initiative (SDI) Scheme;

64. Services provided by training providers (Project implementation agencies)

under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the

Ministry of Rural Development by way of offering skill or vocational training

courses certified by National Council For Vocational Training.

65. Services by way of sponsorship of sporting events organised:

66. Services provided by way of pure labour contracts of construction,

erection, commissioning, installation, completion, fitting out, repair,

maintenance, renovation, or alteration of a civil structure or any other

original works pertaining to the Beneficiary-led individual house

construction / enhancement under the Housing for All (Urban)

Mission/Pradhan Mantri Awas Yojana (PMAY);

67. Services by way of pure labour contracts of construction, erection,

commissioning, or installation of original works pertaining to a single

residential unit otherwise than as a part of a residential complex;

68. Services of general insurance business provided under schemes:

69. Services of life insurance business provided under following schemes:

Janashree Bima Yojana (JBY); or

Aam Aadmi Bima Yojana (AABY);

Life micro-insurance product as approved by the Insurance

Regulatory and Development Authority, having maximum amount

of cover of fifty thousand rupees;

Varishtha Pension BimaYojana;

Pradhan Mantri Jeevan JyotiBimaYojana;

Pradhan Mantri Jan DhanYogana;



Pradhan Mantri Vaya Vandan Yojana; and

Any other insurance scheme of the State Government as may be

notified by Government of India on the recommendation of GSTC.

70. Services by way of collection of contribution under Atal Pension Yojana

(APY).

71. Services by way of collection of contribution under any pension scheme

of the State Governments.

72. Service of transportation of passengers, with or without accompanied

belongings,

73. Services by a person by way of:

Conduct of any religious ceremony;

Renting of precincts of a religious place meant for general public,

owned or managed by an entity registered as a charitable or

religious trust under section 12AA of the Income-tax Act, 1961

74. Services by a hotel, inn, guest house, club or campsite, by whatever name

called, for residential or lodging purposes, having declared tariff of a unit

of accommodation less than one thousand rupees per day or equivalent;

75. Services by way of transportation by rail or a vessel from one place in

India to another of the following goods:

76. Services provided by a goods transport agency, by way of transport in a

goods carriage of:

77. Services by the following persons in respective capacities –

Business facilitator or a business correspondent to a banking

company with respect to accounts in its rural area branch;

Any person as an intermediary to a business facilitator or a business

correspondent;

Business facilitator or a business correspondent to an insurance

company in a rural area;

78. Carrying out an intermediate production process as job work in relation to

cultivation of plants and rearing of all life forms of animals, except the

rearing of horses, for food, fibre, fuel, raw material or other similar products

or agricultural produce;

79. Services by way of loading, unloading, packing, storage or warehousing

of rice;

80. Services by way of right to admission to the following and where the

consideration for admission is not more than 250 per person

Circus, dance, or theatrical performance including drama or ballet;

Award function, concert, pageant, musical performance or any

sporting event other than a recognized sporting event;

81. Services provided by Government or a local authority where the gross

amount charged for such services does not exceed 5000.



82. Health care services by a clinical establishment, an authorised medical

practitioner or para-medics; Services provided by way of transportation of

a patient in an ambulance;

83. Services provided by the Goods and Services Tax Network (GSTN) to the

Central Government or State Governments/Union Territories for

implementation of Goods and Services Tax (GST)


GST – CHAPTER 5A – FASTTRACK NOTES

Time of supply of goods

The default provision for time of supply of goods is the earliest of the following

dates:

• Date of issue of invoice by the supplier;

• If invoice is not issued the last date on which supplier is required to issue the

invoice;

• The date on which supplier receives the payment with respect to supply.

Time of supply of services

The default rule for time of supply of services is the earliest of following dates:

• Date of issue of invoice by the supplier;

• The date on which supplier receives the payment with respect to the supply. It

has also been provided that, if invoice is not issued within a period of thirty days

from the date of supply of service, the time of supply shall be the date of

provision of service.

Time of supply under forward charge

GOODS

1.Date of issue of invoice by the supplier or the last date on which he is required,

to issue the invoice

2. Date on which the supplier receives the payment ((entering the payment in

books of account or crediting of payment in bank account, whichever is earlier)

with respect to the supply)

SERVICES-INVOICE ISSUED WITHIN THE TIME PRESCRIBED

Earliest of the following:

Date of issue of invoice by the supplier

Date of receipt of payment (entering the payment in books of account or

crediting of payment in bank account, whichever is earlier)

SERVICES-INVOICE NOT ISSUED WITHIN THE TIME PRESCRIBED

Earliest of the following:

Date of provision of service

Date of receipt of payment (entering the payment in books of account or

crediting of payment in bank ,whichever is earlier)

SERVICES-When the above events are unascertainable

Date on which the recipient shows the receipt of services in his books of

account



TIME LIMIT FOR RAISING INVOICES

GOODS

Before or at the time of,

(a) removal of goods for supply to the recipient, where the supply involves

movement of goods, or

(b) delivery of goods or making available thereof to the recipient, in any other

case

SERVICES

Before or after the provision of service

but within 30 days [45 days in case of insurance companies/banking and

financial institutions including NBFCs] from the date of supply of services

1. Supply of vouchers when the final supply is identifiable (single purpose

vouchers)

Goods -Date of issue of voucher

Services -Date of issue of voucher

Example: Shirt coupon.

2. Multi-purpose vouchers i.e. the precise supply is not identifiable.

Goods -Date of redemption of voucher

Services -Date of redemption of voucher

Example: Sodexo coupon.

3 .In case of ‘associated enterprises’ located outside India

Goods - Not applicable

Services - Earlier of the following

a. date of entry

b. date of Payment.

4 .Levy pf interest, late fees or penalty for delay in payment of consideration

Goods - Date on which the supplier receives such addition to value

Services - Date on which the supplier receives such addition to value.

If it cannot be done by any of the above rules the time of supply will be:

a) When a periodical return has to be filed, the date on which such return is to

be filed;

b) In any other case the date of payment of tax.



Excess payment upto Rupees 1000:

if payment received is up to Rupees 1,000 in excess of the value of the goods

invoiced, the supplier can choose to take the date of invoice issued with

respect to such excess amount as the time of supply of goods for such excess

value.


GST – CHAPTER 5B – FAST TRACK NOTES

Valuation is common for all three acts (CGST, SGST and IGST) and common for

both goods and services.

Taxable value is transaction value i.e. price paid or payable for the supply

provided the supplier and the recipient are not related to each other and price

is the sole consideration.

1. Supplies to unrelated persons where price is the sole consideration

Transaction value

When a transaction of supply of goods/services is made between two persons

who are not related to each other and price is the sole consideration for the

supply,

The ingredients of “taxable value” based on transaction value are enumerated

and discussed below.

1. Price actually paid or payable for the supply (“transaction value”)

2. Any taxes, fees, charges levied under any law other than CGST Act, SGST Act,

UT GST Act and GST compensation to the States) Act.

For Example Mandi tax ,road tax ,stamp duty

3. Expenses incurred by the recipient on behalf of the supplier

4. Incidental expenses like commission and packing incurred by the supplier are

also to be added (if not forming part of price) to the price to arrive at the

transaction value

5. Subsidies (excluding the services provided by a Government) directly linked to

the price

6. Interest or late fee or penalty for delayed payment of any consideration for

any supply

(a) Price actually paid or payable for the supply

This is the price for the specific supply that is being valued. It includes the

amount already paid at the time the supply is being valued for tax, as well as

the amount payable and not yet paid at that time. The word ‘payable’ refers to

price that is agreed to be paid for the goods / services.

(b) Taxes other than GST, if charged separately by the supplier [Section 15(2)(a)]

GST and GST cess are not part of taxable value, but other taxes cesses fees etc.

will form part of the value of taxable supply, if separately billed. For instance, if a

supplier of goods pays mandi tax in relation to the goods being supplied and



bills the same separately, such tax will form part of the value of taxable supply.

In the same situation, if the supplier pays the mandi tax but does not charge the

same separately, even then such tax will form part of the value of taxable

supply as the supplier would have factored such tax while computing the cost

of the goods.

(c) Payments made to third parties by the recipient on behalf of the supplier in

relation to the supply [Section 15(2)(b)]

A supplier may need to incur various expenses in order to make a particular

supply of goods / services. In the normal course, he would pay these amounts

and they would form part of the value that he charges from the customer

(recipient of supply). However, even if the customer makes direct payment of

some of such liabilities (of the supplier) to the third parties, and the supplier does

not include this amount in his bill, it would still form part of the value of the

taxable supply.

(d) Incidental expenses [Section 15(2)(c)]

Incidental expenses, such as, commission and packing charged by the supplier

or anything else done by the supplier in relation to the supply at the time of or

before the delivery of goods or supply of services must be added to value

Commission:

This may be paid to an agent and recovered from the buyer of the goods /

services; this is part of the value of the supply.

Packing, if charged by the supplier to the recipient, is similarly part of the value

of the supply. Inspection or certification charges are another element that may

be added to the value, if billed to the recipient of supply.

Installation and testing charges at the recipient’s site will also be added, being

an amount charged for something done by the supplier in respect of the supply

at the time of making the supply

Interest, late fee and penalty for delayed payment [Section 15(2)(d)] The value

for a taxable supply will include not only the base price but also the charges for

delay in payment.

A supply priced at Rupees 2,000 is made, with a credit period of 1 month for

payment. Thereafter interest of 12% is charged. The payment is received after

the lapse of two months from the date of supply. The amount of 12% per annum.

(i.e. 1% per month) on Rupees 2,000 for one month after the free credit period is



Rupees20. Such interest will be added to the value and thus, the value of

taxable supply will work out to be Rupees 2,020.

Subsidies

Subsidy is a sum of money given to keep the price of a service or commodity

low. If the subsidy is given by the State or Central Government; the lower price,

after adjusting the subsidy, is the taxable value. If the subsidy is given by a

person or entity other than the State or Central Government, it does not lower

the taxable value. The subsidy is added to the value of supply of the supplier

who receives the subsidy

The selling price of a notebook is Rupees 40. For notebooks sold to students in

Government schools, a company uses its CSR funds to pay the seller Rupees 20,

so that the students pay only Rupees 20 per notebook. The taxable value of the

notebook will be Rupees40, as this is a nongovernment subsidy. If the same

subsidy is paid by the Central Government or State Government, the taxable

value of the notebook would be Rupees 20.

Exclusion of discounts from transaction value

The principle here is that price as established at the time of supply forms the

basis of taxable value.

Discounts that are allowed are as follows:

Discounts that are allowed before or at the time of supply and shown in the

invoice;

Discounts that are allowed after supply in terms of an agreement that existed at

the time of supply and are worked out invoice-wise and the proportionate input

tax credit is reversed by the recipient.

Related Person

Such persons are officers/directors of one another’s business

Such persons are legally recognized partners

Such persons are employer and employee

A third person controls ≥ 25% voting stock/shares

One of them controls the other

A third person controls both of them

Such persons together control both of them

Such persons are members of the same family

One of them is the sole agent/sole distributor/sole concessionaire of the other



Determination of value when the consideration is not wholly in the form of

money

1. Open market value of the supply.

2. In case open market value is not available total money value of supply

(monetary consideration plus money value of non-monetary consideration).

3. In case it is not possible to determine the value as above, then value of supply

of the like kind and quality.

4. Further if it is not possible to determine taxable value through above methods

then cost plus ten percent markup method will be adopted to determine the

value.

5. Finally in the absence of all the above options the value is determined as per

residual method

Specific supplies

1. Supply of services involving sale/purchase of foreign currency, the value of

supply will be:

(a) Option a – difference between buying-selling rate and the reference rate

Published by RBI. Where reference rate is not available, 1% of gross Indian Rupee

value of the transaction. And where the conversion is not into Indian Rupees,

then 1% of the lesser of the Indian Rupee equivalent of each currency

Exchanged

(b) Option b – 1% of gross amount upto Rupees1 lac, 1/2% after Rupees1 lac

upto Rupees10 lacs

And 1/10% after Rupees 10 lacs. This option (b) once exercised cannot be

withdrawn during the financial year

2. Supply of services by travel agent of booking of tickets for air-travel, the value

of supply will be 5% of basic domestic fare or 10% of basic international fare.

3. Supply of services in relation to life insurance, the value of supply will be gross

premium reduced by investment allocation, in the case of single premium policy

will be 10% of premium and in all other cases will be 5% of first year’s premium

and 12.5% for other year’s premium.



Composition

The composition levy is an alternative method of levy of tax designed for small

taxpayers whose turnover is up to Rupees 1.5 Crore (Rupees 75 lakhs in case of

few States). The objective of composition scheme is to bring simplicity and to

reduce the compliance cost for the small taxpayers

Moreover, it is optional and the eligible person opting to pay tax under this

scheme can pay tax at a prescribed percentage of his turnover every quarter,

instead of paying tax at normal rate.

Composition scheme is a scheme for payment of GST available to small

taxpayers whose aggregate turnover in the preceding financial year did not

cross Rupees 1.5 Crore. In Case of specified states Rupees 75 Lakhs

Following persons are not allowed to opt for the composition scheme:

a) A casual taxable person or a non-resident taxable person;

b) Suppliers whose aggregate turnover in the preceding financial year crossed

Rupees 1.5 Crore;

c) Supplier who has purchased any goods or services from unregistered supplier

unless he has paid GST on such goods or services on reverse charge basis;

d) Supplier of services, other than restaurant service;

e) Persons supplying goods which are not taxable under GST law;

f) Persons making any inter-State outward supplies of goods;

g) Suppliers making any supply of goods through an electronic commerce

operator who is required to collect tax at source under section 52; and

h) A manufacturer of following goods

Ice cream and other edible ice, whether or not containing cocoa

Pan Masala

Tobacco and manufactured tobacco substitutes

There is no restriction on procuring goods from inter-state suppliers by persons

opting for the composition scheme

A person opting for composition levy will have to pay tax on quarterly basis

before 18th of the month succeeding the quarter during which the supplies

were made.

Supplier of services cannot opt for composition exception being restaurant

services.

Aggregate turnover will be computed on the basis of turnover on an all India

basis and will include value of all taxable supplies, exempt supplies and exports

made by all persons with same PAN, but would exclude inward supplies under



reverse charge as well as central, State/Union Territory and Integrated taxes and

cess.

A taxable person opting to pay tax under the composition scheme is out of the

credit chain. He cannot take credit on his input supplies. When he switch over

from composition scheme to normal scheme, eligible credit on the date of

transition would be allowed

As the composition dealer cannot collect tax paid by him on outward supplies

from his customers, the registered person making purchases from a taxable

person paying tax under the composition scheme cannot avail credit.

If a taxable person has paid tax under the composition scheme though he was

not eligible for the scheme then the person would be liable to penalty and the

provisions of section 73 or 74 shall be applicable for determination of tax and

penalty

Supplies to SEZ from domestic tariff area will be treated as inter-State supply. A

person paying tax under composition scheme cannot make inter-State outward

supply of goods. Thus, for making supplies to an SEZ unit, a person needs to take

registration as a regular taxpayer. The supplies to SEZ will be zero rated and the

supplier will be entitled to make supplies without payment of tax or if he pays

tax, he will be entitled to refund of tax so paid.

Recent Amendment in November GST Council

(1) Uniform rate of tax @ 1% under composition scheme for manufacturers and

traders (for traders, tax is liable only on supply of taxable goods while for the

purpose of determining the eligibility, turnover of exempted goods would also

be considered). No change for composition scheme for restaurant.

(ii) Supply of services by Composition taxpayer up to Rupees 5 lakh per annum

will be allowed by exempting the same

(iii) Annual turnover eligibility for composition scheme is contemplated to be

increased to Rupees 2 crore from the present limit of Rupees 1 crore. Thereafter,

eligibility for composition will be increased to Rupees 1.5 Crore per annum.

(A taxpayer whose turnover is below Rupees 1.5 crore can opt in for

Composition Scheme. In case of North-Eastern states and Himachal Pradesh,

the limit is now Rupees 75 lakh.)



"Input tax" in terms of section 2(62) in relation to a registered person, means the

central tax, State tax, integrated tax or Union territory tax charged on any supply

of goods or services or both made to him and includes

1. Integrated goods and service tax charged on import of goods

2. Tax payable on reverse charge basis under IGST Act/SGST Act/CGST Act/UT

GST Act.

3. But excludes tax paid under composition levy.

Relevant Sections

Section 16: Eligibility and conditions for taking input tax credit.

Section 17: Apportionment of credit and blocked credits

Section 18: Availability of credit in special circumstances

Section 19: Taking input tax credit in respect of inputs and capital goods sent for

job work

Section 20: Manner of distribution of credit by Input Service Distributor

Section 21: Manner of recovery of credit distributed in excess.

INPUT TAX CREDIT means the credit of “input tax”

ELIGIBLE TO TAKE INPUT TAX CREDIT

Every registered person subject to Section 49, shall be entitled to take credit of

input tax charged on any supply of goods or services or both to him which are

used or intended to be used in the course or furtherance of his business. The

input tax credit is credited to the electronic credit ledger

Input tax credit can be taken on the basis of any of the following documents:

(1) Invoice issued under section 31

(ii) Debit note issued under section 34

(iii) Bill of entry

(iv) Invoice prepared in respect of reverse charge basis under section 9(3) and

9(4)

(v) Document issued by ISD under rule 7(1) for distribution of credit referred

under rule 4(1)(g)

Input tax credit is available only if –

(1) The said goods or services or both are used or intended to be used in the

course or in the furtherance of his business;

(ii) He is in possession of tax invoice/ debit note / tax-paying document issued by

a supplier registered under this Act (listed above);

(iii) He has received the said goods or services or both subject to job-work

facilities and restrictions relating to input tax credit in Section 19;



(iv) The supplier has uploaded the relevant invoice on the GSTN;

(v) The supplier has paid the said amount of tax (as charged in the invoice) to

appropriate Government in cash or by way of utilization of input tax credit, as

admissible;

He – claimant of input tax credit – has furnished return under section 39 in FORM-

GSTR 2

ITC cannot be availed after the due date of filing the return for September

month of the next Financial year or on furnishing the Annual Return whichever is

earlier.

Goods received in instalments:

If goods are received in instalments against a single invoice, credit can be taken

upon receipt of last instalment of goods.

Bill to Ship to model:

Under this model, the goods are delivered to a third party on the direction of the

registered person who purchases the goods from the supplier. Receipt of goods

includes delivery to another person on the direction of the registered person by

way of transfer of documents of title to goods or otherwise either before or

during the movement of goods. It would be deemed that the registered person

has received the goods in such scenario. So, ITC will be available to the

registered person on whose order the goods are delivered to third person.

Credits for capital goods are available in full upfront

Credits for capital goods are available in full. There is no provision stipulating

availment of capital goods credit in instalment or tranches. Further, if the tax

payer claims depreciation of the tax component in the value of capital goods

under the provisions of Income Tax Act, then credit is not allowed on such tax

component of capital goods.

Meaning of plant and machinery

Credit of tax paid on goods and services used for construction of immovable

property including work contract service has been allowed only if such

immovable property is in the nature of plant and machinery. The expression

‘plant and machinery’ has been defined through explanation in Chapter V of

the CGST Act to mean apparatus, equipment, and machinery fixed to earth by

foundation or structural support that are used for making outward supply of

goods or services or both and includes such foundation and structural supports

but excludes –

1. Land, building or any other civil structures;

ii. Telecommunication towers; and



iii. Pipelines laid outside the factory premises.

Therefore, any inputs or capital goods used for construction of

telecommunication towers, pipeline laid outside the factory, buildings and other

civil structures (excluding foundation and structural support) will not be available

on input tax credit.

GOODS

1) Meant for personal

consumption

2) Motor Vehicles

3) Goods lost, stolen,

destroyed, written off

4) Goods disposed off by way

of gift or free samples

5) Goods received for construction of immovable property on

own account (other than plant and machinery)

SERVICES

1) Meant for personal

consumption

2) Outdoor catering

3) Beauty Treatment

4) Health Services

5) Cosmetic and plastic surgery

6) Membership of club, health &

fitness center

7) Travel benefits to employees

8) Rent a cab, life insurance,

Health insurance

9) Works contracts for

construction of immovable

property other than Plant and

Machinery

10) Services received for

construction of immovable

property on own account.



Proportionate credit:

ITC based ON usage in

business

Use of input tax credit

For Business purpose ITC Available

For Other Purpose ITC not available

ITC based ON use of Inputs

Taxable supplies

Zero rated supplies

ITC Available

Non-taxable supplies

Exempt Supplies

Nil-rated supplies

ITC NOT AVAILABLE

Banking Company or financial institution including NBFC engaged in accepting

deposits, extending loans or advances Use of input tax credit For Business

purpose For Other Purpose ITC Available ITC not available Use of input tax partly

for Taxable supplies Zero rated supplies Non-taxable supplies Exempt Supplies

Nil-rated supplies ITC AVAILABLE ITC NOT AVAILABLE There is an option allowed

as detailed in Rule 3 as follows: Banks have an option for claiming the ITC on the

deposits and loans or advances to comply with above rules or claim the 50% of

the total ITC available in each month and the rest will lapse. Details for claiming

the 50% ITC have to be filled out in form GSTR-2



If recipient of goods or service or both has not paid the supplier within 180 days

from date of invoice, the amount equal to input tax credit availed along with

the interest will be added to output liability of the recipient. Such non-payment

of the value of invoice must be admitted in the return filed in FORM-GSTR 2 (Rule

2) for the month immediately following the period of 180 days from the date of

issue of invoice. The recipient shall be entitled to avail the credit again once he

makes payment to the supplier. However the interest paid will not be refunded

The condition for payment to the supplier within 180 days for availment of credit

does not apply to supplies on which tax is payable under reverse charge

Where the registered person has claimed depreciation on the tax component

of the cost of capital goods and plant and machinery under the provisions of

the Income Tax Act, 1961, the input tax credit shall not be allowed on the said

tax component.

a. Input Tax Credited to Electronic Credit Ledger

Total ITC on Input and Input services (MINUS) Input Tax which credit is

unavailable.

b. Common Credit

Input Tax Credited to Electronic Credit Ledger (MINUS) Input tax Taxable supply.

C. Common Credit attributable to exempt supplies

Value of Total exempt supplies divided by Total Turnover Multiplied by Common

credit

(ADDED TO OUTPUT TAX LIABILITY)

D. Common Credit attributable to Non-Business Purpose

5% of Common Credit

Ineligible Credit = C+D to be added to output tax liability

Remaining Common Credit = b- minus (C+D) Eligible ITC attributable to business

& Taxable supplies.



ITC Rules for Capital Goods under GST

1. A. Credit of Input Tax will not be available on the following:

1. Capital Goods used exclusively for effecting exempt supplies

ii. Capital Goods used exclusively for non-business (personal) activity

B. Credit of Input Tax will be available in totality where Capital Goods have

been used for effecting taxable supplies and business activity without any

restrictions

C. Amount of input tax referred in above points A and B must be indicated in

Form GSTR-2 and however only point B will be credited to electronic credit

ledger.

D. Where Capital Goods is used commonly for exempt and taxable supplies

and/or business and non-business activity the credit of input tax shall be

calculated in the following manner:

1. Such amount shall be credited to Electronic Credit Ledger

2. Input tax to be credited to electronic credit ledger would be:

= Input Tax – 5% of Input tax for every quarter or part thereof

3. Useful life of such capital good shall be taken to be 5 years from the date of

purchase

4. Now the total amount of input tax credited to Electronic Credit Ledger whole

useful life such common capital good shall be distributed over the useful life.

Credit for a Tax Period = input tax credited to electronic ledger divided by 60 (5

years into 12 Months)

The above amount shall be calculated for all such common capital goods for

every tax period namely a month

5. The amount of credit to be added to output tax liability attributable to

exempt supplies out of input tax for common use of capital good shall be

Credit attributable to exempt supplies = value of exempt supplies divided by

Total Turnover multiplied by Credit of tax period

6. Remaining amount after deducting credit attributable towards exempt

supplies will be allowed as ITC

7. All the above calculations must be done separately for:

• Central tax

• State Tax

• Union Territory Tax

• Integrated Tax



E. Where a capital good which was earlier used or intended to be exclusively

used for:

1. Non- business purpose

2. Effecting exempt supplies

Later to be used commonly for:

1. Business and non-business purpose

2. Effecting taxable and exempt supplies

Input tax to be credited to electronic credit ledger would be:

= Input Tax Minus 5% of Input tax for every quarter or part thereof

TRANSFER OF UNUTILISED ITC ON ACCOUNT OF CHANGE IN CONSTITUTION OF

REGSITERED PERSON

In case of sale, merger, amalgamation, lease or transfer of business, unutilized

ITC can be transferred to the new entity if there is a specific provision for transfer

of liabilities to the new entity. The inputs and capital goods so transferred shall

be duly accounted for by the transferee in his books of accounts.

In case of demerger, ITC will be apportioned in the ratio of value of assets of

new unit as per the demerger scheme.

Details of change in constitution will have to be furnished on common portal

along with request to transfer unutilized ITC. CA or Cost Accountant certificate

will have to be submitted certifying that change in constitution has been done

with specific provision for transfer of liabilities.

Upon acceptance of such details by the transferee on the common portal, the

unutilized ITC will be credited to his Electronic Credit Ledger



Every supplier shall be liable to be registered under the Act in the State from

which he makes a taxable supply of Goods or Services or both.

Registration is required if his aggregate turnover in a financial year exceeds 20

Lakhs

This threshold limit will be 10 Lakhs if a taxable person conducts his business in

any of the special category states as specified in sub-clause (g) of clause (4) of

Article 279A of the Constitution

Turnover will be counted for a PAN computed on all-India basis. Thresh hold

exemption is not state-wise.

A person having multiple business verticals [as defined in Section 2(18)] in one

State may obtain separate registrations for each of the business vertical, subject

to prescribed conditions.

Aggregate turnover includes

-Taxable supplies

--Exempt supplies

--Exports

--Inter-State supplies of persons having the same PAN be computed on all India

basis

Outward Supplies taxable under reverse charge would continue to be part of

the ‘aggregate turnover’ of the supplier of such supplies

Categories of persons who shall be required to be registered under this Act

irrespective of the threshold

Notwithstanding anything discussed in the paragraph above, the following

categories of persons shall get registered compulsorily under this Act:

— Persons making any inter-State taxable supply;

— Casual taxable persons making taxable supply;

— Persons who are required to pay tax under reverse charge;

— Persons who are required to pay tax under sub-section (5) of section 9

(electronic commerce operator)

— Non-resident taxable persons making taxable supply;

— Persons who are required to deduct tax under section 51 (Tax Deduction at

Source);

— Persons who supply goods or services or both on behalf of other registered

taxable persons whether as an agent or otherwise;

— input service distributor;



— Persons who supply goods and/or services, other than supplies specified

under subsection (5) of section 9, through such electronic commerce operator

who is required to collect tax at source under section 52,

— Every electronic commerce operator;

— every person supplying online information and database access or retrieval

services from a place outside India to a person in India, other than a registered

taxable person; and such other person or class of persons as may be notified by

the Central Government or a State Government on the recommendations of

the Council.

Voluntary Registration and UIN

Person, though not liable to be registered under Section 22, may get himself

registered voluntarily, and once registered all provisions of this Act, shall apply to

such person.

Unique Identification Number (UIN)

Unique Identification Number, UIN, is a special class of GST registration for foreign

diplomatic missions and embassies which are not liable to taxes in the Indian

Territory. Any amount of tax (direct or indirect) collected from such bodies is

refunded back to them

Persons not liable for registration

(1) The following persons shall not be liable to registration, namely:

(a) any person engaged exclusively in the business of supplying goods or

services or both that are not liable to tax or wholly exempt from tax under this

Act or under the Integrated Goods and Services Tax Act;(Example : person

trading in children’s drawing books.)

(b) an agriculturist, to the extent of supply of produce out of cultivation of land.

(2) The Government may, on the recommendations of the Council, by

notification, specify the category of persons who may be exempted from

obtaining registration under this Act.



APPLICATION PROCEDURE.

1. Logon to the GST Portal

2. Fill up Form Part-A of Form GST REG-01 (PAN, Mobile and Email)

3. PAN validated online by Common portal from CBDT database.

Mobile no and email verified through OTP sent through it.

4. Temporary Reference Number (TRN) is generated and communicated to the

applicant on the

validated mobile number and email address.

5. Access and fill in the form Part B along with specified documents using the

received number

6. On receipt of such application, an acknowledgement in the prescribed form

shall be issued to the applicant electronically.

7. Application forwarded to GST Officer and he starts verifying the application.

AFTER THREE WORKING DAYS

Officer Approves Your GST Application- FINAL :Certificate of registration GST

REG-06

If Not, Officer asks for more details in FORM GST REG-03 - Within 7 working days,

Produce the documents along with FORM GST REG- 04

The time limit for application is within 30 days (for persons other than casual

taxable person or a non-resident taxable person) and casual taxable person or

a non-resident taxable person shall have to obtain the registration at least 5

days prior to the commencement.

Single registration will be granted from one state or union territory and in case of

persons having business across different states, then multiple registrations are

granted. Even in a single state, multiple registrations are possible wherever a

person has multiple business verticals.

Special Economic Zone unit or Special Economic Zone developer shall make a

separate application for registration as a business vertical distinct from its other

units located outside the Special Economic Zone.

Every person who is liable to take a registration or wants to obtain voluntary

Registration shall have a Permanent Account Number (PAN).

Every person required to deduct tax under section 51 may have, in lieu of a

Permanent Account Number, a Tax Deduction and Collection Account Number

(TAN)

A non-resident taxable person can obtain registration on the basis of any other

document as may be prescribed.



Deemed registration

The grant of registration or the Unique Identity Number under the State Goods

and Services Tax Act or the Union Territory Goods and Services Tax Act shall be

deemed to be a grant of registration or the Unique Identity Number under this

Act subject to the condition that the application for registration or the Unique

Identity Number has not been rejected under this Act within the time specified in

sub-section (10) of section 25.

(2) Notwithstanding anything contained in sub-section (10) of section 25, any

rejection of application for registration or the Unique Identity Number under the

State Goods and Services Tax Act or the Union Territory Goods and Services Tax

Act shall be deemed to be a rejection of application for registration under this

Act.

Certificate of Registration

Nature of registration

a. The registration in GST is PAN based and State specific.

b. One registration per State/UT.



c. However, a business entity having separate business verticals in a State may

obtain separate registration for each of its business verticals.

d. GST identification number called “GSTIN” - a 15-digit number and a certificate

of registration incorporating therein this GSTIN is made available to the applicant

on the GSTN common portal.

e. Registration under GST is not tax specific, i.e. single registration for all the taxes

i.e. CGST, SGST/UT GST, IGST and cesses.

Casual taxable person and Non-resident taxable person.

The certificate of registration issued to a “casual taxable person” or a “non-

resident taxable person” shall be valid for a period specified in the application

for registration or ninety days from the effective date of registration, whichever is

earlier, extendable by proper officer for further period of maximum 90 days at

the request of taxable person.

A casual taxable person or a non-resident taxable person while seeking

registration shall make an advance deposit of tax in an amount equivalent to

the estimated tax liability. Where any extension of time is sought, such taxable

person shall deposit an additional amount of tax equal to the estimated tax

liability for the period for which the extension is sought. Such deposit shall be

credited to the electronic cash ledger of and utilized in the manner provided

under section 44 (Payment of Tax, interest, penalty and other amounts) of the

Act.

(the nature of the activity carried out by a casual taxable person and non-

resident person are temporary as compared to a regular taxable person,

additional safeguards have been placed to ensure that the registration is

granted for a limited period and the tax liability is recovered in advance.)

Amendment of Registration

Except for the changes in some core information in the registration application,

a taxable person shall be able to make amendments without requiring any

specific approval from the tax authority.In case the change is for legal name of

the business, or the State of place of business or additional place of business, the

taxable person will apply for amendment within 15 days of the event

necessitating the change.

The Proper Officer, then, will approve the amendment within the next 15 days.

For other changes like the name of day-to-day functionaries, e-mail IDs, mobile

numbers etc. no approval of the Proper Officer is required, and the amendment

can be affected by the taxable person on his own on the common portal.



An invoice is a commercial instrument issued by a supplier of goods/services to

a recipient. It identifies both the parties involved, and lists, describes the items

sold/services supplied, quantifies the items sold, shows the date of shipment and

mode of transport, prices and discounts, if any, and the delivery and payment

terms (in case of supply of goods).

Significance of invoices has enhanced manifolds under GST regime. The reason

behind the same is the invoice matching mechanism that has been introduced

under GST. For the purpose of claiming the input tax credit, the invoice

matching needs to be done. The inwards supplies of the person claiming the

credit (recipient) should match with the outward supplies of the supplier(s). Thus,

a registered person cannot avail Input Tax Credit unless he is in possession of a

tax invoice or a debit note.

Under the GST regime, an “invoice” or “tax invoice” means the tax invoice

referred to in section 31 of the CGST Act, 2017. This section mandates the

issuance of an invoice or a bill of supply for every supply of goods or services. It

is not necessary that only a person supplying goods or services needs to issue an

invoice. The GST law mandates that any registered person buying goods or

services from an unregistered person also needs to issue a payment voucher as

well as a tax invoice. The type of invoice to be issued depends upon the

category of registered person making the supply.

The provisions relating to tax invoices, debit and credit notes are contained in

Chapter VI - Tax Invoice, Credit and Debit Notes [Sections 31 to 34] of the CGST

Act. State GST laws also prescribe identical provisions in relation to Tax Invoice,

Credit and Debit Notes.

TAX INVOICE ISSUED BY A SUPPLIER OF TAXABLE GOODS/TAXABLE SERVICES

1. Supplier of taxable goods is required to issue a tax invoice:

a. Before or at the time of removal of the goods where the supply involves

movement of goods;

b. Before or at the time of delivery of the goods to the recipient where the

supply does not involve movement of goods.

2. Supplier of services is required to issue a tax invoice:

a. Before provision of the services or

b. After provision of the services but within a specified time.



Manner of issuing the invoice

Supply of Goods

1. Invoice in Triplicate

2. Original copy for recipient Duplicate copy for transporter; and Triplicate copy

for supplier

Supply of Services

1. Invoice in Duplicate

2. Original copy for recipient; and Duplicate copy for supplier

Contents of Tax Invoice

1. GSTIN of supplier

2. Consecutive Serial No & date of issue

3. GSTIN of recipient, if registered

4. Name & address of recipient

5. HSN

6. Description of goods or services

7. Quantity

8. Value of supply

9. Taxable Value

10. Tax rate

11. Amount of Tax

12. POS

13. Address of delivery

14. Tax payable on reverse charge

15. Signature



Revised Tax Invoice

Revised Tax Invoices to be issued in respect of taxable supplies effected during

this period

Effective date of Registration

Date of issuance of certificate of registration

Consolidated Revised Tax Invoice (CTRI) may be issued in respect of taxable

supplies made to an unregistered recipient during this period

In case of inter-State supplies, CTRI cannot be issued in respect of all

unregistered recipients if the value of a supply exceeds 2.5 Lakhs during this

period.

Particulars of the Debit and Credit Notes are also same as revised tax invoices

Consolidated revised tax invoice

A registered person may issue a Consolidated Revised Tax Invoice in respect of

all taxable supplies made to an unregistered recipient between date of grant of

certificate of registration and effective date of registration. However, in case of

inter-State supplies, a consolidated Revised Tax Invoice cannot be issued in

respect of all unregistered recipients if the value of a supply exceeds 2.5 lakhs

Bill of Supply.

Effective date of registration Date of issuance of certificate of registration

Revised Tax invoice Consolidated Revised Tax Invoice (CTRI) may be issued in

respect of taxable supplies made to an unregistered recipient during this period

In case of inter-State supplies, CTRI cannot be issued in respect of all

unregistered recipients if the value of a supply exceeds 2,50,000 during this

period Particulars of the Debit and Credit Notes are also same as revised tax

invoices A supplier supplying exempted goods or service or a supplier who has

opted for composition levy scheme has to issue a bill of supply instead of a tax

invoice. A bill of supply is not eligible for claiming input tax credits.

a. Tax payer supplies exempted goods/services, then issue a bill of supply

b. Tax payer who has opted for composition scheme makes a supply, then issue

a bill of supply



Supplies not exceeding Rs.200/-

A registered person is not required to issue a tax invoice in accordance with the

provisions of clause (b) of sub-section (3) of section 31 i.e. in respect of supply of

goods or services or both where the value therein does not exceed a sum of

Rupees.200 subject to the following conditions, namely: -

(a) The recipient is not a registered person; and

(b) The recipient does not require such invoice,

However, in respect of such supplies the supplier shall issue a consolidated tax

invoice for such supplies at the close of each day in respect of all such supplies.

Continuous supply of goods,

The invoice

– Tax invoice or bill of supply

– is required to be issued:

— When the statement or a running-claim is issued; or

— When payment is received, whichever is earlier

Continuous supply of services

For continuous supply of services, a tax invoice is required to be issued:

— When payment date is ascertainable as per the contract on or before the

due date for payment; or

— when payment date is not ascertainable from the contract on or before the

time when the supplier of services receives the payment;

or — when payment is linked to completion of an event on or before the date of

completion of the event.

Exports

In case of exports of goods or services, the invoice shall carry an endorsement

“SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR

EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST”,

as the case may be, and shall, in lieu of the details specified in clause c cited

supra, contain the following details:

(1) Name and address of the recipient;

(ii) Address of delivery;

(iii) Name of the country of destination; and

(iv) Number and date of application for removal of goods for export:



Goods sent on approval

Invoice in respect of goods sent ‘on approval’ is required to be issued at the

earlier of the end of 6 months from their removal or approval to accept supply is

indicated to supplier

Cessation of services

On cessation of a contract for supply of services, the invoice is required to be

issued to the extent supply is complete prior to cessation

Receipt Voucher

When advance is accepted receipt voucher is being issued by the supplier.

Where at the time of receipt of advance, rate of tax is not determinable then

tax shall be paid at 18%

Where at the time of receipt of advance, nature of supply is not determinable

the same shall be treated as interstate supply.

Refund Voucher

When advance is refunded, then issue refund voucher.

Payment Voucher

Payment voucher is to be issued by recipient of supply liable to pay under

reverse charge. Moreover, A registered person who is liable to pay tax under

reverse charge [under section 9(3)/9(4) of the CGST Act] shall issue an Invoice in

respect of goods or services or both received by him from the supplier who is not

registered on the date of receipt of goods or services or both.

It is important to note here that intra-State supplies of goods and/or services

received by a registered person from an unregistered supplier are exempt from

tax provided the aggregate value of such supplies received from any/all

unregistered suppliers is upto 5,000 in a day.

Further, where the aggregate value of such supplies covered under section 9(4)

exceeds 5,000 in a day from any/all the unregistered suppliers, the registered

person may issue a consolidated invoice at the end of the month. This provision

also applies to a Bill of Supply

Delivery Challan

Rule 55 specifies the cases where at the time of removal of goods, goods may

be removed on delivery challan and invoice may be issued after delivery.

1. Delivery challan in Triplicate

The delivery challan shall be prepared in TRIPLICATE, in case of supply of goods,

in the following manner:

Original for Consignee

Duplicate for Transporter

Triplicate for Consignor



2. Declaration in E-way Bill

Where goods are being transported on a delivery challan in lieu of invoice, the

same shall be declared in E-Way Bill.

3. Tax invoice to be issued after delivery of goods

Where the goods being transported are for the purpose of supply to the

recipient but the tax invoice could not be issued at the time of removal of

goods for the purpose of supply, the supplier shall issue a tax invoice after

delivery of goods

4. Goods transported in SKD or CKD condition

Where the goods are being transported in a semi knocked down or completely

knocked down condition,

(a) the supplier shall issue the complete invoice before dispatch of the first

consignment;

(b) the supplier shall issue a delivery challan for each of the subsequent

consignments, giving reference of the invoice;

(c) Copies of the corresponding delivery challan shall accompany each

consignment along with a duly certified copy of the invoice; and

(d) the original copy of the invoice shall be sent along with the last consignment

Credit Note

Registered Supplier of goods or services or both may issue credit note in the

following situations:

1. Taxable value in invoice Greater than Taxable value in respect of such supply

2. Tax charged in invoice Greater than Tax payable in respect of such supply

3. where the goods supplied are returned by the recipient

4. where goods or services or both supplied are found to be deficient

Debit Note

Registered Supplier of goods or services or both shall issue a debit note in the

following situations

1. Taxable value in invoice Less Than Taxable value in respect of such supply

2. Tax charged in invoice Less Than Tax payable in respect of such supply

Debit note shall include a supplementary invoice

Details of Debit Note/Credit Note to be declared in Return

Credit Note:

Any registered person who issues a credit note shall declare the details of such

credit note in the return for the month during which such credit note has been

issued but not later than:



(1) September following the end of the financial year in which such supply was

made, or

(ii) the date of furnishing of the relevant annual return, whichever is earlier.

Debit Note

Any registered person who issues a debit note in relation to a supply of goods or

services or both shall declare the details of such debit note in the return for the

month during which such debit note has been issued.

No credit note shall be issued if the incidence of tax and interest on such supply

has been passed by him to any other person.

E way Bill

E-way bill is an electronic way bill for movement of goods which can be

generated on the GSTN (common portal). A ‘movement’ of goods of more than

50,000 in value cannot be made by a registered person without an e-way bill.

E-way bill will also be allowed to be generated or cancelled through SMS.

When an e-way bill is generated a unique e-way bill number (EBN) is allocated

and is available to the supplier, recipient, and the transporter.

When should an e-way bill be generated?

E-way bill will be generated when there is movement of goods –

In relation to a ‘supply’

For reasons other than a ‘supply’ (say a return)

• Due to inward ‘supply’ from an unregistered person

Who can generate an e-way bill?

• E-way bill must be generated when there is a movement of goods of more

than 50,000 in value to or from a Registered Person. A Registered person or the

transporter may choose to generate and carry e-way bill even if the value of

goods is less than 50,000.

• Unregistered persons or their transporters may also choose to generate an e-

way bill. This means than an e-way bill can be generated by both registered

and unregistered persons. However, where a supply is made by an unregistered

person to a registered person, the receiver will have to ensure all the

compliances are met as if they were the supplier.



A taxpayer or his representative can generate a challan from common portal and fill

the details of the amount to be deposited and purpose thereof. The said challan will be

valid for 15 days. The desired amount can be deposited only through banks. On

successful payment, a challan identification number (CIN) will be generated by the

bank and same will be indicated in the challan

Chapter – 10 of the CGST Act -2017 deals with payment process of tax.

Section 49 envisages to payment of Goods and Services tax, interest, penalty, fee and

other amounts.

Section 50 specifies imposition of interest on delayed payment of tax.

Section 51 pertains to tax deduction at source.

Section 52 pertains to tax collection at source

Different types of ledgers available

1. Electronic tax liability register- For every tax payer an electronic tax liability register

will be maintained on the common portal (gst.gov.in) and it will be debited or credited.

2. Electronic cash ledger- For every tax payer an electronic cash ledger will be

maintained on the common portal (gst.gov.in) for crediting the amount deposited and

debiting the payment towards tax, interest, penalty, fee or any other amount. The date

of credit to the bank account of appropriate government will be deemed to be date

of deposit in the electronic cash ledger.

3. Electronic credit ledger- For every tax payer an electronic credit ledger will be

maintained on the common portal (gst.gov.in) for crediting every claim of input tax

credits and available credit can be used for discharge of tax liability only

Major Features

1. Single challan/payment for CGST, SGST, IGST and cess.

2. Challan to include all major heads (IGST, CGST, SGST, Cess) and Minor heads (Tax,

interest, Fees, penalty and others)

3. No Major-Minor head adjustment will be allowed.

4. Payment through Debit/Credit Card Internet Banking NEFT RTGS and at the Bank

Counter

5. Facility to make advance payments

6. All deposits will become part of Electronic Cash Ledger and can be utilized in

payment of liabilities

What are C PIN, CIN, BRN and E- FPB?

C PIN stands for Common portal Identification Number. It is created for every Challan

successfully generated by the taxpayer. It is a 14-digit unique number to identify the

challan. C PIN remains valid for a period of 15 days.



CIN or Challan Identification Number is generated by the banks, once payment in lieu

of a generated Challan is successful. It is a 17-digit number that is 14-digit C PIN plus 3-

digit Bank Code. CIN is generated by the authorized banks/Reserve Bank of India (RBI)

when payment is actually received by such authorized banks or RBI and credited in the

relevant government account held with them. It is an indication that the payment has

been realized and credited to the appropriate government account. CIN is

communicated by the authorized bank to taxpayer as well as to GSTN.

BRN or Bank Reference Number is the transaction number given by the bank for a

payment against a Challan

E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks

which are authorized to collect payment of GST. Each authorized bank will nominate

only one branch as its E-FPB for pan India transaction. The E-FPB will have to open

accounts under each major head for all governments. Any amount received by such E-

FPB towards GST will be credited to the appropriate account held by such E-FPB. For

NEFT RTGS Transactions, RBI will act as E-FPB.

Other Aspects relating to Challan

1. E- challan validity is for 15 days. The commission for making payment through e

challan has to be borne by the person making the payment.

2. Any unregistered person has to make payment on the basis of temporary

identification number generated through common portal.

3. The mandate form obtained after making NEFT or RTGS payment has to be submitted

in the Bank. The validity of the mandate form is 15 days.

4. On successful credit of amount in the concerned (Central/State) Government

Account maintained in the authorized bank, a Challan Identification Number (CIN) will

be generated by the collecting bank which will be indicated in the challan.

5. The ‘deposit’ made by one of the modes and in the prescribed manner will be

credited to the Electronic Cash Ledger of the taxable person.

6. On receipt of the CIN from the collecting bank, the said amount is credited into the

electronic cash ledger of the person on whose behalf the deposit is made and the

common portal will generate a receipt to this effect.

7. If CIN is not generated even after making payment and submission of mandate form

or when after generation, it has not reflected in the common portal, the person making

the deposit or the person on whose behalf the deposit has been made, can make a

representation in prescribed form through the common portal or e-gateway through

which the payment has been made.



8. Date of credit into the treasury of the State Government/Central Government is

deemed to be the date of deposit and not the actual date of debit to the amount of

the taxable person.

9. In case any discrepancy is noticed in electronic cash ledger, the registered person

shall communicate the same to the officer exercising jurisdiction in the matter, through

the common portal in prescribed form.

Order in which a taxpayer has to discharge his tax and other dues.

1. Self-assessed tax and other dues related to returns of previous tax periods.

2. Self-assessed tax and other dues related to return current tax period.

3. Any other amount payable under the GST Act & Rules there under.

Different types of payment status

1. Not Paid

2. Initiated

3. Transaction failed

4. PAID

5. Paid at Tax Office

6. Awaiting Bank Confirmation

7. Awaiting Bank Clearance

8. Expired

9. Cheque/DD Dishonored

10. M o e Reversal

11. Cash Received at Counter

12. Payment deposited at Bank

13. C PIN Mismatch (Neft/RTGS)

What happens if the taxable person files the return but does not make payment of tax?

In such cases, the return is not considered as a valid return. Unless the supplier has paid

the entire self-assessed tax and filed his return and the recipient has filed his return, the

ITC of the recipient would not be confirmed

Interest on delayed payment of tax

Section 50 of CGST Act makes it mandatory for a tax payer to pay interest on belated

payment of tax i.e. when he fails to pay tax (or part of tax) to the Government’s

account within the due date

Interest under section 50 of CGST Act is payable in the following three circumstances

1. Sub-section (1): Delay in payment of tax, in full or in part

2. Sub-section (3): Undue or excess claim of input tax credit under section 42 (10)

3. Sub-section (3): Undue or excess reduction in output tax liability under section 43 (10)

Rate of Interest

1. 18% in the case of tax dues as per sub-section (1)



2. 24% in case tax dues as per of sub-section (3)

The period of interest will be from the date following the due date of payment to the

actual date of payment of tax.

The term “tax” here means the tax payable under the Act or Rules made thereunder.

The payment of interest in case of belated payment of tax should be made voluntarily

i.e. even without a demand. The interest payable under this section shall be debited to

the Electronic Liability Register. The liability for interest can be settled by adjustment with

balance in Electronic Cash Ledger but not with balance in electronic credit ledger.

TAX WRONGFULLY COLLECTED AND PAID TO CENTRAL GOVERNMENT OR STATE

GOVERNMENT

Payment of tax based on erroneous determination of ‘nature of supply’ is not permitted

to be adjusted because of the above appropriation of payments. Remedy lies in

refund. Taxable person who has paid tax in error is entitled to refund by first restoring the

discharge of the correct tax due so that the incorrect tax paid reflects on the common

portal as ‘paid in excess’ and

• IGST paid in error will be refunded subject to conditions prescribed

• IGST payable due to payment of CGST & SGST/UTGST is exempted from payment of

interest on IGST due

Tax Collected at source

Every E-Commerce Operator shall collect TCS at a rate not exceeding 1% on the net

value of transaction in which he collects consideration of the supply. Please note that if

there is returning of supplies to Suppliers, then the same shall be reduced from the gross

value; TCS shall be worked on such net figure only (after such reduction)

The amount collected so shall be paid to the Central/State Government respectively

within ten days after the end of the month in which such collection is made



The term “return” ordinarily means statement of information (facts) furnished by

the taxpayer, to tax administrators, at regular intervals.

The returns serve the following purposes:

a) Mode for transfer of information to tax administration;

b) Compliance verification program of tax administration;

c) Finalization of the tax liabilities of the taxpayer within stipulated period of

limitation;

d) Providing necessary inputs for taking policy decision;

e) Management of audit and anti-evasion programs of tax administration

Chapter IX of the CGST Act [Sections 37 to 48] prescribes the provisions relating

to filing of returns as under:

Section 37 Furnishing details of outward supplies

Section 38 Furnishing details of inward supplies

Section 39 Furnishing of returns

Section 40 First return

Section 41 Claim of input tax credit and provisional acceptance thereof

Section 42 Matching, reversal and re-claim of input tax credit

Section 43 Matching, reversal and re-claim of reduction in output tax liability

Section 44 Annual Return

Section 45 Final Return

Section 46 Notice to return defaulters

Section 47 Levy of late fee

Section 48 Goods and services tax practitioners

All the returns under GST laws are to be filed electronically. Taxpayers can file

the statements and returns by various modes.

Basic features of return mechanism

All the returns are to be filed online.

Electronic filing of returns

Uploading of invoice level information

Auto-population of information relating to ITC from

Returns of supplier to that of recipient

Invoice-level information matching

Auto- reversal of Input Tax Credit in case of mismatch.



Modes Of Filing Return

GSTN portal (www.gst.gov.in)

Offline utilities provided by GSTN

GST Suvidha Providers (GSPs)

List of returns under GST

GSTR – 1

Monthly Statement of Outward supplies of Goods or Services

Filed By Registered Person

Date Of Filing - 10th of the next Month

CONTENTS OF GSTR- 1

Basic & Other Details

• G S T I N

•Legal name and Trade name

•Aggregate turnover in previous year

•Tax period

•HSN - wise summary of outward supplies

•Details of documents issued

•Advances received/advances adjusted

Details of Outward Supplies

1. B2B

2. B2C

3. Zero rated and Deemed exports

4. Debit/Credit notes issued

5. Nil rated Exempted Non GST

6. Amendments for prior period



GSTR – 2

Monthly Statement of Inward supplies of Goods or Services



CONTENTS OF GSTR- 2

Basic & Other Details

•G S T I N

•Year

•Tax Period

•Legal name and Trade name

•HSN summary of inward supplies

•ISD Credit/TDS Credit/TCS Credit person and nil rated/exempted

•Advances paid/advances adjusted Non GST Supplies.

•ITC reversal/reclaim

• Addition/reduction in output tax due to mismatch

Details of Inward Supplies

1. B2B supplies under forward charge

2. Supplies under reverse charge

3. Import of inputs and capital goods

4. Debit/Credit notes

5. Supplies from composition taxable

6. Amendment for prior period

GSTR – 3

Monthly Return for a normal taxpayer





GSTR – 4

Quarterly Return

Filed by Taxable Person opting for Composition Levy

Date of Filing - 18th of the month succeeding the quarter

GSTR – 5

Monthly Return for a nonresident Taxpayer

Filed By Non-resident Taxpayer

Date Of Filing - 20th of the month succeeding the tax period or within 7 days

after expiry of registration, whichever is earlier

GSTR – 9

Annual Return

Filed By Registered Person other than an ISD, TDS/TCS Taxpayer, Casual Taxable

Person and Nonresident Taxpayer

Date Of Filing - 31st December of next Financial Year

GSTR – 10

Final Return

Filed by Taxable Person whose registration has been surrendered or cancelled

Date Of Filing - Within three months of the date of cancellation or date of order

of cancellation, whichever is later.

Returns to be filed by a normal taxpayer

GSTR - 1

Statement of Outward Supplies



•This Statement signifies the tax liability of the supplier for the supplies effected

during the previous month.

•It needs to be filed by the 10th of every month in relation to supplies effected


•For example, a statement of all the outward supplies made during the month

of July, needs to be filed by 10th August.

GSTR-2 Statement of Inward Supplies

•This Statement signifies accrual of ITC (Input Tax Credit) from the inputs

received during the previous month.

•It is auto-populated from the GSTR-1 filed by the corresponding suppliers of the

Taxpayer except for a few fields like imports, and purchases from unregistered

suppliers.

•It needs to be filed by the 15th of every month in relation to supplies received


•For example, a statement of all the inward supplies received during the month

of July needs to be filed by 15th August.

GSTR-3- Return

•This is a consolidated return. It needs to be filed by the 20th of every month. It

consolidates the following details

•a. Outward Supplies (Auto-Populated from GSTR-1)

•b. Inward Supplies (Auto-Populated from GSTR-2)

•c. ITC availed

•d. Tax Payable

•e. Tax Paid (Using both Cash and ITC)

Due date of payment

Payment should be made on or before 20th of every month

Annual Return

This return needs to be filed by 31st December of the next Financial Year.

In this return, the taxpayer needs to furnish details of expenditure and income for

the entire Financial Year.



Return filing milestones

GSTR-1

•Signifies Tax Liability

• File via GSTN/Easy upload tools provided by GSTN GSPs

• Periodical uploading allowed

• Filed by 10th

GSTR-2

•Signifies ITC availability

•Auto-populated from GSTR-1 filed by a Tax Payer’s Suppliers

•Changes allowed between 10th and 15th

• Filed by 15th

GSTR-3

STR-3

•Auto-populated from GSTR-1 and GSTR-2

•Filed by 20th

•Payment can be made any time before or on 20th.

Revision of Returns

The mechanism of filing revised returns for any correction of errors/omissions has

been done away with.

The rectification of errors/omissions is allowed in the subsequent returns.

However, no rectification is allowed after furnishing the return for the month of

September following the end of the financial year to which such details pertain

or furnishing of the relevant annual return, whichever is earlier.

Penal provisions relating to returns

Any registered person who fails to furnish Form GSTR- 1, GSTR-2, GSTR-3 or Final

Return within the due dates shall be liable to pay a late fee of ` 100 per day,

subject to a maximum of `5,000



ITC Matching and auto-reversal

It is a mechanism to prevent revenue leakage.

The process of ITC Matching begins after the due date for filing of the return

(20th of every month). This is carried out by GSTN.

The details of every inward supply furnished by “recipient” in form GSTR-2 shall

be matched with corresponding details of outward supply furnished by

corresponding “supplier” in his valid return.

A return may be considered to be a valid return only when the appropriate GST

has been paid in full by the taxable person, as shown in such return for a given

tax period.

In case the details match, then ITC claimed by recipient in his valid returns shall

be considered as finally accepted and such acceptance shall be

communicated to recipient.

Failure to file valid return by the supplier may lead to denial of ITC in the hands

of the recipient.

In case the ITC claimed by the recipient is in excess of the tax declared by the

supplier or where the details of outward supply are not declared by the supplier

in his valid returns, the discrepancy shall be communicated to both the supplier

and the recipient.

Similarly, in case, there is duplication of claim of ITC, the same shall be

communicated to the recipient.

The recipient will be asked to rectify the discrepancy of excess claim of ITC and

in case the supplier has not rectified the discrepancy communicated in his valid

returns for the month in which the discrepancy is communicated then such

excess ITC as claimed by the recipient shall be added to output tax liability of

recipient in the succeeding month.

Similarly, duplication of ITC claimed by the recipient shall be added to output

tax liability of recipient in the month in which such duplication is communicated.

The recipient shall be liable to pay interest on the excess ITC or duplicate ITC

added back to output tax liability of recipient from the date of availing of ITC till

the corresponding additions are made in their returns.



Re-claim of ITC refers to taking back the ITC reversed in the Electronic Credit

Ledger of the recipient by way of reducing the output tax liability.

Such re-claim can be made by recipient only if supplier declares details of the

Invoice and/or Debit Notes in his valid return within prescribed timeframe.

In such case, interest paid by recipient shall be refunded to him by way of

crediting the amount to his Electronic Cash Ledger.

12 mar 2020 - gst · 2019-12-15 · amendment) bill, 2014 on gst in the parliament on 19th...

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