introduction and constitution

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Introduction andConstitution

Why Tax: Government need fund to fulfill Increasing developmental needs ofcountry or to fulfill Socio Economic Objectives of the country,that’s why Government impose tax.

What is Tax: Tax is a Compulsory Extortion of money made under an Act.

Type of Tax: It can be classified into two parts as direct Tax & Indirect Tax.Where burden of tax borne by the person on whom it is levied thenthe tax will be direct Tax and where burden of Tax shifted toanother person i.e. ultimate consumer then it will be called asIndirect Tax.

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Chapter 1 – Introduction and Constitution CA. Raj Kumar

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(i) It is an important source of Revenue to the government.

(ii) It is levied on goods and/or services.

(iii) Tax burden is shifted to another person.

(iv) Indirect Tax does not pinch directly to the END User.

(v) Changes in the Rates of Indirect Taxes directly affects inflation.

(vi) Indirect Tax is Regressive in nature i.e. Rate of Tax will be same for Rich &Poor consumer.

(vii) It promotes social welfare by imposing higher tax Rates on Demerits Itemse.g. Tobacco.

- Before Introduction of GST – there were lots of Indirect Taxes e.g. CentralExcise Duty, VAT, CST, Service Tax, Entertainment TAX, Octroi etc. which leadsto multiple Taxes multiple compliances, multiple laws, cascading, double Taxationetc.

- To over come All there demerits government Introduced GST in India w.e.f.01-07-2017. Now there will be one Law, All compliance at one place, No cascading,No double Taxation,

- Moreover All manufacturers, Trader & Services provided will be called on“Supplier” and All Buyer/customers will be called as Recipient and

- International transaction will also be called as “Inter State Transaction”

PRE & POST GST

Features of Indirect Tax

CA. Raj Kumar Chapter 1 – Introduction and Constitution

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- GST is a Tax imposed on Goods and/or Services.

- There must be a supply of Goods/Services.

- Supply Can be of Two Types as follows—

* Inter State Supply: Where origin & destination of supply fall under 2Different States, UT’s, State & UT, countries then the supply will be InterState and IGST would be levied.

IGST will be payable to C.G. and C.G. retain CGST potion out of IGST &Balance Portion (SGST) will be transferred to destination or consumingState. [where Destination is an Union Territory then Balance Portion (UTGST) will be retained by C.G. itself in different Pocket/account.

* Intra State: Where origin and destination of supply falls under sameState/UT then the supply will be Intra State & accordingly CGST &SGST/UT GST would be payable.

* Foe Levy and collection of CGST = CGST Act, 2017 (Total 1 Act)

* For Levy and collection of SGST = SGST Act, 2017 (Total 31 Acts)

* For Levy and collection of UTGST = UT GST Act, 2017 (Total 1 Act)

* For Levy and collection of IGST = IGST Act, 2017 (Total 1 Act)

* For Levy and collection of GST compensation Cess = GST compensation Cess Act,2017 (Total 1 Act)

It is a value added taxhaving continuous chainof credit where burdenis shifted on END User

WHAT IS GST

GST LAW


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Inward Supply Outward Supply CGST

SGST

INPUT TAX OUTPUT TAX XXX UTGST

IGST

I.T.C. : OF..

CGST Use ITC XXX

SGST NET GST XXX

UTGST

IGST

(2)

(1)

(3)

It means:

(i) First of all credit of IGST will be utilised-

- For the payment of IGST

- For the payment CGST / SGST or UTGST

(in ANY Ratio and in any sequence)

0-----------0

C C

II

S

U

S

U

CREDIT CONCEPT UNDER GST


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(ii) After that credit of CGST will be utilised –

- For the payment of CGST


(iii) Lastly credit of SGST will be utilised –

- For the payment of SGST


(iii) Lastly credit of UTGST will be utilised –

- For the payment of UTGST


Note: Credit of SGST can NOT be utilised for the payment of CGST & Vice Versa.

Credit of UTGST can NOT be utilised for the payment of CGST & Vice Versa.

Deficiencies in Old System of Taxation

Or

Benefit GST

- (i) Multiple taxes – Now one TAX one Notices

(ii) Multiple compliances – Now all compliances at one place.

- (iii) Cascading effect – Now cascading effects Removed to the extent.

- (iv) Double Taxation – Now double Taxation Removed to the extent.

- (v) No Uniformly among laws- Now one law with greater uniformity

- (vi) Now No Evasion of TAXES to the Extent which leading to Increment inGovernment Revenue.

- Moreover due to Introduction of GST there will be a major Boost to “Make inINDIA” Initiative & GST is a win-win situation for All.


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- GSTN is a company Registered under section 8 of Companies Act, 2013 i.e. Acompany “Not for Profit”.

- Both the Govt. provide funding to GSTN.

- GSTN provide GST portal service to Govt. and Tax Payers.

- Facilities offered by GSTN/GST Portal are as follows—

* Registration, filing of Return, Distribution of IGST Between CG & SG/UT,Matching of Returns, Analysis Tax Payer’s profile and provide Various Kindsof Report to Government.

Now See Diagram as “GIST of GST” that shows Entire Frame Work of GST

GST NETORK (GSTN)


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For Introduction of GST in INDIA, lots of changes were required in constitutionof INDIA. Mainly four Articles in constitution need to be study.

ARTICLE No. : 246A* CG & every SG have simultaneous power to make laws with respect to CGST &

SGST/UTGST for Intra State supplies.

* CG has Exclusive power to make law with respect to IGST for Inter State supplies.

* 5 Petroleum products [Petroleum crude, High Speed Diesel, Motor Sprit, NaturalGas, Aviation Turbine Fuel] would be covered under the ambit of GST from thatdate which will be recommended by GST council.

ARTICLE No.: 269A* As stated earlier, CG has Executive power to make law with respect to IGST on

Inter State supplies.

* IGST will be payable to CG. The CG will retain 50% amount an d Balance 50% shallbe transferred to consuming/destination state government or retained by CG indifferent pocket in Case where destination is a state.

ARTICLE No.: 366* GST means A Tax as Goods/services.

(Excluding Tax on Alcoholic Liquor a human (consumption)

* Goods – Any kind of moveable property will be called as Goods.

* Service – Anything other than goods will be treated as service.

* All International Transaction will also be called as Inter-State transaction.

CONSTITUTION


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ARTICLE No.: 279A: GST COUNCIL1. Where industry demands any change in law it approach GST Council for the same.

2. Such matter is discussed in GST COUNCIL.

3. After discussion if favorable voting percentage is 75% or more (weighted %) then theproposal/recommendation is sent to the Parliament. Every decision of the Goods andServices Tax Council shall be taken at a meeting, by a majority of at least 75% of theweighted votes of the members present and voting, the vote of the Central Governmentshall have a weightage of 1/3 of the total votes cast, and The votes of all the StateGovernments taken together shall have a weightage of 2/3 of the total votes cast, inthat meeting.

4. After that a formal notification is issued for the same.

5. Now the change will be effective for industry and government.

6. 50% of the total number of Members of the Goods and Services Tax Council shallconstitute the quorum at its meetings.

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Definitions

1. ACTIONABLE CLAIM:

Actionable claim means CONTIGENT assets.

For Example:

Betting, Gambling, Lottery

Pending Litigations

Insurance claim

Etc.

However under GST-Regime Actionable claim Relating to Lottery, Betting, GamblingALONE will be Regarded as supply of Goods.

REST of the forms of Actionable Claim – will NOT be treated as supply of Goods orservices. Hence NO Question of GST.

2. AGENT: Agent” means:

A person, including a factor, broker, commission agent, arhatia, del credere agent,or any other mercantile agent, by whatever name called,

who carries on the business of supply or receipt of goods or services or both onbehalf of another.

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Chapter 2 – Definitions CA. Raj Kumar

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3. PRINCIPAL: Principal” means: a person on whose behalf an agent carries on thebusiness of supply or receipt of goods or services or both.

4. AGGREGATE TURNOVER: “Aggregate Turnover” means:

the aggregate value of all OUTWARD taxable supplies

(excluding the value of inward supplies on which tax is payable by a person on RCMOR NCM BASIS),

exempt supplies,

exports of goods or services or both and

inter-State supplies of persons having the same Permanent Account Number,

to be computed on all India basis

but excludes central tax, State tax, Union territory tax, integrated tax and cess.

5. EXEMPT SUPPLY:

Exempt Supply” means:

Supply of any goods or services or both which attracts nil rate of tax or whichmay be wholly exempt from tax

and includes non-taxable supply.

Note: Exempt supply – shall NOT Include Zero Rated Supply.

6. AGRICULTURIST: Agriculturist” means an individual or a Hindu Undivided Family whoundertakes cultivation of land–

By own labour, or

By the labour of family, or

By servants on wages payable in cash or kind or by hired labour under personalsupervision or the personal supervision of any member of the family.

CA. Raj Kumar Chapter 2 – Definitions

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7.FAMILY: Family” means,––

The spouse and children of the person, and

The parents, grand-parents, brothers and sisters of the person (if they arewholly or mainly dependent on the said person)

8. AUTHORISED BANK: “Authorised Bank” shall mean a bank or a branch of a bankauthorised by the Government to collect the tax or any other amount payable under thisAct.

Role of Authorized Bank: The taxable person required to pay tax on supplies made byhim or on Inward supplies fall order RCM.

For making payment of GST the person need to create challan from GST Portal.

After that Amount mention in challan need to be deposited in authorized bank &such authorized bank integrated with GST Portal GSTN.

For above GSTN & Banks are tie upped :

& Such Tie upped – Bank or Branch of the Banks called as Authorized Bank (Total:26 Apx) & as and when the person make payment to authorized branch it will beupdated in E –Cash Ledger at GST Portal.

Note: Date of Credit in Authorised Bank will be the date of Deposit in E-Cash Ledger

9. BOARD: Central board of Indirect Taxes and taxes [C.B.I.C.]

10. BUSINESS: The Definition is taken from Sales Tax (Vary wide Definition) &cover Allthe Transactions that are currently subjected to Various TAXES – That are beingsubsumed in GST

Note: Supply – should be undertaken in the course of or Furtherance of Business

(a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or anyother similar activity, whether or not it is for a pecuniary benefit;


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(b) Any activity or transaction in connection with or incidental or ancillary to sub-clause(a);

(c) Any activity or transaction in the nature of sub-clause (a), whether or not there isvolume, frequency, continuity or regularity of such transaction;

(d) Supply or acquisition of goods including capital goods and services in connection withcommencement or closure of business;

(e) Provision by a club, association, society, or any such body (for a subscription or anyother consideration) of the facilities or benefits to its members;

(f) Admission, for a consideration, of persons to any premises;

(g) Services supplied by a person as the holder of an office which has been acceptedby him in the course or furtherance of his trade, profession or vocation;

(h) activities of a race club including by way of totalisator or a license to book maker oractivities of a licensed book maker in such club; and

(i) Any activity or transaction undertaken by the Central Government, a StateGovernment or any local authority in which they are engaged as public authorities.

SN. 11

CAPITAL GOODS INPUTS INPUT SERVICE

Meaning Goods – the Value ofWHICH is Capitalised inthe Books of Account ofthe person claiming I.T.C.

+

Any goods other thanCAPITAL goods.

+

ANY SERVICE

+

Use Such goods are used orIntended to be used in thecourse or furtherance ofBusiness.

Used or Intended to beused by a supplier in thecourse or furtherance ofBusiness.

Used or Intendedto be used By aSupplier – IN thecourse orfurtherance ofBusiness.


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12. CASUAL TAXABLE PERSON “Casual Taxable person” means:

A person who occasionally undertakes transactions involving supply of goods orservices or both in the course or furtherance of business,

in a State or a Union territory where he has no fixed place of business (Branchoffice).

Eg: Supply made in Trade Fair-DEL By a Person Registered in HR: eg. Kalyan Jewellers(Mumbai Based)-conduct Exhibition-cum-sale in Delhi-where he has NOFixed Place ofBusiness.

SOME OTHER POINT:

Normally Exemption limit/Registration limit are given to a supplier but in case CTP Suchlimit will not be available ie. Mandatory Registration is required.

Normally Supplier has a period of 30 Days to Apply for registration but in case of CTPno such time Limit is available; rather he is required to be registered @ 5 days inadvance.

Normally – if a person supply goods/service in a particular month : than GST of thatmonth is to be paid on 20th of next month but in case of CTP GST Payment – need to bepaid in advance ie 5 days in advance.

13. NON-RESIDENCE TAXABLE PERSON: Non-Resident Taxable Person” means:

Any person who occasionally undertakes transactions involving supply of goods orservices or both,

who has no fixed place of business or residence in India.

14. COMMON PORTAL: Means the common goods and services tax electronic portal.

* Common portal means GST Portal

* It is owned by GSTN

* GSTN is a company Registered under Companies Act. 2013 (Sec : 8 ) ie Not forprofit


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* GSTN Provide service to Government & Government Fund to GST on Actual/Costbasis.

* All work like Registration, Return, Payment, Computation & settlement of – IGST &Other functions etc. done by GSTN.

15. CONSIDERATION:

As we know that to be a supply of goods/service : All the 3 conditions must besatisfied:

These should be an activity ie sale, lease etc.

During the business/further hence of business.

For a consideration.

However : Some notified activities will be called as supply even if NoConsideration)

More over Consideration is liable to GST ie Consideration is equal to transactionvalue & liable to GST

CONSIDERATION INCLUDES:

Supply of Goods/Service(Passive/ACTIVESomething in Return inAny Form (Monetary orNon-monetary)

“NOT a PART of Consideration(Unless Adjusted as Consideration)”

“Shall NOT be treated as a PARTof consideration.”

“Includible as A PART of Consideration”

SupplierRecipient

Deposit

Govt. Subsidy

Subsidy fromAny other

[SN:93]* The person who is

liable to payConsideration.

OR* The person to whom

Delivery is madeOR

to whom Service isRendered

Where no considerationis payable

Including Agent


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16. Credit and Debit Note

Basis CREDIT NOTE DEBIT NOTE

IssuedBy

CREDIT Note is issued by supplierONLY. (IF issued by Recipient forAccounting purpose – than – NOT ARelevant Documents)

Debit NOTE issued by SupplierONLY (IF issued by Recipient forAccounting purpose then NOT aRelevant Documents)

[Note: Debit note also called assupplementary INVOICE]

Reasonof

Issuing

It can be issued only IN Followingsituations:—

In terms of Value* Over Invoice In terms of TAX.

Deficient Supply* Under Supply Return Supply

It can be issued ONLY in followingsituations:

In terms of Value* Under Invoice In terms of TAX

DEBIT NOTE

Debit note/Supplementary Invoice is issued by the supplier of goods/serviceswill only be relevant

Reasons of issuing debit note may be : Under invoicing in terms of charging lowervalue or lower GST in main invoice, one more reasons

So to supplement main invoice supplier need to issue a debit note.


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Treatment of Debit Note GST – With the help of Example

Mr. X

Sale of 110 Unit @ Rate Rs. 50/- per unit

But Invoice Issued only of 100 Unit By Mistake.

Main Invoice : 12/3/2019 Value (100 Unit * 50) = 5000

GST @ 18% = 900

5900

Treatment on the basis of main Invoice

Mr. X Supplier file GSTR: 1 By 10th April.

E – Liability Register of Mr. X – Updated by Rs. 900 as output GST.

On 20th April Mr. X Paid GST of Rs 900 to Government.

On the other side recipient will book ITC of Rs. 900/-

Recipient file GSTR: 2 by 15thApril on GST Portal therefore E-Credit Ledger ofrecipient updated by Rs 900 as ITC.

Now Later on suppose on in June 2019 it was found that invoice issued on 12th

march was a case of under invoicing

Now What to do :

Supplier need to issue a debit note of Rs 500 as value & GST thereon

Ie. Debit Note/Supplier Invoice (In June : 2019)

Value (10 Unit * 50 ) = 500

GST 18% = 90

590

Supplier


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Now supplier will file GSTR:1 Including Detail of above Debit Note on 10th of July& pay GST ON 20th July.

On the other side Recipient file GSTR = 2 on 15thof July & claim ITC of Rs 90/-

CREDIT NOTE : (JUST OPPOSITE OF DEBIT NOTE)

Credit note issued by supplier will only be relevant.

Reason of issuing credit note: Over Invoicing etc.

Eg. Unit Sold = 100 Unit

But invoice issued for110 Unit

Eg. Value : 110 Unit * 50 = 5500

12/3/19 GST = 990

= 6490

Output Liability = 990 ITC = 990

+ Later on suppose in JUNE : 2019 Value : 500

credit note issued GST : 90

Now Supplier need to file GSTR , 1 including the detail of credit note by 10th ofJuly, resulting thereof output liability of supplier – Decrease by Rs. 90/-

On the other side recipient required to file GSTR : 2 Including the details ofcredit note resulting thereby ITC of recipient – Decrease by Rs 90/-

THUMB RULE: Output GST @ Supplier = ITC to Recipient

17. E - LIABILITY REGISTER/E - CREDIT LEDGER /E-CASH LEDGER:

As and when any person registered @ GST Portal then 3 online ledgers are being linkedto the registration number of that person.Transaction in above ledgers are as follows :

SUPPLIER RECIPIENT


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E – Liability Registered

Balance in E – Liability registered increased when supplier files : GSTR = 1 in thenext month by 10th including details of debit note (if any)

Balance in E – Liability Registered decreased on payment of liability & filingGSTR 3 on 20th of Next Month.Moreover If there is a case of credit note inGSTR 1, it will decrease the balance of E – Liability Register.

E – CREDIT LEDGER

Balance in E- Credit ledger increased when recipient files GSTR: 2 on 15th ofnext month on GST portal.

Balance in E- Credit Ledger Decreased when the person discharge his ownliability on 20th of next month by filing GSTR 3 and by using credit.

E – CASH LEDGER

Balance in E – Cash ledger increased when the person makes payment in the“Authorized ” Bank & After that bank provide information to GST portal aboutsuch deposit & Assessee’s E – Cash Ledger gets updated.

Balance in E - Cash Ledger Decreased on payment of tax on 20th of next month.

18. INDIA: India” means:

The territory of India as referred to in article 1 of the Constitution,

its territorial waters, seabed and sub-soil underlying such waters,

continental shelf, exclusive economic zone or any other maritime zone as perMaritime Zones Act, 1976, and

the air space above its territory and territorial waters.


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Some Background:

INWARD SUPPLY OUTWARD SUPPLY[Input Tax: XXX] [Output Tax: XXX]

Input Tax Credit (ITC) USE XXXXXX

Note: ITC can be utilized for the payment of OUTPUT Tax Only.

19. INWARD SUPPLY:

Inward Supply” in relation to a person, shall mean:

Receipt of goods or services or both

whether by purchase, acquisition or any other means

with consideration or without consideration.

20. INPUT TAX: Input Tax” in relation to a registered person, means:

NCM SUPPLIES: The CGST, SGST, IGST or UTGSTcharged on any supply of goods orservices or both made to him and

RCM SUPPLIES: The tax payable under Reverse charge mechanism under CGST/SGST/UTGST/IGST/ACT.

NEITHER NCM NOR RCM: The IGST charged on import of goods.

However tax paid by composite dealer out of his pocket will not be input tax forrecepient.

21. INPUT TAX CREDIT: Means the Credit of INPUT TAX.

Note: For a Tax to qualify as INPUT Tax Credit, it must first be “INPUT TAX”.


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22. OUTWARD SUPPLY:

Supply of goods/service provided/given by supplier by any mode as sale/transfer/barter etc.

with consideration and without consideration only in selected cases

Made during the course of business/further hence of Business.

23. OUTPUT TAX: Output Tax” in relation to a taxable person, means:

The tax chargeable under this Act

on taxable supply of goods or services or both made by him or by his agent

but excludes tax payable by him on reverse charge basis;

24. JOB WORK: Job Work” means:

Any treatment or process undertaken by a person

on goods belonging to another registered person and

the expression “job worker” shall be construed accordingly.

Mr. X Job Worker

Out Source any one or more process

Multiple Process Job Worker

Any treatment or process under taken by a person (Job Worker whetherregistered or not) – on goods belonging to another person ( Mr. X)

& the person doing job work is called as job worker.

Process


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Job Work V/S GST:

Mr. X Independent Person [Job Worker]

[T1]Transfer of Goods Worth Rs 5 Lakh

(Principal) Labour + MaterialJob Charges = Rs. 15000/-

Return of Goods after Job Work = SERVICE

[T1]

* We are talking about goods.

* But transfer of goods to job worker is not a supply therefore no question of GSTat all @ T1

Activity

+

Business SUPPLY

+

No Consideration

More over T1 does not fall under 4 specified cases.

[T2] Return of Goods

Here we are talking about goods

It is not a Supply.

Activity

Business

Consideration of Goods

So No Question of GST

Job Work


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[T3]

Supplier [Job Worker] & Recipient [ Principal]

Here we are talking about service ie job work service

It is a Supply. : A

B

C Consideration of service : Rs. 15000/-

Taxable person in this case will be Mr. Job Worker.

GST Computation. : Rs.15000 * 18% = 2700/-

25. MONEY: Money” means:

The Indian legal tender or any foreign currency, cheque, promissory note, bill ofexchange, letter of credit, draft, pay order, traveller cheque, money order, postalor electronic remittance or any other instrument recognised by the Reserve Bankof India

when used as a consideration to settle an obligation or exchange with Indian legaltender of another denomination

but shall not include any currency that is held for its numismatic value.

As we know that definition of goods/service excludes moneyie. Money is neither Goodsnor service. Hence no GST on Money.

However: When person exchange money for a consideration (commission) then suchactivity is called as service & liable to GST for example: Activity of forex dealer liableto GST as a Service.

So we need to know: What is money…

INR /$/Cheque/DD/Bill of Exchange Money = YES all are money

Old outdated currency = NOT A money (eg. 500/1000 Note)

Shares/Gold etc. = NOT a money.

Money: Market price & face Price equal.


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26. Non-Taxable Supply” Means:

A supply of goods or services or both

which is not leviable to tax under this Act or under the IGST Act.

27. Taxable supply Means a supply of goods or services or both which is leviable totax under this Act.

Question: Taxable Supply ofGoods/service

Non-Taxable Supplyof Goods/services

Whetherincluded inAggregateTurnover

Meaning * Goods/SERVICE

+

* Supply

+

* Leviable to GST

* Goods/SERVICE

+

* Supply

+

* NOT Leviable toGST

i. Sale of Money/Security

No – as it is NOTgoods/Service

NO – as it is NOTgoods/Service

No

ii. Sale of AlcoholicLiquor for HumanConsumption/fivePetroleum Product.

No - As it is goods& also fall order theDefinition of Supply –But is Excluded fromcharging section –therefore Not liableto GST

Yes – It is Goods &also fall under theDefinition of supply.BUT it is excludedfrom charging sectionhence NOT liable toGST-Therefore it iscalled – Non-TaxableSupply”.

Yes


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iii. Transfer of Goodsto Job Worker

No, as it is goods Butit does not Amountto supply. HenceCAN NOT be calledas “Taxable Supply.”

NO - as it is goodsBut it does notAmount to supply.Hence CAN NOT becalled as “NonTaxable Supply.”

No

28. Non-Taxable Territory” Means: the territory which is outside the taxableterritory.

29: “Taxable Territory” Means: the territory to which the provisions of this Act apply.

TERRITORY

Taxable Territory Non Taxable TerritoryThe territory to which Rest of the Area.Provisions of particular GST Laware Applicable.

Act TT NTT

For IGST Act : Whole of India. Any place except India.

For DL – GST Act DL Any place except DL

For UP GST UP Any place except UP (Say HR,USA)

For CGST All India Any location Except India.

For UT GST UT Any place except UT


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STATES AND UT

30. “State” includes Delhi and Puducherry.

31. “Union territory” means the territory of-

(a) the Andaman and Nicobar Islands;

(b) Lakshadweep;

(c) Dadra and Nagar Haveli;

(d) Daman and Diu

(e) Chandigarh; and

(f) Other territory

32. OTHER TERRITORY- Includes territories other than

Delhi and Puducherry

the Andaman and Nicobar Islands;

Lakshadweep;

Dadra and Nagar Haveli;

Daman and Diu

Chandigarh

33. PERSON: - Person” includes–

(a) An individual;

(b) A Hindu Undivided Family;

(c) A company;

(d) A firm;

(e) A Limited Liability Partnership;


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(f) An association of persons or a body of individuals, (whether incorporated or not, inIndia or outside India)

(g) Any corporation established by or under any Central Act, State Act or ProvincialAct or a Government company.

(h) Any-body-corporate incorporated by or under the laws of a country outside India;

(i) A co-operative society registered under any law relating to co-operative societies;

(j) A local authority;

(k) Central Government or a State Government;

(l) Society

(m) Trust; and

(n) Every artificial juridical person, not falling within any of the above.

Includes: Company, Firm, LLP, AOP (Incorporated/Unincorporated), Govt. Company,Foreign Company, Co-operative Society, CG, SG, Local Authority, Society,TRUST etc.

Note: Every Person is understood to have a separate Identity.

eg. A TRUST SETUP By a Company – Now Company AND TRUST – haveseparate Identity/Both are separate persons.

34. PRINCIPAL PLACE OF SUPPLY:

The place as specified in ‘Registration Certificate’ as principal place (Generally HeadOffice/Corporate office) registered Address under Company Act/Address specified inpartnership deed/Billing Address.

35. PRINCIPAL SUPPLY: means:

The supply of goods or services which constitutes the predominant element of acomposite supply and

to which any other supply forming part of that composite supply is ancillary.


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What is Principle Supply: - A supply which constitutes predominant element of acomposite supply.

For Example: * Laptop + Carry case = LAPTOP

* Split AC + INSTALLATION = AC

* Goods + Transportation = Goods

* etc.

36. QUARTER: Quarter shall mean:

A period comprising 3 consecutive calendar months,

ending on the last day of March, June, September and December of a calendaryear.

Means: 3 Consecutive Calendar months

JAN to March, April to June, July to Sept., Oct. to Dec

For Example: Any Activity Start ie. March & Complete in April = How Many Quarter = 2

37. REGISTERED PERSON: Registered person” means:

A person who is registered under GST

but does not include a person having a Unique Identity Number.

*Who is Registered U/S 25 (i.e. AT the movement Registration is granted to theperson)

*Excluding: person having UIN (Awarded to UN, International organization, embassyetc.)

Why to get UIN? - For certain purposes eg. Refund of TAXES on the Notified supplyof Goods/Services received by them.


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38. REMOVAL: in relation to goods, means-

Dispatch of the goods for delivery by the supplier thereof or by any Agent on hisbehalf or

Collection of the goods by the recipient thereof or by any agent on behalf of suchrecipient;

39. RETURN: Means any return prescribed or otherwise required to be furnished by orunder this Act or the rules made thereunder.

40. REVERSE CHARGE MECHANISM: “Reverse charge” means:

The liability to pay tax by the recipient of supply of goods or services or both

instead of the supplier of such goods or services or both

41. TAX PERIOD: The period of which RETURN [Monthly/Quarterly] is required to befurnished.

42. TURNOVER IN A STATE: Turnover in State” or “Turnover in Union Territory”means:

the aggregate value of all outward taxable supplies

(excluding the value of inward supplies on which tax is payable by a person on RCMOR NCM BASIS)and

exempt supplies made within a State or Union territory by a taxable person,


inter-State supplies of goods or services or both made from the State or Unionterritory by the said taxable person

but excludes central tax, State tax, Union territory tax, integrated tax andcess;

It is a Replica of “Aggregate Turnover” But limited to STATE & All INDIA BASIS.

Note: T/O in a State – Required in the concept of Composition Scheme.


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43. VALID RETURN: Valid Return” means a return furnished under section 39 (1)onwhich self-assessed tax has been paid in full.

44. WORKS CONTRACT means:

A contract for

o Building,

o construction,

o fabrication,

o completion,

o erection,

o installation,

o fitting out,

o improvement,

o modification,

o repair, maintenance, renovation, alteration or commissioning

ofany immovable property wherein transfer of property in goods (whether asgoods or in some other form) is involved in the execution of such contract.

* [Goods + Service] @ Single PRICE [Which will be classified as SERVICE]

BUT LIMITED TO IMMOVABLE PROPERTY

What about (Goods + Service) @ Single PRICE & Resultant Property is an movableproperty – then Depend: eg. Service/Goods Can not be called as works contract.

30

Charegability andGoods & Services

Section: 1 : Short Title, Extent & Commencement.

: SHORT Title : CGST Act, 2017

: Extent: it extends to whole of India.

: Commencement: it came into force as 01.07.2017

Section: 9

General Provision Section 9(1 and 2 )

Charging Section

CGST shall be levied & collected-

: On all goods goods/service [Except 5 petroleumproducts on which GST will be levied from Notifieddate) and on Alcoholic liquor for human consumption)

: Where supply is made of above goods/services.

3

CA. Raj Kumar Chapter 3 – Chargeability and Goods & Services

31

: The supply is an intra state supply.

: The Supply is made by a Taxable person.

: CGST shall be calculated on taxable supplies ie otherthan Exempted supplies as per the manner prescribedunder Section : 15.

: GST will be collected from supplier as per prescribedmanner.

RCM :: Section 9(3) : On notified goods/services CGST is to be collectedunder Reverse charge from Recipient. For example:Goods Transport Agency, Legal Services.

RCM :: Section 9(4) : Where supplier is unregistered and Recipient isRegistered then CGST shall be collected fromRecipient under RCM. (But it is Applicable in RealEstate Sector only)

Neither NCM Nor RCM:Section 9(5)

: On notified services CGST shall be collected from E-commerce operator having place of Business in IndiaBut where Ecommerce operator has No Place ofBusiness in India then he need to setup a place ofBusiness in India or to appoint any person as agent.

1. Hotel Accommodation Service: E-Commerce Operator will be the deemedsupplier and liable to pay GST.

However if the real supplier (Hotel) is crossing the limit of 10 Lakh or 20 Lakhthen Hotel Liable to Pay GST.

Notified Services and their provisions are as follows:

Chapter 3 – Chargeability and Goods & Services CA. Raj Kumar

32

2. Misc. Utilities (e.g. urban clap): E-commerce operator i.e. (Urban Clap) will bedeemed supplier and Liable to Pay GST.

However if Real Supplier of service crossing the limit of Rs. 10 lakh/20 lakh thenReal supplier liable to pay GST.

3. Passenger Transportation Service: E-commerce operator (e.g. Uber/OLA) will bedeemed supplier of service and Always liable to pay GST.

Definition of Goods/Service is very important as GST is levied on goods and/or service:-

Goods: : Every kind of moveable property will be called asgoods.

: Moreover things attached to earth or any immovablestructure will also be treated as goods e.g. Signage,Growing Crops, trees etc.

: Lastly, Actionable claims i.e. contingent Assets likelottery/Betting/Gambling, unsecured debtors will alsobe treated as goods.

Service: : Anything other than goods will be treated as Service.

: Service can be of two types – one is Active (dosomething) and another is passive i.e. (Not to dosomething e.g. Non-Competence contract, any kind ofdeal cancellation etc.)

Neither Goods NorServices:

: Money & securities will neither be treated as goodsNor service.

: However Activities Related to money or securities For– A consideration will be treated as service e.g. Forexcharges, Demand Draft Commission, Brokerage etc.

GOODS and SERVICES

33

SupplyThere are two sections in this chapter read with 3 schedules. Supply is the Taxable eventto levy GST i.e. It is the backbone for levying GST.

Section 7: Defines:

Part – A : Meaning of supply [Read with Schedule: I]

Part – B : After being supply – It will be supply of goods or supply of servicesuch distinguishment will be discussed as per schedule – II

Part – C : Some of the Activities/transaction will never be treated asSupply and consequently not liable to GST as per schedule – III.

Section 8: It describes treatment of composite and Mix supply treatment.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECTION 7 (1): PART – A

For being supply any transaction needs to satisfy A/B/C test i.e. there must be anActivity (e.g. Sale, Barter, Exchange, Renting, Leasing, disposal, licensing, transferetc.) during the Business or Related to Business for a Consideration which can be inmonetary to non-monetary Form.

Import of Service If it is for consideration and used for business purpose will alsobe called as supply. Moreover if such import of service is used for personal purposeeven then it will be called as supply however later on it will be exempted by N/N:9/2017.

4

Chapter 4 – Supply CA. Raj Kumar

34

SCHEDULE-1

Four specified Activity will also be treated as supply even if these are withoutconsideration ie FREE OF COST (F.O.C.)

(i) Permanent Transfer of Business Assets only where ITC has been availed in respectthereof, meaning thereby where ITC has not been availed with respect to thatAssets then there will be no supply.

(ii) Transaction between Related persons (e.g. Brother, Sister, Spouse, Employees etc.& in between Deemed distinct persons i.e. Multiple Registration under same PAN,Head office and branch office relationship, branch to branch relationship): Relatedparty transactions will be called as supply even if it is free of COST.

However gift to employee upto Rs. 50,000 in a Financial year shall not be treatedas supply.

(iii) Supply between principal & Agent i.e. PRINCIPAL to AGENT or Agent to Principalwill be called as supply even there is no consideration.

As per Circular No.:57/31/18

Where principle Invoices to Agent and Agent Invoices to customer: then suchAgent will fall under Schedule-I and

Where principle Invoices directly to customer and the transaction mediated byan Agent: then such agent will not be covered under Schedule-I.

(iv) Import of Service from outside India, from a related person, by a PERSON inIndia for Business purpose will be treated as supply event it is withoutconsideration.

CA. Raj Kumar Chapter 4 – Supply

35

NOW Need to discuss – whether

the given supply is a “Supply of Goods” or

Supply of Service: SCHEDULE II

1. Goods Related:

Where upon a transaction “Ownership of Goods” is transferred [e.g. Sale] orownership will be transferred at future date [e.g. Hire Purchase Transaction] thenit will be called as supply of goods.

2. Land & Building:

Renting/Leasing etc. of Land & Building ie immovable property will be called assupply of service. However sale of Land & constructed Building will not be treatedas supply.

Moreover sale of under construction property will be treated as supply of service.

3. Job Work:

Any Treatment or process done by Job worker by using Goods &service will becalled on service ie job work service.

4. Transfer of Business Assets:

(i) Permanent Transfer of Business Assets for a consideration or free of cost, itshall be treated as supply of goods.

(ii) Temporary transfer of Business Assets for non-business purpose withconsideration or without consideration then it will be called as supply ofservice.

(iii) Sale or Succession of Running Business is a supply of service however it isexempted from GST.

(iv) On closure of Business then the Business assets shall be deemed to besupplied as goods to himself.


36

5. Following shall be treated as supply of service –

* Temporary transfer of Intellectual property right.

* Customised software.

* Negative activities/any kind of Deal cancellation.

* Leasing of assets.

6. Composite supply as works contract shall be called as service ie works contractservice.

7. Supply of food/drink (Soft Drink) for human consumption shall be treated assupply of service.

8. Supply of Goods of any un-incorporated association of person [AOP] or Body ofIndividuals [BOI] to its members shall be treated on supply of goods.

NO SUPPLY SECTION: 7(2)

(a) (i) Activities undertaken by CG/SG/LA as specified under Article number 243G/W of constitution of India (eg. Land Consolidation, Sanitary, PublicHealth etc.) shall not be treated as supply hence no GST shall be levied.

(ii) Service By SG By way of Granting Alcoholic Liquor license shall not be treatedas supply.

(b) Activities/transaction as specified in Schedule – III which are as follows..[NEWMAGIC]

(i) Supply of Goods from NTT [Non Taxable Territory] to another NTT withoutentering into India shall not be called as supply.

(ii) Service by employee (including whole time Director) to employer in the courseof Employment shall not be called as supply.

(iii) Supply of “Custom Bonded Warehoused” goods to any person before clearancefor home consumption from custom Department, Moreover supply of goods Byway of transferring of “ownership Documents” of Goods after the goods havebeen dispatched from origin port [outside India] But Before clearance forHome Consumption.


37

(iv) Mortuary services including transportation of deceased person shall not becalled as supply.

(v) Actionable claim other than getting/gambling/Lotteries shall not be treatedas supply.

(vi) Government People:

* Functions performed by MP/MLA/MLC member of municipalities, shallnot be called as supply.

* Duties performed the person having constitutional post (e.g. PrimeMinister, Chief Minister etc.) shall not be treated as supply.

* Duties performed by Part time director of a Government body (e.g.Human Right Commission) shall not be called as supply.

(vii) Sale of Land, Constructed property will not be treated as supply.

(viii) Services by ANY court, Tribunal ESTABLISHED Under any law shall not betreated as supply.

SECTION: 7(3)

Government has power to notify the transactions to be treated as supply of Goods andnot as supply of service or Vice Versa

SECTION : 8: CLASSIFICATION OF COMPOSITE & MIXED SUPPLIES

(a) Under composite supplies,: classification will be based as principal supply i.e. wholebundle will be called/classified by the name of principle supply and according GSTRate of principle supply will be applicable.

As per section 2 : COMPOSITE SUPPLY: “Composite Supply” means:

a supply made by a taxable person to a recipient consisting of two or moreTAXABLE supplies of goods or services or both, or any combination thereof,

which are naturally bundled

and supplied in conjunction with each other in the ordinary course of business,

one of which is a principal supply.


38

Example 1: Suvarna Manufacturers entered into a contract with XYZ Ltd. forsupply of readymade shirts packed in designer boxes at XYZ Ltd.’s outlet.Further, Suvarna manufacturers would also get them insured during transit. In thiscase, supply of goods, packing materials, transport and insurance is a compositesupply wherein supply of goods is principal supply.

Example 2: When a consumer buys a TV set and he also gets warranty and amaintenance contract with the TV, this supply is a composite supply. In thisexample, supply of TV is the principal supply, warranty and maintenance servicesare ancillary.

(b) Under Mixed supplies: In mixed bundle principle supply is not Identifiable henceclassification will be based on the supply which has highest Rate of GST i.e. thewhole bundle will be called/classified with the name of such supply.

As per section 2: MIXED SUPPLY:

“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.

Example: A supply of a package consisting of canned foods, sweets, chocolates, cakes,dry fruits, aerated drink and fruit juices when supplied for a single price is a mixedsupply. Each of these items can be supplied separately and is not dependent on anyother. It shall not be a mixed supply if these items are supplied separately.

Example: A house is given on rent through a single rent deed - one floor of which isto be used as residence and the other for housing.


39

Question 1: Whether supply of books, pamphlets, brochures, envelopes, annual reports,leaflets, cartons, boxes etc., printed with design, logo, name, address or other contentssupplied by the recipient of such supplies, would constitute supply of or supply of services?

Answer: In the case of printing of books, pamphlets, brochures, annual reports, andthe like, where only content is supplied by the publisher or the person who owns theusage rights to the intangible inputs while the physical inputs including paper used forprinting belong to the printer, supply of printing [of the content supplied by the recipientof supply] is the principal supply and therefore such supplies would constitute supply ofservice.

In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins,wall paper etc. printed with design, logo etc. supplied by the recipient of goods but madeusing physical inputs including paper belonging to the printer, predominant supply is thatof goods and the supply of printing of the content [supplied by the recipient of supply] isancillary to the principal supply of goods and therefore such supplies would constitutesupply of goods. [Circular No. 11/11/2017]

Question 2: The issue relating to levy of IGST exemption on inter-state movement ofvarious modes of conveyance, carrying goods or passengers or for repairs andmaintenance, between distinct persons carrying goods or passengers or both; or forrepairs and maintenance, [except in cases where such movement is for further supply ofthe same conveyance] has been examined.

Answer: Removal of motor vehicle is as a stock transfer then it shall be treated as asupply of goods. Where removal/movement of motor vehicle is just because of any otherreason eg. as a conveyance etc then it shall never be called as supply. [Circular No.1/1/2017]

Moreover above provision shall also apply to inter-state movement of such goods, andother than in cases where movement of such goods is for further supply of the samegoods, such inter-state movement shall be treated ‘neither as a supply of goods or supplyof service,’ and consequently no IGST would be applicable on such movements.

Various clarifications


40

Question 3: LAB (Linear Alkyl Benzene) manufacturers have stated that they receivesuperior Kerosene oil (SKO) from, a refinery, say, Indian Oil Corporation (IOC). Theyextract n-Paraffin (C9-C13 hydrocarbons) from SKO and return back the remaining ofSKO to the refinery. In this context, the issue has arisen as to whether in thistransaction GST would be levied on SKO sent by IOC for extracting n-paraffin or only onthe n-paraffin quantity extracted by the LAB manufactures. Further, doubt have alsobeen raised as to whether the return of remaining Kerosene by LAB manufactures wouldseparately attract GST in such transaction.

Answer: LAB manufacturers generally receive superior kerosene oil [SKO] from arefinery through a dedicated pipeline; on an average about 15 to 17% of the total quantityof SKO received from refinery is retained and balance quantity ranging from 83%-85% isreturned back to refinery. The retained SKO is towards extraction of Normal Paraffin,which is used in the manufacturing of LAB. In this transaction consideration is paid byLAB manufactures only on the quantity of retained SKO (n-paraffin).

In this transaction GST will be payable by the refinery on the value of net quantity ofsuperior kerosene oil (SKO) retained for the manufacture of Linear Alkyl Benzene (LAB).

Accordingly, it is here by clarified that, in aforesaid case, GST will be payable by therefinery only on the net quantity of superior kerosene oil (SKO) retained for themanufacture of Linear Alkyl Benzene (LAB). Though, refinery would be liable to pay GSTon such returned quantity of SKO, when the same is supplied by it to any other person.[Circular No. 12/12/2017-]

Question 4: Whether retreading of tyres is a supply of goods or services?

Answer: In retreading of tyres, which is a composite supply, the pre-dominant element isthe process of retreading which is a supply of service.

Rubber used for retreading is an ancillary supply. Which part of a composite supply is theprincipal supply, must be determined keeping in view the nature of the supply involved.Value may be one of the guiding factors in this determination, but not the sole factor.

The primary question that should be asked is what is the essential nature of thecomposite supply and which element of the supply imparts that essential nature to thecomposite supply.

Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded tyres,is a supply of goods attracting GST @ 28%. [Circular No. 34/8/2018 ]


41

Question 5: Is GST leviable on the fee/amount charged in the following situations/cases:

(1) A customer pays fees while registering complaints to Consumer Disputes RedressalCommission office and its subordinate offices. These fees are credited into StateCustomer Welfare Fund’s bank account.

(2) Consumer Disputes Redressal Commission office and its subordinate offices chargepenalty in cash when it is required.

Answer:

Services by any court or Tribunal established under any law for the time being in force isneither a supply of goods nor services.

Consumer Disputes Redressal Commissions (National/State/District) may not be tribunalsliterally as they may not have been set up directly under Article 323B of theConstitution.

However, they are clothed with the characteristics of a tribunal on account of manyreasons.

In view of the aforesaid, it is hereby clarified that fee paid by litigants in theConsumer Disputes Redressal Commissions are not leviable to GST.

Any penalty imposed by or amount paid to these Commissions will also not attract GST.

42

Taxable Person

Background:

Where supply of Goods/Service made by a Taxable person whether Intra or Inter Shallbe leviable to GST i.e. where such supply made by “Non-Taxable Person” then no GST willbe levied.

Now the question is this who is Taxable Person. Taxable Person has been defined U/s = 2as the person

“Who is Registered (i.e. who has taken voluntarily Registration) or

Required to be registered as per Law.

Now question is this when a person required to get registered himself. The solution isgiven under section 22,23,24 as to when a person Require Registration & when he doesnot need to get Register himself.

SECTION 23: NO REGISTRATION

Following persons are not required to get Registration i.e. such person will be called asNon-Taxable persons.

(1) AN agriculturist (Individual/HUF)

(2) Person Engaged only in Exempted supplies (Exempted supply = NIL Rated, 100%Exempted, Non-Taxable).

(3) Other Notified person (e.g. where a supplier supplies only RCM supplies then suchsupplier need not to get any Registration Under GST).

5

CA. Raj Kumar Chapter 5 – Taxable Person

43

SECTION 24: MANDATORY REGISTRATION

The following person requires mandatory registration u/s: 24 i.e. Registration Requiredwithout

Applying any threshold limit of Rs. 10 Lakhs/20 Lakhs/40 Lakhs.

(1) Person engaged in Inter- state Taxable supplies of goods.

[However suppliers of handicraft goods and inter - state supplier of services arenot required Mandatory Registration i.e. they need registration only afterapplicable threshold limit.]

(2) Casual Taxable Person making Taxable supplies

[However the casual taxable person making taxable supplies of handicraft goodsnot required mandatory registration i.e. need registration only after applicablethreshold limit.]

(3) The Person who is liable to pay Tax under RCM as Recipient.

(4) Person who is required to pay tax under section 9(5). [Hotel Accommodation, Misc.Utilities, Transportation of passengers]

(5) Non Resident Taxable person making taxable supplies.

(6) The supplies of goods who supplied goods through E-Commerce operator.

(7) Agent making taxable supplies on behalf of other taxable person.

(8) Other notified persons.

SECTION: 22

Where the person having aggregate turnover only upto threshold limit or below the limitthen the

Person not required to get registration.

But when the person crosses the threshold limit of 10 Lakh/20 Lakh/40 Lakh then he isrequired to get registration “In All Those States” From where he is making “TaxableSupplies”.

Chapter 5 – Taxable Person CA. Raj Kumar

44

WHAT IS AGGREGATE TURNOVER: “Aggregate Turnover” means:

the aggregate value of all taxable supplies

(excluding the value of inward supplies on which tax is payable by a person onreverse charge basis),

exempt supplies,


inter-State supplies of persons having the same Permanent Account Number,

to be computed on all India basis

but excludes central tax, State tax, Union territory tax, integrated tax and cess.

WHAT IS APPLICABLE LIMIT:

(1) Where the person making “Taxable Supplies” from “ANY” of the 4 Specifiedstates then the applicable limit of the person will be Rs. 10 LAKH for all states.

[4 specified States = MANIPUR, MIZORAM, NAGALAND, TRIPURA]

(2) Where the person making supplies from any of the 6 specified states then theapplicable limit will be Rs. 20 Lakh for all the states.

[6 specified States = Arunachal Pradesh, Uttarakhand, Meghalaya, Sikkim,Telangana, Puducherry].

(3) Where the person making supplies from other states/union territories and

* Exclusively Engaged in supply of goods then the limit will be Rs. 40 Lakhfor all the states.

* However limit of Rs. 40 lakh will not be applicable—

Where the supplier is making supplies of TIP (Tobacco, Ice-Cream,Pan masala) then the limit will be Rs. 20 Lakh.

CA. Raj Kumar Chapter 5 – Taxable Person

45

Where the Person exclusively engaged in Supplies of Service thenthe applicable limit will be Rs. 20 Lakhs.

Where the person engaged in Supplies Goods as well as servicesthen the applicable limit will be Rs. 20 Lakhs.

Moreover if the person supplies goods and earned Interest (Exempted supplyof Service) then such Exempted supply of service shall be ignored and theapplicable limit will be Rs. 40 Lakhs.

(A) Persons registered under old taxation system (Central Excise Law/VAT Laws Etc.)then the person shall be liable to get registration with effect from 01.07.2017.

(B) Where a going concern transferred or succeeded then such transferee orsuccessor shall be liable to be registered with effect from the date of suchtransfer/Succession.

(C) Where there is transfer of business due to amalgamation or demerger of 2 ormore persons then the transferee shall be liable to be registered with effect fromthe date of Incorporation of New Entity.

Some Other Notes:

46

Exemption

Section 11: Power to grant exemption from tax

BASIS Exemptions Notification Special Order

Type

Wholly Exempt Wholly Exempt

Partly Exempt Partly Exempt

Wholly Exempt Wholly Exempt

Partly Exempt Partly Exempt

Examples - Supply of Salt/Water:

- Health Care SERVICES:

- Supply of Agriculture implements:

- Rate of IGST will be 1% onAluminums INGOTS.

- Solar cells If use in specifiedfinal product:

Floods and landslides etc hascaused extensive damage topublic and private property

Effective

Date

Specific Date or

Date of Issue

Specific Date or

Date of Issue

Conditional Unconditional Conditional Unconditional

6

CA. Raj Kumar Chapter 6 – Exemption

47

Clarifica-tion

Example:

1-1-18 Confusion Clarification Conclusion

Govt Issued What about Govt. Issue Effectivea Notification “Pipe fittings” second Notification Date of Secondon 1-1-18 - whether exempt issued on 1-7-18 Notification willStating that or NOT? the word PIPE shall also be:“Pipes” are include “Pipe Fittings” Also.Exempted fromGST

Q.: What about the assesses who have paid taxes during confusionperiod: Get refund with interest.

Q.: What if such Notification (Second) issued after the expire of oneyear from the date of original Notification: shall apply prospectively.

Chapter 6 – Exemption CA. Raj Kumar

48

Jaagran party (Bhajan)Renting & Accommodation (Bhojan)

@ JOB

(Academic)

@ Precaution: “Public Toilets”

CHARITY & RELIGION

TRUST Kailash Maansarovar Haj Yatra

HEALTH

EDUCATION

NEWSPAPEREDUCATIONAL

INSTITUTE(WITH LIABRARY)

SDI / DDUGKY

Corporate Cum Institute

Training Program me

Blood Bank

Bio- MedicalWaste

Health Care

Therapy

Clinical EstablishmentHuman BeingsAnimal

Summary


49

3/3A/4/5 Article 243 G/W 30 Year : Longterm Lease Farmer6 P.V.T Contractor (ERCC)7 Gareeb Business Entity 20 Year : Spectrum /Coal Non Performer8 Government to Government Importer/Exporter (MOT)9 UP to Rs 5000/- 10 Year : Railway Common Man (RTI)9C Government Entity Government Departt.

(Guarantee.)

GOVERNMENT

SPORTS

FIFASPONSOR

Player, Umpire, Referee, Coach.

Person BasedPeriod BasedBy Default


50

(Farm)

ElectricityInfrastructure (@ Cultivation)

&DistributionOf Electricity

Membership

Fumigation

KISAAN

Cultivation Rearing of Animals

Electricity Exchange

Fruits &Vegetables

Ripening etc.

Agriculture Produce

Job Work

NCCCD

Fumigator

Insemination (Birth)

Slaughter House(Death)

TubeWell

WarehouseAgriculture Produce/Rice/SugarcaneMinor Forest Produce


51

ENTRY FEE = GST ×

Rs 150,000/-Per Performance.

@ Residence

NOTE : At Residential Projects : SN : 41A / 41B

ENTERTAINMENT

DESI PERFORMER (Folk /Classical)

Zoo

Hobby Classes (ACP)

KHEL /TAMASHAA UPTO Rs. 500

FIFA (Men /Women)

Protected Monuments

Rental House PM Awaas Yojana House(Construction)

Own House(Construction)

HotelAccommodation

Immovable Property (Renting and Accommodation)


52

Inland Water Way ×

GTA to Unregistered Person ×& Government ×

Others × Nepal/Bhutan or--- Other

× × ×

Section Number 15 /16/17

DL /Passport VISA (Embassy)

City me

Run by Persons

TRANSPORTATION OF PASSENGER

JAL

THAL

VAYU

SOCIO ECONOMIC Welfare

KOTA

NPO & NPO (2)

OLD AGE

TRANSPORTATION OF GOODS

DOMESTIC

JAL

THAL

VAYU

INTERNATIONAL

IMPORT

EXPORT


53

ESI & Re-InsuranceEPFO thereof.IRDASEBINPSCMPFO

BANKING

BUSINESS

Idea of Business from:an Business Exhibition

Business of Hiring ofMotor Vehicle

Start as “Start – up @Bio - Incubator”

Near by a TollDue to Accident: Legal CASEBecause of this “RunningBusiness” (Going Concern Sold)

RBI

BC / BF

BANK

InterestCharges

JAN – DHAN A/C Charges

CARD Transaction Processingcharge

Financial Service to over-seas – client charges (from

SEZ)

INSURANCE

Regulatory BodiesGeneral Insurance /BPL/APL

Life Insurance BPL/APLPremium Paid by government

Army/PoliceInsurance

Annuity PensionATAL PensionS.G. Pension


54

IGST EXEMPTION 09/2017

Import of servicesNO GSTSupplier

Locatedin NTT

Recipient Located in TT:

- Government- Individual for personal use- Trust- RBI- Embassy- UN/International

Organisation- Sez (Unit /Developer)

Recipient Located in NTT:Except Veesel

SupplierLocated in TT

Recipient:

- Foreign Tourist (Exclusivelyforeign Tour)

- Deemed distinct- NTT (Intermediary)


55

N/N: 12/2017 issued under section 11

1. Charitable Trust

Service By way of following charitable activities by a Recognised charitable trustwill be Exempted.

(a) Activity by way of Public health- by way of care & counseling of terminally illpersons, HIV Infected persons, and person addicted to Drugs or Alcohol.

(b) Activity of advancement of Religion, spiritually or Yoga.

(c) Activity of advancement of Educational programs or skill development forAbandoned children, person residing in rural AREAS having age over 65years.

(d) Activities of preservation of Environment Including watershed, forest &wide life

2. Renting of Religious Place & Conduct of Religious Ceremony:

(a) Service of conduct of Religious ceremony will be exempted.

(b) Service of Renting of Religious place owned or managed by a Trust whereRoom Rent limited to Rs. 999 per day, Hall Rent limited to Rs. 9999 per day,shop rent limited to be 9999 per month will be exempted.

3. Religious Journey:

Service By Kumaon Mandal Vikas Nigam Limited in Respect of “Kailash MansaroverYatra (CHINA) and service by HAJ Committee in Respect of Haj Yatra (SaudiArab) will be exempted.

CHARITABLE & RELIGIOUS


56

1. NEWS:

Service of providing news by an “Independent Journalist”, Press Trust of India(PTI) or United News of India (UNI) will be exempted. (However if Journalist isEmployee then it will not be a supply.)

2. LIABRARY:

Service of “Lending of Books etc. “By Public Libraries will be Exempted (Howeversuch Service By Private Libraries will be Exempted under SN:3)

3. EDUCATIONAL INSTITUTE:

Service provided by Education Institute (School/College/Institution) to student,Facility, staff & New Entrants (entrance Examination fee) will be exempted.

Service provided to school –

(a) Service of T.C.S. (Transportation facilities for student faculties & Staff,catering Including Mid-day meal, security & House - keeping) will beexempted ONLY for schools.

(b) Service Related to or conduct of Entrance/Final Examination will beexempted for all (i.e. school/college/Institutes).

(c) Service of supply of “Online Educational Periodicals” to colleges will beExempted.

4. CORPORATE-CUM-INSTITUTE:

Any service provided by “NSDC” (National Skill Development Corporation), SSC(Sector Skill Council), AA (Assessment Agency), training partner (e.g. AmbujaCement Foundation, Hindustan Soft Education etc.) will be Exempted.

5. Service by way of “Assessments” under “SDI” (Skill development Initiative will beexempted.

6. Serviced By “Training Provider” under “DDUGKY” (Deen Dayal Upadhyaya GrameenKaushalya Yojna” ) will be Exempted.

EDUCATION


57

7. TRAINING:

Service provided “Under any training Programme” to CG/SG/UT i.e. where totalexpenditure is born by Govt will be exempted.

1. VETERINARY CLINIC:

Service of Health Care (Diagnostic, Treatment, Care) of Birds/Animal provided byVeterinary clinic will be Exempted.

2. CORD BLOOD BANK:

Service of preservation of STEM Cells or any Related Service by Cord Blood Bankwill be exempted.

3. HEALTH CARE OF HUMAN BEINGS:

- Health care service (Diagnostic treatment, care including food for patient,Hair Transplant, Cosmetic & Plastic Surgery for CURE , Ambulance service)

- Provided by (Hospital, Nursing Home, Sanatorium, clinic, pathology Lab(Indoor & outdoor) Physiotherapist, Dietitians etc.

- Moreover ambulance service given by any other will also be Exempted.

4. REHABILITATION CENTRE:

Service By : Recognised Rehabilitation professionals.

By way of : Rehabilitation Therapy or counseling etc.

AT : Medical Establishment, Educational Institutes, RehabilitationCentre established by CG/SG/UT or Registered TRUST.

5. BIO-MEDICAL WASTE:

- Service of “Treatment or disposal” of Biomedical waste or Related process.

- By operator of “biomedical waste”

- to clinical Establishment.

HEALTH


58

6. PUBLIC CONVINIENCE:

Service By way of public convenience such as provision of facilities of bathroom,washroom, urinal, toilets will be exempted.

1. FIFA:

Service provided to or By FIFA and its subsidiaries Related to any Event underFIFA : U-17 World-Cup, 2017. (Hosted in India) will be Exempted.

2. FIFA (Woman’s):

Service provided to or BY FIFA and its subsidiaries Related to any event underFIFA U-17 women’s World-Cup 2020(to be hosted in INDIA) will be Exempted.

3. SPONSORSHIP:

- Service by way of sponsorship of sporting events.

- Organised by Recognised body.

- will be Exempted.

4. INDIVIDUAL SERVICE:

- Service of Individuals as a Player, referee, umpire, coach or team managerfor participation in a sporting event.

- Organised By a Recognised Sport Body (eg. BCCI)

- Moreover service By one Recognised Sports Body to another RecognisedSports Body will Also be Exempted.

SPORTS


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1. Article 243G/W

- Service as specified under Article 243 G/W (e.g. Land Consolidation, UrbanTown Planning, Public Health etc.) provided By “Governmental Authority” willbe Exempted.

- Pure Service/Composite Service (having service portion atleast 75%)provided By any person to CG/SG/LA/Government ENTITY will beExempted.

2. GOVERNMENT SERVICE ( Except PVT):

* Service provided by CG/SG/UT/Local Authority.

- to Non-Business Entity will be Exempted.

- to Business Entity will be taxable. (Unless otherwise specifiedelsewhere)

* Moreover following will be taxable as follows:

(a) - Service By Department of Post,

- By way of speed posts, Express Parcel Post, Life Insurance service,Agency Service.

- to Non-Government will be taxable (to maintain parity with privateplayers)

(b) Service By government in Relation to Aircraft/Vessel (in or outsidethe port or Airport) will be Taxable.

(c) Service by Government by way of transportation of Goods/Passengerwill be taxable.

GOVERNMENT


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3. GARIB BUSINESS ENTITY:

- Service by CG/SG/UT/Local Authority.

- to a Business Entity having Aggregate turnover in PFY only upto thresholdlimit.

- will be Exempted.

Note: Sub-Point a/b/c/of Point (2) will Remain Same.

4. GOVERMENT TO GOVERMRNT:

- Service provided by CG/SG/UT/Local Authority.

- to another CG/SG/UT/Local Authority.

- will be exempted.

Note: Sub-Point a/b/c/of Point (2) will Remain Same.

5. SMALL VALUE GOVERNMENT SERVICE:

- Service provided by CG/SG/UT

- Where the value of such service not more than Rs. 5000.

- In case of continuous supply of service (a service having life of more than 3month & having periodic payment schedule) limit of Rs. 5000 will becomputed on the basis of a Financial year i.e. value in Financial year is uptoRs. 5000 then the service will be exempted.

6. GOVERNMENT GRANT

- Service By “Govt. Entity”

- to CG/SG/UT/LA

- Where consideration received in Form of Grant.

- then it will be Exempted.


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7. LONGTERM LEASE

- Service By S.G.I.D.C./U (State Government Industrial DevelopmentCorporation or by other Entity having 50% or more ownership ofGovernment.

- Service of Granting Long Term Lease (30 years or more) of Industrial plotsor plot for Development of Infrastructure for Financial Business.

8. SPECTRUM:

- Service by CG/SG/UT/LA

- By way allotting spectrum to Business Entity,

- Prior to 01.04.2016

- will be exempted.

9. INDIAN RAILWAY:

- Services by Indian Railway Finance Corporation.

- By way of Leasing of Assets (e.g. Wagon, Coaches, Locos etc.)

- to Indian Railways.

- will be exempted.

10. GOVT. TESTING ETC.:

- Service provided by the CG/SG/UT/Local Authority,

- By way of “Registration Under any Law”, Testing, Calibration, Safty check orCertification Relating to Safety of workers/consumers/public at largeIncluding Fire License.

- Moreover service by way of Licensing, Registration and Analysis or testingof Food Samples supplied by FSSAI to food Business Operator.

11. GST PORTAL:

Service provided by GSTN to CG/SG/UT for implementation of GST will beexempted.


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12. NON-PERFORMANCE :

- On Cancellation (Non-Performance) of Government Contract,

- consideration in the form of fines/liquidated damages payable toCG/SG/UT/Local Authority

- will be exempted from GST.

13. AGRICULTURE:

- Service by CG/SG/UT/Local Authority by way of “assignment of right” touse Natural Resources.

- to Individual Farmer.

- For cultivation of Plant/Rearing of animals For Food, fibre, raw material etc.(Except Horse)

- will be exempted.

14. COAL MINE:

- Service By CG/SG/UT/Local Authority.

- By way of “assignment of Right” to use natural Resources.

- Prior to 01.04.2016.

- will be exempted

15. MOT:

- Service By CG/SG/UT/Local.

- By way of “Deputing” Officers after Office hour or on holidays.

- For Inspection of container stuffing etc. in Relation to Import-ExportCargo.

- On Payment of Merchant Overtime Fee

- will be exempted.


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16. RTI:

Service By way of RTI will be Exempted from GST.

17. ERCC:

- Services supplied by a State Government to Excess Royalty CollectionContractor (ERCC)

- by way of assigning the right to collect royalty on behalf of the StateGovernment on the mineral dispatched by the mining lease holders

- will be exempted.

18. GUARANTEE BY GOVT.

- Service By CG/SG/UT

- to Government Undertaking or PSU’s[Public sector undertaking]

- By way guarantying the Loans.

- taken by Government undertaking or PSU’s

- will be exempted.

1. Electricity:

- Service supplied by “Electricity Distribution Utility (e.g. ElectricityExchange)

- By way of construction, erection, commissioning or Installation ofInfrastructure.

- for Extending Electricity distribution Network.

- upto the tube-well of the farmer or Agriculturist for Agriculture use

- will be exempted.

AGRICULTURE


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2. RICE:

- Service By way of loading, unloading, packing, storage/warehousing of Rice

- will be Exempted.

3. MIINOR FOREST PRODUCE:

- Service by Way of warehousing of minor Forest Produce will be Exempted.

4. WAREHOUSING:

- Service of ware housing/storage of

- Cereals, pulses, fruits, Nuts and Vegetables, spices copra, sugarcane,jaggary, Raw Vegetables, Fibre (such as cotton, flex, jute etc.) Indigo,unmanufactured tobacco, betel NUTS, Tendu Leaves, Coffee & tea.

- will be Exempted.

5. ELECTRICITY

- Transmission to Distribution of Electricity

- by transmission utilities (eg. Power Grid, Electricity Exchange, ElectricityCompanies) - will be Exempted.

6. FUMIGATION

- Service by way of fumigation in a warehouse.

- where agriculture produced are stored

- will be Exempted.

7. AGRICULTURE RELATED

Services relating 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 similarproducts or agricultural produce by way of-

(a) Agricultural operations directly related to production of any agriculturalproduce including cultivation, harvesting, threshing, plant protection ortesting;


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(b) Supply of farm labour;

(c) Processes carried out at an agricultural farm including tending, pruning,cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing,sorting, grading, cooling or bulk packaging and such like operations which donot alter the essential characteristics of agricultural produce but make itonly marketable for the primary market;

(d) Renting or leasing of agro machinery or vacant land with or without astructure incidental to its use;

(e) Loading, unloading, packing, storage or warehousing of agricultural produce;

(f) Agricultural extension services;

(g) Services by any Agricultural Produce Marketing Committee or Board orservices provided by a commission agent for sale or purchase of agriculturalproduce.

(h) Services by way of fumigation in a warehouse of agricultural produce.

8. JOBWORK

- Carrying out “An Intermediate Production Process”.

- as Job Work

- In Relation to Cultivation of plant & Rearing of animals (Except horse),

And agriculture produce

- will be Exempted

Question. Whether custom milling of paddy by Rice millers is liable to GST or isexempted under S. No 55 of Notification 12/2017.

Answer. It is clarified that milling of paddy into rice is not eligible forexemption under S. No 55.Therefore, it is hereby clarified that milling of paddyinto rice on job work basis, is liable to GST at the rate of 5%, on the processingcharges (and not on the entire value of rice).


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9. INSEMINATION

- Service of Artificial Insemination.

- of Live Stock (except horse)

- will be Exempted.

10. SLAUGHTERING

Service of Way of Slaughtering of Animals.

11. FRUITS & VEGETABLES

- Services by way of pre-conditioning, precooling, ripening, waxing, retailpacking, labelling of fruits and vegetables

- which do not change or alter the essential characteristics of the said fruitsor vegetables

- will be exempted.

12. NCED

- Service Provided by “National Centre for cold chain development.

- By way of “Cold Chain Knowledge” Distribution

- will be Exempted.

1. ZOO & PROTECTED MONUMENTS:

- Admission/Entry fees of a

- Museum, National Park, Wild Life Sanctuary, Tiger Reserve, ZOO andProtected Monuments

- will be Exempted.

ENTERTAINMENT/ENTRY FEES


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2. ART, CULTURE, SPORTS

- Service of training/Coaching in Re-creational Activities Relating to

- Art, Culture

- Sports by Recognised Charitable Trust

- will be Exempted.

3. ENTERTAINMENT

“Services by way of right to admission to-

(a) circus, dance, or theatrical performance including drama or ballet;

(b) award function, concert, pageant, musical performance or any sportingevent other than a recognised sporting event;

(c) Recognised sporting event;

(d) Planetarium, where the consideration for right to admission to the eventsor places as referred to in items (a), (b), (c) or (d) above is not more thanRs. 500 per person.

4. FIFA (MEN/WOMEN)

- Entry Fee (Ticket to FIFA Event (U-17 World Cup 2017)

- Will be Exempted.

5. FOLK/CLERICAL ART

- Service by Folk/Classical Artist

- By Way of Folk/Clerical Performance

- In Relation of “music”/Dance/Theatre

- Where consideration charged is not more than Rs. 1,50,000/-

- will be exempted.

NOTE: Where such artist provides service as Brand Ambassador then it will betaxable.


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1. CONSTRUCTION (PMAY):Services provided by way of

Pure labour contracts of construction, erection, commissioning, installation,completion, fitting out, repair, maintenance, renovation, or alteration of a civilstructure or any other original works

pertaining to the beneficiary-led individual house construction or enhancement

under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.

2. CONSTRUCTION (KOTHI):- Service by way of

- Pure Labour contracts (i.e. only service component i.e. Not a compositesupply having component of Goods).

- of Construction, commission, Erection, Installation of original work (Nowwork).

- of a “SINGLE” Residential UNIT will be Exempted.

Note: Above service with Respect to “Residential Complex i.e. a Building Comprisingmore than one UNIT will be taxable.

3. SHORT TERM ACCOMODTION:- Service By Hotel, Inn, Guest house etc.

- Intended for sort term Residential purpose.

- having value of a UNIT (Room) below or upto Rs. 1000

- will be Exempted.

4. LONG TERM ACCOMODATION:- Service By way of renting of Residential Dwelling (i.e. Intended for long

term Residential purpose)

- For Residence purpose.

- will be Exempted.

RENTING, ACCOMODARTION @ IMMOVABLEPROPERTY


69

Circular No. 44/18/2018: Issue Related to Taxability of ‘Tenancy Rights’under GST

- Transfer of tenancy rights to a new tenant against consideration in theform of tenancy premium is taxable.

- However, renting of residential dwelling for use as a residence is exempt.

- Hence, grant of tenancy rights in a residential dwelling for use asresidence dwelling against tenancy premium or periodic rent or both isexempt.

- As regards services provided by outgoing tenant by way of surrenderingthe tenancy rights against consideration in the form of a portion oftenancy premium is liable to GST.

5. TDR/FSI:

- Service by way of transfer of development rights (herein refer TDR) orFloor Space Index (FSI)

- for construction of residential apartments by a promoter in a project,intended for sale to a buyer, wholly or partly,

- except where the entire consideration has been received after issuance ofcompletion certificate, where required, by the competent authority or afterits first occupation, whichever is earlier.

6. Long Term Lease:

- Premium, salami, cost, price, development charges or by any other name payablein respect of service by way of granting of long term lease of thirty years, ormore,

- for construction of residential apartments by a promoter in a project, intendedfor sale to a buyer, wholly or partly,

- except where the entire consideration has been received after issuance ofcompletion certificate, where required, by the competent authority or after itsfirst occupation, whichever is earlier.


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1. Jal, Thal, Vayuu:

Analysis

INLAND WATER-WAYS: eg. BOAT : exempted

OTHER WATER- WAYS: (exempted if for public transport)

(Taxable)

Public Transport(exempted)

Special Bus( taxable)Tourist Vehicle(Taxable)

(taxable)

(exempted)

*Radio Taxi: taxable*School Bus: exempted (SN 66)

(taxable)

(Exempted)

: METRO, MONO, TRAM (exempted)

TRANSPORTATION OF PASSENEGER

JAL

THAL

ContractCarriageROAD

StageCarriage

AC

Non-AC

RAIL INDIAN RAIL

OTHERS

FirstClass/AC

Others:

AC

Non-AC


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NER = Exempted

RCS – GAP FUNDING by Government = exempted

GAP FUNDING EXEMPTED

Fly under ‘RCS’

Fare : Rs. 2500/- Common MANPer Hour (MAX)

* No Tax on ATF* No Navigation Charges* No Landing charges.

2. Embassy:

- Service By “Foreign Diplomatic Mission” i.e. Embassy.

- will be Exempted (e.g. Visa Fees)

3. DRIVING LICENSE/PASSPORT etc.:

- Service By CG/SG/UT/Local Authority.

- By way of issuance of

- Passport, VISA (On Arrival), Driving License, Birth Certificate, DeathCertificate.

- will be Exempted.

VAYU

GOVT

AIR INDIA

SPICE JET

INDIGO etc.


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4. TRANSPORTATION OF GOODS

(Exempted)

(taxable )

(taxable)

Service of Transportation of goods by aircraft or vessel in relation toexport of Goods exempted from GST. Moreover service of transportation ofgoods by air from outside India to India is also exempted.

1. Old Age home:

- Service By CG/SG/Recognised TRUST.

- By Running Old Age home.

- to its Residents (60 years or more)

- Where consideration is upto Rs. 25000 (Including All) per month permember.

- will be Exempted.

JAL

INLAND WATER-WAYS

OTHERS

VAYU

THAL

BY RAIL

BY ROAD

G.T.A. &Courier

(Taxable)

OTHERS(Exempted)

SOCIAL WELFARE


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2. Fair Price Shop:

- Service By Fair Price shops (Rashan Ki Sarkari Dukan)

- to CG/SG/UT

- By way of Sale of food grains, Kerosene etc to public

- and Received commission from Government

- then such commission will be exempted.

3. NPO’s:

Service by an unincorporated body or a non- profit entity registered under any lawfor the time being in force, to its own members by way of reimbursement ofcharges or share of contribution –

(a) As a trade union;

(b) For the provision of carrying out any activity which is exempt from the levy ofGoods and service Tax; or

(c) Up to an amount of Rs.7500 per month per member for sourcing of goods orservices from a third person for the common use of its members in a housingsociety or a residential complex.

Note-1 Where contribution is more than Rs. 7500 Say 9000 than whole amount ofRs. 9000 will be Taxable & RWA Eligible to book ITC as Input/Capitalgoods or Input services.

Note-2 Member counting will be based on Number of Flat/Home & Not on thebasis of Number of owners.

Example:

- Mr. A. owned 2 Flats = then it will be treated as 2 members.

- Mr. A & Mrs. A jointly owned a Flat then it will be called as 1 Flat.


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4. NPO: (2)

Services provided by an unincorporated body or a non-profit entity registeredunder any law for the time being in force, engaged in,-

(i) Activities relating to the welfare of industrial or agricultural labour orfarmers; or

(ii) Promotion of trade, commerce, industry, agriculture, art, science, literature,culture, sports, education, social welfare, charitable activities andprotection of environment,

to its own members against consideration in the form of membership fee upto anamount of one thousand rupees (Rs 1000/-) per member per year.

1. RBI: Services by RBI will be Exempted.

2. Interest/forex:

(a) Interest on “Loan/Advance/Deposits” will be Exempted. Moreover Discounton Bill Discounting will be Exempted.

Note: Interest involve in credit card service will be Taxable.

(b) Commission on – Sale – purchase of foreign currency amongst Bank &Authorised dealers & Vice-Versa will be exempted.

3. JAN DHAN YOJANA

- Service by Banking company to Account holder of “Basic Saving Bank Deposit”Under “PM Jan Dhan Yojana”

- Will be exempted.

4. CARD PROCESSING

- Service By way of “Card Transaction Processing” By Bank.

BANKING


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- Where transaction Amount is upto Rs. 2000.

- Then “Bank Charge with Respect to such transaction will be Exempted.

[CARD = Credit Card, Debit Card & Other Cards]

Example:

Transaction Value Transaction Charges@ 2%

GST on Transactioncharges

Rs. 500 Rs. 10 Exempted

Rs. 1500 Rs. 30 Exempted

Rs. 2500 Rs. 50 Taxable

Rs. 10,000 Rs. 200 Taxable

5. Agency Service:

Services by the following persons in Respective Capacities –

(a) Business facilitator or a business correspondent to a banking company withrespect to accounts in its rural area branch;

(b) Any person as an intermediary to a business facilitator or a businesscorrespondent with respect to services mentioned in entry (a); or

(c) Business facilitator or a business correspondent to an insurance company ina rural area.

6. IFS

Services by an intermediary of financial services:


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Located in a multi services SEZ with International Financial Services Centre(IFSC) status

to a customer located outside India for international financial services

in currencies other than Indian rupees (INR).

1. Annuity:

Services of life insurance business provided by way of annuity under the NationalPension System regulated by the Pension Fund Regulatory and DevelopmentAuthority of India.

2. Group Insurance:

(a) 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.

(b) Services of life insurance provided or agreed to be provided:

by the Naval Group Insurance Fund

to the personnel of Coast Guard

under the Group Insurance Schemes of the Central Government.

(c) Services of life insurance provided or agreed to be provided by the CentralArmed Police Forces (under Ministry of Home Affairs) Group InsuranceFunds to their members under the Group Insurance Schemes of theconcerned Central Armed Police Force.

INSURANCE


77

3. Government Bodies:

Service provided By following Government bodies will be Exempted.

ESIC * Employee State Insurance Corporation.

EPFO * Employee Provident Fund Organisation.

CM-PFO * Coal Mines Provident Fund Organisation.

NPS * National Pension Scheme

IRDA * Insurance Regulatory & Development Authority of INDIA.

SEBI * Security and Exchange Board of INDIA.

4. General Insurance:

- General Insurance Service under specified Insurance scheme which isavailable only to people covered under “Below poverty line” (BPL) orMarginally upto BPL Category

- will be Exempted.

Specified Scheme:

- HUT Insurance Scheme

- Jan Arogya Bima Policy

- P.M. Suraksha Bima Yojana

- Nirmaya Health Insurance Scheme Scheme

- Bangla SHASYA Bima Yojana

- etc.

5. Life Insurance:

- Life Insurance Service under specified Insurance Scheme which is availableto person fall under BPL Category or marginally upto BPL Category etc.

- Will be Exempted.


78

Specified Insurance Scheme:

* Jan Shree Bima Yojana

* Aam Aadmi Bima Yojana

* Life Micro Insurance product” (where Maximum cover is upto Rs. 200000)

* Varishtha Pension Bima Yojana

* PM Jan Dhan Yojana

* PM Vaya Vandan Yojana

6. Premium paid by Government:

- Service By way of Insurance

- Where total premium is paid by CG/SG/UT

- will be Exempted (e.g. Insurance of Government Employees).

7. Re-Insurance:

- Service By way of Re-Insurance of Insurance Service specified under PointNumber 4, 5, 6.

- will also be Exempted.

8. Atal Pension:

- Service under “ATAL Pension Yojana”

- Will be Exempted.

9. State Pension Scheme:

- Service under “State Pension Yojana”

- will be Exempted.


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1. Transfer of Going Concern:

- Service way of transfer of going concern

- will be Exempted.

2. Hiring of Motor Vehicle:

(a) - Service of Hiring of Motor Vehicle having capacity of 12 plus passenger

- to State Transport Undertaking.

- will be Exempted.

(aa) - Service of hiring of “E-Vehicle having capacity of 12 plus passenger

- to Local Authority.

- will be Exempted.

(b) - Service of hiring of “Goods Transport Vehicle”

- to State Transport Agency.

- will be Exempted.

(c) - Service of Hiring of Motor Vehicle (For Transport of Student, Faculty,Staff)

- to a person who is providing service

- to an Educational Institute (as specified earlier) i.e. school, college,Institution

3. Toll:

- Service By way of “Access to a Road or a Bridge.

- On Payment of Toll Charges/Annuity.

- will be Exempted.

BUSINESS RELATED


80

4. Incubator:

- Service By Incubator (R&D Centres e.g. Amity Noida, ITI kharagpur, NDRIKarnal)

- to Incubatee (i.e. Start ups)

- By way of providing space/capital/coaching/Networking etc.

- will be Exempted upto 3 years subject to condition.

Conditions:

(i) Turnover in P.F.Y : Limited to Rs. 50 lakhs.

(ii) Maximum Exemption in Current Financial: upto Rs. 50 lakhs.

Year 1 Year 2 Year 3 Year 4 Year

T/O

GST

20 L 30 L 40 L 50 L

T/O

GST

55 L 25 L 40 L 30 L

T/O

GST

20 L 55 L 40 L 15 L

5. Incubator:

- Service By an Incubator will be exempted.

6. Legal Service:

- Service provided by Arbitral Tribunal/Advocates [Individual (Junior/Senior)partnership Firm of Advocate]


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- to a Non-Business Entity Including Government Department or

- to a Business Entity having turnover in PFY limited to Rs. 10 lakh/20 lakh/40Lakh

- will be Exempted.

Moreover:

- Legal Service By Advocate (Individual (Junior/Senior) Partnership firm ofAdvocate)

- to AN Advocate or Partnership firm of Advocate

- will also be Exempted.

Legal Service Means:

- any Service provided in Relation to

- Advice/Consultancy/Assistance

- and Includes Representation service.

7. Business Exhibition:

- Service By an organiser (e.g. footwear association of INDIA).

- to any person (e.g. Footwear Manufacturer

- IN Respect of a Business Exibition held outside INDIA.


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Additional Exemption Under IGST Act, 2017: N/N : 9/2017 (IGST)

1. Import of Service:

- Where Location of supplier is outside India.

- and location of Recepient is in INDIA and Recipient is –

* Government (CG/SG/UT/LA/Governmental Authority)

* Individual (Using Service for Personal use)

* Recognised Charitable Trust.

* RBI (service Related to forex services)

* Embassy (Use for official/personal purpose)

* United Nations/International organisation (For Official use)

* Special Economic Zone (Developer/Unit)

- Then such import of services will be Exempted.

2. - Where supplier is located outside India & Recepient is also located outsideIndia.

- then GST will be Exempted.

- However Where”

- Services is of “Transportation of Goods” from outside INDIA toINDIA.

- Supplier (Shipping company) located outside India.

- Recepient (the person who ‘paid freight) located outside INDIA

- Then this service will be taxable.

3. Where supplier of service Located in India & Recipient Belongs to outsideINDIA.

(a) - Service provided by Indian Tour Operator

- to a foreign Tourist


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- In Relation to a Tour

- Conducted wholly outside INDIA.

- will be exempted.

(b) - Service supplied by Branch Office/Head Office

- to any head office/Branch office of that person Located outsideIndia.

- will be Exempted.

(c) - Service provided By an Indian “Intermediary

- and Location of supplier & Recepient of Goods is outside India.

- will be Exempted.

Note:

Following Documents need to be maintained –

- Bill of Loading

- Copy of Contract

- etc.

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Valuation

1. The value of Taxable supply of Goods/Service will be the PRICE Actually paid orpayable for the said supply which is also known as “Transaction” Value.

2. Above Transaction value shall be adjusted with following –

(a) ALL OTHER TAXES: ANY Tax/Duty/CESS will be Included in TransactionValue Except GST & Compensation CESS will be includible.

(b) SUPPLIER’S LIABILITY: ANY amount which is a liability of supplier but paidby Recepient (e.g. Goods Testing Charges) will be includible.

(c) INCIDENTAL EXPENSES: Any Incidental Expenses e.g. packing,commission, Loading, Unloading etc. will be Includible.

(d) INTEREST/LATE FEE: Any Interest/Late Fee/Penalty for DelayedPayment or Deferred payment will be Includible.

Note: Interest on Loan/Advance/Deposit is Exempted So No Question ofInclusion.

7

SECTION: 15 VALUE OF TAXABLE SUPPLIES

CA. Raj Kumar Chapter 7 – Valuation

85

Situation Clarification

(1): X sells a mobile phone to Y. The cost ofmobile phone is ` 40,000/-. However, X givesY an option to pay in installments, ` 11,000/-every month before 10th day of the followingmonth, over next four months (` 11,000/- *4= ` 44,000/- ). Further, as per the contract,if there is any delay in payment by Y beyondthe scheduled date, Y would be liable to payadditional/penal interest amounting to` 500/- per month for the delay. In someinstances, X is charging Y ` 40,000/- for themobile and is separately issuing anotherinvoice for providing the services ofextending loans to Y, the consideration forwhich is the interest of 2.5% per month andan additional/penal interest amounting to` 500/- per month for each delay in payment.

As per the provisions of section15(2) of the CGST Act, the amount ofpenal interest is to be included in thevalue of supply. The transactionbetween X and Y is for supply of taxablegoods i.e. mobile phone. Accordingly, thepenal interest would be taxable as itwould be included in the value of themobile, irrespective of the manner ofinvoicing.

(2) X sells a mobile phone to Y. The cost ofmobile phone is ` 40,000/-. Y has the optionto avail a loan at interest of 2.5% per monthfor purchasing the mobile from M/s ABC Ltd.The terms of the loan from M/s ABC Ltd.allows Y a period of four months to repay theloan and an additional/penal interest @ 1.25%per month for any delay in payment.

The additional/penal interest is chargedfor a transaction between Y and M/sABC Ltd., and the same is gettingcovered under Sl. No. 27 of notificationNo. 12/2017-Accordingly, in this casethe 'penal interest' charged thereonon a transaction between Y and M/s ABCLtd. would not be subject to GST, as thesame would be covered undernotification No. 12/2017. The value ofsupply of mobile by X to Y would be `40,000/- for the purpose of levy of GST.

Circular No. 102/21/2019: Clarification regardingapplicability of GST on additional/penal interest

Chapter 7 – Valuation CA. Raj Kumar

86

(e) SUBSIDY

- Where subsidy is given by the Govt.

- to the supplier and

- linked to unit price of the supply.

- will be Excludible.

And where all the 3 conditions related to subsidy is not satisfied then it willbe “Includible in Transaction value”

(f) DISCOUNT:

Manner of offering Discount:

Discount can be offered in 2 ways.

- One is “Reduction in Price”

- another is Increasing in Quantity.

Time of Discount:

Discount can Actually be passed at 2 times.

- One is Pre-supply or at the time of supply.

- another is Post Supply.

Type of Discount:

There are Various types of Discount which are as follows:-

- Cash Discount.

- Quantity Discount

- Bulk discount.

- Corporate Discount

- Holi/Diwali/Discount


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- Buy one get one free

- Target Based Discount (Value or Quantity)

- Secondary Discount

- etc.

Discount can be offered by as pre-supply or Post supply Discount.

Pre Supply Discount Post Supply Discount

In case pre-supplyDiscount it isautomatically in Buildin the Invoice and it isExcludible.

Post supply discount will Also be Excludible By way of issuingcredit note at later date i.e. GST Liability of supplier will bereduced on the Basis of Credit Note Subject to conditions.

Condition:

There must be an agreement between supplier &Recipient at the time of supply or Before there offregarding “Post Supply Discount”.

When credit note issued By supplier at later dateRecipient must corresponding ITC on the Basis of suchCredit Note.

Note: If both the conditions are not satisfied than suppliercan not reduce the Related tax Liability even on the Basis ofCredit Note.

Note (1) If Transaction value is not available/Reliable – then go for valuation Rules.

Note: (2): Assessable value = Tariff value:

Government has power to fix value of Goods/Service for GST/Cess calculationpurpose

Where such value is fixed with Respect to some goods/service than valuation ofsuch goods/service will be Based on such value.


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Levy of GST on the service of display of name or placing of name plates of thedonor in the premises of charitable organisation receiving donation or gifts from

individual donors

Issue: Whether GST is applicable on donations or gifts received from individual donorsby charitable organisation involved in advancement of religion, spirituality or yoga whichis acknowledged by them by placing name plates in the name of the individual donor.

Clarification: Some examples of cases where there would be no taxable supply are asfollows:-

(a) “Good wishes from Mr. Rajesh” printed underneath a digital blackboard donated byMr. Rajesh to a charitable Yoga institution.

(b) “Donated by Smt. Malati Devi in the memory of her father” written on the door orfloor of a room or any part of a temple complex which was constructed from suchdonation.

In each of these examples, it may be noticed that there is no reference or mention ofany business activity of the donor which otherwise would have got advertised. Thuswhere all the three conditions are satisfied namely the gift or donation is made to acharitable organization, the payment has the character of gift or donation and thepurpose is philanthropic (i.e. it leads to no commercial gain) and not advertisement, GSTis not leviable.

Clarifications


89

TEST YOUR SELF

Question 1

A supply priced at ` 2,000 is made, with a credit period of 1 month for payment.Thereafter, interest of 12% is chargeable. The payment is received after the lapse oftwo months from the date of supply. Whether such interest will be included or not?

Answer

The amount of 12% p.a. (i.e. 1% per month) on ` 2,000 for one month after the freecredit period is ` 20. Such interest will be added to the value and thus, the value ofsupply will work out to be ` 2,020, assuming the interest to be exclusive of GST.

Question 2

The selling price of a notebook is ` 50. For notebooks sold to students in Governmentschools, a company uses its CSR funds to pay the seller ` 30, so that the students payonly ` 20 per notebook. What is the treatment of such subsidy?

Answer

The value of the notebook will be ` 50, as this is a non-government subsidy. If thesame subsidy is paid by the Central Government or State Government, the value of thenotebook would be ` 20.

Question 3

Royal Biscuit Co. gives a discount of 30% on the list price to its distributors. Thus, fora carton of Spice bisk, in the invoice the list price is mentioned as ` 200, on which adiscount of 30% is given to arrive at the final price of ` 140. How can u deal with suchdiscount?

Answer

The value is ` 140, as the discount is allowed at the time of supply and shown in theinvoice.


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Question 4

The agreement of Raju Electrical Appliances with its dealers is that purchase of ricecookers over 1000 pieces in the Diwali month will entitle them to discount of 5% percooker. Therefore, the quantum of discount can be determined only at the end of Diwalimonth. How can u deal with such discount?

Answer

However, since the agreement relating to discount was in existence at the time ofsupply, and the discount can be worked out for each invoice, such post supply discountwill be allowed as a deduction from the value of supply of rice cookers.

Raju Electrical Appliances can issue credit note for 5% of the value of goods along withGST and claim adjustment of excess tax paid. The dealer must reverse theproportionate input tax credit on the relevant stock to bring it in line with the reducedtax.

Question 5

Pink and Blue Pvt. Ltd. (PBPL) sold goods to Orange Pvt. Ltd. (OPL) on 15th January at` 50,000 (exclusive of taxes and discounts) and charged ` 9,000 as IGST @ 18%. Theterms of supply stipulated that discount @ 2% will be given to OPL if it makes thepayment within one month of the supply. OPL avails the input tax credit of ` 9,000 inthe month of January and makes the payment for the goods on 10th February. What isthe treatment of such discount as per section 15.

Answer

PBPL issues credit note for ` 1180 [` 1,000 for value of discount and ` 180 forproportionate IGST leviable thereon] to OPL on 11th February. After receiving creditnote, OPL reverses the input tax credit of ` 180 attributable to the discount given bythe PBPL. PBPL can reduce its GST liability of the month of February by ` 180. OPLwould have paid ` 57,820 (` 50,000 + ` 9,000 - ` 1,000 - ` 180) to PBPL on 10thFebruary.

Question 6

In the above example, whether the answer will be different if the terms of supply didnot provide for discount @ 2% for payment within one month but PBPL offers suchdiscount to OPL at the time of payment after negotiation?


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Answer

The discount will not be allowed as a deduction from the value. PBPL will issue acommercial credit note for only the value of discount, i.e. for ` 1,000. OPL will notreverse any input tax credit and PBPL will also not be able to reduce its GST liabilityfor the month of February. In this case, OPL would pay ` 58,000 (` 50,000 +9,000 - `1,000) to PBPL on 10th February.

Question 7

A company announces turnover discounts after reviewing dealer performance during theyear. The discounts are based on performance slabs and are given as cash-back. Whatis the treatment of such discount?

Answer

As these discounts were not known at the time of supply of the goods, they will not bededucted from value of those goods. Hence, the company will not be able to adjustexcess tax paid from its tax liability.

Question 8: Black and White Pvt. Ltd. has provided the following particulars relating togoods sold by it to Colourful Pvt. Ltd.

List price of the goods exclusive of taxes and discounts 50000

Tax levied by the municipal authority on the sale of such goods 5000

Packing charges not included in price above 1000

Black and White Pvt. Ltd. received ` 2000 as a subsidy from a NGO on sale of suchgoods. The price of ` 50,000 of the goods is after considering such subsidy. Black andWhite Ltd. offers 2% discount on the list price of the goods which is recorded in theinvoice for the goods.

Determine the value of taxable supply made by Black and White Pvt. Ltd.


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Answer

Computation of value of taxable supply

Particulars `

List price of the goods (exclusive of taxes and discounts) 50,000

Tax levied by Municipal Authority on the sale of such goods[Includible in the value as per section 15(2)(a)]

5,000

Packing charges [Includible in the value as per section 15(2)(c)] 1,000

Subsidy received from a non-Government body [Since subsidy isreceived from a non-Government body, the same is included inthe value in terms of section 15(2)(e)]

2,000

Total 58,000

Less: Discount @ 2% on ` 50,000 [Since discount is known atthe time of supply and recorded in invoice, it is deductible fromthe value in terms of section 15(3)(a)]

1,000

Value of taxable supply 57,000

Question 9

Samriddhi Advertisers conceptualized and designed the advertising campaign for anew product launched by New Moon Pvt Ltd. for a consideration of `5,00,000.Samriddhi Advertisers owed `20,000 to one of its vendors in relation to theadvertising service provided by it to New Moon Pvt Ltd. Such liability of SamriddhiAdvertisers was discharged by New Moon Pvt Ltd. New Moon Pvt Ltd. delayed thepayment of consideration and thus, paid `15,000 as interest. Assume the rate ofGST to be18%.

Determine the value of taxable supply made by Samriddhi Advertisers.


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Answer

Computation of value of taxable supply

Particulars `

Service charges 5,00,000

Payment made by New Moon Pvt. Ltd to vendor of SamriddhiAdvertisers [Liability of the supplier being discharged by therecipient, is includible in the value in terms of section15(2)(b)]

20,000

Interest for delay in payment of consideration [Includible inthe value in terms of section 15(2)(d) – Refer note below](rounded off)

12,712

Value of taxable supply 5,32,712

Note: The interest for delay in payment of consideration will be includible in the valueof supply but the time of supply of such interest will be the date when such interest isreceived in terms of section 13(6). Such interest has been assumed to be inclusive ofGST and thus, the value has been computed by making back calculations.


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Analysis of CONCEPT of Composition schemeWhat is composition scheme: It is an alternate method to pay tax. It is an optionalscheme.

6 categories of persons are not eligible for the scheme:(1) Person making inter-state supply of goods. [eg. one state to another, export of

goods]

(2) Supplier of any service OTHER than

(a) Restaurant services

(b) Limited value services along with main business. [Maximum value: 10 % ofturnover within the state/UT or ` 5,00,000 whichever is higher ] ie if valueof these services exceed the maximum limit then the person not eligible forthe scheme

Note: Interest received on extending deposit loan and advances shall beignored completely.

(3) Supplier of non taxable goods.

(4) The person who supply goods through E commerce operator.

(5) Manufacturer of specified goods. [Pan masala, tobacco, ice cream, Aerated Water]

(6) Casual taxable person and NR. (Banjaare)

……………………………………………………………………………………………………………………………………………………………………


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If a person not fall in above five categories then proceeds …..

PFY CFY

If Aggregateturnover (alloutwardsupplies ietaxable,exempted etc):does notexceeds to` 75 Lakh/150lakh: then theperson will beeligible forcompositionscheme in CFY.

` 75 lakh limitapplicable on 8states:

AP, M-M-M,NST, UK

` 150 lakhlimit applicableon:

JK, HP, Assamand rest ofthe states&UT

Note: Interestreceived onextendingdeposit loan

Inward supply Outward Supplies

(if any inward supply taken GST to be paid as per compositeUnder RCM then compositerates of GST toWill not beapplicable butIt will be paid as per normal rate of tax.)

A Manufacturer 1% Of Turnoverwith in thestate (Allsupply ;taxable,

exempted)

B Restaurantservice

5% Of Turnoverwith in thestate (Allsupply ;taxable,

exempted)

C Other supplierof

goods/services

1% Of Taxableturnover within the state

(1) Bill of supply: Such dealer shall issue BILL OF supply insteadof invoice and can-not charge GST from the customer and compositetax will not be input tax for buyer and accordingly buyer will not beeligible for ITC.

Registeredperson

(Voluntarilyor otherwise)

CompositeDealer (NOITC shall be

allowed)


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and advancesshall beignoredcompletely.

(2) PAN based scheme: It is PAN based scheme applicable for allregistrations/taxable persons registered under same PAN.

(3) Upto limit only: In CFY after aggregate turnover of ` 150/` 75 lakhs; the scheme will be lapsed and the person required to paytax as per normal rate of taxes.

(4) Return: Quarterly return and payments by 18th of next monthand minimum books of accounts and show off as he is a compositedealer.

(5) Fraudulent intent: If the proper officer has reasons tobelieve that a taxable person has paid tax under composition schemeeven though not being eligible, such person shall, in addition to anytax that may be payable by him under regular scheme, be liable toa penalty.

(6) Its for outward supplies: Benefit of composition scheme shallbe allowed only in respect of OUTWARD supplies and not on inwardsupplies ie if a composite dealer takes inward supplies on which RCMis applicable that mean composite dealer liable to pay tax togovernment on such inward supplies then benefit of compositionsceme will not be available ie composite dealer liable to pay tax asper normal rate of taxes.

(7) He shall mention the words “composition taxable person, noteligible to collect tax on supplies” at the top of the bill of supplyissued by him; and

(8) He shall mention the words “composition taxable person” onevery notice or signboard displayed at a prominent place at hisprincipal place of business and at every additional place or places ofbusiness


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Q.1 Mr X, a manufacturer submit the following details for PFY 18 -19. Determine whetherhe is eligible for composition scheme for CFY (19-20)

1. value of intra state supply under NCM 105,00,000

2. intra state exempted supply 13,00,000

3. intra state supply covered under 100% E/N 32,00,000

4. value of inward supplies covered under RCM 2,50,000

5. value of inward supplies covered under NCM 3,00,000

Ans:

1. value of intra state supply under NCM 105,00,000

2. intra state exempted supply 13,00,000

3. intra state supply covered under 100% E/N 32,00,000

4. value of inward supplies covered under RCM -

5. value of inward supplies covered under NCM -

Aggregate turnover 150,00,000

Mr X is eligible for composition scheme as aggregate turnover does not exceed ` 150lakh

Examples:


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Q.2 Mr X, running a Restaurant, submit the following details for PFY 18 -19. Determinewhether he is eligible for composition scheme for CFY (19-20).

Particulars Value inLakhs

Value in lakhs Valuein lakhs

Value of Restaurant services 130 130 130

Interest received from banks 30 30 30

Other services : Renting of commercialproperty

10 15 25

Ans:


Value in lakhs Value inlakhs

Value of Restaurant services 130 130 130

Interest received from banks - - -

Other services : Renting of commercialproperty

10 15 25

Eligibility Eligible asaggregate

turnover is140 lakh.

Not eligibleas otherservices

exceeds themax amount

Noteligible as

otherservicesexceedsthe maxamount


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Q.3 Mr X, is a manufacturer submit the following details for PFY 18 -19. Determinewhether he is eligible for composition scheme for CFY (19-20).



Value of pen manufactured and sold 130 130 130

Interest received from banks 30 30 30

Sale of pan masala manufactured 10 - -

Other services : Renting of commercialproperty value of room ` 900

10 12 15

Ans:


Value inlakhs

Value inlakhs

Value of pen sold (intra) 130 130

Interest received from banks - -

Sale of pan masala (intra) 10 - -


12 15

Eligibility Not eligible ashe is engaged

inmanufacturing

pan masala

Eligible asAggregate

turnover doesnot exceeds` 150 lakh

Noteligible as

otherservicesexceeds

10 % limit


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Q.4 Mr X, is a trader submit the following details for PFY 18 -19. Determine whether heis eligible for composition scheme for CFY (19-20).



Value of pen sold (intra) 130 130 130

Sale of pen inter state (export to USA) 10 - -

Sale of nil rated goods 5 - -


- 15 5

Petrol - - 5

Ans:



Value of pen sold (intra) 130 130 130

Sale of pen inter state (export to USA) 10 - -

Sale of nil rated goods (intra) 5 5 -


- 15 5

Petrol - - 5


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Eligibility Not eligibleas making

inter statesupply of

goods

Not eligibleas otherservices

exceeds 10%

NotEligible

Q.5 Mr X eligible for composition scheme in CFY. He manufactured and sold thefollowings with in the state as follows. Compute the GST amount.

Particulars Value in lakhs

Sale of chocolates (GST RATE 28%) 10

Sale of nil rated goods 30

Ans:

Particulars Value in lakhs

Sale of chocolates (GST RATE 28%) 10

Sale of nil rated goods 30

Turnover in the state 40

Amount of GST @ 1% 0.4

Q.6 Mr. X, a manufacturer (eligible for composition scheme), submit the following detailsfor CFY 19 -20. Determine the GST liability for current Financial Year.

1. Value of intra state supply under NCM chargeable to GST @ 18% 55,00,000

2. Intra state nil rated supply 13,00,000


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3. Intra state supply covered under 100% E/N 32,00,000

4. Value of inward supplies covered under RCM chargeable to GST @18%

2,50,000

5. value of inward supplies covered under NCM chargeable to GST @5%

3,00,000

Ans. Computation of GST

Particulars Turnover Tax rate Amount of GSTunder

compositionscheme

1. Value of intra state supply underNCM chargeable to GST @ 18%

55,00,000 Compositerate 1%

55,000

2. Intra state nil rated supply 13,00,000 Compositerate 1%

13,000

3. Intra state supply covered under100% E/N

32,00,000 Compositerate 1%

32,000

4. Value of inward supplies coveredunder RCM chargeable to GST @18%

2,50,000 Normal rate18%

45,000

5. value of inward supplies coveredunder NCM chargeable to GST @ 5%

3,00,000 - To be paid bysupplier


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MAIN BODY OF SCHEME:

- An Eligible person whose Aggregate Turnover in PFY was limited to ` 50 Lakh

- Will be Eligible to pay tax under this scheme @ 3% + 3% on first supplies ofGoods/Service made from 1st April of CFY upto ` 50 Lakhs.

Example: Business start on 1-4-19 [Normal Rate = 18%, Composite Rate = 3%+3% =6%]

FY TURNOVER ELIGIBILITYOF SCHEME

TAXABLEVALUE

TAX

19-20 45 Lakh Composition

First ` 20 lakh

(Threshold limit)

Balance ` 25 lakh

` 25Lakh ` 1.5Lakh

20-21 60 Lakh Composition Up to 50 Lakh 3 Lakh

Regular 10 Lakh 1.8 Lakhs

21-22 30 Lakh Regular 30 Lakh 5.4 Lakhs

22-23 40 Lakh Composition 40 Lakh 2.4 Lakhs

NOTE: Interest on Loan/Deposit/Advances should be completely Ignored.

COMPOSITION SCHEME (SERVICE FOCUSED)NOTIFICATION NO: 2/2019


104

Who is Not Eligible for the Scheme:

(i) Whose Aggregate Turnover Exceeds ` 50 Lakhs in PFY.

(ii) Who is engaged in Making

- Non Taxable Supplies

- Inter State Supplies

- 4 Specified Goods Supplied including aerated water

- Supply through E-Commerce Operator

(iii) Who is a casual Taxable Person?

(iv) Who is eligible to pay tax under original composition scheme.

Q: A person Engaged in Supplying goods on well on service but service portion exceedsthe limit specifies under original Notification (` 5 Lakhs or 10% whichever isHigher) whether such person will be Eligible for this scheme.

Ans: YES, Subject to fulfillment of Other Conditions.


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(i) PANBASED:

The scheme is Pan Based i.e. this scheme or Regular Scheme, it will be decided forAll premises/registrations under same PAN i.e. All Premises/registrations EitherUnder this scheme or under Regular Scheme.

(ii) BILL OF SUPPLY:

The Supplier shall issue bill of supply instead of Invoice and not entitled to collectGST from his Recipient.

(iii) NO ITC:

No ITC Shall be Availed by the supplier who is availing this scheme. Moreover TaxPaid by such supplier out of his pocket (3% + 3%) will not be Input Tax forRecipient and Recipient also Eligible to Book ITC.

(iv) SHOW OFF:

The supplier shall mention on the Top of bill of supply “as” “Not Eligible to collectTax on Supplies”.

(v) CALCULATION OF 3% + 3%:

While Calculated composite tax, exempted supplies will also be taken to Include.

(vi) INWARD SUPPLY UNDER RCM:

The Composite Rate is applicable only on “Out-ward supplied made by him” i.e. ifany inward supplies taken by him under RCM then regular Rate of Tax will beapplicable & Not composite Rate of Taxes.

(vii) REMAINING PROVISION:

Remaining Provision of Original composition scheme shall be applicable Mutatis/Mutandis.

OTHER PARTS OF THE SCHEME

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Reverse Charge MechanismWhat is Reverse Charge: As per Section 2 “Reverse charge” means the liability topay tax by the recipient of supply of goods or services or both instead of thesupplier of such goods or services or both under section 9 (3), (4) or under section 5(3),(4) of the Integrated Goods and Services Tax Act.

Exemption from registration to supplier: where a person exclusively engaged inmaking supplies of goods or services on which tax is liable to be paid by recipient inthis case such supplier will be exempted from registration.

SN

Category of Supplyof Services

Supplier ofservice

Recipient (Mustbe Located in TTfor RCM purpose

and should betraceable)

Remark

1 GTA Service GTA Factory, Society,Co-operativesociety, GSTINholder, Body –corporate,Partnership firm

RCM= Rate 5% and noITC to supplier

NCM= Rate 12% withITC to supplier

8

N/No. 13/2017- Central Tax (Rate): Specified Servicesunder Reverse Charge@ intra state supplies

CA. Raj Kumar Chapter 8 – Reverse Charge Mechanism

107

SN


Supplier ofservice



Remark

(registered ornot),CTP(Registered)

Note: NO RCM ifRecepient is Govt.Department, Localauthority;Governmentalagencies, registeredonly as TDS deductor

Exempted:if fall undersn 21,21A,21B

2 Legal Services by Advocate(Senior/Junior/Firm )

Business Entity Exempted:if fall undersn 45

3 Services of ArbitralTribunal

Arbitraltribunal.

Business Entity Exempted:if fall undersn 45

4 SponsorshipServices

Any person Body-corporate orpartnership firm

Exempted:if fall undersn 53

5 -Services ofCG,SG,UT,LA

(Other than Rentingof immovableproperty)

CG,SG,UT,LA Business Entity Note: NCM will alwaysbe applicable onP.V.T. services.

Exempted:if fall undersn 6,7,8 etc.

Chapter 8 – Reverse Charge Mechanism CA. Raj Kumar

108

SN


Supplier ofservice



Remark

5A -Services ofCG,SG,UT,LA

By way of Renting ofimmovableproperty@ B to B)

CG,SG,UT,LA GSTIN Holder(RegisteredPerson)

Note: NCM will beapplicable –

On Renting ofimmovable property@B to C

5B

Services of Transferof development right[TDR] /Floor SpaceIndex[FSI]

Any person Promoter

Exempted:if fall undersn 41A

5C

Long term lease ofland (30 years ormore) forconstruction of aproject

Any person Promoter

Exempted:if fall undersn 41B

6 Services of Director Director Company or abody corporate

No supply: if WTD,Director of GovtBody.

7 Services ofInsurance Agent

Insurance Agent InsuranceCompany

-

8 Services of RecoveryAgent

Recovery Agent Banking company,FI, NBFC

-


109

SN


Supplier ofservice



Remark

9 Copyright Servicesrelating to originaldramatic, musical orartistic

Music composer,photographer,artist, or thelike

Music company,producer or thelike, located in thetaxable territory.

-

9A Copyright relating tooriginal literary

Author Publisher locatedin the taxableterritory:

RCM NOTAPPLICABLE IF--theauthor has takenregistration underCGST and filed adeclaration, that hewill pay GST.

10 Services ofOverseeingCommittee

Members ofOverseeingCommitteeconstituted bythe Reserve Bankof India

Reserve Bank ofIndia

11Services supplied byindividual DirectSelling Agents(DSAs)

Individual DirectSelling Agents(DSAs)

A bankingcompany, NBFC

NCM will beapplicable if

Supplier is a bodycorporate, PF, LLP

12. Services of businessfacilitator (BF)

Businessfacilitator (BF)

A bankingcompany,



110

SN


Supplier ofservice



Remark

13. Services of Agent ofbusinesscorrespondent (BC)

An agent ofbusinesscorrespondent(BC)

Businesscorrespondent,


14. Security services(services provided byway of supply ofsecurity personnel)

Any person

(other than abody corporate)

Registeredperson,

Note: NCM will beapplicableWhere Supplier is..

-Body corporate

(and /or)

Where recipient is..

-Govt. Department,Local authority;Governmentalagencies, registeredonly as TDS deductor

-Composite dealeru/s10

15 Services of rentingof a motor vehicle

Any personpaying CGST atthe rate of 2.5%on renting ofmotor vehicleswith ITC only ofinput service inthe same line ofbusiness

Any bodycorporate locatedin the taxableterritory.

RCM not applicable ifSupplier is a bodycorporate

16 Lending of securities Lender Borrower


111

SN Category of Supplyof Services

Supplier ofservice

Recipient ofService

Remark

1 Any service by anyperson who islocated in a NTT

Any personlocated in aNTT

Any personlocated in theTT

-

2 Transportation ofgoods by a vessel- as from a placeoutside India up -tothe customs stationof clearance inIndia.

A personlocated in NTT

Importer -

SN Supplies Recepient ieperson liable to

pay tax under RCM

(1) Cement supplied by unregistered person to a promoter forconstruction of a project

Promotor

(2) Capital goods supplied by unregistered person to apromoter for construction of a project

Promotor

As per IGST LAW in addition to above following shall alsobe covered under: N/ N: 10/2017- Integrated Tax

Specified Supplies under Section 9(4)


112

SN Supplies Recepient ieperson liable to

pay tax under RCM

(3) Supply of such goods and services or both by unregisteredperson exceeding 20% to a promoter for construction of aproject

Promotor

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InvoiceSection 31 Who,when, how to issue invoice/ bill of supply, Revised Invoice

etc

Section 32 only a registered person can collect in prescribed manner:

Section 33 Amount of Tax to be indicated in tax invoice and otherdocuments:

Section 34 Debit and credit note

Section: 31 to 34 of CGST ACT, 2017 AND CGST RULES, 2017

Section 32: only a registered person can collect in prescribed manner: A personwho is not a registered taxable person shall not collect in respect of any supply ofgoods and/or services any amount by way of tax under the CGST/SGST Act and theregistered taxable person shall calloect tax in accordance with the provisions of thisAct.

Section 33: Amount of Tax to be indicated in tax invoice and other documents:Where any supply is made for a consideration, every person who is liable to pay tax forsuch supply shall prominently indicate in all documents relating to assessment, taxinvoice and other like documents, the amount of tax which will form part of the price atwhich such supply is made.

9

Tax INVOICE/Bill of supply/Receipt Voucher:For supply of goods or services

Chapter 9 – Invoice CA. Raj Kumar

114

Who isrequired toissue /Billoff supply.

Tax inovoice:

Tax inovoice is required to be issued by the following poerions:

A Registered supplierpaying tax under regular scheme shall issueTAX INVOICE.

A Registered Recepient (RCM): Recipient liable to pay GST underreverse charge need to issue an invoice.

Bill of supply:

A Registered supplier making EXEMPTED supplies shall issue a BILLOF SUPPLY

A Registered taxable PersonPaying Tax under COMPOSITIONSCHEME shall issue a BILL OF SUPPLY.

Note: Small value invoice/Bill of supply: Where supply is made to anunregistered person having value below Rs. 200 then the supplier need notmandatorily to issue Invoice or Bill of supply but need to issue aconsolidated invoice/bill of supply at the end of the day and will keep thatdocument himself.

Receipt Voucher: A registered Supplier shall, on receipt of advancepayment with respect to any supply, issue a receipt voucher evidencingreceipt of such payment.

NOTE: No need of signature in case of computer generateddocuments.

When

(Last dateor duedate)

In case of supply of goods

(a) Where supply involve Removal of goods: Then the invoice shall beissued before or at the time of removal of goods and in casewhere supply does not involve Removal of goods: Then the invoiceshall be issued before or at the time of delivery of goods.

CA. Raj Kumar Chapter 9 – Invoice

115

(b) In case of continuous supply of goods:

Where periodic“statements of account”are given by supplier

Then invoice shall be issued on or beforeeach such statements is issued.

Where Payment is madebefore statement or nosuch periodic“statements of account”are given by supplier

Then invoice shall be issued on or beforeeach payment

is received.

(c) In case of sale on approval basis:Invoce shall be issued on or beforeacceptance date or 6 Months from the date of removal (whichever isEarlier)

In case of supply of Taxable Services:

(a) At the time of provision of service, Before provision of service orafter provision of service [within 30/ (45 days in case of Banking andInsurance)]

(b) In case of continuous supply of service:

Where the due date ofpayment is ascertainablefrom the contract,

The invoice shall be issued on or before the due dateof payment

Where the due date ofpayment is not ascertainablefrom the contract,

The invoice shall be issued before or at the time whenthe supplier of service receives the PAYMENT;

Where the payment is linkedto the completion of anevent,

The invoice shall be issued on or before the date ofcompletion of that event.

Chapter 9 – Invoice CA. Raj Kumar

116

(c) Where the supply of services ceasesunder a contract before thecompletion of the supply, the invoice shall be issued when the supplyceases and such invoice shall be issued to the extent of the supplyaffected before such cessation.

NOTE:Where recepient liable to pay GST under RCM then An invoiceshall be issued on the date of receipt of Goods /services

How Manner of issuing: Supply of goods:The invoice shall be prepared intriplicate, Supply of Services: The invoice shall be prepared in duplicate.

Revisedinvoice

A registered taxable person may, within 1 month from the date ofissuance of RC issue a revised invoice against the invoice already issuedduring the period:

Starting from the effective date of registration

Till the date of issuance of RC to him. (So that buyer can availthe credit if he is eligible)

Basis Debit Note/Supplementary Invoice.

Credit Note

When toissue

Where one or more tax invoicehas been issued and the taxablevalue or tax charged in thattax invoice is found lessthenthe supplier shall issue tothe recipient one or more debitnotes.

Where- one or more tax invoice hasbeen issued and the taxable value ortax charged in excess, or sale returnor under supply then the supplier, mayissue a CREDIT NOTE.

What todo afterissue

Any registered person whoissues a debit note shall declarethe details of such debit notein the upcoming return and thetax liability shall be adjusted.

Supplier shall declare the details ofsuch one or more credit notes in theupcoming return but max to max bySeptember of next FinancilaYear orthe date of filing of annual return,whichever is earlier, and the taxliability shall be adjusted.

CA. Raj Kumar Chapter 9 – Invoice

117

BankingCompanyor aFinancialInstitutionincludingNBFC/insurer

Exemption from Serial Number and ADDRESS:Where the supplier oftaxable service is an insurer or a banking company or a FI, NBFC the saidsupplier shall issue a tax invoice even if not having serial number andaddress of recipient.

GoodsTransportAgencyService

BILTY/CONSIGNMENT NOTE: the said supplier of service shall issue atax invoice containing the gross weight, name, vehicle registration numberdetails of goods transported, details of origin and destination, GSTIN oftaxable person etc.

PassengerTransportationService

In case of passenger transportation service: TICKET= INVOICE:

In case of cinema hall: TICKET= INVOICE [and in case of multiplexis mandatory to issue electronically even if value is below Rs.200]

118

Time of Supply

BACKGROUND Section 12: Time of supply- in case of Goods

Section 13: Time of supply- in case of Services

GST is payable on supply of goods or services. A supply consists of elements that canbe separated in time, like purchase order/agreement, dispatch (of goods), delivery (ofgoods) or provision or performance of service, entry in the records, payment, andentry of the payment in the recordsor deposit in the bank.

So, at which of these points of time does GST become payable? Does it becomepayable when an agreement to supply goods or services is made, or when the goods areshipped or the services are provided, or when the invoice is issued or when payment ismade? What if the goods are shippedover a period of time? What if the service isprovided over a period of time? Provisions relating to ‘time of supply’ provide answer toall such and other questions that arise on the timing of the liability to pay CGST andSGST/UTGST (intra-State supply) and IGST (inter-State supply) as time of supplyfixes the point in time when the liability to pay tax arises.The CGST Act providesseparate provisions for time of supply for goods and services vide sections 12 and 13.

Note:

Meaning of “Date of Payment” for supplier: Date of bookish entry by supplier orDate of Actual credit in supplier’s bank, whichever is earlier.

Meaning of “Date of Payment” for Recepient: Date of bookish entry by Recepientor Date of Actual debit in revepient’s bank, whichever is earlier.

10

CA. Raj Kumar Chapter 10 – Time of Supply

119

Basis IN CASE OF SUPPLY OF SERVICE

SECTION : 13

IN CASE OF SUPPLY OFGOODS

SECTION : 12

GeneralProvision:

Where invoice is issued with- intime:

Invoice date

OR

Payment date (Earlier)

Where invoice is not issued with-in time:

Completion date

OR

Payment date (Earlier)

RESCUE Provision:

Bookish Entry Date in RecipientBooks.

Relaxation: IF Amount Received inExcess of Bill Amount (MAX uptoRs.1000): Such “Advance Payment” canbe Ignored for the purpose of “Timeof supply”at the OPTION ofSupplier.

Where invoice is issued with intime: Invoice date

Where invoice is not issuedwith- in time:

Invoice Due Date (Removal /delivery date)

Relaxation: IF Amount Receivedin Excess of Bill Amount (MAXupto Rs. 1000) : Such “AdvancePayment” can Ignored for thepurpose of “Time of supply”atthe option of Supplier.

Chapter 10 – Time of Supply CA. Raj Kumar

120


SECTION : 13


SECTION : 12

ReverseCharge

General provision

Payment date

OR

61th day from the date of invoice(Earlier)

Rescue Bookish Entry Date in theBooks of Recipient.

Associated Enterprises+Import ofservice +RCM

Payment Date

Or (Earlier)

Bookish Entry Date

General provision

Payment date

OR

31th day from the date ofinvoice

OR

Goods recd. Date(Earliest)

Rescue: Bookish Entry Date inthe Books of Recipient.

SpecialCase:

VoucherWhether the =ToS = Date ofSupply is Issue of VoucherIdentifiable

=ToS=Date ofRedemption ofVoucher.

- Same -

Yes

No

CA. Raj Kumar Chapter 10 – Time of Supply

121


SECTION : 13


SECTION : 12

Residuary

Provision

Return Filing Due Date

or

Date of payment of TAX

(AS the Case May be)

- Same -

SpecialCase

(AdditionalValue)

ToS = Date of Receipts of AdditionalValue (Interest, penalty etc)

- Same -

Chapter 10 – Time of Supply CA. Raj Kumar

122

CHILLAR CONCEPT: ie concept of Rs. 1,000 (For exampleTelecommunication service)

Customer Payment Invoice Excess/Unde

r

TOS Remark

“A”

Jan. 2018

Feb. 2018

1500

2224

1862

1862

-362

+362

For 1862

For 1862

TOS@ Invoice Based

TOS@ Invoice Based

“B”

Jan. 2018

Feb. 2018

1862

1862

1862

1862

-

-

For 1862

For 1862

TOS@ Invoice Based

TOS@ Invoice Based

“C”

Jan. 2018

Feb. 2018

2000

1724

1862

1862

+138

-138

For 1862

+ for 138

For 1862

-138 =1724

TOS@ Invoice Based

TOS@ Payment Based

TOS@ Payment Based

An additinal Facility: At the option of the supplier in case “C” - ToS can be based oninvoice ie ignoring Rs. 138 received as advance. However this facility will works only whenamount received in excess of bill amount is upto Rs. 1000

123

Registration

Section 25: Procedure for Registration

When andhow many

One state one Registration: Every person who is liable to beregistered shall apply for registration in EVERY SUCH STATE INWHICH HE IS SO LIABLE (ie from where he makes a taxablesupply) within 30 days from the date on which he becomes liable toregistration ie one state/UT: one registration - mandatory.

Separate Registration with in the state for different Place ofBusiness: The person having multiple Place of Business in a state MAYobtain a SEPARATE REGISTRATION for each Place of Business.

Multiple RC Multiple RC on same PAN (within the samestate or in different state) shall be treated asDISTINCT PERSONS.

Supply from TWI Every person who makes a supply FROM theTerritorial Waters of India shall obtainregistration in the Coastal State or Unionterritory where the NEAREST point of theappropriate baseline is located

11

Section 22, 23, 24 already covered

Chapter 11 – Registration CA. Raj Kumar

124

How Main document for registration:

PAN (Generally)

Any other document (In case of NR)

Registration certificate:

After due verification-RC /UIN (for UN/ INTERNATIONALorganization/embassy ) with effective date,

shall be granted(in prescribed form and period if not issued insuch period then deemed to have been granted after suchperiod)or rejected.

Note: UIN holder will not be treated as Registered Person.

Structure of RC: State wise PAN based GSTIN-----

First two digits: State code

Next 10 digit : PAN

Next digit: SN of Registration in same state on same PAN

Next digit: blank for further use

Next digit: Check digit (department use)

………………………………………………………………………………………………………………………..

Registration process:

(i) Disclose PAN (to whom it is needed), Mob. No., Email id.

(ii) Verification of above : by GST PORTAL, by OTP (for mob no andEmail)

(iii) Generation of reference no. by portal.

(iv) File registration APPLICATION by using reference no.

(v) Acknowledgement by portal on mob no. and Email id

CA. Raj Kumar Chapter 11 – Registration

125

(vi) (Note: Casual taxable person shall be given temporary id numberfor making advance deposit of tax on estimation basis)

(vii) The application forwarded to officer and the officer verify theapplication along with documents.,

whether satisfied

If no response by the officer within 3 days from applicationdate or 7 days from receiving the clarification then theregistration shall be deemed to be granted.[Section 26:Deemed Registration]

(viii) A Registration certificate shall be issued in firm GST REG -6mentioning principal place of business and additional placestherein as declared in application form.

And the RC will be effective:

From the date on which applicant liable for registration [ifapplication made within time]

Otherwise it will be effective from the date of GRANT ofRegistration.

YES

Then the officerGRANT registrationwithin 3 working daysfrom the date ofsubmission ofapplication

NO

Then the officer intimate the deficiencywithin 3 working days from the date ofsubmission of application.

And applicant shall provide clarificationor satisfy officer within 7 working daysof receipts of information.

After this the officer is-

Satisfied: ok grant registrationwithin 7 working days.

Not satisfied: Reject the application.


126

Non Regis-tration andfound byGST officer

It is found during any survey, inspection, search, enquiry or any otherproceeding that—

Person required registration but fails to get register himself:then such officer may register the said person on a temporarybasis and

issue an order and it will be effective from the date of order ofRegistration.

And such person shall

o within 90 days from the date of grant of suchregistration shall file an application for registration inprescribed form and such RC will be effective from thedate of ORDER by officer.

o In case appeal filed by the person against such temporaryregistration then need to file application for formalregistration within 30 days of order of AppellateAuthority.

Section:27Specialprovision forCASUALTAXABLEPERSON andNONRESIDENTTAXABLEPERSON

Application for RC: (5 Days in advance) The person shall apply forregistration at least 5 DAYS PRIOR to commencement of business inand such person shall make taxable supplies only after issuance of RC.

Period of RC: (90 +90 days) RC issued to such persons shall be validfor a period of 90 days +90 days OR as specified in application forregistration from the effective date of registration (whichever isearlier).

Advance deposit of Tax: such person MAY deposit advanceestimated tax liability for the period specified in application at thetime of application for registration on the basis of TRN

However if applied for extension then SHALL deposit advance taxon estimation basis for such extended period.

Note: Such amount shall be credited in his E- cash Ledger account.


127

Issue Clarification

Whether the amount requiredto be deposited as advancetax should be 100% of theestimated gross tax liabilityor the estimated tax liabilitypayable in cash should becalculated after deductingthe due eligible ITC whichmight be available to CTP?

Such amount should becalculated after considering thedue eligible ITC which might beavailable to such taxable person.

As per section 27 ofthe CGST, 2017period ofoperation by causal taxableperson is 90 days withprovision for extension ofsame by the proper officerfor a further period notexceeding 90 days.

Various representations havebeen received for furtherextension of the said periodbeyond the period of 180days, as mandated in law.

1. It is clarified that in case oflong running exhibitions (for aperiod more than 180 days),the taxable person cannot betreated as a CTP and thus suchperson would be required toobtain registration as a normaltaxable person.

2. While applying for normalregistration the said personshould upload a copy of theallotment letter granting himpermission to use the premisesfor the exhibition and theallotment letter/consent lettershall be treated as the properdocument as a proof for his placeof business.

3. In such cases he would not berequired to pay advance tax forthe purpose of registration.

4. He can surrender suchregistration once the exhibitionis over.


128

Others Section 28: Amendment in RC (Core and None core fields):

Every RC /UIN holder shall inform the Proper Officer ANY changes inthe information furnished at the time of application of thereafter.

However officer may approve (within 15 working days) or reject (aftergiving SCN and OPPORTUNITY OF BEING HEARD) such changes.

Section 29: Cancellation of Registration:

On Application By registered taxable person OR by legal heirs (in caseof death), manner and period as may be prescribed, having regard to:

discontinuation of business,

transfer of business,

amalgamation,

demerger or otherwise dispose of,

change in constitution of business or

registered person no longer liable to registered.

BY Proper officer himself:

On contravention of act or rules, [eg. issue bogus invoices etc.]

Person paying tax under composition scheme has not furnishedreturn for 3 consecutive tax periods,

Any Registered person (other than immediate preceding) has notfiled return for a continuous period of 6 months,

person having reg. on voluntarily basis has not commencedbusiness within 6 months from the date of registration,

Registration obtained by means of fraud etc.

Not to furnish Bank Detail

Then the proper officer may cancel the registration FROM SUCHDATE as he may deem fit…after giving SCN and opportunity of beingheard However if found satisfactory reply then drop theproceedings and pass an order.


129

Registration can also be cancelled with retrospective effects.

Note: During pendency of the proceedings relating to cancellationof registration, the proper officer may suspend the registrationfor such period and in such manner as may be prescribed.

Prior period liabilities not affect due to cancellation: Suchcancellation does not affect the liability of taxable person for anyperiod prior or after the date of cancellation.

Section 30: Revocation: Where registration is cancelled by PO, anyregistered taxable person may apply for revocation of suchcancellation within 30 days of cancellation and PO may accept or rejectthe application (after giving SCN and opportunity of being heard).

Where registration is cancelled because non filing of return thenrevocation application shall be files only after filing return andpayment of tax, interest, penalties and late fee.

Prospectivecancellation

Where the registration has been cancelled witheffect from the date of order of cancellationof registration, all returns due till the date ofsuch cancellation are required to be furnishedbefore the application for revocationcan befiled.

Further, in such cases, all returns required to befurnished in respect of the period:

o from the date of order of cancellation

o till the date of order of revocation ofcancellation of registration

have to be furnished within a period of 30 daysfrom the date of the order of revocation


130

RetrospectiveCancellation

Where the registration has been cancelled withretrospective effect, the common portal does notallow furnishing of returns after the effectivedate of cancellation.

In such cases it was not possible to file theapplication for revocation of cancellation ofregistration. For enabling filing of application forrevocation of cancellation of registration, subjectto the condition that all returns relating to theperiod

o From the effective date of cancellation ofregistration

o till the date of order of revocation ofcancellation of registration

shall be filed within a period of 30 days from thedate of order of such revocation of cancellation ofregistration

MISC:

RC Display: Display RC in a prominent location at his principal andadditional place (s) of business and shall display the registrationnumber on the name board exhibited at entry of his principal place ofbusiness and any other place of business.

All Documents/notices @ electronically and Digital signed: Eachdocument filed online shall be signed by person specified.All ordersand notices under this chapter shall be issued electronically by properofficer.

All applications/replies @ electronically and digitally signed: Allapplications, including reply, if any, to the notices, returns includingthe details of outward and inward supplies, appeals or any otherdocument required to be submitted under the provisions of these rulesshall be so submitted electronically with digital signature certificateor through e-signature as or through e signature.


131

Physical verification: Proper officer may verify the business place(s)physically. Where the proper officer is satisfied that the physicalverification of the place of business of a registered person is requiredafter the grant of registration, he may get such verification done andthe verification report along with the other documents, includingphotographs, shall be uploaded in on the common portal within a periodof 15 working days following the date of such verification.

132

Input Tax Credit

Analysis of Section 16: CONDITIONS FOR Claiming I.T.C.

GSTR=1 by 10th of next month GSTR=2 By 15thof next monthE- Liability Register-Update E-Credit Register - Update

Supply of Goods/Service “Received”+ Invoice + TOS Supply+ O/P GST Payment Book I.T.C. in his+ Return Books of A/c +

File Return

CONDITIONS FOR Claiming I.T.C. u/s 16

1. Recipient should have Invoice issued bySupplier/SELF Invoice/Debit NOTE/ISDInvoice/ Bill of ENTRY.

2. Goods/Service-Received by Recipient himself orReceived by III Party on Behalf of Recipient.

Note: If Goods Received in Installment thendeemed to be received on Receipt of last LOT.

PORTAL PORTAL

Supplier Recipient

12

CA. Raj Kumar Chapter 12 – Input Tax Credit

133

3. Recipient Need to file – Valid GSTR=3 on time.

4. Supplier Need to file – Valid GSTR-3 on time.

Input tax credit to be availed by a registeredperson in respect of invoices or debit notes,the details of which have not been uploadedby the suppliers under section 37(1), shall notexceed 20 % of the eligible credit available inrespect of invoices or debit notes the detailsof which have been uploaded by the suppliersunder section 37(1).

5. Bill Payment by “Recipient to supplier: should bemade within 180 Days from invoice date. (ForNCM supplies only)

* IF NOT made: then on 181st day, ITC Reversal.

* What if made After 180 Days: Book (Re-Avail)

ITC on Payment Basis (i.e. proportionately)

* WHAT About ‘FOC’ supplies: (RBI Ki Agency)then the bill

Amount shall be deemed to have been paid.

6. INWARD Supply: USE/intended to be used forBusiness or Furtherance of Business.

7. Recipient’s output Supply should be Non-Exempted.

* What about MIX USE: make it Proportionateand restricted it to non-exempted and businesspurpose.

Chapter 12 – Input Tax Credit CA. Raj Kumar

134

8. Keep in mind Last date to Book ITC – Last date:(sep month Return of NEXT Year OR AnnualReturn filing date) whichever is earlier & thiscondition is only for original Booking of ITC ienot for re-availment.

9. Either ITC or Depreciation Under I.T. Act

10. CAPITAL Goods – Use for whole life, IF partlyused then:

Make it proportionate as per prescribed method.

11. No ITC shall be allowed of the TAX arise on Re-Assessment/Fraud etc.

12. Received supply should not be a NEGATIVElisted supply as defined in Sec: 17(5)


135

TEST YOURSELF

Question 1

A is a trader who places an order on B for a consignment of soda ash. A receives abuying order from C for the same quantity of soda ash. A instructs B to deliver thegoods to C, and in turn he raises an invoice on C. Whether A can claim input tax on suchgoods?

Answer

Though the goods are not physically received at the premises of A, section 16(2)(b)allows ITC of such goods to A.

Question 2

The registered head office (New Delhi) of ABC Pvt. Ltd. enters into a contract withDEF Pvt. Ltd. of New Delhi for repair and maintenance of computers systems installedat its registered branch office in Bengaluru, Karnataka. DEF Pvt. Ltd. issues an invoiceon ABC Pvt. Ltd., New Delhi for the services provided by it. Whether head office ofABC Pvt limited can claim ITC on such service?

Answer

Though the actual services are received by the branch office and not by the headoffice, section 16(2)(b) allows ITC of such repair and maintenance services to headoffice.

Question 3

XYZ enters in to a contract with ABC for supply of 10 MT of a chemical for ` 1,18,000(inclusive of GST of ` 18,000) in August, 20XX. The chemical is to be delivered in lotsover a period of three months. ABC raises the invoice for the entire amount in Augustand XYZ also makes the payment in the same month but the supply is completed inNovember. When the ABC can claim Input tax credit ?

Answer

Though XYZ paid the full tax as early as August, it can take the ITC of the same onlyon receipt of last instalment of the chemical in the month of November.


136

Question 4

Due to a quality dispute, PZP Ltd withheld payment on a machine supplied by a vendortill it could be rectified. Over 180 days went by in this dispute. Whether PZP can takethe input tax credit?

Answer

The credit taken by PZP on the invoice got added to the output tax liability of PZP andthus, it had to pay back the credit. Only after the vendor rectified the machine andPZP released the payment, could PZP take the credit again.

Question 5

Hercules Machinery delivered a machine to XYZ in January 2018 under Invoice no. 49dated 28th January, 2018 for ` 4,15,000 plus GST, and undertook trial runs andcalibration of the machine as per the requirements of XYZ. The amount chargeable forthe post- delivery activities was covered in a debit note raised in April 2018 for` 50,000 plus GST. XYZ did not file its annual return till October, 2018. What is thelast date for taking ITC in such case?

Answer

Though the debit note was received in the next financial year, it relates to an invoicereceived in the financial year ending March 2018. Therefore, the time limit for takingITC available on ` 50,000 as well as on ` 4,15,000 is 20th October, 2018; earlier of thedate of filing the annual return for 2017-18 or the return for September 2018.

Question 6

A registered person is in the business of manufacturing shoes. He gave 50 pairs ofshoes for his friends free of cost. Whether the input on such 50 pairs of shoes can beclaimed?

Answer

ITC on inputs and input services attributable to such 50 pair of shoes being used fornon-business purposes will not be available.


137

SECTION: 17 (1)(2)(3)(4)(5)(6)SECTION: 17 (5) &(6) : Negative list of Input Tax Credit : ie. No ITC shall beallowed to Recipient:As per section 17(5) Credit of following inward supplies shall notbe available to the recipient subject to some exceptions.

Generally input tax credit of passenger motor However for certain class of persons input tax creditvehicle Shall not be allowed to recipient of Passenger motor vehicle will be available who

providesFollowing specified services ie use of motor vehicleas :

Eg.(10L + 2.8L)

For further supply of such motor vehicle

Coaching For passenger transportation serviceInnova Car

Input Tax Credit For motor driving service

What about Repair maintenance/servicing/Insurance service -Related to passengermotor vehicle:Rs.100000 +18000 (ITC ×)

√

FurtherSupply.

√Taxi

√

Input Tax Credit DrivingHere Motor Vehicle = Back Bone

Repair/Maintenance Service/ServicingInsurance = Input Tax Credit: allowed

Passenger motor vehicle seating capacity: 13 Person or less (Including Driver)

No Input Tax Credit YES Input Tax Credit to Recipient

PROWISE CA

Show Room

Jai Bala Ji Travels

Texla Motor DrivingSchool


138

Generally input tax credit of Vessel/Aircraft However for certain class of person it will beshall not be Allowed to the recipient : available who Used the Vessel/Aircraft

for following purpose :Eg. Eg.

Further supply of such motor vehicle

For passenger transportation service.

For Training PurposeUsedFor War For transportation of goods

ITC ×

ITC of Repair maintenance etc. also not allowed. √ Sale(Further Supply)

√ Passenger Tran-portation Service

√ Training

√ Goods Trans.

ITC

Vessel/Air Craft = Back Bone

Repair/Maintenance Service/Insurance Service= Input Tax Credit √

AIRCRAFT/VESSEL

NO ; Input Tax Credit to Recipient YES ; Input Tax Credit to Recipient

Indian Navy

Air force

“Dealer”

“Spice Jet”

“CoachingInstitute.”

“Air India”


139

NOTE: Input Tax Credit of repair maintenance/services & Insurance shall also beallowed to

A manufacturer (eg TATA Motors) of motor vehicle/vessel and air craft .egStock Insurance.

Insurance Companies

Claim Insurance Premium

Repair Bill ITC √ of Rs.18,000 Output Tax √100000+ 1800

AuthorisedService Station

R. Capital Ins. Co.


140

PERSONALISED SERVICES (INDIVIDUAL RELATED SERVICE)

NO INPUT TAX CREDIT

Food & Beverages Outdoor catering Beauty treatment service Health service Cosmetic & plastic surgery Life insurance Health insurance service

Director/Employee Insurance

Input Tax Credit ×

Foods : 100000 + GST ×

YES ; INPUT TAX CREDIT allowed

However in Similar Business creditshall be allowed to “Recipient “

Eg.

FOOD FOOD

Input Tax Credit √

Re Insurance Insurance40Cr. ITC √ 100 Cr. ITC ×

Membership of CLUB. Membership of GYM.

Value : 100001800

11800Input Tax Credit of Rs.1800

Travel Benefit to employee: for personalTRIP.

Ie. Package for personal trip of an employeeITC ×

Prowise CA

SAGAR

RATNA

HDFC Life LIC DirectorProwise

GYM Prowise CA

Cox & KingProwise CA


141

Note: If there is a legal requirement to do so then the credit in respect of above 3cases shall be allowed.For example travel benefit to employee is a legal requirement= ITC √

Ie. Service for lady employee after 11 PM. ITC √

TAXIProwise CA


142

WORKS CONTRACT SERVICE(Goods + Service) @ Single price & resultant property = immovable property.

NO Input Tax Credit

When WORKS CONTRACT Service taken byan end user for construction of immovableproperty.

LAND/BuildingTele Communication Tower

Sec.17(6) Pipe line

Work Contract Service: For construction of aHALL in office Premises: ITC ×

YES Input Tax Credit Available to Recipient

However when the services is taken for or related to plant& machinery = ITC √

Work contract ITC √ Service for installation/Erection ofGenerator (Machine)

What about similar business : ITC √SUB-Contract W.C.Ie. Work Contract Service

Service ITC ×

ITC√

WHAT ABOUT : Building material & Construction ServiceWhen goods (Building material construction service –taken by end user for construction of immovableproperty = ITC ×)

Land & BuildingTele Communication TowerPipe Line

Building Material

Contraction Service

Input Tax Credit ×

However ITC on such goods/services shall beallowed when used for or related to plant &Machinery.

Building Material

Construction Service

ITC √What about similar Business :Business MaterialContraction Service

ITC √

PROWISE

PROWISE

DLF PROWISE

PROWISE

PROWISE

DLF PROWISE


143

COMPOSITION DEALERNO ITC shall be allowed to a composition Dealer---

Eg.

Inward supply

No Input Tax Credit Input Tax Credit ×

Non Resident Taxable Person

Import of Goods MCP INDIA

Inter State

Value of Goods : xxx+ BCD xxx

xxx Credit of IGST by NR: Yes allowed+Other I.D. xxx+IGST xxx Credit of other supplies: not allowed+ Com. Cess xxx

Miscellaneous

Purchase[Itc not allowed] Personal Consumption/Stolen/Destroyed etc.

---------------------------------------------------------------------------------------------------

BUYERCOMPOSITE

USA

Non-ResidentParticipatein Trade

fair

0---------------0

DEALER


144

Purchase[ITC taken] Free Sample Distribution

(i) (ii) (Liable to GST)

Purchase[No ITC taken] Free Sample Distribution

(i) (ii) (Not Liable to GST)

Examples-1. ITC on cars purchased by a manufacturing company for official use of its employee

is blocked.

2. ITC on cars purchased by a car dealer for sale to customers is allowed.

3. ITC on cars purchased by a company engaged in renting out cars for transportationof passengers, is allowed.

4. ITC on cars purchased by a car driving school is allowed.

5. ITC on buses purchased by a company for transportation of its employees fromtheir residence to office and back, is allowed.

6. ITC on trucks purchased by a company for transportation of its finished goods isallowed.

Examples –1. ITC on aircraft purchased by a manufacturing company for official use of its CEO

is blocked.

2. ITC on aircraft purchased by an Aviation School providing training on flyingaircrafts, is allowed.


145

Example –1. ITC on general insurance taken on a car used by employees of a manufacturing

company for official purposes, is blocked.

2. ITC on maintenance & repair services availed by a company for a truck used fortransporting its finished goods, is allowed.

Examples –1. AB & Co. a caterer of Amritsar has been awarded a contract for catering in a

marriage to be held at Ludhiana. The firm has given the contract for supply ofsnacks, to be served in the marriage, to CD & Sons, a local caterer of Ludhiana.ITC on such outdoor catering services availed by AB & Co., is allowed.

2. ITC on outdoor catering services availed by a company, for a team developmentevent organized for its employee, is blocked.

3. ITC on outdoor catering service availed by a company to run a canteen in itsfactory. The Factories Act, 1948 requires the company to set up a canteen in itsfactory. ITC on such outdoor catering is allowed.


146

SECTION : 17 (1) “Business & Non Business”(i) Where any inward supply is used for business purpose then input tax credit to

recipient shall be allowed [Section : 16]

(ii) Where any inward supply is used for “non business” purpose then NO Input TaxCredit shall be allowed to Recipient [Section : 16]

(iii) Where inward supply is used commonly for business as well as non business purposethen proportionate Input Tax Credit shall be allowed [Section : 17(1)]

SECTION : 17(2)&(3) Example & Non Exempted

(i) Where any goods are used in NON EXEMPTED Purpose

Taxable

Zero Rated (Export supplies)

then input tax credit on such inward supply shall be allowed [Section : 16]

(ii) Where any goods are used in exempted supplies then input tax credit as relatedinward supplies shall not be allowed [Section : 16]

ITC × ExemptedITC √ Taxable NONITC √ Zero Rated EXEMPTED


147

(iii) Where any inward supplies are used commonly for “Exempted as well as non-exempted purpose then input tax credit shall be allowed at proportionally”.

Value : 100000 Non Exempted 60%GST : 18000

118000 Exempted 40%

100% E/N (GATE : 5)STEP : 1 Book total Input Tax Credit = 18000/- NIL Rated supplySTEP : 2 Reversal of ITC = 7200/- NON Taxable supplies

(Liquor/Petrol)D Where RCM is applicable.E Sale of Land & Complete

Building @ Circle RateE Securities @ 1%MED


148

Question Based on Section : 17 (1) + (2) + (3) + (4)Note: In case of mix use first of all book whole common credit ie common credit willbe transferred to E-credit ledger and after that Reverse to the extent of ineligiblecredit.

Q.1

Total INPUT TAX Outward SuppliesRs. 1,00,000

Exempted = Rs. 30 LakhNon-Exempted = Rs. 40 Lakh

Which Includes:- (Note: All above values are Exclusive of All TAXES.)

* Non-Eligible Input Tax [u/s 17(5)] = Rs. 6000/- [not allowed]

* Exclusive use in Exempted supplies Rs. 9000/- [not allowed]

* Exclusive use in Non-Business purpose Rs. 5000/- [not allowed]

* Exclusive use in Non-Exempted & Business purpose = Rs. 10,000/-[fully allowed]

* Balance inward supplies (Input Tax) – used on MIX/Common Use.

i.e. Use in Exempted & Non-Exempted, Business & Non-Business Purpose = Rs.70,000/-

[Deemed itc related to non-business purpose = 70,000 *5% = 3500 and itc related toexempted purpose : 70,000 * 30/70= 30,000 ie total ineligible itc out of 70,000= Rs.33,500 so it shall be reversed.

Now take annualized figure:

Total common credit Rs.70,000 *12= 8,40,000

Ineligible credit to be reversed: 33500* 12= 4,02,000

(1) Now if due to various adjustments of dr. and cr. Notes final reversal of ITC is Rs.4,10,000 then Rs. 8000 need to be reversed with interest from 1st April of next FY tillthe date of payment @18% PA.[Maximum by September of next FY]

(2) Now if due to various adjustments of dr. and cr. Notes final addition in liability is Rs.3,95,000 then itc of Rs.7000 shall be allowed.

ABC Ltd.


149

April, 2018: DATA

Q. 2Outward Supplies

Renting ofImmovable property ServiceValue : 1,00,000 Exempted = Rs. 30 LakhIGST : 18,000 Non-Exempted = Rs. 40 Lakh

1,18,000

Book itc of Rs. 18,000 and reverse ITC in the same tax period Rs. (18,000 * 30/70 =Rs.7,714 as it is ineligible ITC)

April, 2018

Q. 3Sale of furniture = Rs. 30 Lakh

Renting ofImmovable property Service Securities Trading = Rs. 40 Cr.

Value : 1,00,000IGST : 18,000

1,18,000

Book itc of Rs. 18,000 and reverse ITC in the same tax periodRs. (18,000 * 40/70 =Rs.10,286 as it is ineligible ITC)

Note: securities trading will be treated as exempted service for the purpose of section17 and shall be valued @ 1% ie Rs. 40 lakh.

April, 2018


Renting ofImmovable property Service GTA Service

Value : 1,00,000IGST : 18,000 Rs. = 40 Lakh @ RCM

1,18,000

XYZ Ltd.

A Ltd.


150


Note: RCM supplies generally not an exempted supply but for the purpose of section 17 itshall be treated as exempted supply.


Renting ofImmovable property Sale of Land & Building = Rs. 2 Cr.

(Value as per Circle Rate)

Value : 1,00,000GST: 18,000

1,18,000


Note: Sale of land and building (Completed) not a supply but for the purpose of section 17it shall be treated as exempted supply.

Q. 6Supply: EXCLUSIVE use in Exempted @ Exempted AND

(No itc) Non-Exempted Supplies

Supply Exclusively use in Non-Exempted(full itc allowed)

NEGATIVE Supply (no itc)

[full itc shall be allowed]Common Supply (50% itc allowed and

balance not allowed)

Supply (Deemed Distinct)

Note Lock in period for the option is SAME FY.

BANKINGSECTOR

BankBranch


151

Note: What is exempted and what is non exempted supplies for the purpose of Rule42 and Rule 43.

What is exempted supplies What is not exempted supplies

1. Supplies attracting 100 % E/N 1.Supplies where consideration received inform of interest and discount (exceptBanking co. financial institution, NBFC)

2. NIL rated supplies 2.Transportation of goods by vessel fromIndia to outside India.

3. Non- taxable supplies

4. Supplies taxable under RCM

5. Securities trading @1%

6. Sale of land and completed building@ circle rate


152

(A) Capital Goods Exclusively USE for : Exempted /NON Business Supply = NO ITC

(RELATED INPUT TAX = 20,000)

(B) Capital Goods Exclusively USE for : NON Exempted & Business Purpose = ITC30,000/- allowed

(RELATED INPUT TAX = 30,000)

COMMON USE OF CAPITAL GOODS :

Exempted supplies: 10 Lakh Others supplies: Rs 40 Lakh

PARTICULARS Common Credit

(A)

Capital Goods Purchase & USE for Common Purpose 60,000/-

(Rs 60,000 will betransferred to E-creditLedger )

Capital Goods Purchase Earlier & that time USEExclusively for Exempted & NON Business purpose-NOW USE for common purpose.

Input tax was Rs. 70,000

Capital Goods: after 1 Year :Common USE

(Input Tax - 5% per quarter for 4 quarter)

Rs. 70,000 – 20%= 56,000

Rs.56,000/-

(Rs 56,000 will betransferred to E-creditLedger )

MIX/Common use of Capital Goods: Rule 43


153

PARTICULARS Common Credit

(A)

Capital Goods Purchase Earlier & that time USE for NONExempted and Business purpose- NOW USE for commonpurpose

Input tax was Rs. 60,000 (at that that this amount wastransferred to E- credit Ledger)

Capital Goods: after 1 Year :Common USE

(Input Tax - 5% per quarter for 4 quarter)

Rs. 60,000 – 20%= 48,000

Rs. 48,000/-

Total of Common Credit=Rs.164,000/-

Now find out monthly common credit by spreading it over a period of 60 months ie164,000/60 = Rs. 2,733.33

Now find out ineligible portion and such amount will be added to E liability register @every month for 60 months.

2733.33*10/50 =Rs. 546.67


154

TEST YOURSELF

Question 7

A registered person manufactures a product ‘X’ chargeable to 18% GST, a product ‘Y’chargeable to NIL rate of tax and a product ‘Z’ which is exported without payment oftax under bond. All the three products are manufactured from common inputs andinput services. Whether the input on all input and input services can be claimed?

Answer

ITC on inputs and input services attributable to product ‘Y’ being an exempt supply, willnot be available.

Question 8

(1) Whether ITC on cars purchased by a manufacturing company for official use ofits employees is blocked?=Yes

(2) Whether ITC on cars purchased by a car dealer for sale to customers isallowed? = yes

(3) Whether ITC on cars purchased by a company engaged in renting out carsfor transportation of passengers, is allowed? = Yes

(4) Whether ITC on cars purchased by a car driving school is allowed? =Yes

(5) Whether ITC on buses (seating capacity for 24 persons) purchased by acompany for transportation of its employees from their residence to officeand back, is allowed? =Yes

(6) Whether ITC on trucks purchased by a company for transportation of itsfinished goods is allowed? = Yes

(7) Whether ITC on aircraft purchased by a manufacturing company for officialuse of its CEO is allowed? = No

(8) Whether ITC on aircraft purchased by an Aviation School providing trainingon flying aircrafts, is Blocked?= No

(9) Whether ITC on general insurance taken on a car used by employees of amanufacturing company for official purposes, is blocked?= Yes


155

Question 9

(1) AB & Co., a caterer of Amritsar, has been awarded a contract for cateringin a marriage to be held at Ludhiana. The firm has given the contract forsupply of snacks, to be served in the marriage, to CD & Sons, a localcaterer of Ludhiana. ITC on such outdoor catering services availed by AB &Co., is allowed or not? = Allowed

(2) ITC on outdoor catering services availed by a garment exporter for amarketing event organised for its prospective customers, is blocked orallowed? = Blocked.

(3) Outdoor catering service is availed by a company to run a free canteen in itsfactory. The Factories Act, 1948 requires the company to set up a canteenin its factory. ITC on such outdoor catering is allowed or not? =Allowed

(4) The Managing Director of a company has taken membership of a club, thefees for which is paid by the company. ITC on such service is allowed or not?=Not allowed.

(5) A company avails services of a travel agency for organizing a free vacationfor its top performing employees. ITC on such services is blocked or Not?=Blocked

(6) A manufacturing company purchases food items for being served to itscustomers, free of cost. ITC on such goods is allowed or not?= Not allowed.

Question 10

(1) CD & Co., a works contractor of Noida, has been awarded a contract forconstruction of a commercial complex in Lucknow. The firm avails services of EF& Co., a local works contractor of Lucknow, for the construction of complex. ITCon such works contract services availed by CD & Co., is blocked or Not? = Notblocked.

(2) ITC on works contract services availed by an automobile company forconstruction of a foundation on which a machinery (to be used in the productionprocess) is to be mounted permanently, is allowed or Not?= allowed.

(3) ITC on works contract services availed by a manufacturing company forconstruction of pipelines to be laid outside its factory, is blocked or not ? =Blocked


156

(4) A consulting firm has availed services of a works contractor for repair of itsoffice building. The company has booked such expenditure in its profit and lossaccount. ITC on such services is allowed or not?= Allowed

(5) A telecommunication company has availed services of a works contractor forrepair of its office building. The company has capitalized such expenditure. ITCon such services is allowed or Not?= Not allowed

(6) ITC on works contracts services availed by a software company for constructionof its office, is allowed or not? Not allowed.

Question 11

MN & Constructions procures cement, paint, iron rods and services of architects andinterior designers for construction of a commercial complex for one of its clients.Whether ITC on such goods and services is allowed to MN & Constructions?

Answer

ITC on such goods and services is allowed to MN & Co.

Question 12

A company buys cement, tiles etc. and avails the services of an architect for renovationof its office building. The company has booked such expenditure in its profit and lossaccount. Whether ITC on such goods and services is allowed ?

Answer

ITC on such goods and services is allowed.

Question 13

ITC on goods and/or services used by an automobile company for construction of afoundation on which a machinery (to be used in the production process) is to bemounted permanently, is allowed or Not?

Answer

ITC on such goods and services is allowed.


157

Question 14

A company buys cement, tiles etc. and avails the services of an architect forconstruction of its office building. Whether ITC on such goods and services is allowed?

Answer

ITC on such goods and services is blocked.

Question 15

Mr. X owns a grocery store. He procures rice, wheat and biscuits for being sold in itsstore. Out of the inventory so purchased, he gives 10 kgs each of rice and wheat to hiswife for household use. Whether ITC on 10 kg of Rice and 10 Kg of wheat is allowed?

Answer

Being used for personal consumption, ITC on 10 kg of rice and 10 kg of wheat isblocked.


158

Section 18 ITC in special CASES

: NEW REGISTRATION: Applied for with in PRESCRIBED Time (i.e. 30 Days)

600 Kg. stock10-9-2020

OUTPUT TAX = NO 20L/ OUTPUT TAX = YESITC = NO 10L ITC = YES

Plus(ii)

i. INPUT PURCHASE (iii) * WE Need REG. within 30 DaysValue (1000 Kg. x 200) = 200000 from 10.09.2020GST @ 18% = 36000 * then REG. will be effective from

236000 10.09.2020

Purchase A/c ------------Dr. 236000 (iv) Stock as on: 09.09.2020 Ki SHAMTo Bank 236000 i.e. Op. Stock of input on 10.09.2020

--------------------------- As Such Form = 100 Kg. R/MIn Form of WIP = 200 Kg R/MIn Form of “F.G.”= 300 Kg. R/MLying in Stock 600 Kg.

36000--------- × 600 = 21600/=1000 Kg.

ITC……..Dr. 2160010.09.2020: To Purchase 21600

(1) + (2) + (3) (4)+ (5) + (6)

Sec.: 18(1) (a)


159

: VOLUNTARY REGISTRATION:

600 Kg. stock10-9-2020

OUTPUT TAX = X VOL. OUTPUT TAX = √ITC = X REG. ITC = √

(ii)

i. INPUT PURCHASE (iii) * Registration effective: 10.09.2020Value (1000 Kg. x 200) = 200000GST @ 18% = 36000

236000

Purchase A/c ------------Dr. 236000 (iv) Stock as on: 09.09.2020 Ki SHAMTo Bank 236000 i.e. Op. Stock on 10.09.2020

--------------------------- As Such Form = 100 Kg. R/MIn Form of WIP = 200 Kg R/MIn Form of “F.G.”= 300 Kg. R/MLying in Stock 600 Kg.

36000--------- × 600 = 21600/=1000 Kg.


Sec. : 18(1) (b)


160

WHAT ABOUTCAPITAL GOODS

(USED CG)

(COMPO)01-10-19

NormalScheme

Cap.Goods ITC on Cap.PURCHASE Goods: ?=YesValue:100000+GST:18000 Proporionate

118000 @Remaining Life

Total Tax paid=18000

Less: ITC Relatedto USAGEPeriod =

1-10-19 to 10-9-2020

= 18000*5%*4 quarter= (3600)

Balance ITC = 14400ITC ……….dr 14,400To capital goods 14,400

: COMPOSITION to NormalScheme:

600 Kg. Stock10-9-2020

O/P TAX: 1%/5% . OUTPUT TAX = √ @Normal RateITC = X 100L+ ITC = √

(ii)

(i) INPUT PURCHASE (iii) ITC Milega: WEF. - 10.09.2020Value (1000 Kg. x 200) = 200000GST @ 18% = 36000

236000

Purchase A/c ------------Dr 236000 (iv) Stock as on : 09.09.2020 KiTo Bank 236000 Sham

i.e. Op. Stock on 10.09.2020

As Such Form = 100 Kg. R/MIn Form of WIP = 200 Kg R/MIn Form of “F.G.”= 300 Kg. R/MLying in Stock 600 Kg.

36000--------- × 600 = 21600/=1000 Kg.


(1) + (2) + (3)

Section: 18(1) (c)

10-9-2020


161

WHAT ABOUTCAPITAL GOODS

(USED CG)

(Exempted)01-10-19

NonExempted

Cap.Goods ITC on CapitalPURCHASE Goods: ?=YesValue:100000+GST:18000 Proportionate

118000 @RemainingLife

Total Tax paid=180001ess: ITC Related

To USAGEPeriod =

1-10-19 to 10-9-2020

= 18000*5%*4 Quarter= (3600)

Balance ITC = 14400ITC ……….dr 14,400To capital goods 14,400

: EXEMPTED TO NON-EXEMPTED :

10-9-2020 600 Kg. Stock

O/P TAX = X . OUTPUT TAX = √ @Normal RateITC = X Notification- ITC = √

Date(ii)

(i) INPUT PURCHASE (iii) ITC Milega : WEF. - 10.09.2020Value (1000 Kg. x 200) = 200000GST @ 18% = 36000

236000

Purchase A/c ------------Dr 236000 (iv)Stock as on : 09.09.2020 Ki shamTo Bank 236000 i.e. Op. Stock on 10.09.2020

As Such Form = 100 Kg. R/MIn Form of WIP = 200 Kg R/MIn Form of “F.G.”= 300 Kg. R/MLying in Stock 600 Kg.

36000--------- x 600 = 21600/=1000 Kg.


Section: 18(1) (d)

10-9-2020


162

Sec.: 18(2): ITC Booking LAST DATE: 1Year from the Date of INVOICE of Supply of suchINPUT/Capital goods.

Rule : 40

Section: 18(3)

Rule: 41

SHIFTMr. X : ITC-02Detail – Sale/amalgamation etc.

P.C.A – Certificate Accept Rs. 2 LakhE- CREDIT Ledger E-Credit Ledger: as ITCE- LIA. Register E-Liability Register

PAN - REG - GSTIN E-CASH LEDGER PAN -Fresh GSTIN E-CASH - Ledger

“Going Concern - Sale @ 10 Cr.Business

SERVICE + Supply T/F to New Ownership+ NATURE + T/P = Mr. X SHIFT - ITC

REG. Surrender + SN: 2 Exempti.e. Rs. 10 Cr. = GST X

PROCEDURAL PART: Related to ITC U/S: 18(1)

* Need to file ITC-01 to effect that he is Eligible to Avail ITC.

* With 30 DAYS + Extension

* Containing Detail of Remaining INPUT & Capital Goods

* IF Your Claim Rs. 2,00,000/- Plus - Need P.C.A. Certificate

Section: 18

(2) + (2) + (3) (4)+ (5) + (6)

200000

Mr. X“GOING

CONCERN” Mr. Y


163

STOCK

* NORMAL Scheme 1-4-2020

* Taxable Supply/ * Composition SchemeNon-Exempted * Exempted Supply

ITC √ ITC X

INPUT AS SUCH 100 Kg.* Stock - IN WIP Form 200 Kg. SHIFT – ITC – Balance

IN FP (R/M) 300 Kg.600 Kg. (ITC Reverse/Output Liability/@ Remaining Life)

Section: 18(4)

600 Kg


164

Q. BASED ON SECTION: 18(4):

(A)- 1-4-2020

INPUT PURCHASE

Value1000Kg x 200) = 200000 (C)- WEF: 10-9-2020GST = @ 18% = 36000 Outward Supply: Exempt

236000

(B)- AS ON DATE OUTWARD (D)- As on : 10-9-2020 : OPENING ?Supply = NON-Exempted AS SUCH = 100 kg. (R/M)Purchase A/c 200000 INPUT: WIP = 200 Kg. (R/M) Purchase Dr.ITC---------------Dr. 36000 FG = 300 Kg. (R/M) To O/P GST

To Bank 236000 600 Kg.

Related TAX = 36000 x 600 = 216001000 O/P GST

(B1)- CAP. Goods as on 1-4-2020 O/P. Liability –Increase To ITCValue : 100000 To CASHGST : 18000

118000 CAPITAL GOODS:CAP. Goods ………………Dr. 100000 Assume: Life ITC (Full) = 18000

ITC…………………….Dr. 18000 5 Year = 60 Month ITC Related to =To Bank 180000 PRO. Month Basis USAGE Period

(or PART thereof) (1-4-20 to 10.9.20) =180018000 x 6M60M 16,200

Section 18(5): Not Relevant


165

Q: BASED ON = Section 18(6)

(1-4-2018) ABC Ltd. (10-3-2020)(A) CAPITAL GOODS CAPITAL GOODS = SUPPLY

Values : 2,00,000 FOR Rs. 70,000/-GST : 36,000

2,36,000 ITC = 36,000

Goods + supply + inter/intra+ taxable person : ABC LTD + No exemption+

(B) CAP GOODS A/c – 2,00,000/- computation : 70,000 *18%= 12,600ITC - Dr. 36,000/-

To BANK 2,36,000/-

Reversal of ITC/addition in output liabilityTo the extent @ monthly proportionate.36,000*24 months/60 months = 14,400Net = 36,000 – 14,400 = 21,600

Now final amount to be added in output tax liability: Rs 21,600 or 12,600 whicheveris higher ie Rs. 21,600

Note: Where Refractory bricks, Moulds and dies, Jigs and fixtures are supplied asSCRAP, the taxable person may pay tax on the transaction value of such goodsdetermined under section 15.


166

Section 18: Availability of credit in special circumstances

ITC booking onSTOCK HELD inspecial cases

SECTION 18 : AVAILING OF CREDIT IN CERTAINCIRCUMSTANCES

(1)BOOKING OF ITC ON “STOCK” NEED SPECIAL CASES

(a) Pre RC Period:

- Where a person applied for Registration within 30 Daysfrom the date on which he is required to takeregistration.

- Then he shall be entitled to Book the credit on stock ofInput held (as Such, In WIP, Contained in Finishedgoods held in stock)

- On the date, just before the date on which he isrequired to take registration.

(b) Voluntary Registration:

- Where a person takes voluntary registration.

- Then the person shall be entitled to take ITC on stock ofInput held

(as Such, In WIP, Contained in Finished goods lying instock)

- On the date, Just before the date of Grant ofRegistration.

(c) Composition to Regular Scheme:

- Where a person not remain Entitled to pay tax undercomposition scheme i.e. Shift from composition to RegularScheme

- Then the Person shall be Entitled to Take ITC

- On the Inputs held in stock (as such, in WIP, Contained inFinished goods held in Stock)


167

- On the date, just before the date on which he shift toRegular Scheme.

NOTE:

In Such a case the person shall also be entitled to Book ITCCapital Goods held as

on date. Calculation of Eligible ITC will be made as perfollowing Formula:-

Input tax Related to such capital goods : XXX

Less:- 5% per Quarter or Part there of : XXX

(From the date of purchase Till the date, Just beforethe date of shifting to regular Scheme Eligible ITC)

(d) Exempted to Taxable Supplies

- Where an Exempt supply by a Registered Person BecomesTaxable supply.

- Then such Person Shall be entitled to Book ITC on Inputheld in Stock (on Such, In WIP, contained in FinishedGoods held in stock)

- on the Date, just before the date on which such supplybecame Taxable.

NOTE:

In Such a case the person shall also be entitled to Book ITC CapitalGoods held as

on date. Calculation of Eligible ITC will be made as per followingFormula:-

Input tax Related to such capital goods : XXX

Less:- 5% per Quarter or Part there of : XXX

(From the date of purchase Till the date, Just before thedate of shifting to regular Scheme Eligible ITC)


168

Last date to bookITC

(2) In all above cases the registered person can book the credit.

- till 1 Year from the date of issue of tax invoice relating tosuch supply.

Transfer of ITCto NEWEntity/ownership

(3) Where there is a change in the constitution of a registeredperson on account of sale, merger, demerger, amalgamation, lease ortransfer of the business with the specific provisions for transfer ofliabilities, the said registered person shall be allowed to transferthe input tax credit which remains unutilised in his electronic creditledger to such sold, merged, demerged, amalgamated, leased ortransferred business in such manner as may be prescribed.

Reversal ofITC/Payment ofan amount

(4) Where any registered person:

who has availed of input tax credit opts to pay tax undersection 10 or,

where the goods or services or both supplied by him becomewholly exempt,

he shall pay an amount, by way of

electronic credit ledger or

electronic cash ledger,

equivalent to the credit of input tax in respect of inputs held instock and inputs contained in semi-finished or finished goods held instock and on capital goods, reduced by such percentage points asmay be prescribed, on the day immediately preceding the date ofexercising of such option or, as the case may be, the date of suchexemption:

ITC LAPSE: Provided that after payment of such amount, thebalance of input tax credit, if any, lying in his electronic creditledger shall lapse.


169

Calculation inprescribedmanner

(5) The amount of credit under sub-section (1) and the amountpayable under sub-section (4) shall be calculated in such manner asmay be prescribed.

Supply of Capitalgoods

(6) In case of supply of capital goods or plant and machinery, onwhich input tax credit has been taken, the registered person shallpay an amount equal to

the input tax credit taken on the said capital goods or plantand machinery reduced by such percentage points as may beprescribed or

the tax on the transaction value of such capital goods or plantand machinery determined under section 15,

[Whichever is higher]

Note: Where Refractory bricks, Moulds and dies, Jigs andfixtures are supplied as SCRAP, the taxable person may pay tax onthe transaction value of such goods determined under section 15.


170

TEST YOURSELF

Question 16

Mr. Z becomes liable to pay tax on 1st August and has obtained registration on 15thAugust. Whether the Mr. Z can take the ITC on inputs held in stock and as part ofsemi-finished goods or finished goods held in stock or capital goods as on 31st July?

Answer

Mr. Z is eligible for ITC on inputs held in stock and as part of semi-finished goods orfinished goods held in stock as on 31st July. Mr. Z cannot take ITC on capital goods.

Question 17

Mr. A applies for voluntary registration on 5th June and obtains registration on 22thJune. Whether the Mr. A can take the ITC on inputs held in stock and as part of semi-finished goods or finished goods held in stock or capital goods as on 21st June?

Answer 18

Mr. A is eligible for ITC on inputs held in stock and as part of semi-finished goods orfinished goods held in stock as on 21st June. Mr. A cannot take ITC on capital goods.

Question 19

Mr. B, a registered taxable person, was paying tax under composition scheme upto 30thJuly. However, w.e.f. 31st July, Mr. B becomes liable to pay tax under regular scheme.Whether Mr. B will be eligible for ITC on inputs held in stock and inputs contained insemi-finished or finished goods held in stock and on capital goods?

Answer Whether Mr. B will be eligible for ITC on inputs held in stock and inputscontained in semi-finished or finished goods held in stock and on capital goods as on30th July.

ITC on capital goods will be reduced by 5% per quarter from the date of the invoice.

171

Manner of Payment

E-CASH LEDGER:

(i) Every deposit towards Tax, Interest, Penalty, Fee or Other Amount of a PersonWhether Online or Offline Shall be credited to E-Cash Ledger.

[Deposit by making challan i.e. C-PIN]

Process: The taxable person required to pay tax on supplies made by him or onInward supplies fall order RCM.

For making payment of GST the person need to create challan from GSTPortal.

After that Amount mention in challan need to be deposited in authorizedbank & such authorized bank integrated with GST Portal GSTN.

For above GSTN & Banks are tie upped :

& Such Tie upped – Bank or Branch of the Banks called as Authorized Bank(Total: 26 Apx) & as and when the person make payment to authorizedbranch it will be updated in E –Cash Ledger at GST Portal.

Note: Date of Credit in Authorised Bank will be the date of Deposit in E-CashLedger

13

SECTION 49: PAYMENT OF TAX INTEREST,PENALTY & OTHER AMOUNT

Chapter 13 – Manner of Payment CA. Raj Kumar

172

(ii) The amount available in E-Cash Ledger will be used for making any payment towardsTax, Interest, Penalty, Etc. and on Utilisation of Such Amount, E-Cash Ledger willbe debited by that amount. [ie While File GSTR = 3B]

E-LIABILITY REGISTER:

(iii) All Liabilities of a Taxable Person Shall be recorded in E- Liability register.

(iv) Every Taxable Person shall discharge his tax dues and Other dues in the followingOrder

(a) Self Assessed Dues- Related to Returns of Previous Period.

(b) Self Assessed Dues – Related to Returns of Current Period.

(c) Re-Assessed Dues on Determined by Offices.

E-CREDIT LEDGER:

(v) Input-Tax Credit on Self Assessed in Return [GSTR=2] shall be credited to E-credit Ledger.

(vi) The amount available in E-Credit Ledger may be used for making payment of outputTax in Prescribed manners.

(vii) Manner Prescribed for using ITC.

1. Credit of IGST..

o First to be utilised for the payment of IGST

o SECOND to be utilised for the payment of- CGST, SGST / UTGST(IN ANY ORDER ANY RATIO)

2. Credit of CGST..

o First to be utilised for the payment of CGST

o Second to be utilised for the payment of IGST

3. Credit of SGST …

o First to be utilised for the payment of SGST


CA. Raj Kumar Chapter 13 – Manner of Payment

173

3. Credit of UTGST …

o First to be utilised for the payment of UTGST


(viii) Refund of balance

Any Balance in E-Cash Ledger or E-Credit Ledger, After payment of Tax, Interest,Penalty, Fee or Any other may be refunded.

(ix) PRESUMPTION OF PASSING ON TAX BURDEN:

Every Taxable Person who has paid the tax shall

- Unless the contrary proved by him

- Be deemed to have passed the full incidence of Tax.

- to the Recipient.

Chapter 13 – Manner of Payment CA. Raj Kumar

174

Interest forbelated period@ 18% [max]for belated

period

(1) Every person who is liable to pay tax but fails to pay the tax orany part thereof to the Government by due date,

- shall for the period for which the tax or any part thereofremains unpaid, pay,

- on his own, interest at such rate, maximum 18% PA.

How tocalculateinterest

(2) The interest shall be calculated, from next day after due date.

Interest @higher % [24%

maximum]

(3) A taxable person

who makes an undue or excess claim of input tax credit or

undue or excess reduction in output tax liability

shall pay interest on such undue or excess claim or on such undueor excess reduction,at such rate not exceeding 24% pa.

- Where CGST credit is used for the payment of Output IGST,

- Then CG shall Transfer Equivalent amount from CGST fund to IGST Fund.

[NOTE: Similar provision also contained in SGST / IGST / UTGST Act]

Section 50: Interest on delayed payment of tax

SECTION – 53 Transfer of Fund

175

ReturnBackground

Note: (1) No rectification of any omission or incorrect particulars shall be allowedafter: next FY SEP. month’s return due date or annual return filing date (whicheveris Earlier)

(2) payment of tax mandatory to file a valid return

(3) Nil return also required to be filed.

Filed by Form Description Frequency Due date Remark

EveryRegisteredpersonincluding CTP

Other than:

Compositedealer

-NR

-ISD

-TDS dedtr

-TCS coll.

GSTR 1

GSTR 2

GSTR 3

GSTR 9(exceptCTP)

GSTR 9C(except:Whoseaudit doneby CAG)

Outwardsupply return

Inward supplyreturn

CombinedReturn

Annual Return

AnnualAuditedstatement(where T/Oexceeds Rs 2crore)

Monthly

Monthly

Monthly

Annually

Annually

By 10th and16th,17th

By 11th to 15th

By 20th

By 31st dec

By 31st dec

Note: GSTR-3 Part: A shall be electronicallygenerated by way of return info from: FORMGSTR-1and 2. Registered taxable person willthen discharge liability of TAX,INTEREST,PENALTY, FEE or ANY OTHER AMOUNTpayable by debiting the E-CASH LEDGER orE- CREDIT LEDGER as given in Form GSTR-3Part B. (Any refund of balance in E CASHLEDGER shall also be claimed in Form GSTR-3Part B )

Note: Where the time limit of GSTR-1 andGSTR-2 has been extended then return shallbe furnished in FORM GSTR- 3B.

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Chapter 14 – Return CA. Raj Kumar

176

Filed by Form Description Frequency Due date Remark

Composite

Dealer

(original andduplicate )

GST CMP 8

GSTR 4

GSTR 9A

Periodicreturn

Annualstatement

Annual Return

Quarterly

Annually

Annually

By 18th

By 30th April

By 31st Dec

RegisteredNONResidenttaxableperson

GSTR 5 Periodicreturn

Monthly By 20th Last Return: 20th of Next Month or within 7days after the last day of validity – whichever isearlier.

Person whoseRC cancel

GSTR 10 FINAL Return One time With- in 3month from(order/effective ofCancellation )whichever islater

Person havingUIN ie UN/INTER-NATIONALorganization/embassy

GSTR 11 Detail of allINWARDSUPPLIES.[Along withapplication forrefund of taxon inwardsupply, if any]

Monthly By 28th

NewRegistrant

GSTR ? First return One time After grant ofRC

Details of outward supply

For the period:The date on which liability ofregistration arises TILL the date on whichRegistration is granted.[Pre RC Period]

CA. Raj Kumar Chapter 14 – Return

177

SECTION 37: OUTWARD SUPPLIES DETAILS i.e. DETAILS OFINVOICE, DEBIT & CREDIT NOTES.[GSTR : 1]

(i) - Every Registered person: [Other Than : Non-Resident, Composite Dealer,ISD, TDS Deductor, TCS Collector]

- Shall Furnish Details of Outward supplies in form GSTR=1 for a tax Periodon or Before 10th of next month and

- Such Details shall be Communicated to Recipient.

NOTE: The Person shall not be allowed to furnish such return from 11th to15th of Next Month i.e. Window closed for GSTR:1 for 5 Days.

(ii) Rectified/Amended GSTR=1

- When GSTR:1 Filed by Supplies it is communicated to Recipient in GSTR:2A thenRecipient files GSTR:2 U/S 38 (Recepient may add or delete any entry given inform GSTR :2A)& it is communicated to supplier in form GSTR:1A

- After that any modification done by Recipient in filing GSTR:2 may be accepted orrejected by Supplier by 17th of Next Month. i.e. Practically 2 Days 16th& 17th andCorresponding GSTR:1 shall be amended if correction made by Recepient isaccepted by supplier.

(iii) MAXIMUM TIME OF AMENDMENT/RECTIFICATION : IN GSTR: 1

- GSTR:1 can be amended or Rectified,

- @ Maximum by the Date of filing of Next Year Sep. Month’s Return or Filingof Annual Return Date (Whichever is Earlier)

NOTE:

- Any Registered Person who has furnished GSTR:1 for any tax period.

- which remain unmatched due to any error / Omission which leads to a caseof Short-Payment.

- Then the Person Liable to pay such tax with Interest.


178

SECTION:38: FURNISHING DETAIL OF INWARD SUPPLY

(i) VALIDATION OF INFORMATION RECEIVED IN FORM GSTR=2A

- Every Registered Person [Other than Non Resident, Composite Dealer, Inputservice distributer, TDS Deductor, TCS Collector]

- Shall Validate, Verify, Modify or Delete (If required) two details of“Outward supplies” filed by supplier in GSTR:1 and Communicated toRecipient in GSTR:2A.

(ii) AFTER THIS - FILING OF GSTR:2 by Recepient

- Such Recipient Shall Furnish “Details of Inward Supplies” in form “GSTR: 2”Including the detail of “RCM” Supplies, and Import of Goods, Credits &Debit note Received.

- After 10th Day but before the 15th day of the next month.

(iii) COMMUNICATION TO SUPPLIER IN GSTR=1A:

- GSTR: 2 as filed by Recipient shall be communicated to supplied in FormGSTR=1A

(iv) MAXIMUM TIME TO AMEND / RECTIFY GSTR:2:

- GSTR Can be Amended or Rectified,

- @ Maximum by the date of filing of Next year September Month’s Return orRelevant Annual Return filing date (whichever is earlier)

NOTES:

- A Registered person who has furnished GSTR 2 for any tax period and

- which have remain unmatched due to any error or omission which leads to a

case of short payment.

- then the person shall be liable to pay Tax with interest.


179

SECTION 39:FILING OF PERIODIC RETURN

(i) GSTR:3

- Every Registered Person (Other than Non Resident, Composite Dealer, ISD,TDS Deductor, TCS Collector)

- Shall Furnish return in GSTR:3 for every calendar month or part thereof,and details of Inward and Outward Supplies, ITC Availed, Tax Payable, TaxPaid Etc.

- On or Before 20th of Next-Month.

(ii) GST-CMP:08

- A composite dealer shall furnish GST- CMP:08 for each Quarter or Partthereof,

- @ Details of turnover within the state and inward supplies, Tax payable, TaxPaid Inward

- on or Before 18th of Next-Month.

(iii) GSTR:5

- Every Registered Non-Resident Taxable Person Shall file GSTR:5 for everyCalendar Month of part thereof

- @ Specified Details

- with in 20 Days after the end of Calendar Month OR

- Within 7 Days after the expiry of Registration period (Whichever is Earlier)

NOTE:

The Commissioner may extend the time limit for Furnishing the Return under thissection.


180

(iv) TAX PAYMENT BY DUEDATE OF RETURN:

- Every Registered person who is required to Furnish Return as above

- shall pay the tax due as per such return by the last date and

- Furnishing the Return accordingly.

(v) NIL RETURN:

- Every registered person (Other than Non Resident, ISD, TDS Deductor,TCS Collector)

- Including Composite Dealer is required to file NIL Return Also

(vi) RECTIFICATION:

After Furnishing a Return, where any registered person discovers any omission orIncorrect Particulars.

- Then he shall rectify such omission or Incorrect Particulars in the UpcomingMonth / Quarter’s Return. [Note: Interest will be payable if any]

- Maximum time for such rectification will be earlier of the two:

- Due Date of Furnishing of Return for September month /Quarterending in September in Next FY.

OR

- Actual Date of Furnishing of Relevant annual Return.

SECTION: 40 : FIRST RETURN @ PRE RC PERIOD- Every Registered Person who has made outward supplies in PRE RC PERIOD [The

Period start with the date on which the person liable for Registration till the dateof grant of Registration)

- shall declare the same in his first return furnished by him after grant ofregistration corticated.

NOTE: Section 41,42,43 not in syllabus


181

Section 44: Annual return @ Annual Frequency

By everyregisteredperson exceptnotified

[GSTR: 9,9A,9B]

(1) Every registered person, [other than

a casual taxable person and

a non-resident taxable person

shall furnish an annual return for every financial yearelectronically on or before the 31st day of December followingthe end of such financial year.

By whoseaccount isrequired to getAudited

[GSTR: 9C]

(2) Every Registered Person who is required to get his accountsaudited [Limit of Rs. 2 crore]shall furnish, electronically, theannual return under sub-section (1) along with a copy of theaudited annual accounts and a reconciliation statement, reconcilingthe value of supplies declared in the return furnished for thefinancial year with the audited annual financial statement,

Section: 45 Final Return [One time Return]Every Registered person: [Other Than : Non-Resident, Composite Dealer, ISD, TDSDeductor, TCS Collector]

- whose registration has been cancelled shall furnish a final return

- within three months of the date of cancellation or date of order of cancellation,whichever is later.


182

Some other Points:

Section: 46

Notice toreturndefaulter

Where a registered taxable person fails to furnish a return undersection 39,[Combined Return] section 44 [Annual Return] or section 45,[Final Return] a notice shall be issued requiring him to furnish suchreturn within 15 days in such form and manner as may be prescribed.[GSTR 3A]

Section: 47

Late fees

Periodic andFinal Return

GSTR-1,2,3,10

Any registered taxable person who fails to furnishthe-details of outward or inward supplies (U/S;37,38,39,45)by the due date shall be liable to paylate fee of Rs.100 [Reduced to Rs. 25 and 10 for NILRETURN] for every day during which such failurecontinues subject to a maximum of Rs. 5000.

AnnualReturn

GSTR- 9,9A,9B,9C

Any registered taxable person who fails to furnishthe return required under section 44 by the due dateshall be liable to a late fee of Rs.100 for every dayduring which such failure continues subject to amaximum of an amount calculated at a 0.25% of histurnover in the State)/UT.

Section :48

GSTPractitioner

Note: The responsibility for correctness shall continue to rest with theregistered taxable person.

To be a GST Practitioner need to apply in specified form.

The person should be: Indian Citizen, sound mind, solvent, non-convicted, Graduate, post graduate, Qualified final exam ofCA/CS/CMA etc]

No person shall be eligible to attend before any authority as aGST practitioner in connection with any proceedings under theAct on behalf of any registered or un-registered person unless hehas been enrolled for this.

A GST practitioner attending on behalf of a registered or anunregistered person in any proceedings under the Act before anyauthority shall produce before such authority, if required, a copyof the authorisation.

183

E-Way Bill

[Rule 138 of CGST Rules, 2017]

1. OBJECT To control /stop practice of bogus invoice related to GOODS to avoidtax evasion. It is not applicable on services as services have no physicalexistance.

2. When E-Way Bill is

Required

[EWB is linkedto movementof goods andnot linked tosupply]

YES if exceed the limit- If Value of consignment exceed Rs. 50,000(for lower value : E way bill - optional)

VALUE of consignment:

Consolidated Invoice cum Bill

Value of Taxable Goods : 30,000 Value for E- Way Bill

Value of Exempted Goods : 25,000

55,000 30,000 + 8400 + 4500 = Rs.42900

+ GST @ 28% 8400 + 25,000 EWB : Not Mandatory

+ Com. Cess 15% 4500

Total 67,900

Crux: Total Invoice value – Exempted Value = XXX

15

Chapter 15 – E-Way Bill CA. Raj Kumar

184

Mnadatory EWB: In following situation: E Way Bill MANDATORY Irrespectiveof value of consignment.

Inter state movement of goods to Job Worker

Not a SUPPLY

Inter state Movement of Handicraft goods.

3.

INTRA/INTER

E- Way Bill – Required for Inter - state as well as INTRA STATEmovement of goods however for INTRA State movement Value for EWBmay very eg. DELHI – INTRA STATE value of consignment Rs. 1,00,000Plus.

4

EWB Made By

S= Supplier

R= Recipient

T=Transporter

Sender Receiver

Transporter

EWB Can be made by any of the above person S T R

By using GSTIN (Registered person), PAN & Aadhar (UnregisteredPerson): Enrolment – USER ID & Password

Login

EWB – Generate

having 12 digit – unique digital number with QR Code

for Quick verification during movement by interceptor.

EWB – NUMBER – Communicated by SMS / E mail :

S T R

Principal(DL)

Job worker(HR)

CA. Raj Kumar Chapter 15 – E-Way Bill

185

5.

Type of EWB

Normal E Way Bill: (Transportation of goods of one type ie one HSN)

E – Way Bill

Bulk E- Way Bill: Transportation of goods of multiple code(Support with Excell sheet) Ie having multiple H. S.N Goods

Consolidated EWB

DL

EWB -1

EWB – 2

EWB -3 CHD PATHANKOT

EWB - 4 DL

ConsolidateEWB

6

Cancellationof E – Way

Bill

EWB- Once generated can be cancelled due to various reasons within 24hours.

Reject By owner: with in 72 hours.

7

Exemption ofEWB

Non-motorized vehicles,

Exempted goods/

Non-taxable goods,

S

S

S

S

JAMMU


186

-Goods wise

-Area wise

-Vehicle wise

-Person wiseetc.

GEMS & Jewellery,

Coal, LPG, Kerosine-oil ,

Postals,

Currency,

Custom control goods,

Goods to Nepal/Bhutan,

Where empty cylinders for packing of liquefied petroleum gas arebeing moved for reasons other than supply.

Movement – which is not a supply (Negative list of supplies)

Specified Area (between SEZ and DTA),

Government Department (eg. Defence), Empty Container

8

Validity of

E- Way Bill

Sr.No.

Distance Validity period

1. Upto 100 km. One day in cases other than OverDimensional Cargo or multimodal shipmentin which at least one leg involves transportby ship

2. For every 100 km.or part thereofthereafter

One additional day in cases other thanOver Dimensional Cargo or multimodalshipment in which at least one leg involvestransport by ship

3. Upto 20 km One day in case of Over DimensionalCargo or multimodal shipment in which atleast one leg involves transport by ship


187

4. For every 20 km.or part thereofthereafter

One additional day in case of OverDimensional Cargo [or multimodal shipmentin which at least one leg involves transportby ship

By commissioner : in Certain CasesExtension :

By EWB Generator: Extend it.

Note:The validity of the e-way bill may be extended within eight hoursfrom the time of its expiry.

Note:Bill generate in one state (say in UP) – will be valid for all state /UT ie. valid for all over India

9

In case of useof

Multivehicle

- Where movement of goods involves use of multivehicle then onlyone E-way bill shall be continued with corresponding Updation inPART-B of EWB ie Transporter Detail.

- However under Multiple Vehicle Movement where a vehicle movesIntra State and Covers distance only Upto 50Km them PART- B ofEWB need not to be Updated.

11

Own Master

Like adding beneficery for NET Banking purpose.

(List of customer, List of supplier, Item, item code)

12.

Time of EWB

Before movement of goods

GST–EWB = 01

S /T /R

PART : AFrom :To : Bill to & Ship toItem Detail : Destination / HSN/Rateetc.


188

S: Sender, T: Transporter, R: Recepient

S / T / R

Both parts are independent and can be filed in any sequence. EWBnumber will be generated on filing of of any part.

After movement of goods

Incase of Rail /Air/Vessel – E – Way Bill shall be generated by suplier orreciver either before movement or after movement, However, goods willbe deliverd to reciver – on production of E- Way Bill.

Checkpost

PART : B

TRANSPORTER DETAIL

Supplier Driver (P.I.C.) Receiver

Officer

Check Relevant Document

E-Way BillQR Code – VerifyE- Way Bill No.

Online summary upload by officer(Within 24 hours) on Portal

& Detailed report: within 3+3 Days on portal

Note: Driver – hold more than 30 minutes – Complained facility

Note : Physical verification done once – Not again physical verification unlessspecific information of contravention.

: Invoice:E- Way Bill (Hard Copy / E-Mode): Bilty; Bill of Entry in case of Imported goods.Advance method for

verification

Use radio frequencyidentification devices


189

Note: No person (including a consignor, consignee, transporter, an e-commerceoperator or a courier agency) shall be allowed to furnish the information in PART A ofFORM GST EWB-01 in respect of a registered person, whether as a supplier or arecipient, who,-

(a) being a person paying tax under section 10, or availing the benefit of notification No.02/2019, has not furnished the statement in FORM GST CMP-08 for twoconsecutive quarters; or

(b) being a person other than a person specified in clause (a), has not furnished thereturns for a consecutive period of two months.

Test Yourself

Question 1

A consignor is required to move goods from City X to City Z. He appoints Transporter Afor movement of his goods. Transporter A moves the goods from City X to City Y. Forcompleting the movement of goods i.e., from City Y to City Z, Transporter A now handsover the goods to Transporter B. Thereafter, the goods are moved to the destinationi.e. from City Y to City Z by Transporter B. How many e way bill are issued ?

Answer

In such a scenario, only one e-way bill would be required. Part A can be filled by theconsignor and then the e-way bill will be assigned by the consignor to Transporter A.Transporter A will fill the vehicle details, etc. in Part B and will move the goods fromCity X to City Y.

On reaching City Y, Transporter A will assign the said e-way bill to the Transporter B.Thereafter, Transporter B will be able to update the details of

Part B. Transporter B will fill the details of his vehicle and move the goods from City Yto City Z [Press Release No. 144/2018 dated 31.03.2018].

Question 2

A consignor hands over his goods for transportation on Friday to transporter. However,the assigned transporter starts the movement of goods on Monday. When the validityperiod of E Way bill starts?


190

Answer

The validity period of e-way bill starts only after the details in Part B are updated bythe transporter for the first time.

In the given situation, Consignor can fill the details in Part A on Friday and handover hisgoods to the transporter. When the transporter is ready to move the goods, he can fillPart B i.e. the assigned transporter can fill the details in Part B on Monday and thevalidity period of the e-way bill will start from Monday [Press Release No. 144/2018dated 31.03.2018].

CA. Raj Kumar List of Sections of CGST Act, 2017

191

PRELIMINARY

Section 1 : Short title, extent and commencement.

Section 2 : Definitions.

ADMINISTRATION

Section 3 : NA

Section 4 : NA

Section 5 : NA

Section 6 : NA

LEVY AND COLLECTION OF TAX

Section 7 : Supply.

Section 8 : Composite and Mixed supplies.

Section 9 : Charging Section

Section 10 : Charging section (Composition levy.)

Section 11 : Exemptions.

LIST OF SECTIONS OF CGST ACT, 2017

List of Sections of CGST Act, 2017 CA. Raj Kumar

192

TIME AND VALUE OF SUPPLY

Section 12 : Time of supply: Goods.

Section 13 : Time of supply: Services.

Section 14 : Change in rate of tax in respect of supply of goods or services.

Section 15 : Value of taxable supply.

INPUT TAX CREDIT

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 forjob work.

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

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

REGISTRATION

Section 22 : Persons liable for registration.

Section 23 : Persons not liable for registration

Section 24 : Compulsory registration in certain cases.


193

Section 25 : Procedure for registration

Section 26 : Deemed registration

Section 27 : Special provisions relating to casual taxable person and non-residenttaxable person.

Section 28 : Amendment of registration.

Section 29 : Cancellation or suspension of registration.

Section 30 : Revocation of cancellation of registration.

TAX INVOICE, CREDIT AND DEBIT NOTES

Section 31 : Tax invoice

Section 32 : Prohibition of unauthorised collection of tax.

Section 33 : Amount of tax to be indicated in tax invoice and other documents.

Section 34 : Credit and debit notes.

ACCOUNTS AND RECORDS

Section 35 : Accounts and other records.

Section 36 : Period of retention of accounts.

List of Sections of CGST Act, 2017 CA. Raj Kumar

194

RETURNS

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 reclaim of input tax credit.

Section 43 : Matching, reversal and reclaim of reduction in output tax liability.

Section43A

: Procedure for furnishing return and availing input tax credit

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.


195

PAYMENT OF TAX

Section 49 : Payment of tax, interest, penalty and other amounts.

Section49A

: Utilisation of input tax credit subject to certain conditions

Section49B

: Order of utilisation of input tax credit.

Section 50 : Interest on delayed payment of tax.

Section 51 : Tax deduction at source.

Section 52 : Collection of tax at source.

Section 53 : Transfer of input tax credit.