Maharaja Surajmal Institute
(Affiliated to GGSIPU, Delhi)
Course: Bachelor of Business Administration
Subject Module
On
GOODS AND SERVICES TAX
BBA Semester V
(Credit: 4)
Module Contributor(s):
/ Compiled by:
Dr. Supriya Chaudhary,
Dr. Anupama Sharma,
Dr. Ruchika Gahlot
Dr. Anshu Lochab
Ms. Chetna Grewal,
July, 2021
CONTENTS
Unit
Name
UNIT 1 Introduction: GST in India
Page
Number
4-42
Lesson1: Meaning, concept, advantages,
disadvantages, features, Constitutional
provisions of Indirect Taxes
4-16
Lesson2: Supply- basic concept, meaning,
types, composite and mixed supplies
17-19
Lesson3: Services under GST- Meaning,
concept, levy and charge of GST.
Lesson 4: Payment of tax
Lesson 5: Registration- meaning, concept,
procedure, person and taxable person
20-30
UNIT 2
Lesson 6: Assessment of tax, Tax invoice,
credit and debit notes, Accounts and Records
Lesson 7: Input tax credit
Lesson 8: Supply- Place, value and time of
supply
Lesson 9: Valuation and exemption
Lesson 10: Job work
43-100
43-65
32-34
35-41
66-71
72-84
85-97
98-100
UNIT 3
Lesson 11: Steps to file returns and their due
dates
Lesson 12: Tax collection at source
Lesson 13: Demands and Recovery under
GST
Lesson 14: Inspection, Search, Seizure and
Arrest Under GST
Lesson 15: Advance Ruling under GST
Lesson 16: Appeals and Revision under GST
101-152
101-126
UNIT 4
Lesson 17: Audit, offences and penalties
under GST
Lesson 18: Activities or transactions which
shall be treated as neither supply of goods
153-162
153-158
127-130
131-139
140-143
144-147
148-152
159-160
nor as supply of services
Lesson 19: Role of GST Practitioner
Multiple choice questions
Long questions
Suggested Readings
Key words
161-162
163-194
195-199
200
UNIT 1
The core of government’s fiscal policy is the power to collect taxes and use them for public purposes. The
power of fiscal policy to generate economic growth and equity comes from the privilege to tax and spend.
Tax is a payment compulsorily collected from individuals or firms by government. A direct tax is levied
on the income or profits of an individual or a company respectively. The word ‘direct’ is used to denote
the fact that the burden of tax falls on the individual or the company paying the tax and cannot be passed
on to anyone else. For example, income tax, corporate tax, wealth tax, etc. An ‘indirect tax’ is levied on
manufacturing and sale of goods or services. It is called ‘indirect’ because the real burden of such tax is
not borne by the individual or firm paying it but is passed in to the consumer. Excise duty, customs duty,
sales tax etc. are the examples. Good and Services Tax (GST), for example, an indirect tax, is paid by the
consumer to the seller and the seller in turn pays to the government.
IMPORTANCE OF TAXATION FOR THE GOVERNMENT, ECONOMY
AND SOCIETY:
Taxation has revenue and non- revenue aims. The revenue it fetches helps government in meeting its
growth goals through investment. Taxes provide funds that can accomplish:
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Provision for public goods
National security
Enforcement of law and order
Redistribution of wealth through progressive taxation system
Economic infrastructure- roads, ports, etc.
Social infrastructure like education, health, etc
Social security measures like insurance, pensions, unemployment benefits
Reduce economic inequality
Provide basic minimum to all through a scheme like Universal basic Income (UBI), if tax
collections are adequate.
If tax collections show buoyancy, government’s need to borrow is reduced and thus
macroeconomic stability can come about
To modernize the economic system like GST
Promote savings
Boost exports by making exports free of the GST burden
Protect domestic production by raising the import duties selectively
Direct Tax
Direct tax is imposed directly on the
Indirect Tax
Indirect tax is tax collected by intermediaries
taxpayer and is paid by the taxpayer
(for e.g. retailers) from the ultimate taxpayer
directly to the government. The incidence i.e. consumers. The incidence and impact of
and impact of the tax is on the same person. the tax is on different persons.
Its burden can be shifted from one person to
Its burden cannot be transferred to other
onther. For e.g. manufacturer shifts the burden
person
of tax to reatailers who inturn shift it ot
consumers.
Indirect tax may affect prices, as generally
It doesn't affect the prices.
consumers pay high prices which are
inclusive of taxes.
For example - Income tax, property tax etc. For example - VAT, custom duty etc.
TAXATION IN INDIA
India has an elaborate federal Constitutional scheme for imposition, collection and appropriation of taxes.
The Central government levies direct taxes such as personal income tax and corporate tax and indirect
taxes like customs and excise duties and services tax. In 2017, however, excise duties and service tax
were integrated into the Goods and Services Tax (GST) for some products. States are a part of GST
though they have residuary power to levy Value added tax (VAT) on goods like petroleum products, tax
on liquor etc. States also have the power to levy direct taxes like tax on agricultural income.
Since 1991, the tax system in India has undergone substantial rationalization- reduced rates and slabs and
better administration. Some of the tax reforms made are:
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Broadening the tax base to include services, fringe benefits, stock and commodity market
transactions etc.
Reduction in customs and excise duties. Peak customs rate is today 10% which is imposed on
90% of non-agricultural industrial goods.
Lowering of corporate tax rates to 25% over a four period from 2015.
Wealth tax is abolished in the Union Budget (2016-2017) andintegrated into the highest income
tax bracket.
Rationalizing the personal income tax rates and slabs starting from 1997 ‘dream budget’.
GST from 2017.
Use of technology for quicker processes.
Simpler procedures for greater compliance.
Stringent action against black money holders through disclosure schemes which have very little
amnesty component eg- Income Disclosure Scheme (IDS) 2016 and severe monetary penalty as
in Pradhan Mantri Garib Kalyan Yojana 2016 (PMGKY) so that they pay adequate tax.
Constitution (122nd Amendment) Act, 2014 and its Salient features
Union Finance Minister Shri Arun Jaitley Intoduces the Constitution Amendment Bill on
Goods and Services Tax (GST) in Lok Sabha;
New Article 246a Proposed to Confer Simultaneous Power to Union and State Legislatures
to Legislate on GST ;
Centre To Compensate States for Loss of Revenue Arising on Account of Implementation
of the GST for a period up to Five Years
The Union Cabinet approved on 17th December,2014 the proposal for introduction of a Bill in
the Parliament for amending the Constitution of India to facilitate the introduction of Goods and
Services Tax (GST) in the country. The Union Finance Minister Shri Arun Jaitley introduced the
said Bill in the Lok Sabha today.
The proposed amendments in the Constitution will confer powers both to the Parliament and
State legislatures to make laws for levying GST on the supply of goods and services in the same
transaction.
GST will simplify and harmonise the indirect tax regime in the country. GST will broaden the
tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the
seamless transfer of input tax credit from one state to another in the chain of value addition, there
is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.
It is thus, expected that introduction of GST will foster a common and seamless Indian market
and contribute significantly to the growth of the economy.
Download the Constitution (122nd Amendment) Act, 2014.
Following are the salient features of this Bill:
• A new Article 246A is proposed which will confer simultaneous power to Union and State
legislatures to legislate on GST.
• A new Article 279A is proposed for the creation of a Goods & Services Tax Council which will
be a joint forum of the Centre and the States. This Council would function under the
Chairmanship of the Union Finance Minister and will have Ministers in charge of
Finance/Taxation or Minister nominated by each of the States & UTs with Legislatures, as
members. The Council will make recommendations to the Union and the States on important
issues like tax rates, exemptions, threshold limits, dispute resolution modalities etc.
• It is proposed to do away with the concept of ‘declared goods of special importance’ under the
Constitution.
• Centre will compensate States for loss of revenue arising on account of implementation of the
GST for a period up to five years. A provision in this regard has been made in the Amendment
Bill (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the
fourth year and 50% in the fifth year).
The proposed GST has been designed keeping in mind the federal structure enshrined in the
Constitution and will have the following important features:
• Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional
Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in
GST.
• At the State level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and
Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
• All goods and services, except alcoholic liquor for human consumption, will be brought under
the purview of GST. Petroleum and petroleum products have also been Constitutionally brought
under GST. However, it has also been provided that petroleum and petroleum products shall not
be subject to the levy of GST till notified at a future date on the recommendation of the GST
Council. The present taxes levied by the States and the Centre on petroleum and petroleum
products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the
interim period.
• Both Centre and States will simultaneously levy GST across the value chain. Centre would levy
and collect Central Goods and Services Tax (CGST), and States would levy and collect the State
Goods and Services Tax (SGST) on all transactions within a State.
• The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all interState supply of goods and services. There will be seamless flow of input tax credit from one
State to another. Proceeds of IGST will be apportioned among the States.
• GST is a destination-based tax. All SGST on the final product will ordinarily accrue to the
consuming State.
• GST rates will be uniform across the country. However, to give some fiscal autonomy to the
States and Centre, there will a provision of a narrow tax band over and above the floor rates of
CGST and SGST.
• It is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in
the course of inter-State trade or commerce. This tax will be for a period not exceeding 2 years,
or further such period as recommended by the GST Council. This additional tax on supply of
goods shall be assigned to the States from where such supplies originate.
INTRODUCTION TO GST
GST is known as the Goods and Services Tax. It is an indirect tax which has replaced
many indirect taxes in India such as the excise duty, VAT, services tax, etc. The
Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and
came into effect on 1st July 2017.
In other words, Goods and Service Tax (GST) is levied on the supply of goods and
services. Goods and Services Tax Law in India is a comprehensive, multi-stage,
destination-based tax that is levied on every value addition. GST is a single
domestic indirect tax law for the entire country.
GST is needed to forge a common domestic market and attract investment. Eliminating a
multiplicity of existing indirect taxes would simplify the tax structure, bring more firms into ‘tax
net’ as there is incentive to pay taxes due to the attraction of input tax credits and thus create tax
buoyancy to enable government to consolidate the fiscal system and provide for greater
resources for social sector. By lowering business costs and transaction costs, it would boost
economic growth and bring India in line with practices in many developed economies. Reducing
production costs would make exporters more competitive. Black money and evasion will reduce
as GST is transparent.
GST is a comprehensive, multi-stage, destination-based tax that is levied on value addition. It
combines many indirect taxes and duties into a single consolidated tax. It provides-set off for tax
paid on inputs which removes cascading (tax on tax). Total burden of the tax is exclusively borne
by te domestic consumer. Exports are not subject to GST.
Before the Goods and Services Tax could be introduced, the structure of indirect tax
levy in India was as follows:
Under the GST regime, the tax is levied at every point of sale. In the case of intrastate sales, Central GST and State GST are charged. All the inter-state sales are
chargeable to the Integrated GST.
Now, let us understand the definition of Goods and Service Tax, as mentioned above,
in detail.
Multi-stage
An item goes through multiple change-of-hands along its supply chain: Starting from
manufacture until the final sale to the consumer. Each final commodity is produced
through a process of value addition in many steps of value addition from raw material
stage to the final sale to the consumer. Value addition is not only physical but also by
way of storage, distribution and sale. At every stage tax is paid and under GST that is
returned (credited) when it is shown that value is further added and the goods resold.
Let us consider the following stages:
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Purchase of raw materials
Production or manufacture
Warehousing of finished goods
Selling to wholesalers
Sale of the product to the retailers
Selling to the end consumers
The Goods and Services Tax is levied on each of these stages making it a multi-stage
tax.
Value Addition
A manufacturer who makes biscuits buys flour, sugar and other material. The value of
the inputs increases when the sugar and flour are mixed and baked into biscuits.
The manufacturer then sells these biscuits to the warehousing agent who packs large
quantities of biscuits in cartons and labels it. This is another addition of value to the
biscuits. After this, the warehousing agent sells it to the retailer.
The retailer packages the biscuits in smaller quantities and invests in the marketing of
the biscuits, thus increasing its value. GST is levied on these value additions, i.e. the
monetary value added at each stage to achieve the final sale to the end customer.
Destination-Based
Destination based means that goods are taxed where they are sold to the consumer and
not where they are made. That is, if goods are made in Gujarat and sold in Telangana,
they are taxed in Telangana where the consumer pays it. Consider goods
manufactured in Maharashtra and sold to the final consumer in Karnataka. Since the
Goods and Service Tax is levied at the point of consumption, the entire tax revenue
will go to Karnataka and not Maharashtra. The manufacturing state gains by its
prosperity which creates a big market for its own goods and sevices within its own
geography.
2. The Journey of GST in India
The GST journey began in the year 2000 when a committee was set up to draft law. It
took 17 years from then for the Law to evolve. In 2017, the GST Bill was passed in
the Lok Sabha and Rajya Sabha. On 1st July 2017, the GST Law came into force.
3. Advantages of GST
GST has mainly removed the cascading effect on the sale of goods and services.
Removal of the cascading effect has impacted the cost of goods. Since the GST
regime eliminates the tax on tax, the cost of goods decreases.
Also, GST is mainly technologically driven. All the activities like registration, return
filing, application for refund and response to notice needs to be done online on the
GST portal, which accelerates the processes.
4. What are the components of GST?
There are three taxes applicable under this system: CGST, SGST & IGST.
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CGST: It is the tax collected by the Central Government on an intra-state sale
(e.g., a transaction happening within Maharashtra)
SGST: It is the tax collected by the state government on an intra-state sale
(e.g., a transaction happening within Maharashtra)
IGST: It is a tax collected by the Central Government for an inter-state sale
(e.g., Maharashtra to Tamil Nadu)
UTGST: It is applicable on supplies within the Union Territory. Tax collected
goes to the administration of the Union Territory. It applies to the five Union
Territories without legislatures namely- Andaman and Nicobar Islands, Dadra
and Nagar Haveli, Chandigarh, Lakshadweep and Daman and Diu.
In most cases, the tax structure under the new regime will be as follows:
Transaction
New
Regime
Old Regime
Revenue Distribution
Sale within the
State
CGST +
SGST
VAT + Central
Excise/Service tax
Revenue will be shared equally between the Centre and the
State
Sale to another
State
IGST
Central Sales Tax +
Excise/Service Tax
There will only be one type of tax (central) in case of interstate sales. The Centre will then share the IGST revenue based
on the destination of goods.
Illustration:
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Let us assume that a dealer in Gujarat had sold the goods to a dealer in Punjab
worth Rs. 50,000. The tax rate is 18% comprising of only IGST.
In such a case, the dealer has to charge IGST of Rs.9,000. This revenue will go to
Central Government.
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The same dealer sells goods to a consumer in Gujarat worth Rs. 50,000. The
GST rate on goods is 12%. This rate comprises CGST at 6% and SGST at 6%.
The dealer has to collect Rs.6,000 as Goods and Service Tax, Rs.3,000 will go to the
Central Government and Rs.3,000 will go to the Gujarat government since the sale is
within the state.
5. Tax Laws before GST
In the earlier indirect tax regime, there were many indirect taxes levied by both the
state and the centre. States mainly collected taxes in the form of Value Added Tax
(VAT). Every state had a different set of rules and regulations.
Inter-state sale of goods was taxed by the centre. CST (Central State Tax) was
applicable in case of inter-state sale of goods. The indirect taxes such as the
entertainment tax, octroi and local tax were levied together by state and centre. These
led to a lot of overlapping of taxes levied by both the state and the centre.
For example, when goods were manufactured and sold, excise duty was charged by
the centre. Over and above the excise duty, VAT was also charged by the state. It led
to a tax on tax effect, also known as the cascading effect of taxes.
The following is the list of indirect taxes in the pre-GST regime:
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Central Excise Duty
Duties of Excise
Additional Duties of Excise
Additional Duties of Customs
Special Additional Duty of Customs
Cess
State VAT
Central Sales Tax
Purchase Tax
Luxury Tax
Entertainment Tax
Entry Tax
Taxes on advertisements
Taxes on lotteries, betting, and gambling
CGST, SGST, and IGST have replaced all the above taxes.
However, certain taxes such as the GST levied for the inter-state purchase at a
concessional rate of 2% by the issue and utilisation of ‘Form C’ is still prevalent.
It applies to certain non-GST goods such as:
i.
ii.
iii.
iv.
v.
vi.
Petroleum crude;
High-speed diesel
Motor spirit (commonly known as petrol);
Natural gas;
Aviation turbine fuel; and
Alcoholic liquor for human consumption.
It applies to the following transactions only:
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Resale
Use in manufacturing or processing
Use in certain sectors such as the telecommunication network, mining, the
generation or distribution of electricity or any other power sector
GST Council
GST Council is an apex member committee to modify, reconcile or to procure any law or
regulation based on the context of goods and services tax in India. The council is headed by the
union finance minister Nirmala Sitharaman assisted with the finance minister of all the states of
India.
A single common “Goods and Services Tax (GST)” was proposed and given a go-ahead in 1999
during a meeting between the Prime Minister Atal Bihari Vajpayee and his economic advisory
panel. Mr Vajpayee set up a committee headed by the then finance minister of West Bengal,
Asim Dasgupta to design a GST model.
Later, Finance Minister P Chidambaram in February 2006 continued work on the same. It finally
was implemented on July 1st, 2017 to be a comprehensive, destination-based indirect tax that has
replaced various indirect taxes that were implemented by the State and Centre such as VAT,
excise duty, and others. The government of India also formed a GST Council to govern the
rules the Goods and Services Tax.
The GST council is the key decision-making body that will take all important decisions
regarding the GST. The GST Council dictates tax rate, tax exemption, the due date of forms, tax
laws, and tax deadlines, keeping in mind special rates and provisions for some states. The
predominant responsibility of the GST Council is to ensure to have one uniform tax rate for
goods and services across the nation
How is the GST Council structured?
The Goods and Services Tax (GST) is governed by the GST Council. Article 279 (1) of the
amended Indian Constitution states that the GST Council has to be constituted by the President
within 60 days of the commencement of the Article 279A.
According to the article, GST Council will be a joint forum for the Centre and the States. It
consists of the following members:
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The Union Finance Minister, Arun Jaitley will be the Chairperson
As a member, the Union Minister of State will be in charge of Revenue of Finance
The Minister in charge of finance or taxation or any other Minister nominated by each State
government, as members.
GST Council recommendations
Article 279A (4) specifies that the Council will make recommendations to the Union and the
States on the important issues related to GST, such as, the goods and services will be subject or
exempted from the Goods and Services Tax.
They lay down GST laws, principles that govern the following:
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Place of Supply
Threshold limits
GST rates on goods and services
Special rates for raising additional resources during a natural calamity or disaster
Special GST rates for certain States
Features of GST Council :
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GST Council office is set up in New Delhi
Revenue Secretary is appointed as the Ex-officio Secretary to the GST Council
Central Board of Excise and Customs (CBEC) is included as the chairperson as a permanent
invitee (non-voting) to all proceedings of the GST Council
Create a post for Additional Secretary to the GST Council
Create four posts of commissioner in the GST Council Secretariat (This is at the level of Joint
Secretary)
GST Council Secretariat will have officers taken on deputation from both the Central and State
Governments
The cabinet also provides funds for meetings the expenses (recurring and nonrecurring) of the
GST Council Secretariat. This cost is completely borne by the Central government.
Functions of GST Council:
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As per Article 279A (4), the Council will make recommendations to the Union and the States on
important issues related to GST, like
Taxes, cesses, and surcharges to be subsumed under the GST;
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Goods and services which may be subject to, or exempt from GST;
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The threshold limit of turnover for application of GST;
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Rates of GST;
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Model GST laws, principles of levy, apportionment of IGST and principles related to place of
supply;
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Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and
Kashmir, and Uttarakhand; and
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Other related matters.
GST rates will include the floor rates with bands, special rates for raising additional resources
during natural disasters / calamities, special provisions for certain States, etc.
SUPPLY UNDER GST
Under GST, Supply is considered a taxable event for charging tax. The liability to pay tax arises
at the ‘time of supply of goods or services’. Thus, determining whether or not a transaction falls
under the meaning of supply, is important to decide GST’s applicability.
Concept Before GST
Under the erstwhile indirect tax regime, there was no concept of Supply. The stage at which
indirect taxes were levied varied under different tax laws. The ‘excise duty’ was charged on
goods manufactured when they were taken out of the factory. ‘Service Tax’ was levied based on
certain rules known as the ‘point of taxation’ rules, for services rendered. A VAT would arise on
the value of the sale of goods or provision of services. The present system has merged all taxes
to maintain a single taxable event .
What is supply under GST?
Supply includes sale, transfer, exchange, barter, license, rental, lease and disposal. If a person
undertakes either of these transactions during the course or furtherance of business for
consideration, it will be covered under the meaning of Supply under GST.
Elements of Supply
Supply has two important elements:
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Supply is done for a consideration
Supply is done in course of furtherance of business
If the aforementioned elements are not met with, it is not considered as a sale.
Examples:
1. Mr. A buys a table for Rs.10,000 for his personal use and sells it off after 10 months of use to
a dealer. This is not considered as supply under CGST as this is not done by Mr A for the
furtherance of business.
2. Mrs. B provides free coaching to neighbouring students as a hobby. This is not considered as
supply as this act is not performed for a consideration.
However, as specified in Schedule I of GST Act, certain activities are considered as supply even
if it is made without consideration.
Classification of supply and types
Composite supply and Mixed Supply:
There are a few supplies which are made together with two or more items. Such supplies are
further classified into Composite Supply and Mixed Supply.
A supply comprising of two or more goods/services, which are necessarily supplied in
conjunction with each other as per frequent business practices followed in that area. In other
words, these items cannot be supplied individually. There is a principal supply and a secondary
supply in the whole transaction. In such cases, the tax rate on principal supply will apply on the
entire supply.
E.g. Buying a Dry Fruit Gift Box for Diwali. It includes dry fruits, a box and a wrapper. Box and
wrapper cannot be sold individually without the main content which is dry fruit. This is
composite supply.
A supply comprising of two or more goods/services, wherein the supplies are independent of
each other and are not necessarily required to be sold together is called a mixed supply. The first
condition to be met for mixed supply is that ‘it should not be a composite supply’. In such cases,
the tax rate that is higher of the two supplies will be applicable to the entire supply.
E.g Buying a Christmas package consisting of cakes, aerated drinks, chocolates, Santa caps and
other gift items. Each of these items can be sold separately and are not dependent on each other.
This is mixed supply.
Import of services:
Import of goods/services with consideration is considered as supply whether for personal or
business use.
Scope : List of supplies and taxability
Activities considered as a supply of goods as per Schedule II of the GST Act
Transfer – Transfer of title of goods
Transfer of business assets:
1. Business assets transferred/disposed of with or without consideration
2. If the owner ceases to be a taxable person then his business assets will be assumed to be supplied to him
in course of his business-
This is not applicable in the following cases:
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Business is transferred to another person
Business is carried by a taxable representative
Supply of goods by an unincorporated AOP/BOP for a consideration
Activities considered as a supply of services as per Schedule II of GST Act
Transfer -Transfer of right in goods without transfer of title
Land and building –
1. Lease, rent, tenancy, easement, licence to occupy land
2. Lease or letting out of the building (Building includes commercial/ industrial/residential complex for
business use either wholly or partly)
Transfer of business assets: The owner uses or allows to use business assets for personal use.
Construction of a building/complex intended for sale to a buyer wholly or partly
Temporary transfer or permitting the use of intellectual property right
Renting of immovable property (Rented residence is exempted from GST)
Development of information technology software
Agreeing to refrain from an act – Non-competition agreements
Transfer of right to use any goods for a consideration
Any treatment or process which is applied to another person’s goods is a supply of services.
Activities or transactions treated neither as the sale of goods nor sale of
services as per Schedule III of GST Act
Following are the transactions covered under negative list:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Services provided by an employee to the employer.
Gifts up to Rs.50,000/- in value in a Financial Year, by an employer to an employee
Services of the funeral, burial, crematorium or mortuary including transportation of the deceased
Services by any court or Tribunal.
Duties performed by the MP/MLA/MLC/ Members of Local Bodies.
Duties performed by any person as a Chairperson or a Member or a Director in a body established
by the Central Government or a State Government or local authority.
Duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity.
Sale of Land
Sale of Building (However, If construction of a complex /building intended for sale to a buyer
and part of the consideration is received before completion, then it will be treated as Supply of
Services)
Actionable claims, other than lottery, betting and gambling.
Thus, GST law has simplified tax treatment by clearly classifying activities considered as
goods/services or transactions considered as neither sale of goods or services.
Activities Under Schedule I, II And III
Besides the above definition, there are three schedules that mention the activities that are
considered as Supply under GST.
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Schedule I mentions the transactions that are considered supply even if there is no consideration involved.

Activities are treated as supply of goods and supply of services are mentioned under GST Schedule II .

Schedule III lists the activities that are treated as neither supply of goods nor supply of services under
GST.
Schedule I
There are certain activities that are construed as supply even if there is no consideration
involved. Such supplies are referred to as “Deemed Supplies” under GST. Following are the list
of all such activities:


Permanent transfer or disposal of business assets. Provided Input Tax Credit has been availed on such
assets.
Supply of goods or services between related persons or distinct persons as mention under section 25.
Provided such a supply is made in the ordinary course of business or for furtherance of business.

Principal supplying goods to his agent. Provided the agent undertakes to supply such goods on behalf of
the principal.

Agent supplying goods to his Principal. Provided the agent undertakes to receive such goods on behalf of
the principal.

Taxable person importing services from either a related person or any of his establishments outside India.
Schedule II
Activities Treated As Supply of Goods
Following are the activities that form “Supply of Goods” under GST:
1. Any transfer of title in Goods
2. Transfer of title in goods under an agreement stipulating that the property in goods shall pass at a future
date upon payment of full consideration as agreed.
3. Goods forming part of the assets of a business transferred or disposed of by or under the direction of the
person carrying on the business. Provided such goods are transferred so that they no longer form part of
those assets. Moreover, such a transfer takes place whether or not for a consideration.
4. There are cases where a person ceases to be a taxable person. In such a case, goods forming part of the
assets of any business carried on by the said person shall be deemed to be supplied by him in the course
or furtherance of his business. Provided such goods are supplied immediately before the person ceases to
be a taxable person, unless:


The business is transferred as a going concern to another person
Business is carried on by a personal representative who is deemed to be taxable
5. Supply of goods by any unincorporated association to a member for cash, deferred payment or other
valuable consideration.
Activities Treated As Supply of Services
Following are the activities that form “Supply of Services” under GST:
1. Transfer of right in goods or of undivided share in goods without the transfer of title
2. Any lease, tenancy, easement, licence to occupy land
3. Lease or letting out of the building including a commercial, industrial or residential complex for business
or commerce, either wholly or partly
4. Any treatment or process which is applied to another person’s goods
5. Transfer of business assets:



By or under the direction of a person carrying on a business
Goods held assets or used for the purposes of the business are put to any private use or
Are used, or made available to any person for use, for any purpose other than the purpose of the
business, whether or not for a consideration
6. Renting of immovable property
7. Construction of a complex, building, civil structure or a part thereof, including a complex or building
intended for sale to a buyer, wholly or partly. This is except the cases where:


the entire consideration has been received after issuance of completion certificate, where required
by the competent authority or
after its first occupation, whichever is earlier.
8. Temporary transfer or permitting the use of any intellectual property right
9. Development, design, programming, customization, adaptation, up-gradation, enhancement,
implementation of information technology software
10. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.
11. Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash,
deferred payment or other valuable consideration.
12. Composite supply of works contract as defined in clause (119) of section 2.
13. Composite supply:


by way of or as part of any service or
in any other manner whatsoever, of goods, being food or any other article for human consumption
or any drink. (other than alcoholic liquor for human consumption).
Provided such supply or service is for cash, deferred payment or other valuable consideration.
Schedule III
There are certain activities that are not to be treated as Supply under GST. Hence, following
activities are neither treated as supply of goods not supply of services:

Services given by an employee to the employer

Any person performing duties as a Chairperson or a Member or a Director of a government body.
Provided the person is not regarded as an employee before the commencement of this clause.

Functions performed by members of:

Parliament

State Legislature

Panchayats

Municipalities

Other Local Authorities

Duties performed by a person holding any designation in order to pursue constitutional provisions.
 Funeral, burial, crematorium or mortuary including transporting the deceased.
 Sale of land
 Actionable claims besides lottery, gambling and betting
 Sale of building subject to clause (b) of paragraph 5 of Schedule II
So, to explain the concept of supply under GST, here is an infographic that explains the concept
in a much simple way.
Levy and Collection of GST under CGST Act, IGST
Act and UTGST Act.
Section 9 of CGST Act/SGST Act and Section 5 of IGST Act are the Charging Sections
for the purposes of levy of GST.
CGST and SGST shall be levied on all intra-state supplies of goods and/or services and
IGST shall be levied on all inter-state supplies of goods and/or services respectively.
A. Levy and Collection of GST Under CGST Act. (Section 9)
1. Levy of central goods and service tax [Section 9(1)]:
Under CGST Act, central tax called as the central goods and services tax (CGST) shall
be levied on all intra-State supplies of goods or services or both, except on the supply of
alcoholic liquor for human consumption.
It shall be levied on the value determined under section 15 and at such rates, not
exceeding 20%, as may be notified by the Government on the recommendations of the
Council and collected in such manner as may be prescribed and shall be paid by
the taxable person. [Similar rates have been prescribed under SGST/UTGST]
2. Central tax on petroleum products to be levied from the date to be notified
[Section 9(2)]:
The central tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied
with effect from such date as may be notified by the Government on
the recommendations of the Council.
3. Tax payable on reverse charge basis [Section 9(3)]:
The Government may, on the recommendations of the Council, by notification, specify
categories of supply of goods or services or both, the tax on which shall be paid on
reverse charge basis by the recipient of such goods or services or both.
Further, all the provisions of this Act shall apply to such recipient as if he is the person
liable for paying the tax in relation to the supply of such goods or services or both.
4. Tax payable on reverse charge if the supplies are made to a registered
person by unregistered person [Section 9(4)]:
The central tax in respect of the supply of taxable goods or services or both by a
supplier, who is not registered, to a registered person shall be paid by such person on
reverse charge basis as the recipient and all the provisions of this Act shall apply to such
recipient as if he is the person liable for paying the tax in relation to the supply of such
goods or services or both. [Section 9(4) has been deferred till 30.6.2018]
5. Tax payable on intra-State supplies by the electronic commerce operator on
notified services [Section 9(5)]
As per section 2(45) of the CGST Act, 2017, “electronic commerce operator” means any
person who owns, operates or manages digital or electronic facility or platform for
electronic commerce.
Further, “electronic commerce” means the supply of goods or services or both, including
digital products over digital or electronic network.
Thus, Electronic Commerce Operators (ECO), like flipkart, uber, makemy-trip, display
products as well as services which are actually supplied by some other person to the
consumer, on their electronic portal. The consumers buy such goods/services through
these portals. On placing the order for a particular product/service, the actual supplier
supplies the selected product/service to the consumer. The price/consideration for
the product/service is collected by the ECO from the consumer and passed on to the
actual supplier after the deduction of commission by the ECO.
The Government may, on the recommendations of the Council, by notification, specify
categories of services the tax on intra-State supplies of which shall be paid by the
electronic commerce operator (ECO), if such services are supplied through it.
Further, all the provisions of this Act shall apply to such electronic commerce operator
(ECO) as if he is the supplier liable for paying the tax in relation to the supply of such
services.
However, where an electronic commerce operator (ECO) does not have a physical
presence in the taxable territory, any person representing such electronic commerce
operator (ECO) for any purpose in the taxable territory shall be liable to pay tax.
Where an electronic commerce operator (ECO) does not have a physical presence in the
taxable territory and also he does not have a representative in the said territory, such
electronic commerce operator shall appoint a person in the taxable territory for the
purpose of paying tax and such person shall be liable to pay tax.
The Government vide Notification No. 17/2017 CT (R) dated 28.06.2017 has notified the
following categories of services supplied through ECO for this purpose—
1. services by way of transportation of passengers by a radio-taxi, motorcab, maxicab
and motor cycle;
2. services by way of providing accommodation in hotels, inns, guest houses, clubs,
campsites or other commercial places meant for residential or lodging purposes,
except where the person supplying such service through electronic commerce
operator is liable for registration under section 22(1) of the CGST Act.
B. Levy and Collection of GST Under IGST Act. (Section 5)
The provisions under section 5 of the IGST Act are similar to section 9 of CGST
Act except—
1. the word CGST has been substituted by IGST under IGST Act
2. under IGST Act, tax called integrated tax is to be levied on all
interState supplies and on goods imported into India.
3. maximum rate under section 5(1) of the IGST Act is 40% (i.e. 20% CGST +
20% UTGST).
C. Levy and Collection of GST Under UTGST Act. (Section 7)
The provisions under section 7 of the UTGST Act are similar to section 9 of
CGST Act except—
1. the word CGST has been substituted by the word UTGST under the
UTGST Act.
2. under UTGST Act, tax called UT tax is be levied on all intra-State supplies,
3. maximum rate 7(1) of UTGST Act is 20%.
GST Composition Scheme
Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can
get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be
opted by any taxpayer whose turnover is less than Rs. 1.5 crore*.
*CBIC has notified the increase to the threshold limit from Rs 1.0 Crore to Rs. 1.5 Crores.
1. Who can opt for Composition Scheme
A taxpayer whose turnover is below Rs 1.5 crore* can opt for Composition Scheme. In case of
North-Eastern states and Himachal Pradesh, the limit is now Rs 75* lakh.
As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an
extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. This amendment will be
applicable from the 1st of Feb, 2019. Further, GST Council in its 32nd meeting proposed
an increase to this limit for service providers on 10th Jan 2019*.
Turnover of all businesses registered with the same PAN should be taken into consideration to
calculate turnover.
*CBIC has notified the increase to the threshold limit from Rs 1.0 Crore to Rs. 1.5 Crores.
1. The time limit to opt into the composition scheme for the FY 2020-21 in form CMP-02 has been
extended up to 30th June 2020. It applies for both taxpayers registered under section 10 of the
CGST Act as well as the taxpayers opting for the scheme notified via CGST (Rate) notification
no. 2/2019 dated 7th March 2019.
2. The time limit to file form ITC-03 has accordingly been extended till 31st July 2020.
3. The dealers can submit challan-cum-statement in form CMP-08 for the January-March 2020
quarter by 7th July 2020.
4. The time limit to file GSTR-4 annual returns for the FY 2019-20 by the composition dealers has
been extended till 15th July 2020.
2. Who cannot opt for Composition Scheme
The following people cannot opt for the scheme



Manufacturer of ice cream, pan masala, or tobacco
A person making inter-state supplies
A casual taxable person or a non-resident taxable person
Businesses which supply goods through an e-commerce operator
3. What are the conditions for availing Composition Scheme?
The following conditions must be satisfied in order to opt for composition scheme:







No Input Tax Credit can be claimed by a dealer opting for composition scheme
The dealer cannot supply goods not taxable under GST such as alcohol.
The taxpayer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism
If a taxable person has different segments of businesses (such as textile, electronic accessories,
groceries, etc.) under the same PAN, they must register all such businesses under the scheme
collectively or opt out of the scheme.
The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard
displayed prominently at their place of business.
The taxpayer has to mention the words ‘composition taxable person’ on every bill of supply
issued by him.
As per the CGST (Amendment) Act, 2018, a manufacturer or trader can now also supply services
to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. This amendment will
be applicable from the 1st of Feb, 2019.
4. How can a taxpayer opt for composition scheme?
To opt for composition scheme a taxpayer has to file GST CMP-02 with the government. This
can be done online by logging into the GST Portal.
This intimation should be given at the beginning of every Financial Year by a dealer wanting to
opt for Composition Scheme.
Here is a step by step Guide to File CMP-02 on GST Portal.
5. How Should a Composition Dealer raise bill?
A composition dealer cannot issue a tax invoice. This is because a composition dealer cannot
charge tax from their customers. They need to pay tax out of their own pocket.
Hence, the dealer has to issue a Bill of Supply.
The dealer should also mention “composition taxable person, not eligible to collect tax on
supplies” at the top of the Bill of Supply.
6. What are the GST rates for a composition dealer?
Following chart explains the rate of tax on turnover applicable for composition dealers :
As per notification dated 01.01.2018, turnover in case of traders has been defined as ‘ Turnover of
taxable supplies of goods’.
7. How should GST payment be made by a composition dealer?
GST Payment has to be made out of pocket for the supplies made.
The GST payment to be made by a composition dealer comprises of the following:



GST on supplies made.
Tax on reverse charge
Tax on purchase from an unregistered dealer*
*Only on the specified categories of goods and services and well as the notified class of
registered persons with effect from 1st Feb 2019 but is yet to be notified. Hence, not applicable
until then.
8. What are the returns to be filed by a composition dealer?
A dealer is required to pay tax in a quarterly statement CMP-08 by 18th of the month after the
end of the quarter. Also, a return in form GSTR-4 has to be filed annually by 30th April of next
financial year from FY 2019-20 onwards. GSTR-9A is an annual return to be filed by 31st
December of the next financial year. It was waived off for FY 2017-18 and FY 2019-20.
Also, note that a dealer registered under composition scheme is not required to maintain detailed
records.
9. What are the advantages of Composition Scheme?
The following are the advantages of registering under composition scheme:



Lesser compliance (returns, maintaining books of record, issuance of invoices)
Limited tax liability
High liquidity as taxes are at a lower rate
10. What are the disadvantages of Composition Scheme?
Let us now see the disadvantages of registering under GST composition scheme:



A limited territory of business. The dealer is barred from carrying out inter-state transactions
No Input Tax Credit available to composition dealers
The taxpayer will not be eligible to supply non-taxable goods under GST such as alcohol
and goods through an e-commerce portal.
A. Payments –
1. What are payments to be made under GST?
Under GST the tax to be paid is mainly divided into 3 –



IGST – To be paid when interstate supply is made (paid to center)
CGST – To be paid when making supply within the state (paid to center)
SGST – To be paid when making supply within the state (paid to state)
CIRCUMSTANCES
CGST
SGST
IGST
Goods sold from Delhi to Bombay
NO
NO
YES
Goods sold within Bombay
YES
YES
NO
Goods sold from Bombay to Pune
YES
YES
NO
Apart from the above payments a dealer is required to make these payments –

Tax Deducted at Source (TDS) – TDS is a mechanism by which tax is deducted by the dealer
before making the payment to the supplier
For example –
A government agency gives a road laying contract to a builder. The contract value is Rs 10 lakh.
When the government agency makes payment to the builder TDS @ 1% (which amounts to Rs
10,000) will be deducted and balance amount will be paid.

Tax Collected at Source (TCS) – TCS is mainly for e-commerce aggregators. It means that any
dealer selling through e-commerce will receive payment after deduction of TCS @ 2%.
This provision is currently relaxed and will not be applicable to notified by the government.

Reverse Charge – The liability of payment of tax shifts from the supplier of goods and services to
the receiver. To know more about reverse charge check out our article ‘Know all about Reverse
Charge under GST‘

Interest, Penalty, Fees and other payments
2. How to calculate the GST payment to be made?
Usually, the Input Tax Credit should be reduced from Outward Tax Liability to calculate the
total GST payment to be made.
TDS/TCS will be reduced from the total GST to arrive at the net payable figure. Interest & late
fees (if any) will be added to arrive at the final amount.
Also, ITC cannot be claimed on interest and late fees. Both Interest and late fees are required to
be paid in cash.
The way the calculation is to be done is different for different types of dealers –
Regular Dealer
A regular dealer is liable to pay GST on the outward supplies made and can also claim Input Tax
Credit (ITC) on the purchases made by him.
The GST payable by a regular dealer is the difference between the outward tax liability and the
ITC.
Composition Dealer
The GST payment for a composition dealer is comparatively simpler. A dealer who has opted
for composition scheme has to pay a fixed percentage of GST on the total outward supplies
made.
GST is to be paid based on the type of business of a composition dealer.
3. Who should make the payment?
These dealers are required to make GST payment –
1. A Registered dealer is required to make GST payment if GST liability exists.
2. Registered dealer required to pay tax under Reverse Charge Mechanism(RCM).
3. E-commerce operator is required to collect and pay TCS
4. Dealers required deducting TDS
4. When should GST payment be made?
GST payment is to be made when the GSTR 3 is filed i.e by 20th of the next month.
5. What are the electronic ledgers?
These ledgers are maintained on the electronically on GST Portal.
6. How to make GST payment?
GST payment can be made in 2 ways –

Payment through Credit Ledger –
The credit of ITC can be taken by dealers for GST payment. The credit can be taken only for
payment of Tax. Interest, penalty and late fees cannot be paid by utilizing ITC.

Payment through Cash Ledger –
GST payment can be made online or offline. The challan has to be generated on GST Portal for
both online and offline GST payment.
Where tax liability is more than Rs 10,000, it is mandatory to pay taxes Online.
7. What is the penalty for non-payment or delayed payment?
If GST is short paid, unpaid or paid late interest at a rate of 18% is required to be paid by the
dealer.
Also, a penalty to be paid. The penalty is higher of Rs. 10,000 or 10% of the tax short paid or
unpaid.
B. Refunds –
1. What is GST refund?
Usually when the GST paid is more than the GST liability a situation of claiming GST refund
arises. Under GST the process of claiming a refund is standardized to avoid confusion. The
process is online and time limits have also been set for the same.
2. When can the refund be claimed?
There are many cases where refund can be claimed. Here are some of them –
Excess payment of tax is made due to mistake or omission.





Dealer Exports (including deemed export) goods/services under claim of rebate or Refund
ITC accumulation due to output being tax exempt or nil-rated
Refund of tax paid on purchases made by Embassies or UN bodies
Tax Refund for International Tourists
Finalization of provisional assessment
3. How to calculate GST refund?
Let’s take a simple case of excess tax payment made.
Mr. B’s GST liability for the month of September is Rs 50000. But due to mistake, Mr. B made a
GST payment of Rs 5 lakh.
Now Mr. B has made an excess GST payment of Rs 4.5 lakh which can be claimed as a refund
by him. The time limit for claiming the refund is 2 years from the date of payment.
4. What is the time limit for claiming the refund?
The time limit for claiming a refund is 2 years from relevant date.
The relevant date is different in every case.
Here are the relevant dates for some cases –
Reason for claiming GST Refund
Relevant Date
Excess payment of GST
Date of payment
Export or deemed export of goods or services
Date of despatch/loading/passing the frontier
ITC accumulates as output is tax exempt or nil-rated
Last date of financial year to which the credit belongs
Finalisation of provisional assessment
Date on which tax is adjusted
Also if refund is paid with delay an interest of 24% p.a. is payable by the government.
5. How to claim GST refund?
The refund application has to be made in Form RFD 01 within 2 years from relevant date.
The form should also be certified by a Chartered Accountant.
What is GST Registration
In the GST Regime, businesses whose turnover exceeds Rs. 40 lakhs* (Rs 10 lakhs for NE and
hill states) is required to register as a normal taxable person. This process of registration is called
GST registration.
For certain businesses, registration under GST is mandatory. If the organization carries on
business without registering under GST, it will be an offence under GST and heavy penalties will
apply.
GST registration usually takes between 2-6 working days. We’ll help you to register for GST in
3 easy steps.
*CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The
notification will come into effect from 1st April 2019.
Who Should Register for GST?








Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)
Businesses with turnover above the threshold limit of Rs. 40 Lakhs* (Rs. 10 Lakhs for NorthEastern States, J&K, Himachal Pradesh and Uttarakhand)
Casual taxable person / Non-Resident taxable person
Agents of a supplier & Input service distributor
Those paying tax under the reverse charge mechanism
Person who supplies via e-commerce aggregator
Every e-commerce aggregator
Person supplying online information and database access or retrieval services from a place
outside India to a person in India, other than a registered taxable person
*CBIC has notified the increase in threshold turnover from Rs 20 lakhs to Rs 40 lakhs. The
notification will come into effect from 1st April 2019.
What is GST Registration Process?
The Goods And Services Tax (GST) Registration services at ClearTax helps you to get your
business GST registered and obtain your GSTIN.
Documents Required for GST Registration




PAN of the Applicant
Aadhaar card
Proof of business registration or Incorporation certificate
Identity and Address proof of Promoters/Director with Photographs




Address proof of the place of business
Bank Account statement/Cancelled cheque
Digital Signature
Letter of Authorization/Board Resolution for Authorized Signatory
GST Registration Fees
GST Registration is a tedious 11 step process which involves submission of many business details and
scanned documents. You can opt for ClearTax Goods And Services Tax (GST) Registration services
where a GST Expert will assist you, end to end with GST Registration.
Penalty for not registering under GST
An offender not paying tax or making short payments (genuine errors) has to pay a penalty of
10% of the tax amount due subject to a minimum of Rs.10,000.
The penalty will at 100% of the tax amount due when the offender has deliberately evaded
paying taxes
Person not liable to register under GST | Section 23 | CGST Act 2017 | GST series part 15
1. Section 23 of the CGST Act 2017 explains about the person not liable to be registered under
GST. The article covers the statutory provisions under sec 23 and its simplified analysis along
with relevant notifications.
2. Section 23(1)(a) of CGST Act – Statutory Provision:- Any person engaged exclusively in
the business of supplying goods or services or both that are not liable to tax or are wholly
exempt from tax under this Act or under IGST Act does not require registration.
2.1 For example, Mr. X is engaged exclusively in the supply of alcohol for human consumption.
He is not liable to obtain registration as per sec. 23(1)(a) even if his turnover exceeds Rs 20
Lakhs
2.2 Analysis: – Section 23 is specifically granting exemption from registration to persons
exclusively engaged in exempt supplies or supplies not liable to tax even if the aggregate
turnover is more than Rs. 20 Lakhs whereas section 22 mandates to take registration if the
aggregate turnover in a financial year exceeds Rs. 20 Lakhs Irrespective of the fact whether such
turnover includes taxable supplies or exempt supplies.
2.3 Section 23 overrides section 22, wherein section 22 is concerned about the persons whose
aggregate turnover is more than Rs 20 Lakhs while section 23 is exempting entities engaged
exclusively in making exempt supplies.
2.4 From the above discussion, it is clearly understood that the person who is engaged
exclusively in making exempt supplies is not liable for registration even if his aggregate turnover
exceeds Rs 20 Lakhs.
3. Section 23(1)(b) of CGST Act – Statutory Provision: An agriculturist, to the extent of
supply of produce out of cultivation of land, does not require registration.
3.1 “Agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation
of land – (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable
in cash or kind or by hired labour under personal supervision or the personal supervision of any
member of the family – section 2(7) of CGST Act.
3.2 Only those who are directly engaged in the cultivation of land are eligible for the exemption.
4. Section 23(2) of the CGST Act – Statutory Provision: The government can grant an
exemption to other categories of persons on the recommendation of the GST Council by issuing
the notification. CBIC has issued following notifications for granting exemptions to other
categories of persons:4.1 Notification No. 5/2017-CT dated 19-6-2017– Persons providing services where the
service recipient is liable to pay GST under reverse charge Persons who are making supplies
of taxable goods or services or both, where total tax is payable on the recipient of goods or
services ( under Reverse Charge Mechanism) are exempt from registration under GST Act.
4.2 Notification No. 7/2017-IT dated 14-9-2017 – Job worker making Inter-State
supplies: A job worker with turnover less than 20/10 lakhs is exempt from registration, even if
he makes inter-State supplies to the registered person. This exemption is not available to
Jewellery, goldsmiths’ and silversmiths’ wares and other articles manufactured on job work basis
4.3 Notification No. 10/2017-IT dated 13-10-2017 – Interstate supply of taxable services if
the aggregate turnover of supplier of service, including inter-state supplies is less than Rs
20/10 lakhs, he is not required to register under GST under section 23(2) of CGST Act.
4.4 Notification No. 65/2017-CT dated 15-11-2017 – Persons supplying services through ecommerce operator Persons who are suppliers of service and supplying services through e-
commerce operator are not required to register under GST if their aggregate turnover is less than
Rs 20 lakhs per annum (Rs 10 lakhs in case of specified States)
4.5 Notification No. 3/2018-IT dated 22-10-2018 – Interstate supply of handicraft
goods: Persons engaged in the supply of handicraft goods making inter-state supply are exempt
from registration. They are also not required to obtain casual registration if they supply goods
outside the State where they are having their fixed establishment – They are required to have
income tax PAN and are required to generate e-way bill –
4.5.1 E-way bill even if the value of consignment is much below Rs 50,000 – e-way bill
should be generated irrespective of the value of consignment i.e. even if the value of
consignment is below Rs 50,000 in case of handicraft goods transported inter-state under the
exemption if the turnover of the person below 20/10 lakhs and enjoying
exemption under Notification No. 32/2017-CT dated 15-9-2017
5. Notification No. 10/2019-IT dated 07.03.2019: Exclusive supply of goods: person engaged
in the exclusive supply of goods and whose aggregate turnover in the financial year does not
exceed Rs 40 lakhs is not required to take registration
6. Section 24(1) of CGST specified the persons requiring registration without a threshold limit of
20/10 lakhs. However, Section 24(1) of CGST is not applicable to persons who are not liable for
registration under section 23 of Act. However, if he is liable under reverse charge, registration
under GST will be required.
6.1 Section 24 of the CGST Act is not subject to section 23 of the CGST Act. Hence, a person
dealing only in exempted products is not required to be registered under GST, if he is not liable
under reverse charge.
6.2 In case the person is liable under reverse charge, he needs to take GST registration even if
engaged in exempted supplies.
6.3 AAR MAHARASHTRA held it in Jalaram Feeds that person engaged exclusively in the
manufacture of exempted product receiving GTA service which is under reverse charge would
require registration under CGST Act to discharge his duty liability under reverse charge.
GST Registration Procedure Guide
The structure of GST stands on the foundation of the registration system, for it is a registered person who
is liable to pay tax and who is eligible to avail the benefits of the input tax credit mechanism. A registered
person can also collect GST from his recipients. An unregistered person is not taxed and is also kept
outside the input tax credit mechanism.
The GST law gives a limited option to certain categories of persons to avoid registration and thus avoid
the tax liability lawfully. However, if one falls within the reach of an extensive list of statutorily
prescribed criteria requiring compulsory registration, the supplier must get registered.
Persons Liable for GST Registration – Section 22 of the CGST Act:
a) State or UTs:
Every supplier of the goods or services or both needs to register in a State or a Union Territory, if
his turnover exceeds Rs.20 lakhs.
b) Special Category States:
In case of special category states namely AP, J&K, Assam, Nagaland, Mizoram, Sikkim,
Uttarakhand, etc., the person shall be liable to be registered if his turnover exceeds Rs.10 lakhs.
c) Aggregate Turnover:
Means aggregate value of all taxable supplies, exempt supplies, Exports, and inter-State supplies
of persons having the same PAN but excludes taxes.
d) Registration:
Any person who is registered before the appointed day i.e. 1st July 2017 is liable to be registered
under the CGST Act.
e) Registration of Transferee or Successor:
If a registered business by a taxable person is transferred to another person, then such a person,
be it successor or a transferee, shall be liable to be registered under the Act.
f) Registration in case of amalgamation or demerger:
A transfer due to sanction of a scheme or an arrangement for amalgamation or a demerger takes
place of two or more companies in accordance with the order of the High Court or Tribunal, the
transferee shall be liable to be registered.
Persons Not Liable to be Registered – Section 23 of the CGST Act:
Following persons are not liable for registration:
a) Exempted Goods or Services:
Any person who is engaged exclusively in supply of those goods or services which are wholly
exempted from tax or are not liable to pay tax under CGST or under IGST Act.
b) An Agriculturist:
For those supply only which is produced out of cultivation of land.
c) Notified Person:
Furthermore, the government on the recommendation of the GST council may issue notification
& specify special category of persons who are not liable for registration.
Procedure for GST Registration:
a) Details to be furnished:
Before applying for registration process, person has to declare the following:
• PAN
• Mobile number
• E-mail address
• State or UT
In Part A of FORM GST REG-01 on the Common Portal, either directly or through a
Facilitation Centre notified by Commissioner.
b) Reference Number:
On successful verification of the PAN, mobile number and e-mail, a temporary reference number
shall be generated and communicated to the applicant.
c) Application:
Using the reference number, the applicant shall electronically submit an application in Part B of
FORM GST REG-01, duly signed or verified through electronic verification code (EVC), along
with documents specified in the form.
d) Specified Documents:
The following specified documents are required to be submitted along with the
application:
A. Documents required for Private Limited Company, Public Company (limited company) / One Person Company
(OPC):
i) Company documents
• PAN card of the company
• Registration Certificate of the company
• Memorandum of Association (MOA)/ Articles of Association (AOA)
• Copy of Bank Statement
• Declaration to comply with the provisions
• Copy of Board resolution
ii) Director related documents
• PAN and ID proof of directors
iii) Registered Office documents
• Copy of electricity bill/ landline bill, water bill
• No objection certificate of the owner
• Rent agreement (in case premises are rented)
B. Documents required for Limited Liability Partnerships (LLPs):
i) LLP Documents
• PAN card of the LLP
• Registration Certificate of the LLP
• LLP Partnership agreement
• Copy of Bank Statement of the LLP
• Declaration to comply with the provisions
• Copy of Board resolution
ii) Designated Partner related documents
• PAN and ID proof of designated partners
iii) Registered Office documents
• Copy of electricity bill, landline bill, water bill
• No objection certificate of the owner
• Rent agreement (in case premises are rented)
C. Documents required for Normal Partnerships
i) Partnership documents
• PAN card of the Partnership
• Partnership Deed
• Copy of Bank Statement
• Declaration to comply with the provisions
ii) Partner related documents
• PAN and ID proof of designated partners
iii) Registered Office documents
• Copy of electricity bill / landline bill, water bill
• No objection certificate of the owner
• Rent agreement (in case premises are rented)
• Documents required for Sole proprietorship / Individual
iv) Individual documents
• PAN card and ID proof of the individual
• Copy of Cancelled cheque or bank statement
• Declaration to comply with the provisions
v) Registered Office documents
• Copy of electricity bill/ landline bill, water bill
• No objection certificate of the owner
• Rent agreement ( in case premises are rented)
D. Acknowledgement:
On the receipt of an application, an acknowledgement shall be issued to the applicant in FORM GST REG-02.
UNIT 2
ASSESSMENT OF TAX
CONCEPT
GST is Goods and Service Tax which is an indirect tax that is imposed on supply of goods and
services. It consolidates all the taxes at one platform to help Indian businesses to grow globally.
Since the tax is collected at multistage, Govt. has facilitated easy calculation as well as payments
of GST. For calculation GST Government has made various provisions as well as facilitated with
numerous options of assessment.
Assessment means determination of tax liability under GST law. Assessment is calculation of
tax liability of the taxpayer under GST law. It is the process of figuring out how much tax is to
be paid by an individual each month.
TYPES OF ASSESSMENT UNDER GST
There are various types of assessments under GST. They are as follows:

Self Assessment - Comes under Section 59 done by the taxpayer himself or herself

Provisional Assessment - Comes under Section 60 done by tax authorities

Scrutiny Assessment - Comes under Section 61 done by tax authorities

Best Judgment Assessment - Done by tax authorities

Assessment of non-filers of Returns - Comes under Section 62

Assessment of Unregistered Persons - Comes under Section 63

Summary Assessment - Comes under Section 64 done by tax authorities
Only self-assessment is done by the taxpayer himself. All the other assessments are by tax
authorities.
1. SELF-ASSESSMENT
Every person who is a registered taxable person can assess his tax liability on his or her own and
furnish returns for each taxation period. GST also allows self-assessment just like the other tax
liability such as VAT, Excise and Service Tax under current taxation regime. Self-assessment is
stated under Section 59 of the GST act.
After doing self-assessment, the person is required to pay tax based on this assessment. In this
regard Section 59 of the GST Act states
“Every registered person shall self-assess the taxes payable under this Act and furnish a return
for each tax period as specified under section 39.”
2. PROVISIONAL ASSESSMENT
Under section if an assessee is unable to determine his tax liability value or rate he or she can
request the officer for provisional assessment. This further gives two conditions under which this
assessment is done:

If the taxpayer is unable to determine value due to difficulty in calculation of the
transaction value or confusion regarding inclusion of certain receipts or not.

If the taxpayer is unable to determine the rate of tax due to difficulty in classification of
goods and services or whether any notification is applicable or not.
Procedure for Provisional Assessment

The assessee has to request the GST officer for provisional assessments in writing.

Within 90 days of receipt of such request the officer will pass an order after reviewing the
application. This order is for allowing a payment of tax on provisional basis or at a GST
rate or value specified by him.

The assessee who is making payment on provisional basis has to issue a bond with a
security promising to pay the difference amount between provisionally assessed tax and
final assessed tax.

The GST officer will pass the final assessment within a period of six months from the
date of order of provisional payment.

Provisional assessment will be followed by final assessments.
Interest Payable for Provisional Assessment
If in any case the taxpayer is liable to pay more tax after final assessment than paid at the time of
provisional assessment, the person is liable to pay interest at a specified rate on such tax
payments.
The interest to be paid by the taxpayer is calculated from the actual due date of tax till the actual
tax payment made. The interest will be charged maximum at the rate of 18%.
Refund under Provisional Assessment
If in any case the taxpayer was liable to pay less after the final assessment than paid at the time
of provisional assessment, the person will be refunded back with the same amount as well as
interest will be paid on such refund under section 56. The rate of interest paid will be maximum
6%.
Time Limit for Final Assessments
The final assessment will be done within 6 months of the provisional assessment. The time limit
can be extended for 6 months by the Joint or Additional Commissioner. The commissioner can
even extend this time period to 4 years if required.
3. SCRUTINY ASSESSMENT

To verify the correctness of the returns, the GST officer scrutinize it. Return is scrutinize
by proper office as per the provision of section 61 of CGST Act.

In case any discrepancy found, he shall furnish the notice to the registered persons about
the discrepancy and seeking the reply from the person.The person shall within 15 days
from the date of the notice shall furnish the reply.

The registered person may accept the discrepancy as mentioned in the notice and pay the
taxes, interest and any other amount due and inform the same to proper officer.

If proper office found the information is acceptable the proper office shall inform the
registered person accordingly.

In case if discrepancy is not accepted by the person then he shall give explanation to the
proper officer.

This is not mandatory for the officer as it is not a legal or judicial proceeding. The officer
for the same can ask for explanations if any discrepancies noticed. The officer can take
the following actions after receiving the explanations for the same:

When Explanation is Satisfactory- The officer will inform the taxpayer and no
further actions will be taken in this regard.

When Explanation is not Satisfactory- The taxpayer has not given the
explanation within 30 days or has not rectified the discrepancies the officer may

Conduct a tax audit under section 65.

Inspect and search the places of the taxpayer’s business

Start a special audit under section 66

Initiate demand and recovery provisions

Send notices for outstanding demand or shortfall of when there is no
willful intention of doing fraud under section 73

Send notices for outstanding demand or shortfall when there is willful
intention of fraud under section 74.
No order can be passed under scrutiny assessment as it is not a legal or judicial
proceeding.
4. BEST JUDGMENT ASSESSMENT
The Assessing Officer under this assessment has an obligation to make an assessment of the total
income or less of a taxpayer to the best of his judgment in the following cases.
Assessment of non-filers of returns
Under section 62, in case if a taxpayer fails to furnish the returns even after the notice under
section 46, a GST officer is required to conduct an assessment. The GST officer in this case
access the tax liability of the taxpayer to the best of his judgment taking into consideration all the
relevant materials that are available.
The officer can issue an assessment order within a period of five years from the date of
furnishing of annual return for the financial year for which the tax has not been paid. After
receiving this order , if the concerned taxpayer furnished a valid return within 30 days from the
issue
of
assessment
order,
the
order
can
be
withdrawn.
In this case the taxpayer will be liable to pay late fee under section 47 and/or interest under
section 50(1)
Assessment of Unregistered Person
Under section 63, if in case any taxpayer fails to obtain a GST registration or whose registration
has been cancelled under section 29(2) even if he is liable to be registered and pay tax, the GST
officer can process his or her tax liability to the best of his judgement. This has to be done for the
relevant period for which the tax is unpaid. The officer can issue an assessment order within five
years from the date specified under section 44 for furnishing annual return for the financial year
for which taxes are unpaid.
5. SUMMARY ASSESSMENT
This type of assessment is stated under Section 64. The authorized office is required to obtain
prior permission of additional commissioner or joint commissioner to take this assessment. To
protect the interest of revenue, a GST officer can proceed to assess the tax liability of a person
showing a tax liability with any evidence. The officer can also issue an assessment order id he
has proof that the delay in assessment can adversely affect the interest of revenue.
6. CONSEQUENCES AND PENALTIES OF NON COMPLIANCE UNDER GST
These may be the consequences and penalties under GST may be levied if there is non
compliance:
Penalty of 100% of the amount involved with subject to minimum penalty of 10000 is
levied for tax evasion and short deduction.

A penalty which may extend upto rupees 25000 would be liable to pay in the given
circumstances:
Persons who acquires or receive any goods and services with the knowledge that
it is a violation of the GST Act.

Help other persons to commit fraud in GST

Persons are not issuing the invoice in accordance with the GST rules.

Person fail to account the invoices in their books of accounts

Absent from the tax authority where the summons are issued.
If the taxable amount involved rupees 1 crore to 2 crore imprisonment of 1 year along
with the fine is laviable.
If the taxable amount involved rupees 2 crore to 5 crore imprisonment of 3 years along
with the fine is liable.
Where the taxable amount is not paid and short paid, penalty shall be 10% of the tax
amount due with a minimum penalty of rupees 10000.
Conclusion
Assessment of GST is an important procedure to be conducted by the taxpayer for calculation of
the tax liability. For the easy calculation various options are available to the assessee as per his or
her comfort zone requirement. With every option of assessment there are different regulations
and procedures to be considered. Most of the provisions of assessment under GST are similar to
the current indirect tax system.
TAX INVOICE
INTRODUCTION
Generally speaking, an invoice is a commercial instrument issued by a seller to a buyer. It
identifies both the trading parties, and lists, describes, and quantifies the items sold, shows the
date of shipment and mode of transport, prices and discounts, if any, and the delivery and
payment terms. In certain cases, (especially when it is signed by the seller or seller’s agent), an
invoice serves as a demand for payment and becomes a document of title when paid in full.
In Simple terms, a tax invoice is an invoice sent by the registered dealer to the purchaser
showing the amount of tax payable. It includes the description, quantity, value of goods and
services and the tax charged.
Under the GST regime, an “invoice” or “tax invoice” means the tax invoice referred to in
section 31 of the CGST Act, 2017. This section mandates the issuance of an invoice or a bill of
supply for every supply of goods or services. It is not necessary that only a person supplying
goods or services needs to issue an invoice. The GST law mandates that any registered person
buying goods or services from an unregistered person needs to issue a payment voucher as well
as a tax invoice. The type of invoice to be issued depends upon the category of registered person
making the supply. For example,if a registered person is making or receiving supplies (from
unregistered persons), then a tax invoice needs to be issued by such registered person. However,
if a registered person is dealing only in exempted supplies or is availing the composition scheme
(composition dealer), then such a registered person needs to issue a bill of supply in lieu of
invoice. The invoice should contain description, quantity and value & such other prescribed
particulars (in case of supply of goods), and the description and value & such other prescribed
particulars (in case of supply of services). An invoice or a bill of supply need not be issued if the
value of the supply is less than Rs. 200/-, subject to specified conditions.
IMPORTANCE OF TAX INVOICE UNDER GST
Under GST, a tax invoice is an important document. It not only evidences the supply of goods or
services, but is also an essential document for the recipient to avail Input Tax Credit (ITC). A
registered person cannot avail Input Tax Credit unless he is in possession of a tax invoice or a
debit note. GST is chargeable at the time of supply. Invoice is an important indicator of the time
of supply. Broadly speaking, the time of supply of goods or services is the date of issuance of an
invoice or receipt of payment, whichever is earlier. Thus the importance of an invoice under
GST cannot be over-emphasized. Suffice it to say, the tax invoice is the primary document
evidencing the supply and vital for availing Input Tax Credit.
A tax invoice is a legal document that a seller submits to a customer in which the tax is included
or a document (in India) from a registered supplier to a registered dealer.
The GST law mandates that any registered person buying goods or services from an unregistered
person needs to issue a payment voucher as well as a tax invoice. An invoice or a bill of supply
need not be issued if the value of the supply is less than Rs. 200/- subject to specified conditions.
The
main difference
invoices include
between a
information
standard invoice and
about
Goods
&
a tax
invoice is
that
Services Tax (GST),
the tax
whereas
regular invoices don't. Both types of invoices are used for annual accounts and financial reports,
while tax invoices are also needed to claim tax credits.
CONTENTS OF TAX INVOICE:
The contents of tax invoice are:
(a) Name, Address and GSTIN of the supplier.
(b) A consecutive serial number, in one or multiple series, containing alphabets or numerals or
special characters hyphen or dash and slash symbolised as "-" and "/" respectively, and any
combination thereof, unique for a financial year.
(c) Date of its issue
(d) Name, Address of the recipient and the address of delivery, along with the name of State and
its code, if such recipient is unregistered and where the value of taxable supply is fifty thousand
rupees or more
(e) Name, Address and GSTIN or UIN, if registered of the recipient
(f) HSN code of goods or Accounting Code of services
(g) Description of goods or services
(h) Quantity in case of goods and unit or Unique Quantity Code thereof
(i) Total value of supply of goods or services or both
(j) Taxable value of supply of goods or services or both taking into account discount or
abatement, if any
(k) Rate of tax (Central tax, State tax, Integrated tax, Union territory tax or cess)
(l) Amount of tax charged in respect of taxable goods or services (Central tax, State tax,
Integrated tax, Union territory tax or cess)
(m) Place of supply along with the name of State, in case of a supply in the course of inter-State
trade or commerce
(n) Address of delivery where the sane us different from the place of supply
(o) Whether the tax is payable on reverse charge basis
(p) Signature or digital signature of the supplier or his authorized representative
(q) HSN Code (for the class of persons as may be required)
(r) In case of export of goods or services, invoice shall carry a endorsement "Supply Meant For
Export on Payment of IGST" Or "Supply Meant For Export Under Bond or Letter Of
Undertaking Without Payment of IGST" and in place of details specified in clause (e), shall
contain the following details:

name and address of the recipient

address of delivery

name of the country of destination

number and date of application for removal of goods for export
*If supplier is a bank or NBFC or any financial institution, then within 45 days from the
supply of service.
Tax Invoice vs. Bill of Supply
Bill of Supply
Tax Invoice
Who has to issue?
Taxable Supplier who is
supplying Taxable goods or
Taxable Services.
Supplier of Exempt Goods or
services and Composition Tax
payer
When need not be issued
Need not issue a Tax Invoice if
the value of the goods or services
supplied is less than ₹200/- and
recipient is unregistered .(Need to
prepare one aggregate Invoice for
each day)
Need not issue a bill of supply if
the value of the goods or
services supplied is less than
₹200/-.(Need to prepare one
aggregate BOS for each day)
Can Input Tax claimed?
Input Tax Credit(ITC) can be
claimed based on Tax Invoice
Input Tax Credit(ITC) cannot be
claimed based on ‘Bill of
Supply’
.
CREDIT AND DEBIT NOTES
What is Debit Note and Credit Note?
When goods supplied are returned or when there is a revision in the invoice value due to goods
(or services) not being up to the mark or extra goods being issued a Debit Note or Credit Note is
issued by the supplier and receiver of goods and services.
A debit note or a Credit Note can be issued in 2 situations:
1. When the amount payable by buyer to seller decreases –There can be a change in the
value of goods after the goods are delivered and invoice is issued by the seller. This can
be due to a return of goods or due to the bad quality of the goods delivered, etc.In this
case, the value of goods decreases due to which a Debit Note is issued by the purchaser to
the seller. The Debit Note provides details of the amount of money debited from the
sellers’ account and also states the reason for the same.The reason behind this – In the
purchaser’s books of account the seller will have a credit balance. When a debit note is
issued the credit balance of the Sellers account decreases, thus reducing the seller’s
balance. It means that that lesser amount is required to be paid by the buyer to the seller
to settle his liability. Thus debit note reduces the liability for the buyer.The seller issues a
Credit Note as a response or acknowledgment to the Debit Note.
2. When the amount payable by buyer to seller increases-When the value of invoice
increases due to extra goods being delivered or the goods already delivered have been
charged at an incorrect value a Debit Note is required to be issued.The Debit Note, in this
case, is issued by the seller to the buyer. And the buyer as an acknowledgment to the
receipt of Debit Note issues a Credit Note.The reason behind this – In the seller’s books
of account the buyer will have a debit balance. When a debit note is issued the debit
balance of the buyer’s account increases. It means that more amount is required to be
paid by the buyer to the seller to settle his liability. Thus, credit note increases the
liability for the buyer.
Debit Note under GST
Cases when Debit note is to be issued by supplier:
Cases Where Debit note has to be issued by the Supplier
A.
Original tax invoice has been issued and taxable value in the invoice is less than actual
taxable value.
B.
Original tax invoice has been issued and tax charged in the invoice is less than actual tax
to be paid.
Note
Debit note will include a supplementary invoice.
Debit note example
An example of a situation when a debit note is issued:

Company A purchases goods worth £200 from Company B.

Upon arrival at Company A, the goods are damaged. Company A would like to return the goods
to Company B.

Company A issues a debit note - containing all the relevant information including original
purchase amount and VAT.

When Company B receives the debit note, they can review and approve the request, and issue a
credit note as proof of reimbursement to Company A.
In this case, it is the buyer who issues a debit note to the supplier as a request for credit or
reimbursement.
However, there are also cases when a debit note is issued from the supplier to the buyer. For
example:

Supplier, Company Z, sells and ships goods worth £5000 to buyer, Company X.

Company Z invoices Company X for only £4000 (due to a mistake)

Company Z realises their mistake, and issues a debit note to Company X for the difference of
£1000 to resolve the difference, and make the necessary adjustments in their accounts receivable.
Credit Note under GST
Cases when Credit note is to be issued by supplier:
Cases Where Credit note has to be issued by the Supplier
A
Original tax invoice has been issued and taxable value in the invoice exceeds actual taxable
value.
B
Original tax invoice has been issued and tax charged in the invoice exceeds actual tax to be
paid.
C
Recipient returns the goods to the supplier
D
Services are found to be deficient
Note:
Credit note will include a supplementary invoice
Credit Note Example
Kapoor Pvt Ltd supplied goods worth Rs. 1,00,000 to M/s Sharma Traders on April 1,2017. A
tax invoice of an equivalent amount was issued to M/s Sharma Traders on the same day. M/s
Sharma traders made payment against the invoice. However, M/s Sharma later realized that
certain goods were of poor quality and hence decided to return the goods. Goods worth Rs.
20,000 were returned to Kapoor Pvt Ltd on April 20, 2017. Since, goods were returned; Kapoor
Pvt Ltd needs to raise a credit note in favor of M/s Sharma Ltd.Such a credit note would notify
M/s Sharma traders that a credit needs to be made in their account of an amount equal to the
goods returned by them. This document is a proof that M/s Sharma Traders should reduce the
amount it owes to Kapoor Pvt Ltd Rs. 20,000 under the terms of original invoice.
Particulars to be included in Debit Note and Credit Note
The debit note/ credit note shall contain the following particulars:
1. name, address, and GSTIN of the supplier,
2. nature of the document,
3. a consecutive serial number containing only alphabets and/or numerals, unique for a
financial year,
4. date of issue of the document,
5. name, address and GSTIN/ Unique ID Number, if registered, of the recipient,
6. name and address of the recipient and the address of delivery, along with the name of
State and its code, if such recipient is unregistered,
7. serial number and date of the corresponding tax invoice or, as the case may be, bill of
supply,
8. the taxable value of goods or services, rate of tax and the amount of the tax credited or, as
the case may be, debited to the recipient, and
9. Signature or digital signature of the supplier or his authorized representative.
Debit Note or Credit Note can be issued anytime i.e. there is no time limit for issuing the Debit.
Note. Also, Debit Notes and Credit Notes issue have to be declared in the GST returns filed in
the following month for the month in which document is issued
The details have to be declared on earlier of the following dates:

September following the end of the year in which such supply was made,

the date of filing of the relevant annual return.
Note: The tax liability will be adjusted but no reduction in output tax liability of the supplier will
be permitted if the incidence of tax and interest on such supply has been passed on to any other
person.
How to generate a Debit or Credit Note?
You can create a Debit Note or a Credit Note in no time using Clear Tax GST software. Once
you create a Credit or Debit Note the amount gets adjusted against the original invoice.
Difference between credit note and debit note?
To put it simply, the difference between credit and debit note is that in credit notes you record
money that you owe to a client due to a downward revision in an invoice and in debit notes you
record money that a client owes you due to upward revision in an invoice.A debit note is issued
when there is a purchase return and reduces receivables, while a credit note is issued when there
is a sales return and reduces payables.
ACCOUNTS AND RECORDS
Every registered person is required to keep and maintain all records at his principal place of
business.
Who must maintain accounts under GST?
It is the responsibility of the following persons to maintain specified records


The owner
Operator of warehouse or godown or any other place used for storage of goods
Every transporter
Every registered person whose turnover during a financial year exceeds the prescribed limit (2
crore) will get his accounts audited by a chartered accountant or a cost accountant.
What records must be maintained under GST?
Every registered person must maintain records of:

Production or manufacture of goods

Inward and outward supply of goods or services or both

Stock of goods

Input tax credit availed

Output tax payable and paid and

Other particulars as may be prescribed
What are the accounts which must be maintained under GST?
There are various accounts to be maintained that businesses need to keep under GST.
For example, under GST, a trader has to maintain the following a/cs (apart from accounts like
purchase, sales, stock) –





Input CGST a/c
Output CGST a/c
Input SGST a/c
Output SGST a/c
Input IGST a/c


Output IGST a/c
Electronic Cash Ledger (to be maintained on Government GST portal to pay GST)
Maintenance of Accounts by Registered Persons
(1) Every registered person shall keep and maintain, in addition to the particulars mentioned in
sub-section (1) of section 35, a trueand correct account of the goods or services imported or
exported
supplies
or
attracting payment
of
tax
on
of
reverse
charge
along
with
the
relevant
documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt
vouchers, payment vouchers andrefund vouchers.
(2)
Every
registered
person,
other
than
a
person
paying
tax
under
section
10, shall maintain the accounts of stock in respect of goods received and supplied by him,
and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost,
stolen, destroyed,written off or disposed of by way of gift or free sample and the balance of
stock including raw materials, finished goods, scrap and wastage thereof.
(3)
Every
registered
person
shall
keep
and
maintain
a
separate
paying
tax
account
of
advances received, paid and adjustments made thereto.
(4)
Every
registered
person,
other
than
a
person
under
section
10, shall keep and maintain an account, containing the details of tax payable (including
tax payable in accordance with the provisions of sub-section (3) and sub-section (4) of section
9), tax collected and paid,input tax, input tax credit claimed, together with a register of tax
invoice, credit notes, debit notes, delivery challan issued or received during any tax period.
(5) Every registered person shall keep the particulars of –
(a) names and complete addresses of suppliers from whom he has received the goods or services
chargeable to tax under the Act;
(b)
names
and
complete
addresses
of
the
persons
to
whom
he
has
supplied
goods or services, where required under the provisions of this Chapter;
(c)
the
complete
address
of
the
premises
where
goods
are
stored
by
him,
including goods stored during transit along with the particulars of the stock stored therein.
(6) If any taxable goods are found to be stored at any place(s) other than
those declared under sub-rule (5) without the cover of any valid documents, the proper
officer shall determine the amount of tax payable on such goods as if such goods have been
supplied by the registeredperson.
(7)
Every
registered
person
shall
keep
the
books
of
account
at
the
principal place of business and books of account relating to additional place of business
mentioned in his certificate of registration and such books of account shall include any electronic
form of data stored on anyelectronic device.
(8)
Any
entry
in
registers,
accounts
and
documents
shall
not
be
erased,
effaced or overwritten, and all incorrect entries, otherwise than those of clerical nature, shall be
scored out under attestation and thereafter, the correct entry shall be recorded and where the
registers and otherdocuments are maintained electronically, a log of every entry edited or
deleted shall be maintained.
(9) Each volume of books of account maintained manually by the registered person shall
be serially numbered.
(10)
Unless
proved
otherwise,
if
any
documents,
registers,
or
any
books
of
account belonging to a registered person are found at any premises other than those mentioned in
the certificate of registration, they shall be presumed to be maintained by the said registered
person.
(11)
Every
agent
referred
to
in
clause
(5)
of
section
2
him
from
each
shall
maintain
accounts depicting the,(a)
particulars
of
authorisation
received
by
principal
to
receive or supply goods or services on behalf of such principal separately;
(b)
particulars
including
description,
value
and
quantity
(wherever
quantity
(wherever
applicable) of goods or services received on behalf of every principal;
(c)
particulars
including
description,
value
and
applicable) of goods or services supplied on behalf of every principal;
(d) details of accounts furnished to every principal; and
(e)
tax
paid
on
receipts
or
on
supply
of
goods
or
services
goods
shall
effected
on
behalf of every principal.
(12)
Every
registered
person
manufacturing
maintain
monthly
production accounts showing quantitative details of raw materials or services used in the
manufacture and quantitative details of the goods so manufactured including the waste and by
products thereof.
(13) Every registered person supplying services shall maintain the accounts showing quantitative
details of goods used in the provision of services, details of input services utilised and the
services supplied.
(14)
Every
registered
person
executing
works
contract
shall
keep
separate
accounts for works contract showing –
(a)
the
names
and
addresses
of
the
persons
on
whose
behalf
the
works
contract is executed;
(b)
description,
value
and
quantity
(wherever
applicable)
of
goods
or
applicable)
of
goods
or
services received for the execution of works contract;
(c)
description,
value
and
quantity
(wherever
services utilized in the execution of works contract;
(d) the details of payment received in respect of each works contract; and
(e)
the
names
and
addresses
of
suppliers
from
whom
he
received
goods
or
services.
(15) The records under the provisions of this Chapter may be maintained in electronic form and
the record so maintained shall be authenticated by means of a digital signature.
(16)
Accounts
maintained
by
the
registered
person
together
with
all
the
invoices, bills of supply, credit and debit notes, and delivery challans relating to
stocks, deliveries, inward supply and outward supply shall be preserved for the period as
provided in section 36 and shall, where such accounts and documents are maintained manually,
be kept at every related place of business mentioned in the certificate of registration and shall
be accessible at every related place of business where such accounts and documents are
maintained digitally.
(17) Any person having custody over the goods in the capacity of a carrier
or a clearing and forwarding agent for delivery or dispatch thereof to a recipient on behalf of any
registered person shall maintain true and correct records in respect of such goods handled by him
on behalf of such registered person and shall produce the details thereof as and when required
by the proper officer.
(18)
Every
registered
person
shall,
on
demand,
produce
the
books
of
accounts which he is required to maintain under any law for the time being in force.
GENERATION AND MAINTENANCE OF ELECTRONIC RECORDS
(1) Proper electronic back-up of records shall be maintained and preserved in such manner that,
in the event of destruction of such records due to accidents or natural causes, the information can
be restored within areasonable period of time.
(2)
The
registered
person
maintaining
electronic
records
shall
produce,
on
demand, the relevant records or documents, duly authenticated by him, in hard copy or in any
electronically readable format.
(3)
Where
the
accounts
and
records
are
stored
electronically
by
any
registered person, he shall, on demand, provide the details of such files, passwords of such files
and explanation for codes used, where necessary, for access and any other information which
is required for such accessalong with a sample copy in print form of the information stored in
such files.
RECORDS TO BE MAINTAINED BY OWNER OR OPERATOR OF GODOWN OR
WAREHOUSEAND TRANSPORTERS
(1)
Every
person
required
to
maintain
records
and
accounts
in accordance with the provisions of sub-section (2) of section 35, if not already registered under
the Act, shall submit the details regarding his business electronically on the common portal in
FORM GSTENR-01, either directly or through a Facilitation Centre notified by the
Commissioner and, upon validation of the details furnished, a unique enrolment number shall be
generated and communicated to the said person.
(2)
The
person
enrolled
under
sub-rule
(1)
as
aforesaid
in
any
other
State
or Union territory shall be deemed to be enrolled in the State or Union territory.
(3)
Every
person
who
is
enrolled
under
sub-rule
(1)
shall,
where
required,
amend the details furnished in FORM GST ENR-01 electronically on the common portal either
directly or through a Facilitation Centre notified by the Commissioner.
(4) Subject to the provisions of rule 56,(a) any person engaged in the business of transporting goods shall maintain records of goods
transported, delivered and goods stored in transit by him along with the Goods and Services Tax
Identification Number of the registered consigner and consignee for each of his branches.
(b) every owner or operator of a warehouse or godown shall maintain books of accounts with
respect to the period for which particular goods remain in the warehouse, including the
particulars relating to dispatch, movement, receipt and disposal of such goods.
(5) The owner or the operator of the godown shall store the goods in such
manner that they can be identified item-wise and owner-wise and shall facilitate any physical
verification or inspection by the proper officer on demand.
INPUT TAX CREDIT
CONCEPT
Input Tax Credit means claiming the credit of the GST paid on purchase of Goods and
Services which are used for the furtherance of business. The Mechanism of Input Tax Credit
is the backbone of GST and is one of the most important reasons for the introduction of GST.
As GST is a single tax levied across India (right from manufacture of goods/ services till it
reaches the end customer), the chain does not get broken and everybody is able to take
benefit of the same and there is seamless flow of credit.
Input credit means at the time of paying tax on output, you can reduce the tax you have already
paid on inputs and pay the balance amount.
When you buy a product/service from a registered dealer you pay taxes on the purchase. On
selling, you collect the tax. You adjust the taxes paid at the time of purchase with the amount of
output tax (tax on sales) and balance liability of tax (tax on sales minus tax on purchase) has to
be paid to the government. This mechanism is called utilization of input tax credit.
For example, you are a manufacturer: a. Tax payable on output (FINAL PRODUCT) is Rs 450.
Tax paid on input (PURCHASES) is Rs 300. You can claim INPUT CREDIT of Rs 300 and you
only need to deposit Rs 150 in taxes.
GST comprises of the following levies:1. Central Goods and Services Tax (CGST) [also known as Central Tax] which is levied on intrastate or intra-union territory on supply of goods or services or both.
2. State Goods and Services Tax (SGST) [also known as State Tax] which is levied on supply of
goods or services or both within the same state.
3. Union Territory Goods and Services Tax(UTGST) [also known as Union Territory Tax] which is
levied on supply of goods or services within the same union territory.
4. Integrated Goods & Services Tax (IGST) [also known as Integrated Tax) on inter-state supply of
goods or services of both.
The input tax credit of these components of GST would be allowed in the following
manner:1. Credit of CGST – Allowed 1st for payment of CGST and the balance can be utilised for the
payment of IGST. Credit of CGST is not allowed for payment of SGST.
2. Credit of SGST/ UTGST – Allowed 1st for payment of SGST/UTGST and the balance can be
utilised for the payment of IGST. Credit of SGST/ UTGST is not allowed for payment of CGST.
3. Credit of IGST – Allowed 1st for payment of IGST, then for payment of CGST and the balance
for payment of SGST/ UTGST.
This has been explained in the following table:Credit of
CGST
SGST/UTGST
IGST
To be utilised 1st for the
payment of
CGST
SGST/ UTGST
IGST
Maybe utilised further for the
payment of
IGST
IGST
CGST, then SGST/ UTG
Who can claim ITC?
ITC can be claimed by a person registered under GST only if he fulfills ALL the conditions as
prescribed.
a. The dealer should be in possession of tax invoice
b. The said goods/services have been received
c. Returns have been filed.
d. The tax charged has been paid to the government by the supplier.
e. When goods are received in installments ITC can be claimed only when the last lot is received.
f. No ITC will be allowed if depreciation has been claimed on tax component of a capital good
A person registered under composition scheme in GST cannot claim ITC.
What can be claimed as ITC?
ITC can be claimed only for business purposes. ITC will not be available for goods or services
exclusively used for: a. Personal use b. Exempt supplies c. Supplies for which ITC is specifically
not available.
How to claim ITC?
All regular taxpayers must report the amount of input tax credit(ITC) in their monthly GST
returns of Form GSTR-3B. The table 4 requires the summary figure of eligible ITC, Ineligible
ITC and ITC reversed during the tax period. The format of the Table is given below:
A taxpayer can claim ITC on a provisional basis in the GSTR-3B to an extent of 20% of the
eligible ITC reported by suppliers in the auto-generated GSTR-2A return. Hence, a taxpayer
should cross-check the GSTR-2A figure before proceeding to file GSTR-3B. A taxpayer could
have claimed any amount of provisional ITC until 9 October 2019. But, the CBIC has notified
that from 9 October 2019, a taxpayer can only claim not more than 20% of the eligible ITC
available in the GSTR-2A as provisional ITC. This means taht the amount of ITC reported in the
GSTR-3B from 9 October 2019 will be the total of the actual ITC in GSTR-2A and the
provisional ITC being 20% of the actual eligible ITC in the GSTR-2A. Hence, matching of the
purchase register or expense ledger with the GSTR-2A becomes crucial.
Reversal of Input Tax Credit
ITC can be availed only on goods and services for business purposes. If they are used for nonbusiness (personal) purposes, or for making exempt supplies ITC cannot be claimed . Apart from
these, there are certain other situations where ITC will be reversed.
ITC will be reversed in the following cases1) Non-payment of invoices in 180 days– ITC will be reversed for invoices which were not
paid within 180 days of issue.
2) Credit note issued to ISD by seller– This is for ISD. If a credit note was issued by the seller
to the HO then the ITC subsequently reduced will be reversed.
3) Inputs partly for business purpose and partly for exempted supplies or for personal
use – This is for businesses which use inputs for both business and non-business (personal)
purpose. ITC used in the portion of input goods/services used for the personal purpose must
be reversed proportionately.
4) Capital goods partly for business and partly for exempted supplies or for personal use –
This is similar to above except that it concerns capital goods.
5) ITC reversed is less than required- This is calculated after the annual return is furnished. If
total ITC on inputs of exempted/non-business purpose is more than the ITC actually reversed
during the year then the difference amount will be added to output liability. Interest will be
applicable.
The details of reversal of ITC will be furnished in GSTR-3B. To find out more about the
segregation of ITC into business and personal use and subsequent calculations, please visit
our article.
Reconciliation of ITC
ITC claimed by the person has to match with the details specified by his supplier in his GST
return. In case of any mismatch, the supplier and recipient would be communicated regarding
discrepancies after the filling of GSTR-3B. Learn how to go about reconciliation through our
article on GSTR-2A Reconciliation. Please read our article on the detailed explanation of the
reasons for mismatch of ITC and procedure to be followed to apply for re-claim of ITC.
Documents Required for Claiming ITC
The following documents are required for claiming ITC: 1. Invoice issued by the supplier of
goods/services 2. The debit note issued by the supplier to the recipient (if any) 3. Bill of entry 4.
An invoice issued under certain circumstances like the bill of supply issued instead of tax invoice
if the amount is less than Rs 200 or in situations where the reverse charge is applicable as per
GST law. 5. An invoice or credit note issued by the Input Service Distributor(ISD) as per the
invoice rules under GST. 6. A bill of supply issued by the supplier of goods and services or both.
Special cases of ITC
a.ITC for Capital Goods
ITC is available for capital goods under GST.
However, ITC is not available for- i. Capital Goods used exclusively for making exempted goods
ii. Capital Goods used exclusively for non-business (personal) purposes Note: No ITC will be
allowed if depreciation has been claimed on tax component of capital goods.
b. ITC on Job Work
A principal manufacturer may send goods for further processing to a job worker. For example, a
shoe manufacturing company sends half-made shoes (upper part) to job workers who will fit the
soles. In such a situation the principal manufacturer will be allowed to take credit of tax paid on
the purchase of such goods sent on job work.
ITC will be allowed when goods are sent to job worker in both the cases:
1. From principal’s place of business
2. Directly from the place of supply of the supplier of such goods
However, to enjoy ITC, the goods sent must be received back by the principal within 1 year (3
years for capital goods).
c. ITC Provided by Input Service Distributor (ISD)
An input service distributor (ISD) can be the head office (mostly) or a branch office or registered
office of the registered person under GST. ISD collects the input tax credit on all the purchases
made and distribute it to all the recipients (branches) under different heads like CGST,
SGST/UTGST, IGST or cess.
d. ITC on Transfer of Business
This applies in cases of amalgamations/mergers/transfer of business. The transferor will have
available ITC which will be passed to the transferee at the time of transfer of business.
TIME, PLACE AND VALUE OF SUPPLY UNDER GST
Three types of taxes can be charged in the invoice. SGST and CGST in case of an intra-state
transaction and IGST in case of an interstate transaction. But deciding whether a particular
transaction is inter or intrastate is not an easy task.
Think about an online training where customers are sitting in different parts of the world.
Say in case, hotel services, where the receiver may have an office in another state and may be
visiting the hotel only temporarily, or where goods are sold on a train journey passing through
different states.
To help address some of these situations, the IGST act lays down certain rules which define
whether a transaction is inter or intrastate. These rules are called the place of supply rules.
Why are time place and value of supply important?
Time of supply means the point in time when goods/services are considered supplied’. When the
seller knows the ‘time’, it helps him identify due date for payment of taxes.
Place of supply is required for determining the right tax to be charged on the invoice, whether
IGST or CGST/SGST will apply.
Value of supply is important because GST is calculated on the value of the sale. If the value is
calculated incorrectly, then the amount of GST charged is also incorrect
1. Time of Supply
Time of supply means the point in time when goods/services are considered supplied’. When the
seller knows the ‘time’, it helps him identify due date for payment of taxes.
CGST/SGST or IGST must be paid at the time of supply. Goods and services have a separate
basis to identify their time of supply. Let’s understand them in detail.
A. Time of Supply of Goods
Time of supply of goods is earliest of:
1. Date of issue of invoice
2. Last date on which invoice should have been issued
3. Date of receipt of advance/ payment*.
For example:
Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The
payment was received on 31st January. The goods were supplied on 20th January.
*Note: GST is not applicable to advances under GST. GST in Advance is payable at the time of
issue of the invoice. Notification No. 66/2017 – Central Tax issued on 15.11.2017
Let us analyze and arrive at the time of supply in this case.
Time of supply is earliest of –
1. Date of issue of invoice = 15th January
2. Last date on which invoice should have been issued = 20th January
Thus the time of supply is 15th January.
What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X on 1st
January?
The time of supply for the advance of Rs 50,000 will be 1st January(since the date of receipt of
advance is before the invoice is issued). For the balance Rs 50,000, the time of supply will be
15th January.
B. Time of Supply for Services
Time of supply of services is earliest of:
1. Date of issue of invoice
2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period)
Let us understand this using an example:
Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued on
20th January and the payment for the same was received on 1st February.
In the present case, we need to 1st check if the invoice was issued within the prescribed time.
The prescribed time is 30 days from the date of supply i.e. 31st January. The invoice was issued
on 20th January. This means that the invoice was issued within a prescribed time limit.
The time of supply will be earliest of –
1. Date of issue of invoice = 20th January
2. Date of payment = 1st February
This means that the time of supply of services will be 20th January.
C. Time of Supply under Reverse Charge
In case of reverse charge the time of supply for service receiver is earliest of:
1. Date of payment*
2. 30 days from date of issue of invoice for goods (60 days for services)
*w.e.f. 15.11.2017 ‘Date of Payment’ is not applicable for goods and applies only to services.
Notification No. 66/2017 – Central Tax
For example:
M/s ABC Pvt. Ltd undertook service of a director Mr. X worth Rs. 50,000 on 15th January. The
invoice was raised on 1st February. M/s ABC Pvt Ltd made the payment on 1st May.
The time of supply, in this case, will be earliest of –
1. Date of payment = 1st May
2. 60 days from date of date of invoice = 2nd April
Thus, the time of supply of services is 2nd April.
2. Place of supply
It is very important to understand the term ‘place of supply’ for determining the right tax to be
charged on the invoice.
Here is an example:
1)Location of Service Receiver. Maharashtra
Place of supply
Maharashtra
Nature of Supply
Intra-state
GST Applicable
CGST + SGST
2)Location of Service Receiver
Maharashtra
Place of supply
Kerala
Nature of supply
Inter-state
GST Applicable
IGST
A. Place of Supply of Goods
Usually, in case of goods, the place of supply is where the goods are delivered.
So, the place of supply of goods is the place where the ownership of goods changes.
What if there is no movement of goods. In this case, the place of supply is the location of goods
at the time of delivery to the recipient.
For example: In case of sales in a supermarket, the place of supply is the supermarket itself.
Place of supply in cases where goods that are assembled and installed will be the location where
the installation is done.
For example, A supplier located in Kolkata supplies machinery to the recipient in Delhi. The
machinery is installed in the factory of the recipient in Kanpur. In this case, the place of supply
of machinery will be Kanpur.
B. Place of Supply for Services
Generally, the place of supply of services is the location of the service recipient.
In cases where the services are provided to an unregistered dealer and their location is not
available the location of service provider will be the place of provision of service.
Special provisions have been made to determine the place of supply for the following services:
●
●
●
●
●
●
●
Services related to immovable property
Restaurant services
Admission to events
Transportation of goods and passengers
Telecom services
Banking, Financial and Insurance services.
In case of services related to immovable property, the location of the property is the place
of provision of services.
Example 1:
Mr. Anil from Delhi provides interior designing services to Mr.Ajay(Mumbai). The property is
located in Ooty(Tamil Nadu).
In this case, place of supply will be the location of the immovable property i.e. Ooty, Tamil
Nadu.
Example 2:
A registered taxpayer offers passenger transport services from Bangalore to Hampi. The
passengers do not have GST registration. What will be the place of supply in this case?
The place of supply is the place from where the departure takes place i.e. Bangalore in this case.
3. Value of Supply of Goods or Services
Value of supply means the money that a seller would want to collect the goods and services
supplied.
The amount collected by the seller from the buyer is the value of supply.
But where parties are related and a reasonable value may not be charged, or transaction may take
place as a barter or exchange; the GST law prescribes that the value on which GST is charged
must be its ‘transactional value’.
This is the value at which unrelated parties would transact in the normal course of business. It
makes sure GST is charged and collected properly, even though the full value may not have been
paid.
To generate GST compliant invoices and file GST Returns use our ClearTax GST software.
Time of Supply of Goods under GST Explained
Point of taxation means the point in time when goods have been deemed to be supplied or
services have been deemed to be provided. The point of taxation enables us to determine the rate
of tax, value, and due dates for payment of taxes.
Under GST the point of taxation ,ie., the liability to pay CGST / SGST, will arise at the time of
supply as determined for goods and services. There are separate provisions for time of supply for
goods and time of supply for services. To read about time of supply of services please click here.
How to determine time of supply
The time of supply of goods shall be the earlier of the following dates:
(a) The date of issuing of invoice (or the last day by which invoice should have been issued)
OR
(b) The date of receipt of payment
-whichever is earlier
If the supplier receives an amount up to Rs. 1000 in excess of the invoice amount, the time of
supply for the extra amount shall be the date of issue of invoice (at the option of the supplier).
For (a) and (b)- The supply shall be assumed to have been made to the extent it is covered by the
invoice or the payment (as the case may be).
For (b)- the date of receipt of payment shall be earlier of1. The date on which he entered the payment in his books
OR
2. The date on which the payment is credited to his bank account
Example:
(a) Date of invoice 15th May 2018
(b) Date of receipt of payment 10th July 2018
(c) Date when supplier recorded receipt in books 11th July 2018
Time of supply will be 15th May 2018
Time of supply under reverse charge
Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the
supplier. In case of reverse charge, the time of supply shall be the earliest of the following
dates—
(a) the date of receipt of goods OR
(b) the date of payment OR
(c) the date immediately after THIRTY days from the date of issue of invoice by the supplier (60
days for services)
If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall
be the date of entry in the books of account of the recipient.
For clause (b)- the date of payment shall be earlier of(a) The date on which the recipient entered the payment in his books
OR
(b) The date on which the payment is debited from his bank account
Example:
(a) Date of receipt of goods 15th May 2018
(b) Date of payment 15th July 2018
(c) Date of invoice 1st June 2018
(d) Date of entry in books of receiver 18th May 2018
Time of supply of goods 15th May 2018
If for some reason time of supply could not be determined supply under (a), (b) or (c) then it
would be 18th May 2018 i.e., date of entry
Time of supply for vouchers
In case of supply of vouchers the time of supply is(a) The date of issue of voucher, if the supply can be identified at that point OR
(b) The date of redemption of voucher, in all other cases;
When time of supply cannot be determined
If it is not possible to determine the time of supply by the above provisions, then it will be(a) The date on which a periodical return has to be filed
or
(b) The date on which the CGST/SGST is paid, in any other case.
In GST regime, the tax collection event will be earliest of the dates as given above. The various
events like issuing invoice/making payment in case of supply of goods /services or completion of
event-in case of supply of service triggering the tax levy, confirms that the Government wants to
ensure tax is collected at the earliest point of time.
There are multiple parameters in determining ‘time’ of supply. Thus, businesses will face a
challenge in maintaining and reconciling between revenue as per financials and as per GST.
Importance of Place of Supply in GST
GST is all set to float its wings across India, and it is a high time that we start adapting to its
rules and provisions. Under GST, special attention is given to the reporting structure of all
transactions, irrespective of the fact that it is of goods or for services. There are three types of
taxes under GST, CGST, SGST and IGST. All these taxes are leviable whenever there is a
movement of goods or services.
Movement of goods and services can be of 2 types:
● Within the State i.e. Intra-State
● Between Two States i.e. Inter-State
Intra-State movement attracts CGST and SGST whereas Inter-State movement attracts IGST.
In order to determine the levy of taxes based on Place of Supply, following two things are
considered:
Location of Supplier: It is the registered place of business of the supplier
Place Of Supply: It is the registered place of business of the recipient
Understanding Place of Supply in GST
To determine the actual nature of the movement of goods and services, it is imperative to
understand the “place of supply” of such goods or services. It plays a pivotal role in identifying
whether CGST & SGST or IGST will be levied on any transaction.
Place of supply of goods and services have been given separate provisions. The location of the
supplier and the place of supply together define the nature of the transaction. The registered
place of business of the supplier is the location of the supplier, and the registered place of the
recipient is the place of supply.
Place of supply rules for Goods
1) Where the supply involves a movement of goods, the place of supply shall be determined
by the location of the goods at the time of final delivery.
For e.g. A manufacturer in Kolkata, West Bengal, has an order from a customer in Surat,
Gujarat. The manufacturer directs his branch in Mumbai, Maharashtra to ship the goods to Surat.
In this case, place of supply shall be Surat, Gujarat and thus entails an inter-state movement of
goods and will attract levy of IGST.
2) Where the supply involves a movement of goods, on the direction of a third party,
whether as an agent or otherwise, the place of supply shall be the principle place of
business of such third party, irrespective of the place of delivery of goods.
For e.g. A dealer in Mumbai, Maharashtra sells products to a customer in Delhi. Delhi-based
customer directs the Mumbai seller to send the materials to Kolkata-based customer. Although
the place of delivery is Kolkata, since Delhi-based seller had directed such movement, then the
place of supply shall be the principle place of business, i.e. Delhi and thus, charge IGST on such
movement.
3) Where the supply does not involve any movement of goods, then place of supply shall be
the location of such goods at the time of final delivery.
For e.g. A Ltd has its registered office in Hyderabad, Telangana, opens a branch in Bengaluru,
Karnataka, and purchases workstations from B Ltd. Whose office is in Bengaluru, Karnataka.
Even though the same is, a supply of goods but there is no movement of goods. Since the
movement is intra-state, it will attract CGST and SGST.
4) Where the supply includes installation of goods at site, then place of supply shall be the
place of such installation.
For e.g. Installation of telephone towers or lift in an office building.
5) Where the goods are being supplied on board a vehicle, vessel, aircraft, or a train, i.e. on
board a conveyance, then place of supply shall be the first location at which the goods are
boarded.
For e.g. Howrah to New Delhi Rajdhani starts its journey from Howrah, West Bengal and passes
through many states before ending its journey in New Delhi. The food served on board the train
shall be considered as supply of goods. Thus, place of supply shall be Howrah since it is the first
location of the goods.
6) Any other cases not covered above will be determined further as per recommendations
from the GST council (yet to be finalised)
The above rules are defined for goods. The place of supply of services is separate and specific in
nature. They go as follows.
Place of supply rules for Services
For an immovable property: Where such immovable property is located or supposed to be
located
Where both service provider and recipient are required to be physically present: Location
of the service provided
In case of an event: The location where such event was held or amusement park is located
Ancillary activities to the events: If the person is registered, then his location or if the person is
unregistered, then the place where the event was held
Note: Where the event is to be held across many States, then place of supply shall be treated as
all the States in which such services are being provided on a proportionate basis as per the terms
of the contract. Where no such contract exists, then on a reasonable basis or as may further be
prescribed.
Transportation of goods: If the recipient is registered, then his location and if unregistered, then
location of the goods from where they started for being delivered
Passenger Transportation: If the recipient is registered, then his location and if unregistered,
then location from where the passenger embarks on his journey
Supply of services on board a conveyance, vehicle, vessel, train or aircraft: The first point of
departure for that journey
Telecommunication Services :● Fixed leased line, Internet leased line, cable or dish antenna: Place of installation
● Postpaid Mobile or Internet Connection: Billing Address of the recipient of service
● Prepaid Mobile or Internet Connection: Location where such pre-payment was made or
vouchers are sold
Note: When such a recharge is made through Internet Banking or E-Wallets, then the place of
supply of service shall be the address of the recipient as on the record with the service provider.
Banking or Financial Institutions to account holders: Location of the recipient of the services
as per record of the provider
Banking or Financial Institutions to non-account holders: Location of the supplier of service
Insurance: If the person is registered, then his location or if the person is unregistered, then the
location of the recipient as per records of the service provider.
Restaurant, catering, personal grooming, beauty treatment, fitness and health services,
cosmetic or plastic surgery: Location where the service is provided
In all the above cases, where the location of the recipient cannot be identified, which is generally
the fixed establishment or registered office of the recipient, then the usual place of residence of
the recipient shall be treated as the location of receipt.
Understanding the Importance of Bill To-Ship To w.r.t. above provisions
When there are 3 parties involved in a transaction, then the place of supply plays a crucial part in
determining which of the parties will pay tax. This is similar to point 2 above, where goods are
moved from one place to the other on the direction of a third party, then the place of supply shall
be the principle place of business of that third party.
Wherever the third party exists, accordingly, the inter-state and intra-state sale can be adjudged
and taxed.
Time of Supply
Once you have determined what to tax, whether CGST, SGST or IGST, then it is time to identify
the “when to tax.” It is another critical point in payment of taxes and regularizing the returns.
Different rules and provisions have been created for notifying the time at which tax becomes
due.
For determining the time of supply in case of goods and services,
● The date of issuance of invoice or,
● Date of receipt of payment
Whichever is earlier.
Further, for item (b) above, the date of receipt of payment shall be,
● The date of credit in bank account or,
● Date at which the receiver actually entered the payment in his books of accounts
Whichever is earlier.
Where the amount received is in excess of the invoice, and then time of supply shall be treated
from the date of issuance of invoice for that extra amount.
For e.g. Maruti Enterprises issued invoice to Telga Informatics on 30th May 2017. Telga made a
payment to Maruti on 2nd June 2017 and further, Maruti credited the entry in their books on 3rd
June 2017. In the above example, time of supply shall be 30th May 2017.
Further, in case of reverse charge, things are a little bit different for goods and services. The time
of supply shall be earlier of the following:
● Date of payment or
● Date of receipt of goods or
● Date immediately 30 days from the date of issue of invoice in case of goods (60 days
in case of services)
If is still not possible to determine the correct date from the above options, then time of supply
shall be the date at which recipient makes an entry in his books of accounts.
Similarly, to determine the time of supply in case of receipt vouchers, it shall be,
The date on which the voucher is issued or
If the above cannot be ascertained, then the date on which the voucher is redeemed.
In all other cases, where it is not possible to determine the time of supply with the help of above
provisions, then the time of supply shall be either date of filing periodical returns or payment of
CGST/SGST as the case may be.
Value of Supply
After determining what and when of GST, it is time to determine “How much” of GST is to be
paid.
The value of supply has been defined as the “transaction value” of the goods and services
transacted between un-related parties. The value of supply shall include the following:
Basic consideration for the goods and services
●
●
●
●
●
●
Any taxes, cess, duties, fees and charges under any Act
Any amount payable by the supplier for the recipient
All ancillary or incidental expenses like packing, commission, etc.
Subsidies, not Central or State Government subsidies
Interest, penalty or late fee charged for delayed payment
Any discounts that are given for the supply of goods and services, which were not known
earlier.
● Other discounts, which are linked to specific invoices or were agreed upon at the time of
entering into a contract, shall be allowed as a deduction from transaction value.
Thus, after ravaging through all the above provisions, it is clear for a taxpayer to identify when
to pay tax, how much tax is to be paid and who will finally bear the tax burden. As such, place of
supply, time of supply and the value of supply, knit together, determine the total tax liability that
needs to be cleared as per schedule.
Valuation in GST
Value of Supply Every fiscal statute makes provision for the determination of value as tax which
is normally payable on ad-valorem basis. In GST also, tax is payable on ad-valorem basis i.e
percentage of value of the supply of goods or services. Section 15 of the CGST Act and
Determination of Value of Supply, CGST Rules, 2017 contain provisions related to valuation of
supply of goods or services made in different circumstances and to different persons.
Transaction Value
Under GST law, taxable value is the transaction value i.e. price actually paid or payable,
provided the supplier & the recipient are not related, and price is the sole consideration. In most
of the cases of regular normal trade, the invoice value will be the taxable value. However, to
determine value of certain specific transactions, Determination of Value of Supply rules have
been prescribed in CGST Rules, 2017.
Compulsory Inclusions
Any taxes, fees, charges levied under any law other than GST law, expenses incurred by the
recipient on behalf of the supplier, incidental expenses like commission & packing incurred by
the supplier, interest or late fees or penalty for delayed payment and direct subsidies (except
government subsidies) are required to be added to the price (if not already added) to arrive at the
taxable value.
Exclusion of discounts
Discounts like trade discount, quantity discount etc. are part of the normal trade and commerce.
Therefore, pre-supply discounts i.e. discounts recorded in the invoice have been allowed to be
excluded while determining the taxable value.
Discounts provided after the supply can also be excluded while determining the taxable value,
provided two conditions are met, namely - (a) discount is established in terms of a pre supply
agreement between the supplier & the recipient and such discount is linked to relevant invoices
and (b) input tax credit attributable to the discounts is reversed by the recipient.
Taxable value when consideration is not solely in money
In some cases, where consideration for a supply is not solely in money, taxable value has to be
determined as prescribed in the rules. In such cases following values have to be taken
sequentially to determine the taxable value:
i.
ii.
iii.
iv.
v.
Open Market Value of such supply.
ii. Total money value of the supply i.e. monetary consideration plus money value of
the non-monetary consideration.
iii. Value of supply of like kind and quality.
iv. Value of supply based on cost i.e. cost of supply plus 10% mark-up.
v. Value of supply determined by using reasonable means consistent with principles
& general provisions of GST law. (Best Judgement method)
Market Open Value means the full value of money excluding taxes under GST laws,
payable by a person to obtain such supply at the time when supply being valued is made,
provided such supply is between unrelated persons and price is the sole consideration for
such supply.
Supply of like kind & quality means any other supply made under similar circumstances, is
same or closely resembles in respect of characteristics, quality, quantity, functionality,
reputation to the supply being valued.
Illustration: (1) Where a new phone is supplied for Rs. 20000/- along with the exchange of an
old phone and if the price of the new phone without exchange is Rs.24000/-, the open market
value of the new phone is Rs 24000/-.
(2) Where a laptop is supplied for Rs. 40000/- along with a barter of printer that is
manufactured by the recipient and the value of the printer known at the time of supply is Rs.
4000/- but the open market value of the laptop is not known, the value of the supply of laptop
is Rs. 44000/-.
Value of supply between distinct and related persons (excluding Agents)
A person who is under influence of another person is called a related person like members of
the same family or subsidiaries of a Directorate General of Taxpayer Services CENTRAL
BOARD OF EXCISE & CUSTOMS www.cbec.gov.in Valuation in GST GST(Goods and
Services Tax) Directorate General of Taxpayer Services CENTRAL BOARD OF EXCISE &
CUSTOMS www.cbec.gov.in group company etc. Under GST law various categories of
related persons have been specified and as relation may influence the price between two
related persons therefore special valuation rule has been framed to arrive at the taxable value
of transactions between related persons. In such cases following values have to be taken
sequentially to determine the taxable value:
i.
ii.
iii.
iv.
Open Market Value.
Value of supply of like kind and quality.
Value of supply based on cost i.e. cost of supply plus 10% markup.
Value of supply determined by using reasonable means consistent with principles &
general provisions of GST law. (Best Judgement method)
However if the recipient is eligible for full input tax credit, the invoice value will be accepted
as taxable value. It has also been provided that where the goods being supplied are intended
for further supply as such be the recipient, the value shall , at the option of the supplier, be an
amount equivalent to 90% of the price charged for the supply of goods of like kind and
quality by the recipient to his unrelated customer.
Value of supply of goods made or received through an agent
(a) Open market value of goods being supplied, or, at the option of the supplier, 90% of the
price charged for the supply of goods of like kind and quality by the recipient to his
unrelated customer.
Illustration: Where a principal supplies groundnut to his agent and the agent is supplying
groundnuts of like kind and quality in subsequent supplies at a price of Rs. 5000/- per
quintal on the day of supply. Another independent supplier is supplying groundnuts of
like kind and quality to the said agent at the price of Rs. 4550/- per quintal. The value of
the supply made by the principal shall be Rs. 4550/- per quintal or where he exercises the
option the value shall be 90% of the Rs. 5000/- i.e. is Rs. 4500/- per quintal.
(b) In case value cannot be determined under (a) then following values have to be taken
sequentially to determine the taxable value: i. Value of supply based on cost i.e. cost of supply plus 10% mark-up.
ii. Value of supply determined by using reasonable means consistent with principles &
general provisions of GST law. (Best Judgement method)
Value of supply of services in case of a Pure Agent Subject to fulfilment of certain
conditions, the expenditure and costs incurred by the supplier as a pure agent of the
recipient of supply of service, has to be excluded from the value of supply.
Illustration: Corporate services firm A is engaged to handle the legal work pertaining to
the incorporation of Company B. Other than its service fees, A also recovers from B,
Registration fee and Approval fee for the name of the company paid to Registrar of the
Companies. The fees charged by the Registrar of the companies registration and approval
of the name are compulsorily levied on B. A is merely acting as a pure agent in the
payment of those fees. Therefore, A’s recovery of such expenses is a disbursement and
not part of the value of supply made by A to B.
Determination of value in respect of few specific supplies Methods to determine
Taxable value of following five specific supplies have also been prescribed under
valuation Rules. These can be used by the supplier if he so desires.
(a) Purchase or sale of foreign currency including money changing
(b) Booking of tickets for air travel by an air travel agent
(c) Life insurance business
(d) Value of supply of Second hand goods
(e) Value of redeemable vouchers/Stamps/Coupons/ tokens
The special provisions related to determination of these supplies are as below:
Special provision related to determination of Value of service of purchase or sale of
foreign currency including money changing
Option-1
Case 1: Transaction where one of the currencies exchanged is Indian Rupees
Taxable value is difference between buying rate or selling rate of currency and RBI
reference rate for that currency at the time of exchange multiplied by total units of
foreign currency. However if RBI reference rate for a currency is not available then
taxable value is 1% of the gross amount of Indian Rupees provided/received by the
person changing the money.
Case 2: Transaction where neither of the currencies exchanged is Indian Rupees
Valuation in GST GST(Goods and Services Tax) Directorate General of Taxpayer
Services CENTRAL BOARD OF EXCISE & CUSTOMS www.cbec.gov.in Taxable
value will be 1% of the lesser of the two amounts the person changing the money would
have received by converting (at RBI reference rate) any of the two currencies in Indian
Rupees.
Option-2 The person supplying the service may also exercise the following option to
ascertain the taxable value, however, once opted then he cannot withdraw it during the
remaining part of the financial year:
•One percent of the gross amount of currency exchanged for an amount upto one lakh
rupees, subject to minimum amount of two hundred and fifty rupees.
•One thousand rupees and half of a percent of the gross amount of currency exchanged
for an amount exceeding one lakh rupees and up to ten lakh rupees.
• Five thousand rupees and one tenth of a percent of the gross amount of currency
exchanged for an amount exceeding ten lakhs rupees subject to a maximum amount of
sixty thousand rupees.
Special provision related to determination of value of service of booking of tickets
for air travel by an air travel agent
Taxable value is 5% of basic fare in case of domestic travel and 10% of basic fare in case
of international travel. Basic fare means that part of the air fare on which commission is
normally paid to the air travel agent by the airline. The expression ‘basic fare’ means that
part of the air fare on which commission is normally paid to the air travel agent by the
airlines.
Special provision related to determination of value of service in relation to life
insurance business
Taxable value varies with nature of insurance policy. The details are as follows:
• Where policy has dual benefits of risk coverage and investment – Taxable value is gross
premium charged less amount allocated for investments or savings if such allocation is
intimated to the policy holder at the time of collection of premium.
• Single premium annuity policy where allocation for investments and savings is not
intimated to the policy holder – taxable value is ten percent of the single premium
charged from the policy holder.
• Other cases- Twenty five percent of premium charged from the policy holder in the
first year and twelve and a half percent of premium charged for subsequent years.
However, where insurance policy has benefit of risk coverage only, then taxable value is
entire premium charged from the policy holder.
Special provision related to determination of value of second hand goods
The taxable value of supply of second hand goods i.e. used goods as such or after such
minor processing which does not change the nature of goods shall be the difference
between the purchase price and the selling price, provided no input tax credit has been
availed on purchase of such goods. However, if the selling price is less than purchase
price, that negative value will be ignored.
Persons who purchase second hand goods after payment of tax to supplier of such goods
will be governed by this valuation rule only when they do not avail input tax credit on
such input supply. If input tax credit is availed, then such supply will be governed by
normal GST valuation.
Value of supply of goods repossessed from a defaulting borrower.
If the defaulting borrower is not a registered person, the purchase value will be purchase
price in the hands of such borrower reduced by five percentage points for every quarter or
part thereof, between the date of purchase and the date of disposal by the person making
such repossession.
However, if the defaulting borrower is registered, the repossessing lender agency will
discharge GST at the supply value without any reduction from actual/notional purchase
value.
Special provisions related to determination of value of redeemable vouchers/
stamps/ coupons/ tokens
The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp)
which is redeemable against a supply of goods or services or both shall be equal to the
money value of the goods or services or both redeemable against such token, voucher,
coupon, or stamp.
Value of taxable services provided by a notified class of service providers as
referred to in Para 2 of Schedule 1 between the distinct persons
The taxable value is deemed to be Nil wherever input tax credit is available.
Valuation of certain works contract services
(i)
Construction of a complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partly, except where
the entire consideration has been received after issuance of completion certificate,
where required, by the competent authority or after its first occupation, whichever
is earlier.
In case of supply of service mentioned above, involving transfer of property in land or
undivided share of land, as the case may be, the value of supply of service and goods
portion in such supply shall be equivalent to the total amount charged for such supply
less the value of land or undivided share of land, as the case may be, and the value of
land or undivided share of land, as the case may be, in such supply shall be deemed to be
one third of the total amount charged for such supply.
“Total amount” means the sum total of,(a) consideration charged for aforesaid service; and
(b) amount charged for transfer of land or undivided share of land, as the case may be.
Valuation in the case of supply of lottery Value of supply of lottery shall be 100/112
of the face value or the price notified in the Official Gazette by the organising State,
whichever is higher, in case of lottery run by State Government and 100/128 of the face
value or the price notified in the Official Gazette by the organising State, whichever is
higher, in case of lottery authorised by State Government.
Rate of exchange of currency, other than Indian rupees, for determination of value
The rate of exchange for determination of value of taxable goods or services or both
shall be the applicable RBI reference rate for that currency on the date of time of supply
as determined in terms of section 12 or section 13 of the CGST Act.
Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax
Where the value of supply is inclusive of GST, the tax amount shall be determined in the
following manner, Tax amount= (Value inclusive of taxes X GST tax rate in % )/(100+
sum of GST tax rates in %) For example - If the value inclusive of tax is Rs. 100/- and
applicable GST tax rate is 18% then Tax amount = (100x18)/ (100+18) = 1800/118=Rs.
15.25 Valuation in GST GST(Goods and Services Tax) GST Valuation in GST
GST Exemption: List of Goods & Services Exempt Under GST
The Goods and Services Tax, GST, has replaced all other types of indirect taxes applicable on
goods and services. Instead of VAT, service tax, etc., a single GST is charged on the value of
goods and services. There are different GST rates applicable for different types of goods and
services. However, in some instances, no GST is levied. Non-application of GST is called GST
exemption. This exemption is available for specific businesses, goods and services.
Exempt supply under GST
Exempt supply under GST means supplies which not attract goods and service tax. In these
supply no GST is charged. Input tax credit paid on these supplies will not be able for utilisation.
These are the following three types of supply which are considered as exempt supply:● supplies which are chargeable to nil rate tax.
● supplies which are partially and wholly exempt from the charge of GST by the
notifications which amended the section 11 of CGST and section 6 IGST.
● supplies which comes under the sec 2(78) of the Act. which covers the supplies which are
not taxable under the Act like alcoholic liquor for human consumption.
GST exemption from registration
Agriculturists
Person who fall in the threshold exemption limit of turnover for supply of goods INR 40 lakhs
and for supply of services INR 20 lakhs and for specified category INR 20 lakh and INR 10 lakh.
Person who are making NIL Rated and exempt supply of goods and services such as fresh milk,
honey, cheese, agriculture services etc.
Person making activities which are not covered under the supply of goods and services such as
funeral services , petroleum products etc.
person making supplies those are covered under reverse charge such as tobacco leave, cashew
nut(not shelled and peeled ) etc.
Let’s understand the exemptions in each instance –
GST exemption for businesses
Small and medium scale businesses can enjoy GST exemptions if their aggregate turnover is up
to a specified limit. When the GST Act was launched, this limit was INR 20 lakhs for individuals
and businesses and INR 10 lakhs for hilly states and North-eastern States of India. However, in
the 32nd GST Council Meeting, which was held in January 2019, the limits have been changed.
These limits are as follows –
Businesses and individuals who are supplying goods can claim GST exemption if their aggregate
turnover is less than INR 40 lakhs in a financial year.
For hilly and north-eastern States of India, the limit has been revised to INR 20 lakhs.
For businesses and individuals involved in the supply of services, the limit for claiming GST
exemption is INR 20 lakhs.
In case of hilly and north-eastern States, if the aggregate turnover is up to INR 10 lakhs,
businesses and individuals supplying services can claim GST exemptions.
Hilly and north-eastern States would include Arunachal Pradesh, Jammu and Kashmir, Himachal
Pradesh, Uttarakhand, Tripura, Nagaland, Sikkim, Meghalaya, Mizoram, Assam and Manipur.
Aggregate turnover, as per the GST Act, would include the aggregate value of all types of
taxable supplies, inter-state supplies, exempt supplies and the goods and services which have
been exported. The following, would, however, be deducted from the value of aggregate
turnover –
●
●
●
●
CGST, SGST or IGST already paid by the investor
Taxes which are payable on the basis of reverse charge mechanism
Value of the inward supply of goods and services
Value of non-taxable goods and services#
GST exemptions for goods
There is a list of goods which do not attract GST as recommended by the GSTCouncil. The
reasons for granting exemption ongoods might include any of the following- –
●
●
●
●
In the interest of the public
The exemption is as per the GST Council’s recommendation
The exemption is granted by the Governmentthrough a special order
The exemption is allowed on specific goods through an official notification
Moreover, there are two types of GST exemptions on goods. These are as follows –
Absolute exemption - under this type of exemption, the supply of specific types of goods would
be exempted from GST without considering the details of the supplier or receiver and whether
the good is supplied within or outside the State.
Conditional exemption – under this type of exemption, supply of specific types of goods would
be GST exempt subject to certain terms and conditions which have been specified under the GST
Act or any amendment or notification.
Here is a list of some of the most common goods which are GST exempt –
Types of goods
Live animals
Asses, cows, sheep, goat, poultry, etc.
Meat
Fresh and frozen meat of sheep, cows,
goats, pigs, horses, etc.
Fish
Fresh or frozen fish
Natural products
Honey, fresh and pasteurizedmilk,cheese, eggs, etc.
Live trees and plants
Bulbs, roots, flowers, foliage, etc.
Vegetables
Tomatoes,potatoes, onions, etc.
Fruits
Bananas, grapes, apples, etc.
Dry fruits
Cashew nuts, walnuts, etc.
Tea, coffee and spices.
Coffee beans, tea leaves, turmeric, ginger, etc.
Grains
Wheat, rice, oats, barley, etc.
Products of the milling industry
Flours of different types
Seeds
Flower seeds, oil seeds, cereal husks, etc.
Sugar
Sugar, jaggery, etc.
Water
Mineral water, tender coconut water, etc.
Baked goods
Bread, pizza base, puffed rice, etc.
Fossil fuels
Electrical energy
Drugs and pharmaceuticals
Human blood, contraceptives,etc.
Fertilizers
Goods and organic manure
Beauty products
Bindi, kajal, kumkum, etc.
Waste
Sewage sludge, municipal waste, etc.
Ornaments
Plastic and glass bangles bangles, etc.
Newsprint
Judicial stamp paper, envelopes, rupee notes, etc.
Printed items
Printed books, newspapers, maps, etc.
Fabrics
Raw silk, silkworm cocoon, khadi, etc.
Hand tools
Spade, hammer, etc.
Pottery
Earthen pots, clay lamps, etc.
GST Exemption on services
Just like specific goods, specific services are also GST exempt. There are three types of supply
of services which would qualify for GST exemption. These include the following –
● Supplies which have a 0% tax rate
● Supplies which do not attract CGST or IGST due to the provisions stated in a notification
which amends either Section 11 of CGST Act or Section 6 of IGST Act
● Supplies which are defined under Section 2(78) of the GST Act which are not taxable.
Since these types of supplies are GST exempt, any Input Tax Credit which is applicable on these
supplies would not be available to utilise or set off the GST liability.
Moreover, even under supply of services, there can be two types of GST exemptions which are
as follows –
Absolute exemption
wherein the service would be exempted from GST without any conditions
Conditional exemption or partial exemption
wherein exemption is granted based on a condition. This condition states that if the service is
supplied intra-State or if the service is supplied by a registered person to an unregistered one,
GST would be exempted if the total value of such supplies received by a registered person is not
more than INR 5000/day.
Here is a list of some of the services which enjoy GST exemption –
Types of services
Agricultural services
Cultivation, supplying farm labour, harvesting, warehouse related activities, renting or leading
agricultural machinery, services provided by a commission agent or the Agricultural Produce
Marketing Committee or Board for buying or selling agriculture produce, etc.
Government services
Postal service, transportation of people or goods, services by a foreign diplomat in India, services
offered by the Reserve Bank of India, services offered to diplomats, etc.
Transportation services
Transportation of goods by road, rail, water, etc., payment of toll, transportation of passengers by
air, transportation of goods where the cost of transport is less than INR 1500, etc.
Judicial services
Services offered by arbitral tribunal, partnership firm of advocates, senior advocates to an
individual or business entity whose aggregate turnover is up to INR 40 lakhs
Educational services
Transportation of faculty or students, mid-day meal scheme, examination services, services
offered by IIMs, etc.
Medical services
Services offered by ambulance, charities, veterinary doctors, medical professionals, etc.
Organizational services
Services offered by exhibition organisers for international business exhibitions, tour operators for
foreign tourists, etc.
Other services
Services offered by GSTN to the Central or State Government or Union Territories, admission
fee payable to theatres,circuses, sports events, etc. which charge a fee up to INR 250.
Though GST is applicable for all businesses and on the supply of goods and services, the abovementioned exemptions are available. These exemptions reduce the GST burden and help in the
socio-economic development of the country.
Job Work Under Goods and Service Tax
Job work sector constitutes a significant industry in Indian economy. It includes outsourced
activities that may or may not culminate into manufacture. The term Job-work itself explains the
meaning. It is processing of goods supplied by the principal. The concept of job work already
exists in Central Excise, wherein a principal manufacturer can send inputs or semi-finished
goods to a job worker for further processing. Many facilities,procedural concessions have been
given to the job workers as well as the principal supplier who sends goods for job work.The
whole idea is to make principal responsible for meeting compliances on behalf of the job worker
on the goods processed by him (job worker), considering the fact that typically the job- workers
are small persons who are unable to comply with the discrete provisions of
thelaw.The GST Act makes special provisions with regard to removal of goods for job-work and
receiving back the goods after processing from the job worker without payment of GST. The
benefit of these provisions shall be available both to the principal and the job worker.
What is Job work?
Section 2(68) of the CGST Act, 2017defines job work as ‘any treatment or process undertaken
by a person on goods belonging to another registered person’. The one who does the said job
would be termed as ‘job worker’. The ownership of the goods does not transfer to the job worker
but it rests with the principal. The job worker is required to carry out the process specified by the
principal, on the goods.
Job work Procedural aspects:
Certain facilities with certain conditions are offered in relation to job work, some of which are as
under:
a) A registered person (Principal) can send inputs/capital goods under intimation and subject to
certain conditions without payment of tax to a job worker and from there to another job worker
and after completion of job work bring back such goods without payment of tax. The principal is
not required to reverse the ITC availed on inputs or capital goods dispatched to job worker.
b) Principal can send inputs or capital goods directly to the job worker without bringing them to
his premises, still the principal can avail the credit of tax paid on such inputs or capital goods.
c) However, inputs and/or capital goods sent to a job worker are required to be returned to the
principal within 1 year and 3 years, respectively, from the date of sending such goods to the job
worker.
d) After processing of goods, the job worker may clear the goods to(i) Another job worker for further processing;
(ii) Dispatch the goods to any of the place of business of the principal without payment of tax;
(iii) Remove the goods on payment of tax within India or without payment of tax for export
outside India on fulfilment of conditions.
The facility of supply of goods by principal to the third party directly from the premises of the
job worker on payment of tax in India likewise with or without payment of tax for export may be
availed by the principal on declaring premise of the job worker as his additional place of
business in registration. In case the job worker is a registered person under GST, even declaring
the premises of the job worker as additional place of business is not required. Before supply of
goods to job worker, principal would be required to intimate the Jurisdictional Officer containing
the details of description of inputs intended to be sent by the principal and the nature of
processing to be carried out by the job worker. The said intimation shall also contain the details
of another job worker, if any. The inputs or capital goods shall be sent to the job worker under
the cover of a challan issued by the principal. The challan shall be issued even for the inputs or
capital goods sent directly to the job worker. The challan shall contain the details specified in
rule 10of the Invoice Rules.The responsibility for keeping proper accounts for the inputs or
capital goods shall lie with the principal.Input Tax credit on goods supplied to job worker
Section 19 of the CGST Act, 2017 provides that the principal (a person supplying taxable goods
to the job worker) shall be entitled to take the credit of input tax paid on inputs sent to the jobworker for the job work. Further, the proviso also provides that the principal can take the credit
even when the goods have been directly supplied to the job worker without bringing into the
premise of the principal. The principal need not wait till the inputs are first brought to his place
of business.
Time Limits for return of processed goods
As per section 19 of the CGST Act, 2017, inputs and capital goods after processing shall be
returned back to principal within one year or three years respectively of their being sent out.
Further, the provision of return of goods is not applicable in case of moulds and dies, jigs and
fixtures or tools supplied by the principal to job worker.
Extended meaning of input
As per the explanation provided in section 143 of the CGST Act, 2017, where certain process is
carried out on the input before removal of the same to the job worker, such product after carrying
out the process
to be referred as the intermediate product. Such intermediate product can also be removed
without the payment of tax. Therefore, both input and intermediate product can be cleared
without payment of duty to job worker.
Waste clearing provisions
Pursuant to section 143 (5) of the CGST Act, 2017, waste generated at the premises of the job
worker may be supplied directly by the registered job worker from his place of business on
payment of tax or s such waste may be cleared by the principal, in case the job worker is not
registered.
Transitional provisions: Inputs as such or partially processed inputs which are sent to a job
worker prior to introduction of GST under the provisions of existing law [Central Excise] and if
such goods are returned within 6 months from the appointed day i.e. 1st July, 2017 no tax would
be payable. If such goods are not returned within prescribed time, the input tax credit availed on
such goods will be liable to be recovered.
If manufactured goods are removed, prior to the appointed day, without payment of duty for
testing or any other process which does not amount to manufacture, and such goods are returned
within 6 months from the appointed day, then no tax will be payable. For the purpose of these
provisions during the transitional period, the manufacturer and the job worker are required to
declare the details of such goods sent/received for job work in prescribed format GST TRAN-1,
within 90 days of the introduction of GST.
UNIT 3
Steps to file returns and their due dates
All registered businesses have to file monthly or quarterly and an annual GST return
based on the type of business. All these GSTR filings are done online on the GST
portal.
What is GST return?
A GST return is a document containing details of all income/sales and/or expense/purchase
which a taxpayer (every GSTIN) is required to file with the tax administrative authorities. This is
used by tax authorities to calculate net tax liability.
Under GST, a registered dealer has to file GST returns that broadly include:




Purchases
Sales
Output GST (On sales)
Input tax credit (GST paid on purchases)
To file GST returns or for GST filing, check out gst.cleartax.in website that allows import of data
from various ERP systems such as Tally, Busy, custom excel, to name a few. Moreover, there is
option to use desktop app for Tally users to directly upload data and filing.
Who should file GST Returns?
In the GST regime, any regular business having more than Rs.5 crore as annual aggregate
turnover has to file two monthly returns and one annual return. This amounts to 26 returns in a
year.
The number of GSTR filings vary for quarterly GSTR-1 filers under QRMP scheme. The
number of GSTR filings online for them is 9 in a year, including the GSTR-3B and annual
return.
There are separate returns required to be filed by special cases such as composition
dealers whose number of GSTR filings is 5 in a year.
What are the different types of GST Returns?
Here is a list of all the returns to be filed as prescribed under the GST Law along with the due
dates.
GST filings as per the CGST Act subject to changes by CBIC Notifications
Return Form
Description
Frequency
Due Date
GSTR-1
Details of outward
supplies of taxable goods
and/or services affected.
Monthly
11th* of the next month
with effect from October
2018 until September
2020.
*Previously, the due date
was 10th of the next
month.
Quarterly
GSTR-2
Suspended from
September 2017
onwards
GSTR-3
Suspended from
September 2017
onwards
GSTR-3B
(If opted under the
QRMP scheme)
13th of the month
succeeding the quarter.
Was end of the month
succeeding the quarter
until December 2020)
Details of inward supplies
of taxable goods and/or
services effected claiming
the input tax credit.
Monthly
15th of the next month.
Monthly return on the
basis of finalisation of
details of outward
supplies and inward
supplies along with the
payment of tax.
Monthly
20th of the next month.
Simple return in which
summary of outward
supplies along with input
tax credit is declared and
payment of tax is affected
by the taxpayer.
Monthly
20th of the next month
from the month of January
2021 onwards^
Staggered^^ from the
month of January 2020
onwards upto December
2020.*
*Previously 20th of the
next month for all
taxpayers.
Quarterly
22nd or 24th of the month
next to the quarter***
^20th of next month for taxpayers with an aggregate turnover in the previous
financial year more than Rs 5 crore or otherwise eligible but still opting out of
the QRMP scheme.
^^ 1. 20th of next month for taxpayers with an aggregate turnover in the
previous financial year more than Rs 5 crore.
2. For the taxpayers with aggregate turnover equal to or below Rs 5 crore,
22nd of next month for taxpayers in category X states/UTs and 24th of next
month for taxpayers in category Y states/UTs
***For the taxpayers with aggregate turnover equal to or below Rs 5 crore,
eligible and remain opted into the QRMP scheme, 22nd of month next to the
quarter for taxpayers in category X states/UTs and 24th of month next to the
quarter for taxpayers in category Y states/UTs


CMP-08
Category X: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra,
Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the
Union territories of Daman and Diu and Dadra and Nagar Haveli,
Puducherry, Andaman and Nicobar Islands and Lakshadweep.
Category Y: Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan,
Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur,
Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha or
the Union Territories of Jammu and Kashmir, Ladakh, Chandigarh and New
Delhi.
Statement-cum-challan to
make a tax payment by a
taxpayer registered under
the composition scheme
under section 10 of the
CGST Act (supplier of
goods) and CGST (Rate)
notification no. 02/2019
dated 7th March 2020
(Supplier of services)
Quarterly
18th of the month
succeeding the quarter.
GSTR-4
Return for a taxpayer
registered under the
composition scheme under
section 10 of the CGST
Act (supplier of goods)
and CGST (Rate)
notification no. 02/2019
dated 7th March 2020
(Supplier of services).
Annually
30th of the month
succeeding a financial
year.
GSTR-5
Return for a non-resident
foreign taxable person.
Monthly
20th of the next month.
GSTR-6
Return for an input service
distributor to distribute the
eligible input tax credit to
its branches.
Monthly
13th of the next month.
GSTR-7
Return for government
authorities deducting tax
at source (TDS).
Monthly
10th of the next month.
GSTR-8
Details of supplies
effected through ecommerce operators and
the amount of tax
collected at source by
them.
Monthly
10th of the next month.
GSTR-9
Annual return for a
normal taxpayer.
Annually
31st December of next
financial year.
GSTR-9A
(Suspended)
Annual return optional for
filing by a taxpayer
registered under the
composition levy anytime
during the year.
Annually until FY
2017-18 and FY
2018-19
31st December of next
financial year, only up to
FY 2018-19.
GSTR-9C
Certified reconciliation
statement
Annually
31st December of next
financial year.
GSTR-10
Final return to be filed by
a taxpayer whose GST
registration is cancelled.
Once, when GST
registration is
cancelled or
surrendered.
Within three months of
the date of cancellation or
date of cancellation order,
whichever is later.
GSTR-11
Details of inward supplies
to be furnished by a
person having UIN and
claiming a refund
Monthly
28th of the month
following the month for
which statement is filed.
* Subject to changes by Notifications/ Orders
** Statement of self-assessed tax by composition dealers – same as the erstwhile form
GSTR-4, which is now made an annual return with effect from FY 2019-2020 onwards.
Upcoming Due Dates to file GST Returns
The due dates for filing GST returns can be extended by issuing orders or notifications. Here, we
have got for you the list of upcoming GST returns due dates you must not miss!
Below is the GST Calendar for Every Return from October
2020-March 2021 :
GSTR-1
Quarterly Filing
(Annual turnover up to Rs 1.5 crore can opt for quarterly filing**)
Quarter
Due date
Oct-Dec 2020
13th January 2021
Jan-Mar 2021
13th April 2021
**Such taxpayers can also make use of IFF to upload B2B invoices or documents every month.
Monthly Filing
(Annual turnover of more than Rs 1.5 crore must file monthly)
Month
Due Date
October 2020
11th November 2020
November 2020
11th December 2020
December 2020
11th January 2021
January 2021
11th February 2021
February 2021
11th March 2021
March 2021
11th April 2021
GSTR-2 and GSTR-3
The filing of these forms is currently suspended.
GSTR-3B
GSTR-3B is a summary return to be filed by all taxpayers except those registered under the
composition scheme, every month. However, from 1st January 2021, there is also quarterly filing
option provided to taxpayers with annual aggregate tunrover of up to Rs.5 crore, opting for
the QRMP scheme.
For October 2020 to December 2020
Category of Taxpayer
Period
Due Date*
Aggregate turnover exceeding Rs 5 crore in the
previous financial year
October 2020
20th November 2020
November 2020
20th December 2020
Aggregate turnover less than or equal to Rs 5
crore in the previous financial year
December 2020
20th January 2021
October 2020
For category X states/UT:
22nd November 2020
For category Y states/UT:
24th November 2020
November 2020
For category X states/UT:
22nd December 2020
For category Y states/UT:
24th December 2020
December 2020
For category X states/UT:
22nd January 2021
For category Y states/UT:
24th January 2021
*Last date to file without a late fee
Category X: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa,
Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union Territories of Daman
and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and
Lakshadweep.
Category Y: Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar
Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura,
Meghalaya, Assam, West Bengal, Jharkhand or Odisha or the Union Territories of
Jammu and Kashmir, Ladakh, Chandigarh and New Delhi.
From January 2021 to March 2021
Aggregate turnover exceeding Rs.5 crore in the previous financial year
Period
Due Date
January 2021
20th February 2021
February 2021
20th March 2021
March 2021
20th April 2021
Aggregate turnover up to Rs.5 crore in the previous financial year
(1) Not opting for the QRMP scheme
Period
Due Date
January 2021
20th February 2021
February 2021
20th March 2021
March 2021
20th April 2021
(2) Opting for the QRMP scheme
Quarter
Due date
Jan-Mar 2021
For category X states/UT:
22nd April 2021*
For category Y states/UT:
24th April 2021*
*Pay tax on a monthly basis by 25th of the consequent month for the first two months of
the quarter.
CMP-08
Period (Quarterly)
Due date
Oct-Dec 2020
18th January 2021
Jan-Mar 2021
18th April 2021
GSTR-4
Due date to file GSTR-4 return for the FY 2019-20 is further extended to 31st October
2020 from 31st August 2020.
Due date to file GSTR-4 return for the FY 2020-21 is 30th April 2021.
GSTR-5
Summary of outward taxable supplies and tax payable by the non-resident taxable
persons:
Period (Monthly)
Due Date
October 2020
20th November 2020
November 2020
20th December 2020
December 2020
20th January 2021
January 2021
20th February 2021
February 2021
20th March 2021
March 2021
20th April 2021
GSTR-5A
Summary of outward taxable supplies and tax payable by Online Information and
Database Access or Retrieval Services (OIDAR) provider:
Period (Monthly)
Due Date
October 2020
20th November 2020
November 2020
20th December 2020
December 2020
20th January 2021
January 2021
20th February 2021
February 2021
20th March 2021
March 2021
20th April 2021
GSTR-6
Details of Input Tax Credit (ITC) received and distributed by an Input Service Distributor
(ISD):
Period (Monthly)
Due Date
October 2020
13th November 2020
November 2020
13th December 2020
December 2020
13th January 2021
January 2021
13th February 2021
February 2021
13th March 2021
March 2021
13th April 2021
GSTR-7
Summary of Tax Deducted at Source (TDS) and deposited under GST laws:
Period (Monthly)
Due Date
October 2020
10th November 2020
November 2020
10th December 2020
December 2020
10th January 2021
January 2021
10th February 2021
February 2021
10th March 2021
March 2021
10th April 2021
GSTR-8
Summary of Tax Collected at Source (TCS) by e-commerce operators under GST laws:
Period (Monthly)
Due Date
October 2020
10th November 2020
November 2020
10th December 2020
December 2020
10th January 2021
January 2021
10th February 2021
February 2021
10th March 2021
March 2021
10th April 2021
Below is the GST Calendar for Every Return upto
September 2020:
GSTR-1
Quarterly Filing
(Annual turnover up to Rs 1.5 crore can opt for quarterly filing)
Quarter
Due date
Last date to file without a late fee
Jan-Mar 2020
30th April 2020
17th July 2020
Apr-Jun 2020
31st July 2020
3rd August 2020
Jul-Sept 2020
31st October 2020
31st October 2020
Monthly Filing
(Annual turnover of more than Rs 1.5 crore must file monthly)
Month
Due Date
Last date to file without a late fee
January 2020
11th February 2020
11th February 2020
February 2020
11th March 2020
11th March 2020
March 2020
11th April 2020
10th July 2020
April 2020
11th May 2020
24th July 2020
May 2020
11th June 2020
28th July 2020
June 2020
11th July 2020
5th August 2020
July 2020
11th August 2020
11th August 2020
August 2020
11th September 2020
11th September 2020
September 2020
11th October 2020
11th October 2020
GSTR-2 and GSTR-3
The filing of these forms is currently suspended.
GSTR-3B
GSTR-3B is a monthly summary return to be filed by all taxpayers except those
registered under the composition scheme.
For January 2020
Category of Taxpayer
Due Date*
Aggregate turnover exceeding Rs 5 crore in the previous financial year
20th February 2020
Aggregate turnover less than or equal to Rs 5 crore in the previous financial
year
For category X
states/UT:
22nd February 2020
For category Y
states/UT:
24th February 2020
*Last date to file without a late fee
From February 2020 to July 2020
Category of
Taxpayer
Period
Due Date
Last date to
file without
a late fee
Rate of Interest
Aggregate
turnover
exceeding
Rs 5 crore in
the previous
financial
year
February
2020
20th March
2020
24th June
2020*
Nil
(If tax is paid on or before 04th April
2020)
9% p.a.
(If tax is paid after 04th April 2020 till
24th June 2020 and return is filed by
this deadline)
18% p.a. in the above staggered manner
(If tax is paid or return is filed after
24th June 2020)
March 2020
20th April
2020
24th June
2020*
Nil
(If the tax paid on or before 05th May
2020)
9% p.a.
(If tax is paid after 04th April 2020 till
24th June 2020 and return is filed by
this deadline)
18% p.a. in the above staggered manner
(If tax is paid or return is filed after
24th June 2020)
April 2020
20th May
2020
24th June
2020*
Nil
(If the tax paid on or before 04th June
2020)
9% p.a.
(If tax is paid after 04th April 2020 till
24th June 2020 and return is filed by
this deadline)
18% p.a. in the above staggered manner
(If tax is paid or return is filed after
24th June 2020)
May 2020
27th June
2020
27th June
2020^
Nil
(If return is filed before 27th June
2020)
9% p.a.
(If return is filed after 27th June 2020
but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
June 2020
20th July
2020
20th July
2020^
Nil
(If return is filed before 20th July 2020)
9% p.a.
(If return is filed after 20th July 2020
but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
July 2020
20th August
2020
20th August
2020^
Nil
(If return is filed before 20th August
2020)
9% p.a.
(If return is filed after 20th August
2020 but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
Aggregate
turnover up
to Rs 5 crore
in the
previous
financial
year and
registered in
category X
states/UTs
February
2020
22nd March
2020
30th June
2020^
Nil
(If return is filed before 30th June
2020)
9% p.a.
(If return is filed after 30th June 2020
but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
March 2020
22nd April
2020
3rd July
2020^
Nil
(If return is filed before 3rd July 2020)
9% p.a.
(If return is filed after 3rd July 2020 but
before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
April 2020
22nd May
2020
6th July
2020^
Nil
(If return is filed before 6th July 2020)
9% p.a.
(If return is filed after 6th July 2020 but
before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
May 2020
12th July
2020
12th
September
2020^
Nil
(If return is filed before 6th July 2020)
9% p.a.
(If return is filed after 6th July 2020 but
before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
June 2020
22nd July
2020
23rd
September
Nil
(If return is filed before 23rd September
2020^
2020)
9% p.a.
(If return is filed after 23rd September
2020 but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
July 2020
22nd August
2020
27th
September
2020^
Nil
(If return is filed before 27th September
2020)
9% p.a.
(If return is filed after 23rd September
2020 but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
Aggregate
turnover up
to Rs 5 crore
in the
previous
financial
year and
registered in
category Y
states/UTs
February
2020
24th March
2020
30th June
2020^
Nil
(If return is filed before 30th June
2020)
9% p.a.
(If return is filed after 30th June 2020
but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
March 2020
24th April
2020
5th July
2020^
Nil
(If return is filed before 5th July 2020)
9% p.a.
(If return is filed after 5th July 2020 but
before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
April 2020
24th May
2020
9th July
2020^
Nil
(If return is filed before 9th July 2020)
9% p.a.
(If return is filed after 9th July 2020 but
before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
May 2020
14th July
2020
15th
September
2020^
Nil
(If return is filed before 15th September
2020)
9% p.a.
(If return is filed after 15th September
2020 but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
June 2020
24th July
2020
25th
September
2020^
Nil
(If return is filed before 25th September
2020)
9% p.a.
(If return is filed after 25th September
2020 but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
July 2020
24th August
2020
29th
September
2020^
Nil
(If return is filed before 29th September
2020)
9% p.a.
(If return is filed after 29th September
but before 30th September 2020)
In the above staggered manner and 18%
p.a from 1st October 2020 onwards
upto the actual date of filing
(If return is filed after 30th September
2020)
*A late fee will apply from the due date until the actual date of filing subject to a
maximum of Rs 500 per return (No late fee for Nil GSTR-3B), if filed after 24th June
2020 but before 30th Sept 2020.
^If filed afterwards but before 30th September 2020, the maximum late fee of Rs 500 per
return shall be charged vide CGST notification number 57/2020 dated 30th June 2020.
No late fee is charged for a Nil return.
From August 2020 and September 2020
Category of Taxpayer
Period
Due Date*
Aggregate turnover exceeding Rs 5 crore in the
previous financial year
Aggregate turnover less than or equal to Rs 5
crore in the previous financial year
August 2020
20th September 2020
September 2020
20th October 2020
August 2020
For category X states/UT:
1st October 2020
For category Y states/UT:
3rd October 2020
September 2020
For category X states/UT:
22nd October 2020
For category Y states/UT:
24th October 2020
*Last date to file without a late fee
Category X: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra,
Karnataka, Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or
the Union Territories of Daman and Diu and Dadra and Nagar Haveli,
Puducherry, Andaman and Nicobar Islands and Lakshadweep.
Category Y: Himachal Pradesh, Punjab, Uttarakhand, Haryana,
Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland,
Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal,
Jharkhand or Odisha or the Union Territories of Jammu and Kashmir,
Ladakh, Chandigarh and New Delhi.
CMP-08
Period (Quarterly)
Due date*
Jan-Mar 2020
7th July 2020
Apr-Jun 2020
18th July 2020
Jul-Sept 2020
18th October 2020
*Last date to file without a late fee and interest
GSTR-4
Due date to file GSTR-4 return for the FY 2019-20 is extended to 15th
July 2020.
GSTR-5
Summary of outward taxable supplies and tax payable by the nonresident taxable persons:
Period (Monthly)
Due Date
January 2020
20th February 2020
February 2020
March 2020
April 2020
May 2020
31st August 2020
June 2020
July 2020
August 2020
20th September 2020
September 2020
20th October 2020
GSTR-5A
Summary of outward taxable supplies and tax payable by Online
Information and Database Access or Retrieval Services (OIDAR)
provider:
Period (Monthly)
Due Date
January 2020
20th February 2020
February 2020
31st August 2020
March 2020
April 2020
May 2020
June 2020
July 2020
August 2020
20th September 2020
September 2020
20th October 2020
GSTR-6
Details of Input Tax Credit (ITC) received and distributed by an Input
Service Distributor (ISD):
Period (Monthly)
January 2020
Due Date
13th February 2020
February 2020
13th March 2020
March 2020
31st August 2020
April 2020
May 2020
June 2020
July 2020
August 2020
13th September 2020
September 2020
13th October 2020
GSTR-7
Summary of Tax Deducted at Source (TDS) and deposited under GST
laws:
Period (Monthly)
Due Date
January 2020
10th February 2020
February 2020
10th March 2020
March 2020
April 2020
31st August 2020
May 2020
June 2020
July 2020
August 2020
10th September 2020
September 2020
10th October 2020
GSTR-8
Summary of Tax Collected at Source (TCS) by e-commerce operators
under GST laws:
Period (Monthly)
Due Date
January 2020
10th February 2020
February 2020
10th March 2020
March 2020
31st August 2020
April 2020
May 2020
June 2020
July 2020
August 2020
10th September 2020
September 2020
10th October 2020
Late Fees for not Filing Return on Time
If GST Returns are not filed within time, you will be liable to pay interest and a late
fee.
Interest is 18% per annum. It has to be calculated by the taxpayer on the amount of
outstanding tax to be paid. The time period will be from the next day of filing to the
date of payment.
Late fees is Rs. 100 per day per Act.
So it is 100 under CGST & 100 under SGST. Total will be Rs. 200/day. Maximum is
Rs. 5,000. There is no late fee on IGST. However, currently, a reduced late fees of Rs
50 per day of delay(Rs 20 for NIL return) is applicable for those who file GSTR-1 and
GSTR-3B.
Tax collected at source (TCS)
Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at
the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to
collect tax from the purchasers.
Goods covered under TCS provisions and rates applicable to them
When the below-mentioned goods are utilized for the purpose of manufacturing, processing, or
producing things, the taxes are not payable. If the same goods are utilized for trading purposes
then tax is payable. The tax payable is collected by the seller at the point of sale. The rate of TCS
is different for goods specified under different categories :
Type of Goods
Liquor of alcoholic nature, made for consumption by humans
Timber wood under a forest leased
Tendu leaves
Timber wood by any other mode than forest leased
A forest produce other than Tendu leaves and timber
Scrap
Minerals like lignite, coal and iron ore
Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs
Purchase of Motor vehicle exceeding Rs. 10 Lakhs
Parking lot, Toll Plaza and Mining and Quarrying
Classification of Sellers and Buyers for TCS
1. There are some specific people or organizations who have been classified as sellers for tax
collected at source.No other seller of goods can collect tax at source from the buyers apart
from the following list :

Central Government

State Government

Local Authority

Statutory Corporation or Authority

Company registered under the Companies Act

Partnership firms

Co-operative Society

Any person or HUF who is subjected to an audit of accounts under the Income-tax
act for a particular financial year.
2. A buyer is a person who obtains goods of specified nature in any sale or right to receive
any such goods, by way of auction, tender or any other mode. However, the below buyers
are exempted from collection of tax at source.

Public sector companies

Central Government

State Government

Embassy of High commission

Consulate and other Trade Representation of a Foreign Nation
Clubs such as sports clubs and social clubs
TCS Payments & Returns

All sums collected by an office of the Government should be deposited on the same day
of collection.

The seller deposits the TCS amount in Challan 281 within 7 days from the last day of the
month in which the tax was collected.

If the tax collector responsible for collecting the tax and depositing the same to the
government does not collect the tax or after collecting doesn’t pay it to the government as
per above due dates, then he will be liable to pay interest of 1% per month or a part of the
month.

Every tax collector has to submit quarterly TCS return i.e in Form 27EQ in respect of the
tax collected by him in a particular quarter. The interest on delay in payment of TCS to
the government should be paid before filing of the return.
Certificate of TCS
1. When a tax collector files his quarterly TCS return i.e Form 27EQ, he has to provide a
TCS certificate to the purchaser of the goods. 2. Form 27D is the certificate issued for
TCS returns filed. This certificate contains the following details:

Name of the Seller and Buyer

TAN of the seller i.e who is filing the TCS return quarterly

PAN of both seller and buyer

Total tax collected by the seller

Date of collection

The rate of Tax applied
2. This certificate has to be issued within 15 days from the date of filing TCS quarterly
returns. The due dates are:
Quarter Ending
Date for generating Form 27D
For the quarter ending on 30th June
30th July
For the quarter ending on 30th September
30th October
For the quarter ending on 31st December
30th January
For the quarter ending on 31st March
30th May
In case you are still confused about filing TCS returns, feel free to consult the tax experts at
ClearTax.
TCS Exemptions
Tax collection at source is exempted in the following cases:

When the eligible goods are used for personal consumption

The purchaser buys the goods for manufacturing, processing or production and not for the
purpose of trading those goods.
TCS under GST

Any dealer or traders selling goods online would get the payment from the online
platform after deducting an amount tax @ 1 % under IGST Act. (0.5% in CGST & 0.5%
in SGST)

The tax would have to be deposited to the government by 10th of the next month.

All the dealers/traders are required to get registered under GST compulsorily.

These provisions are effective from 1st Oct 2018. Example: Mr. Raj(seller) is a trader
who sells clothes online on Flipkart (buyer). He receives an order for Rs 10, 000 inclusive
of commission. Flipkart would thus be deducting tax for Rs 100 (1% of Rs. 10000).
Submission of Form 24G
In the case of an office of the Government, where tax has been paid to the credit of Central
Government without the production of a challan associated with the deposit of the tax in a bank,
below are the changes to the rules, Form 24G has to be submitted:
Rules where TDS is deposited without challan (changes to Rule 30)

If TDS has been deposited without a challan, the person to whom TDS has been reported
for depositing to the government – such a person has to submit a statement in Form 24G
to the agency authorised by the Principal Director of income tax (systems). [Rule 30(4)]

Such Form 24G must be submitted issued within 15 days from the end of the relevant
month. For the month of March, the form should be submitted by 30 April 2019

Form 24G must be submitted (a) electronically under digital signature (b) electronically
along with verification in Form 27A (c) or verified through an electronic process as
prescribed

A person referred to in bullet 1 shall inform the Book Identification number generated to
each of the deductors for whom the sum deducted has been deposited.

The Principal Director General of Income Tax (Systems) shall specify the procedure for
furnishing and verification of statement Form 24G.
Rules where TCS under section 206C is deposited without challan (changes to Rule 37CA)

If TCS has been deposited without a challan, the person to whom the collector has
reported the TCS for depositing to the government – such a person will submit Form 24G
to the agency authorised by the Principal Director of income tax (systems).

Such Form 24G must be submitted within 15 days from the end of the relevant month.

If Form 24G pertains to the month of March, it must be submitted on or before 30th
April.d. Form 24G must be issued :

electronically under digital signature

electronically along with verification in Form 27A or

verified through an electronic process as prescribed

A person referred to in bullet 1 shall inform the Book Identification number generated to
each of the deductors for whom the sum deducted has been deposited.

The Principal Director General of Income Tax (Systems) shall specify the procedure for
furnishing and verification of statement Form 24G.
Demand and Recovery under GST
. Introduction: Levy of tax is mandated by law under GST, its recovery is an
important administrative function under law. Though the focus is on self-assessment
and voluntary payment of tax, there bound to be certain disputes and other factors
resulting in non-payment, delayed payment of tax. In civil society the demand of tax
before its recovery is more humane touch to the process, these processes ultimately
aimed at proper recovery of tax for larger social good. The verification, scrutiny,
audit, review of returns and records are well recognised methods in tax administration.
Legal provisions under GST for demand and recovery: Chapter XV comprising
sections 73 to 84 lay down the procedure in demand and recovery of GST. Tabular
representation may help to understand the broad spectrum of the process:
Section
Details
73
Determination of tax not paid or short paid or erroneously refunded or input tax credit
wrongly availed or utilised for any reason other than fraud or any wilful misstatement
or suppression of facts.
74
Determination of tax not paid or short paid or erroneously refunded or input tax credit
wrongly availed or utilised by reason of fraud or any wilful misstatement or
suppression of facts.
75
General provisions relating to determination of tax.
76
Tax collected but not paid to Government.
77
Tax wrongfully collected and paid to Central Government or State Government.
78
Initiation of recovery proceedings
79
Recovery of tax.
80
Payment of tax and other amount in instalments.
81
Transfer of property to be void in certain cases
82
Tax to be first charge on property
83
Provisional attachment to protect revenue in certain cases.
84
Continuation and validation of certain recovery proceedings.

Section 73 and 74 have many similarities on recovery procedure, though the
circumstances under which the proceedings are initiated are totally different.
The time limit is higher under section 74 considering the serious nature of
circumstances like “….by reason of fraud or any wilful misstatement or
suppression of facts.” Following table summarises the details:
Particulars
Section 73
Section 74
Situation of
proposing GST
demand of tax
interest, penalty etc.
When tax is not paid or short paid or wrong
availment or utilization of ITC or refund is
erroneously refunded for reason other
than fraud or wilful misstatement or
suppression of facts to evade tax
For reason of fraud or wilful
misstatement or suppression of
facts to evade tax
Time limit for
issuance of SCN
3 month prior to issuance of order
6 month prior to issuance of order
Time limit for
Passing of order
Within 3 year from the due date for
furnishing of annual return for financial year
to which tax has not paid or short paid or
wrong availment or utilization of ITC relates
to or 3 years from the date of erroneous
refund
Within 5 year from the due date
for furnishing of annual return for
financial year to which tax has not
paid or short paid or wrong
availment or utilization of ITC
relates to or 5 years from the date
of erroneous refund

The following points are important to the proceedings:
a. Proper officer- only proper officer, not all can initiate proceedings.
Jurisdiction in terms of administrative instructions determine the position of
proper officer.
b. Tax period- any period i.e. any one month, number of months, any months in
different financial years with in the limited period of 3 or 5 years.S.73(3)/74(3).
c. Person chargeable with tax- the scope is widened by no restriction to
registered person or taxable person. Even persons not registered are covered
here. In case of HUF, Firms, LLP, Corporate bodies the persons responsible
will be liable to take note of the SCN and reply to that.
d. Voluntary payment is always encouraged for easy and speedier closure of
proceedings. To incentivise such compliance, no penalty or lesser penalty are
proposed as per the situation mentioned in the section.
e. Tax, interest and penalty are recoverable under these provisions.

Voluntary tax payment related provisions are as follows:
Section 73
Section 74
Proper officer shall not serve any notice/statement on
receipt information with respect to payment of tax
along with application interest on the basis of his own
ascertainment or as ascertained by proper officer. Such
payment must be made before service of notice
/statement
Proper officer shall not serve any
notice/statement on receipt information with
respect to payment of tax along with application
interest and 15% of tax as penalty on the basis of
his own ascertainment or as ascertained by proper
officer. Such payment must be made before
service of notice /statement
If the applicable pay tax along with applicable interest
within 30 days from the date of issuance of
notice/statement, then the penalty shall not be
applicable and all the proceeding in the respect shall be
deemed to be concluded
If the applicable pay tax along with applicable
interest and 25% of tax as penalty within 30 days
from the date of issuance of notice/statement
,then the penalty shall not be applicable and all
the proceeding in the respect shall be deemed to
be concluded

Issue of show cause notice SCN and related issues: Show Cause Notice
(SCN) is the first stage of litigation under GST. SCN is to be issued proposing
demand of tax, interest, fees, or penalty and is required to be issued for taking
action with respect to payment of tax collected by any person which has not
been deposited with the govt. Under GST, the department is required to issue
SCN when-

Tax is not paid or short paid or

Tax is erroneously refunded or

Input tax credit is wrongly availed or utilized or

Any demand of tax, interest, fee or penalty is to be proposed as a result of .
enquiry or audit.

Validity of SCN must be verified in pursuance of Section 75 of the Act. Section
75 prescribe situations like pending/further adjudication proceedings and time
line restrictions with respect to issue of SCN. SCN must be issued within the
time limit as prescribed u/s section 73 or 74 of the Act. It should be issued
along with document relied upon by Department. Interesting to note that
section 75(2) permits proceedings to be continued under 73(1) even if the SCN
issued under 74(1) fail to establish the allegation of fraud or any wilful
misstatement or suppression of facts to evade tax has not been established. The
SCN must be specific with respect to allegation and should not suffer from
vagueness and arbitrariness.

Penalty payable under section 73 and 74: Penalty payable under proceedings
vary depending on the level of voluntary compliance. Early response to
proceedings and early payment of tax and interest (u/s 50) entail the chargeable
person certain concessions in levy of penalty. In a nutshell the details are as
follows:
Time line for compliance
Sec 73
Sec 74
Before service of notice 73(5)/74(5)
No penalty
15% of tax amount
Within 30 days of issue of show cause notice
73(8) /74(8)
No penalty
25% of tax amount
After considering the representations in
proceedings 73(9) / 74(11)
10% of tax amount or
10,000/- the higher one
50% of tax amount (within 30
days) 100% of tax amount after
30 days

Self-assessed tax to be paid: Notwithstanding anything contained in section
73 or section 74 where any amount of self-assessed tax in accordance with a
return furnished under section 39 remains unpaid, either wholly or partly, or
any amount of interest payable on such tax remains unpaid, the same shall be
recovered under the provisions of section 79 [LC Infra Projects (P) Ltd vs Union
of India, WP No 28876 of 2019 High Court of Karnataka- held that issue of SCN is
mandatory for recovery of interest/s 50]

Where any penalty is imposed under section 73 or 74, no penalty shall be
imposed for same act or omission on the same person under any other provision
of this Act. Limitation as per section 75(13).

General provisions for demand of tax: Section 75 make general provisions
relating to demand of tax made under section 73 and 74.
a. Computing period of issuance of SCN or order- 3 years’ u/s 73(10) or 5
years’ u/s 74(10)-linked to due date of annual return of financial year.
b. Order in pursuance of directions of appellate authority or tribunal or courtwithin 2 years from the date of communication from such authority. Sec 75(3).
c. Opportunity of personal hearing or adjournment-If favourable order is issued
by the authority no need of hearing. Or else opportunity of hearing and not
more than 3 adjournments may be granted before passing orders on the basis of
records.
d. Contents of Order- Order should contain the relevant facts and basis of
decision. The amount of tax, interest and penalty demanded shall not exceed
the amount specified in the notice. Payment of interest is automatic.
e. Conclusion of Proceedings-Order shall be passed within 3 years or 5 years,
linked to due date of annual return of financial year.
f. The exclusion of time under adjudication proceedings, stay etc., shall be
considered as per section 75(11).

Section 74- applicable situations: Proceedings under Section 74 calls for
greater responsibility on the part of department as well as taxable person. It also
invokes extended period for 5 years, conclusion of proceedings as against lower
period of 3 years under section 73. The applicability rests on following
conditions:
a. by reason of fraud, or
b. any wilful-misstatement or
c. suppression of facts to evade tax,

FRAUD-The dictionary meaning is “wrongful or criminal deception intended
to result in financial or personal gain”. A person or thing intended to deceive
others, typically by unjustifiably claiming or being credited with
accomplishments or qualities also describe fraud. The basic element of fraud is
deceit. As per Section 25 of the Indian Penal Code (“the Code”) fraudulently
is defines as: “A person is said to do a thing fraudulently if he does that thing
with the intent to defraud but not otherwise”. According to the section 17 of
Indian contract act 1872, fraud means making a suggestion, as a fact, which
the person making does not believe to be true. Fraud also means active
concealment of fact with a view to deceive the exchequer. Intension to evade
duty is built in to the act of fraud. Fraud is against to public policy. The trace of
fraud in GST proceedings make take variety of forms, designs and may involve
one or more parties.

WILFUL-MISSTATEMENT– Wilful means with intent to evade GST. Every
misstatement need not be wilful. Wilful is deliberate or intentional. The
dictionary meaning is “having or showing a stubborn and determined intention
to do as one wants, regardless of the consequences.” A false statement will be
termed as wilful if it is intentional or deliberate. Misstatement must be wilful to
invoke extended period of limitation.

SUPPRESSION OF FACTS TO EVADE TAX– Suppression means not
providing information which the person is legally required to provide but
deliberately not stated. Explanation 2. To section 74 states –For the purposes of
this Act, the expression “suppression” shall mean non-declaration of facts or
information which a taxable person is required to declare in the return,
statement, report or any other document furnished under this Act or the rules
made thereunder, or failure to furnish any information on being asked for, in
writing, by the proper officer. Intension to evade tax is not mere failure to pay
tax, it must be something more like deliberately avoiding payment of duty. If
all facts are disclosed to department, extended period is not applicable.

Tax collected but not paid to Government: Section 76 provides that if any
person who has collected from any other person an amount as tax or purporting
to be tax has not paid the amount to Government, he shall deposit the amount.
Various aspects under section 76 are captured here under:
a. Amount shall be collected as tax- merely billed is not collected, actual
payment by the other person to the bill results in collection.
b. Demand if a person does not deposit or pay it- there is no time limit to issue
SCN.
c. Interest payable on delay in deposit.
d. Personal hearing and order.

Time limit for passing the order is within one year from the date of issue of
notice.

Disposal of amount deposited with the Government Sub section (9) permits
appropriation of such amount against assessed liability. Government Sub
section (10) permits refund the amount to person who has borne the incidence.

Tax wrongfully collected and paid to Central Government or State
Government: Section 77 (similar section 19 under IGST) contemplates a
situation where a mix up of payment of SGST/UTGST/CGST and IGST may
happens by mistake. Details are as follows:
GST category
Wrongly classified
and paid
Remedy
Consequences
IGST
SGST/UTGST/CGST
Refund of the amount
To pay IGST- No interest.
SGST/UTGST/CGST
IGST
Refund of the amount
To pay
SGST/UTGST/CGST- No
interest

The law makers did not provide for adjustment amongst central and state tax
authorities. That would have given big relief to tax payers.

Initiation of recovery proceedings: Recovery of tax is an important
administrative function. If the persons pay tax determined as per proceedings/
adjudication, question of recovery does not arise. In practical life various
reasons cause either delay in payment or the persons not responding to the call
for payment. Section 78 provides a period of THREE MONTHS from the date
of service of such order for payment, failing which recovery proceedings shall
be initiated. Proper officer has power to demand tax in a shorter period in the
interest of revenue.

Recovery of tax: Section 79 provides for manner of recovery of tax due to the
Government. In nutshell the various methods may be summarised as follows:
a. Deduction from any money payable to person.
b. Recovery through detaining and selling goods.
c. Recovery from any other person who is required to pay any amount to the
defaulter- Garnishee order.
d. Distrain property of the person.
e. As arrears pf land revenue.
f. Recovery through Magistrate.
g. Authorities can use one or more methods.
h. Recovery from bond if provided.
i. Recovery out of inter head refund amount against inter head due amount i.e.
CGST/IGST against SGST and vice versa. Section 20 of IGST empowers equal
and parallel powers.

Payment of tax and other amount in Instalments: Section 80-This facility is
a kind of benevolence bestowed upon the taxable person. This facility has to be
sanctioned by Commissioner upon request from taxable person. This facility
grants some time to arrange resources and pay in instalments. This can be
narrated in capsule form as follows:
a. Commissioner is empowered to sanction payment by instalments.
b. Reasons to be recorded in writing for sanction.
c. Monthly instalments not exceeding 24 months.
d. Interest shall be payable.
e. This facility is not available for tax self-assessed by the person.
f. Facility available for demand confirmed u/s 73,74 and 75- tax, interest,
penalty and fine.
g. Commissioner may impose conditions.
h. Default in payment of any instalment will result in entire amount payable
forthwith.

Preventive measures for recovery of Tax: Section 81,82, and 83 lay down
provisions to secure tax due to Government by legal mandate under GST.
Section
Description
Details
81
Transfer of property to be void in
certain cases
Ø Void if done with intention to defraud to Govt.
82
Tax to be first charge on property
Ø Save as otherwise provided under IBC code (
exception)
83
Provisional attachment to protect
revenue in certain cases
Ø Commissioner may exercise attachment
Ø Exception if made for adequate consideration in
good faith with noticing pendency of such
proceedings
Ø During pendency of any proceedings
Ø Attach provisionally

Continuation and validation of certain recovery proceedings. Section 84
provides that when any demand of tax, interest or penalty has been confirmed
against the taxable person and recovery proceedings are being taken the
proceedings will be continued even where amount is enhanced in appeal
revision or other proceedings and in case of reduction of demand such reduced
amount to be recovered. Appropriate authority for recovery shall be so
instructed by Commissioner.

Conclusion: Government revenue is well protected under various
circumstances. The procedures are laid down so as to remove any ambiguity
when there are changes in officers due to transfer or change of jurisdiction. The
attachment proceedings coupled with recovery from third parties who are due
to pay to the chargeable person in arrears are further safety measures.
Inspection under GST
When does inspection under GST occur?
A Joint Commissioner (or an officer of higher rank) may have “reasons to believe”
that in order to evade tax, any person has done the following1.
2.
3.
4.
5.
Suppressed any transaction of supply
Suppressed stock in hand
Claimed input tax credit in excess
Violated of any of the provisions
Any transporter or owner/operator of a warehouse has kept goods which have
escaped tax payment or has kept accounts and/or goods in such a way as to
evade tax
Then he can authorize any officer in FORM GST INS-01 to inspect places of
businesses of:



the taxable person or
the transporter or
owner/operator of warehouse
He can also examine any other place if he sees fit. What is meant by ‘reasons to
believe’? ‘Reason to believe’ means having knowledge of facts (although does not
mean having direct knowledge), that would make any reasonable person, knowing the
same facts, to reasonably conclude the same thing. As per the Indian Penal Code,
1860, “A person is said to have ‘reason to believe’ a thing, if he has sufficient cause to
believe that thing but not otherwise.” Reason to believe is a determination based on
intelligent examination and evaluation. It is different from a purely subjective
consideration, i.e., an opinion. It is based on facts rather than an interpretation of
facts. Is it necessary to record the ‘reasons to believe’ in writing, before issuing
order for Inspection/Search/Seizure? GST Act does not mention recording the
reasons to believe. In fact, Finance Act 2017 has amended Sec 132(1) & (1A) of
Income Tax Act retrospectively stating, that reason to believe, shall not be disclosed
to any person or any authority or the Appellate Tribunal.
Search under GST
What is the difference between search & inspection? ‘Search’ involves an attempt
to find something. Search, in tax/legal parlance, is an action of a government official
(a tax officer or a police officer, depending on the case) to go and look through or
examine carefully a place, person, object etc. in order to find something concealed or
to discover evidence of a crime. The search can only be done under the proper and
valid authority of law. ‘Inspection’ is the act of examining something, often
closely. In tax/legal language, it is a softer provision than search. It enables officers to
access any place of business of a taxable person and also any place of business of a
person engaged in transporting goods or who is an owner/operator of a warehouse or
godown.
Who can order search under GST and when?
On the basis of results of inspection or any other reason, Joint Commissioner of
SGST/CGST or a superior officer can order for a search if he has “reasons to believe”
–


There are goods which are liable for confiscation
Any documents or books or other things which will be useful during
proceedings and are hidden somewhere
He can, on his own or through an authorized officer, search and seize the goods and
documents.
Seizure under GST
What is meant by seizure? The term ‘seizure’ has not been specifically defined in
GST. In legal parlance, seizure is the act of taking over something or someone
by force through legal process, such as the seizure of evidence found at the scene of a
crime. It generally implies taking possession forcibly against the wishes of the
owner. What is the difference between Seizure and Detention? Not allowing the
owner any access to the seized goods by a legal order/notice is called detention.
However, the ownership & possession of goods still lie with the owner. It is issued
when it is suspected that the goods are liable to confiscation. Seizure is taking over or
actual possession of the goods by the department. But the ownership is still with the
owner. Seizure can be made only after inquiry/investigation that the goods are liable
to confiscation.
Procedure for seizure
The proper officer will give an order of seizure in FORM GST INS-02. What are the
powers of the officer authorized to search? The officer authorized to search will
have the power to seal the door of the premises. He can also break open the door of
any premises if access is denied. He can also break open any cupboard or box in
which goods, books, documents etc. are suspected to be concealed. What happens if
it is not possible to seize the goods? If it is not practicable to seize the goods, the
proper officer will order the owner not to remove these goods without prior
permission of the officer. The officer will issue an order of prohibition in FORM GST
INS-03.
How long will the books/documents remain with the officer?
The officer will keep the books and documents as long as it is necessary for
examination and inquiry. Other books which are not relevant to the issue of notice
will be returned within 30 days from the date of notice. The seized goods can be
released on a provisional basis against a bond for the value of the goods in FORM
GST INS-04. The owner must also furnish a security in the form of a bank guarantee
for the amount due (applicable tax, interest and penalty payable). If the owner fails to
produce the provisionally released goods at the appointed date and place then the
security will be encashed and adjusted against the amount due.
What happens after seizure?
1. The person, whose documents are seized, can make copies only in the presence
of an officer.
2. If notice is not issued within six months (extendable by 6 more months) of the
seizing the goods, they will be returned.
3. The Government can issue a list of hazardous or perishable goods which can be
disposed off as soon as they are seized.
4. All goods seized will be listed properly by the officer.
Does the Code of Criminal Procedure apply in such cases? The provisions of the
Code of Criminal Procedure will apply to search and seizure. Other ways to
check/inspect The Commissioner or an authorized officer can purchase any goods
and/or services from a taxable person. This will be done to check the issue of tax
invoices, whether they are maintained correctly, and whether GST amount is clearly
displayed. When the goods are returned, the amount will have to be refunded by the
taxable person and the sales invoice will be canceled.
Arrest under GST
If the Commissioner believes a person has committed an offence u/s 132, the offender
can be arrested under GST. Read our article to know more about arrest under GST. GST
also has provisions for interception and inspection of goods in transit.
What is advance ruling?
Any advance tax ruling is a written interpretation of tax laws. It is issued by tax
authorities to corporations and individuals who request for clarification of certain tax
matters. An advance ruling is often requested when the taxpayer is confused and
uncertain about certain provisions. Advance tax ruling is applied for: before starting
the proposed activity.
For example, under income tax, advance ruling is available in international taxation.
This is to help non-residents ascertain the income-tax liability, plan their income-tax
in advance and avoid long drawn and costly legal disputes. As per GST, the advance
ruling is a written decision given by the tax authorities to an applicant on questions
relating to the supply of goods/services.
Why is advance ruling under GST
necessary?
The objective of any advance ruling, including under GST is to1. Provide certainty for tax liability in advance in relation to a future activity to be
undertaken by the applicant
2. Attract Foreign Direct Investment (FDI) – By clarifying taxation and showing a
clear picture of the future tax liability of the FDI. The clarity and clean taxation
will attract non-residents who do not want to get involved in messy tax disputes.
3. Reduce litigation and costly legal disputes
4. Give decisions in a timely, transparent and inexpensive manner
When can one request for GST
Advance Ruling?
Any taxpayer can request for advance ruling when he is uncertain of the provisions.
Advance tax ruling is applicable on –
(a) Classification of any goods and/or services under the Act
(b) Applicability of a notification which affects the rate of tax
(c) Determination of time and value of supply of goods/services
(d) Whether input tax credit paid (or deemed to be paid) will be allowed
(e) Determination of the liability to pay tax on any goods/services
(f) Whether the applicant has to be registered under GST
(g) Whether any particular thing done by the applicant regarding goods/services will
result in a supply.
Procedure on receipt of application
On receipt of an application, a copy will be forwarded to the prescribed officer and he
will furnish the necessary relevant records.
Process of Advance Ruling under
GST
An advance ruling is first sent to Authority for Advance Ruling (Authority). Any
person unhappy with the advance ruling can appeal to the Appellate Authority for
Advance Ruling (Appellate Authority).
Process of Advance Ruling Under GST
Forms
Application for Advance ruling has to be made in FORM GST ARA-01 along with
Rs. 5,000.
Decision of the Authority
The Authority can by order, either admit or reject the application.
Will all applications be allowed?
The Authority will NOT admit the application when(a) The same matter has already been decided in an earlier case for the applicant
(b) The same matter is already pending in any proceedings for the applicant
Basically, Advance Ruling will not be possible in any pending case or any
decision already given.
Applications will be rejected only after giving an opportunity of being heard. Reasons
for rejection shall be given in writing.
When will the authority give their decision?
Advance ruling decision will be given within 90 days from application. If the
members of the Authority differ in opinion on any point, they will refer the point to
the Appellate Authority.
Advance Ruling will have prospective effect only.
On whom will the advance ruling apply?
The advance ruling will be binding only – (a) On the applicant (b) On the
jurisdictional tax authorities in respect of the applicant. If the law, facts of the original
advance ruling change then the advance ruling will not apply.
Appeal to the Appellate Authority
If the applicant aggrieved by the advance ruling he can appeal to the Appellate
Authority.
APPEALS AND REVISION UNDER GST
Simplified GST Series- Chapter 19- Section 107-108 /CGST ACT 2017 /Appeals
& Revision –Part 1
Section 107- Appeals to Appellate Authority(1) Any person aggrieved by any decision or order passed under this Act or the State
Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by
an adjudicating authority may appeal to such appellate authority as may be prescribed
within three months from the date on which the said decision or order is
communicated to such person.
(2) The Commissioner may, on his own motion, or upon request from the
Commissioner of State tax or the Commissioner of Union Territory Tax, call for and
examine the record of any proceeding in which an adjudicating authority has passed
any decision or order under this Act, or under the State Goods and Services Tax Act
or the Union Territory Goods and Services Tax Act, for the purpose of satisfying
himself as to the legality or propriety of the said decision or order and may, by order,
direct any Officer subordinate to him to apply to the Appellate Authority within six
months from the date of communication of the said decision or order for the
determination of such points arising out of the said decision or order as may be
specified by the Commissioner in his order.
(3) Where, in pursuance of an order under sub-section (2), the authorized officer
makes an application to the Appellate Authority, such application shall be dealt with
by the Appellate Authority as if it were an appeal made against the decision or order
of the adjudicating authority and such authorised officer were an appellant and the
provisions of this Act relating to appeals shall apply to such application.
(4) The Appellate Authority may, if he is satisfied that the appellant was prevented by
sufficient cause from presenting the appeal within the aforesaid period of three
months or six months, as the case may be, allow it to be presented within a further
period of one month.
(5) Every appeal under this section shall be in such form and shall be verified in such
manner as may be prescribed.
Analysis
An assessee, aggrieved by any decision or order passed by adjudicating authority may
prefer an appeal within a period of 3 months from the date of communication of
decision or order in Form GST APL-01, along with relevant documents either
electronically or otherwise as notified by the Commissioner against which a
provisional acknowledgement will be issued immediately.
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The grounds of appeal and form of verification must be duly signed as specified in
Rule 26.
The certified copy of the decision or order is to be filed before the Appellate
Authority within 7 days of filing the appeal.
A final acknowledgement indicating the appeal number shall be issued in Form GST
APL-02 by the said authority
In case the said certified copy is submitted after a period of 7 days, the date of filing
of appeal shall be the date of submission of such copy.
The appeal shall be considered as filed only when the final acknowledgement,
indicating the appeal number is issued
Alternatively, the Commissioner of Central / State or any Union territory can, with a
view to satisfy himself about the legality or propriety of any order or decision, direct a
subordinate officer to file an application before the Appellate Authority within 6
months from the date of communication of decision or order in Form GST APL-03,
along with relevant documents either electronically or otherwise as notified against
issue of an acknowledgement
The Appellate Authority shall treat the application filed by authorized officer as if
such authorized officer is appellant and the provisions of the Act relating to appeal
will be applicable to such application.
The appellate authority in either of the above cases is empowered to condone the
delay up to a period of 1 month.
(6) No appeal shall be filed under sub-section (1) unless the appellant has paid –
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from
the impugned order, as is admitted by him, and
(b) a sum equal to ten per cent of the remaining amount of tax in dispute arising from
the said order ‘[subject to a maximum of twenty-five crore rupees], in relation to
which the appeal has been filed.
(7) Where the appellant has paid the amount under sub-section (6), the recovery
proceedings for the balance amount shall be deemed to be stayed.
(8) The Appellate Authority shall give an opportunity to the appellant of being heard.
(9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing
of an appeal, grant time to the parties or any of them and adjourn the hearing of the
appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party
during hearing of the appeal.
AnalysisThe appeal has to be filed before following authorities-
1. Commissioner (Appeals) where such decision or order is passed by the Additional
or Joint Commissioner; and
2. the Additional Commissioner (Appeals) where such decision or order is passed by
the Deputy or Assistant Commissioner or Superintendent
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Appeal has to be filed in prescribed form and manner along with payment of:
Amount of tax, interest, fine, fee & penalty, as is admitted, in full; and
pre-deposit of sum equal to 10% of remaining amount of tax in dispute (subject to a
maximum of twenty- five crore rupees (effective from 01.02.2019).
On payment of above amount, the recovery proceedings for balance amount are
deemed to be stayed.
The Appellate Authority shall give an opportunity to the appellant of being heard
Maximum 3 adjournments shall be granted to a party on showing reasonable cause
that is to be recorded in writing.
(10) The Appellate Authority may, at the time of hearing of an appeal, allow an
appellant to add any ground of appeal not specified in the grounds of appeal, if it is
satisfied that the omission of that ground from the grounds of appeal was not wilful or
unreasonable.
(11) The Appellate Authority shall, after making such further inquiry as may be
necessary, pass such order, as it thinks just and proper, confirming, modifying or
annulling the decision or order appealed against but shall not refer the case back to the
adjudicating authority that passed the said decision or order.
(12) The order of the Appellate Authority disposing of the appeal shall be in writing
and shall state the points for determination, the decision thereon and the reasons for
such decision.
(13) The Appellate Authority shall, where it is possible to do so, hear and decide
every appeal within a period of one year from the date on which it is filed:
Provided that where the issuance of order is stayed by an order of a Court or Tribunal,
the period of such stay shall be excluded in computing the period of one year.
(14) On disposal of the appeal, the Appellate Authority shall communicate the order
passed by it to the appellant, respondent and to the adjudicating authority.
(15) A copy of the order passed by the Appellate Authority shall also be sent to the
jurisdictional Commissioner or the authority designated by him in this behalf and the
jurisdictional Commissioner of State Tax or Commissioner of Union Territory Tax or
an authority designated by him in this behalf.
(16) Every order passed under this section shall, subject to the provisions of section
108 or section 113 or section 117 or section 118, be final and binding on the parties.
Analysis
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Appellate authority may allow any additional grounds not specified in the grounds of
appeal on being satisfied that the omission was not wilful or unreasonable.
Appellate authority has to pass the order confirming, modifying or annulling the
decision or order appealed against, but shall not remand the case back to the
adjudicating authority.
Opportunity of being heard to be granted in case of order for enhancing fees or
penalty or fine in lieu of confiscation of goods or reducing amount of refund/input
tax credit after issuing show cause notice.
The appellate authority has power to issue show cause notice in case it is of the
opinion that any tax has not been paid or short paid or erroneously refunded or input
tax credit is wrongly availed or utilised.
Appellate authority has to hear and decide the appeal, wherever possible, within a
period of 1 year from the date of filing.
Where the issuance of order is stayed by an order of a court or Tribunal, the period of
such stay shall be excluded in computing the period of one year.
Appellate authority to communicate the copy of order to the appellant, the respondent,
the adjudicating authority, Jurisdictional Commissioner of CGST, SGST and UTGST
or an authority designated in their behalf
The order passed under this section shall be final and binding on the parties subject to
provisions of section 108 (Powers of Revisional Authority) or Section 113 (Orders of
Appellate Tribunal) or Section 117 (Appeal to High Court).
Section 108- Powers of Revisional Authority –
This section pertains to revisionary powers of Revisional Authority.
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The Revisional Authority ans an authority appointed or authorised for revision of
decision or orders as referred to in this section.
The Revisional Authority is empowered to examine any proceedings and stay the
operation of any decision or order, if he considers that such decision or order passed
by any officer subordinate to him is erroneous in so far as it is prejudicial to the
interest of the revenue or illegal or improper or has not taken into account certain
material facts.
After giving the concerned person an opportunity of being heard and making further
necessary inquiry, the Revisional Authority may pass an order within 3 years of
passing of the said order sought to be revised including enhancing or modifying or
annulling the said decision or order
The Revisional Authority shall not exercise such revisionary powers if –
(a) appeal is filed against the order to –
— Appellate Authority U/s.107
— Appellate Tribunal U/s.112
— High Court U/s.117
— Supreme Court U/s.118
(b) period of 6 months as specified in section 107(2) has not expired or more than 3
years have expired after passing the decision or order .
(c) the order has already been taken under this section for revision at any earlier stage
.
(d) revisionary order has already been passed once.
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However, the Revisional Authority may pass an order on any point which has not
been raised & decided in an appeal either before the Appellate Authority, Appellate
Tribunal, High Court or Supreme Court.
The Revisional Authority must pass the order within 1 year from the date of order
passed in such appeal or within 3 years from the date of such passing the decision or
order sought to be revised, whichever is later.
The order passed under this section shall be final and binding on the parties subject to
provisions of Section 113 (Orders of Appellate Tribunal) or Section 117 (Appeal to
High Court) or Section 118(Appeal to Supreme Court).
The time span between the date of decision of the Appellate Tribunal and the date of
decision of the High Court or the date of decision of the High Court and the date of
decision of Supreme Court should be excluded in computing the period of limitation
of three years.
UNIT 4
Introduction to GST Audit
Audit under GST is the process of examination of records, returns and other
documents maintained by a taxable person. The purpose is to verify the correctness of
turnover declared, taxes paid, refund claimed and input tax credit availed, and to
assess the compliance with the provisions of GST.
The GST Audit can be of the different types as depicted in the flowchart given below:
Threshold Limit for Audit under GST by CA/CMA
Every GST registered taxable person whose turnover during a financial year exceeds
the prescribed limit is subject to audit. As per the current notified GST Rules, the
turnover limit is above Rs 2 crore^. Such businesses must get their books of accounts
audited by a chartered accountant or a cost accountant. Such taxpayer shall
electronically file:
1. An annual return using the Form GSTR 9 by 31st December of the next
Financial Year
2. The audited copy of the annual accounts
3. A certified reconciliation statement in the form GSTR-9C, reconciling the value
of supplies declared in the return with the audited annual financial statement
4. Any other particulars as prescribed
^For businesses with an annual turnover of less than Rs.5 crore, filing of GSTR-9C
for FY 2018-19 and FY 2019-20 has been waived off.
Rectifications to Returns After GST Audit
If any taxable person, after furnishing a GST return discovers any omission/incorrect
details (from results of audit), he can rectify subject to payment of interest.
However, no rectification will be allowed after the earlier of:
(i) the due date for filing of return for the month of September or second quarter, (as
the case may be), following the end of the financial year, or
(ii) the actual date of filing o the relevant annual return.
For example, Mr ‘X’ found during the audit that he has made a mistake in Oct 2020
return. X submitted an annual return for FY 2020-21 on 31st December 2021 along
with audited accounts. He can rectify the Oct 2020 mistake within- 20th Oct 2021
(last date for filing September return) or 31st December 2021 ( the actual date of
filing of relevant annual return), whichever is earlier, i.e., his last date for rectifying is
20th Oct 2021.
Such rectification will not be allowed where results are from scrutiny or audit by
the tax authorities.
Audit by Tax Authorities
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The Commissioner of CGST/SGST (or any officer authorized by him) may
conduct an audit of a taxpayer. The frequency and manner of an audit will be
prescribed later.
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A notice will be sent to the auditee at least 15 days before.
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The audit will be completed within 3 months from the date of commencement
of the audit.
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The Commissioner can extend the audit period for a further six months with
reasons recorded in writing.
Obligations of the Auditee
The taxable person will be required to:
1. provide the necessary facility to verify the books of account/other documents as
required
2. to give information and assistance for timely completion of the audit.
Findings of Audit
On conclusion of an audit, the officer will inform the taxable person within 30 days
of:
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the findings,
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their reasons, and
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the taxable person’s rights and obligations
If the audit results in the detection of unpaid/short paid tax or wrong refund or wrong
input tax credit availed, then demand and recovery actions will be initiated.
Offences & Penalties
Offences
There are 21 offenses under GST. We have mentioned a few here. For the entire list of
21 offenses please go to our main article on offenses.
The major offenses under GST are:
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Not registering under GST, even though required by law. (Read our article for
the list of those who have to register mandatorily under GST)
Supply of any goods/services without any invoice or issuing a false invoice
The issue of invoices by a taxable person using the GSTIN of another bona fide
taxpayer
Submission of false information while registering under GST
Submission of fake financial records/documents or files, or fake returns to
evade tax
Obtaining refunds by fraud
Deliberate suppression of sales to evade tax
Opting for composition scheme even though a taxpayer is ineligible
Penalty
If any of the offenses are committed then a penalty will have to be paid under
GST. The principles on which these penalties are based are also mentioned by law.
For late filing
Late filing attracts penalty called late fee. The late fee is Rs. 100 per day per Act. So it
is 100 under CGST & 100 under SGST. Total will be Rs. 200/day*. The maximum is
Rs. 5,000. There is no late fee on IGST in case of delayed filing.
Along with late fee, interest has to be paid at 18% per annum. It has to be calculated
by the taxpayer on the tax to be paid. The time period will be from the next day of
filing to the date of payment.
For not filing
If you don’t file any GST return then subsequent returns cannot be filed. For
example, if GSTR-2 return of August is not filed then the next return GSTR-3 and
subsequent returns of September cannot be filed. Hence, late filing of GST return will
have a cascading effect leading to heavy fines and penalty (see below).
For the 21 offenses with no intention of fraud or tax evasion
An offender not paying tax or making short payments must pay a penalty of 10% of
the tax amount due subject to a minimum of Rs. 10,000.
Consider — in case tax has not been paid or a short payment is made, a minimum
penalty of Rs 10,000 has to be paid. The maximum penalty is 10% of the tax unpaid.
For the 21 offenses with the intention of fraud or tax evasion
An offender has to pay a penalty amount of tax evaded/short deducted etc.,
i.e., 100% penalty, subject to a minimum of Rs. 10,000.
Additional penalties as followsTax amount involved
100-200 lakhs
200-500 lakhs
Above 500 lakhs
Jail term
Upto 1 year
Upto 3 years
Upto 5 year
Fine
In all three cases
Cases of fraud also face penalties, prosecution, and arrest.
Inspection Under GST
The Joint Commissioner of SGST/CGST (or a higher officer) may have reasons to
believe that in order to evade tax, a person has suppressed any transaction or claimed
excess input tax credit etc. Then the Joint Commissioner can authorize any other
officer of CGST/SGST (in writing) to inspect places of business of the suspected
evader.
Search & Seizure under GST
The Joint Commissioner of SGST/CGST can order for a search. He will order a
search on the basis of results of inspection (or other reason) if he has reasons to
believe –
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There are goods which might be confiscated
Any documents or books or other things which are hidden somewhere. Such
items can be useful during proceedings
Such incriminating goods and documents can be seized.
Goods in Transit
The person in charge of a vehicle carrying goods exceeding Rs. 50,000 is required to
carry the following documents:
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Invoice or bill of supply or delivery challan
Copy of e-way bill (hard copy or via RFID)
The proper officer has the power to intercept goods in transit and inspect the goods
and the documents.
If the goods are in contravention of the GST Act then the goods, related documents,
and the vehicle carrying them will be seized. The goods will be released only on
payment of tax and penalty.
Before confiscating the goods, the tax officer shall give an option of paying a fine
instead of confiscation.
Compounding of Offences under GST
Compounding of offenses is a shortcut method to avoid litigation. In case
of prosecution for an offense in a criminal court, the accused has to appear before the
Magistrate at every hearing through an advocate. This becomes expensive and timeconsuming.
In compounding, the accused is not required to appear personally and can be
discharged on payment of compounding fee which cannot be more than the maximum
fine as applicable under GST.
Compounding will save time and money. However, compounding under GST is not
available for cases where the value involved exceeds 1 crore.
Prosecution under GST
The prosecution is conducting legal proceedings against someone in respect of a
criminal charge.
A person committing an offense with the deliberate intention of fraud, becomes
liable to prosecution under GST, i.e., face criminal charges. A few examples of these
offenses are1. Issue of an invoice without supplying any goods/services- thus taking input
credit or refund by fraud
2. Obtaining refund of any CGST/SGST by fraud
3. Submitting fake financial records/documents or files, and fake returns to evade
tax
4. Helping another person to commit fraud under GST
Arrest under GST
If the Commissioner of CGST/SGST believes a person has committed a certain
offense he can be arrested under GST by any authorized CGST/SGST officer (click
here for the list of offenses for which one can be arrested).
The arrested person will be informed of the grounds for his arrest. He will appear
before the magistrate within 24 hours in case of a cognizable offense (Cognizable
offenses are those where the police can arrest a person without an arrest warrant. They
are serious crimes like murder, robbery, counterfeiting).
Appeals
A person unhappy with any decision or order passed against him under
GST can appeal against such decision.
The first appeal against an order by an adjudicating authority goes to the First
Appellate Authority.
If the taxpayer is not happy with the decision of the First Appellate Authority they can
appeal to the National Appellate Tribunal, then to the High Court, and finally to the
Supreme Court.
To avoid the long process of appeal and litigation, a taxpayer may request for
the advance ruling under GST. The taxpayer asks for clarification from GST
authorities on GST treatment before starting the proposed activity. The tax authority
gives a written decision (called advance ruling) to the applicant on the query.
ACTIVITIES OR TRANSACTIONS WHICH NEITHER BE
TREATED AS SUPPLY OF GOODS NOR AS SUPPLY OF
SERVICES
Activities or Transactions which shall be treated neither as a Supply of Goods nor a
Supply of Services
CGST ACT 2017
1) Services by an employee to the employer in the course of or in relation to his
employment.
2) Services by any court or Tribunal established under any law for the time being in
force.
3)
(a) the functions performed by the Members of Parliament, Members of State
Legislature, Members of Panchayats, Members of Municipalities and Members of
other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or
(c) the duties performed by any person as a Chairperson or a Member or a Director in
a body established by the Central Government or a State Government or local
authority and who is not deemed as an employee before the commencement of this
clause.
4) Services of funeral, burial, crematorium or mortuary including transportation of the
deceased.
5) Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of
building.
6) Actionable claims, other than lottery, betting and gambling.
“Explanation 1—” For the purposes of paragraph 2, the term “court” includes
District Court, High Court and Supreme Court.
7) Supply of goods from a place in the non-taxable territory to another place in the
non-taxable territory without such goods entering into India.
8)
(a) Supply of warehoused goods to any person before clearance for home
consumption;
(b) Supply of goods by the consignee to any other person, by endorsement of
documents of title to the goods, after the goods have been dispatched from the port of
origin located outside India but before clearance for home consumption.”
Explanation 2.–– For the purposes of this paragraph, the expression “warehoused
goods” shall have the same meaning as assigned to it in the Customs Act, 1962.”
GST PRACTITIONER
A GST practitioner or GSTP is a person approved by the Central and State
Governments to perform any or all of the following activities, on behalf of a taxable
person:
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File an application for fresh registration
File an application for amendment or cancellation of registration
Furnish details of outward and inward supplies
Furnish monthly, quarterly, annual or final GST returns
Make payments for credit into the electronic cash ledger, i.e. payments for tax,
interest, penalty, fees or any other amount
File a claim for refund
Appear as an authorized representative before any officer of department,
appellate authority or appellate tribunal.
GST Practitioner Eligibility
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One should be a citizen of India
One should be a person of sound mind
One should have not been declared as insolvent
One should have not been convicted for an offence with imprisonment for more
than two years
One should meet the required education or work experience as part of the GST
Practitioner Eligibility criteria, given below:
o One is a retired officer of the Commercial Tax Department of any State
Government or of the Central Board of Excise and Customs, having
worked in a post not lower in rank than that of a Group-B gazetted
officer, for a period not less than two years, OR
o One has passed a graduate or postgraduate degree or its equivalent
examination, having a degree in Commerce, Law, Banking including
Higher Auditing, or Business Administration or Business Management
from any Indian University established by any law for the time being in
force, OR
o One has passed a degree examination of any Foreign University
recognized by any Indian University as equivalent to the degree
examination mentioned above, OR
o One has passed any other examination notified by the Government for
this purpose
o One has passed any degree examination of an Indian University or of
any Foreign University recognized by any Indian University as
o
o
o
equivalent of the degree examination, and have also passed any of the
following examinationsfinal examination of the Institute of Chartered Accountants of India OR
final examination of the Institute of Cost Accountants of India OR
final examination of the Institute of Company Secretaries of India
Forms required by a GST Practitioner
The following forms will be of prime importance to one as a GST tax practitioner:
Form GST
Application for enrolment as a GST practitioner
PCT-1
Form GST
Certificate of enrolment as a GST practitioner, issued by an authorised
PCT-2
officer
Form GST
Notice seeking additional information on application for enrolment or
PCT-3
show cause notice issued to GST practitioner for misconduct
Form GST
Order of rejection of application for enrolment or disqualification of a
PCT-4
GST practitioner found guilty of misconduct
How can one be authorized to file returns as a GST Practitioner?
In order to be authorized as a GST Practitioner in India, the following 4 easy steps
need to be followed–
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Step 1: A potential client views the list of GSTPs on Form GST PCT-5 on the
Common Portal and authorizes a GSTP to prepare any or all of the prescribed
statements using Form GST PCT-6 . At any point, a client will also be able to
withdraw the authorization, using Form GST PCT-7
Step 2: Once authorized, a GSTP should prepare the required statements and
affix his / her digital signature on them, or electronically verify them using his /
her credentials
Step 3: Once a GSTP furnishes a statement, a confirmation will be sought from
the client via SMS / Email. The statement furnished by a GSTP will also be
available to the client on the GST Portal
Step 4: The client must ensure that the statement submitted by the GSTP is true
and correct. Once verified, the client must confirm the statement within the
stipulated due date, failing which it will be considered automatically as
confirmed. The responsibility of the correctness of the statement, although
filled by the GSTP, will rest with the client.
MULTIPLE CHOICE QUESTIONS
1. What is the full form of GST?
A) Goods and Supply Tax
B) Goods and Services Tax
C) General Sales Tax
D) Government Sales Tax
Answer: B
2. GST was implemented in India from
A) 1st January 2017
B) 1st April 2017
C) 1st March 2017
D) 1st July 2017
Answer: D
3. In India, the GST is based on the dual model GST adopted in:
A) UK
B) Canada
C) USA
D) Japan
Answer: B
4. GST is a consumption of goods and service tax based on
A) Development
B) Dividend
C) Destiny
D) Destination
Answer: D
5. The number of structures in India’s GST model is?
A) 6
B) 4
C) 3
D) 5
Answer: B
6. The maximum rate for CGST is?
A) 28
B) 12
C) 18
D) 20
Answer: D
7. The maximum rate applicable for SGST/UTGST is?
A) 28
B) 14
C) 20
D) 30
Answer: C
8. GST rates applicable on goods and services are:
A) 0% 5% 12% 18% 26%
B) 0% 6% 12% 18% 28%
C) 0% 5% 12% 18% 28%
D) 0% 5% 12% 16% 28%
Answer: C
9. Taxes that are levied on any Intra-State purchase are?
A. IGST
B. CGST and SGST
C. SGST
D. SGST
Answer : B
10. What does “I” in IGST stands stand for?
A) Internal
B) Integrated
C) Internal
D) Intra
Answer: B
11.Can a person apply for registration without PAN?
A) NO
B) YES
Answer: A
11. Which of the following is an intra-state supply?
A) Supplier of goods located in Nagpur and place of supply of goods SEZ located in
Mumbai.
B) Supplier of goods located in Kolkata and place of supply of goods in Bangalore.
C) Supplier of goods located in Goa and place of supply of goods in Goa.
D) None of the above
Answer: C
12. The tax which is not merged into GST?
A) Counterveiling duty
B) Excise Duty
C) Basic Customs Duty
D) Purchase Tax
Answer: C
13. What is the time limit for taking ITC?
A) 180 days
B) 1 year
C) 20th October of the next financial year or the date of filling annual return whichever is
earlier.
D) None of the above.
Answer: C
14. Input tax credit is not available in respect of:A) Services on which tax has been paid under composition levy
B) Free samples
C) Goods used for personal consumption
D) All of the above
Answer: D
15. The turnover limit of Rs. 50 lakh for consumption scheme is not available to the state of:A) Himachal Pradesh
B) Assam
C) Uttarakhand
D) None of the above
Answer: C
16. Money means:A) Indian legal tender
B) Foreign Currency
C) Cheque/Promissory Note
D) All of the above
Answer: D
17. Person includesA) Individual
B) HUF
C) LLP
D) All of the above
Answer: D
18. Input tax credit is not available for supplies to:A) SEZ
B) Exports
C) Provide non taxable services
D) Produce taxable goods
Answer: C
19. In case of imported goods, transaction value also includesA) Commission and brokerage
B) Cost of transportation at the place of importation
C) Landing charges at the Indian port
D) Only b and c above
Answer: A
20. Compensation to states under GST(Compensation to States ) Act , 2017 is paid by
a)
b)
c)
d)
Central Government from consolidated fund of India
Central Government from GST compensation fund of India
Central Government directly from the collection of compensation cess
GST Council under Constitution of India.
Answer: B
21. While computing compensation to states, tax revenue of this tax/ these taxes is excluded
a) petroleum crude, diesel, petrol, ATF and natural gas
b) Alcohol for human consumption
c) entertainment tax collected by local authorities
d) All of the above
Answer: D
22. Input tax credit on compensation cess paid under GST(Compensation to States ) Act ,
2017
a)
b)
c)
d)
is not available
is available
is available but not fully
is available after one year
Answer: B
23. Input tax credit under GST(Compensation to States ) Act , 2017 includes GST
Compensation Cess charged on any supply of
a)
b)
c)
d)
goods and/or services,
Goods imported
GST Compensation Cess payable on reverse charge basis;
All of the above
Answer: D
24. Maximum rate of CGST prescribed by law for intrastate supply made is---a)
b)
c)
d)
18%
20%
40%
28%+cess
Answer: B
25. Input tax credit on Compensation cess paid under GST (Compensation to States) Act,
2017 is available for payment of
a)
b)
c)
d)
IGST only
IGST and CGST only
compensation under GST (Compensation to States) Act
None of the above
Answer: C
26. IGST is payable when the supply is --a)
b)
c)
d)
27.
Interstate
Intra-state
Intra- UT
All of the above
Answer: A
Zero rated supply includes supplies madea)
b)
c)
d)
By SEZ unit in India
to SEZ unit in India
Both (a & (b above
None of the above
Answer: B
28. With the introduction of GST, imports will be—
a)
b)
c)
d)
more expensive
cheaper
neutral with no change
None of the above
Answer: A
29. The first committee to design GST model was headed by
a)
b)
c)
d)
30.
Vijay Kelkar
Asim Das Gupta
Dr. Chidambaram
None of the above
Answer: B
First discussion paper (FDP) which formed the basis for GST in 2009 was released by
a)
b)
c)
d)
Union Finance Ministry
Dr. Manmohan Singh
GST Council
Empowered Committee
Answer: D
31. Roll out of GST requires constitutional amendment because—
a)
b)
c)
d)
existing laws were cascading
the powers of levy were exclusive
there are separate laws for goods and services
All of the above
Answer: D
32. Works contract under GST is goods used in work relating toa)
b)
c)
d)
Immovable property
Both movable and immovable property
Immovable property treated as supply of service
Immovable property treated as supply of goods
Answer: C
33. IGST deals with
a)
b)
c)
d)
Composition scheme
Time of supply
Service tax on imported services
All of the above
Answer: C
34. The turnover limit of Rs. 50 Lakh for composition scheme is not applicable to the state of
a)
b)
c)
d)
Himachal Pradesh
Assam
Uttarakhand
None of the above
Answer: C
35. A supplier is liable to get registered under GST if his aggregate turnover in a financial
year crosses Rs. 20 lakh in a state or UT other than special category states if he isa)
b)
c)
d)
an interstate supplier
an intra-state supplier
Electronic commerce operator
Person liable to pay GST under reverse charge
Answer: B
36. Registration under GST is not compulsory toa) Casual taxable person
b) Input service distributor
c) Non-resident taxable person
d) None of the above
Answer: D
37. One of the following states does not fall under special category given under Art. 279A of
the Constitution
a)
b)
c)
d)
Himachal Pradesh
Uttarakhand
Chhattisgarh
Jammu & Kashmir
Answer: C
38. Exemption from registration is available to
a)
b)
c)
d)
Central & State Govt. Departments
Agriculturists
a) & b) above
None of the above
Answer: B
39. Address for delivery
a)
b)
c)
d)
Recipient address mentioned in the tax invoice
Recipient address mentioned in the delivery challan
Recipient address not necessary
Recipient address mentioned in the Gate pass
Answer: A
40. When President assent was obtained for central GST
a)
b)
c)
d)
18th April 2017
22nd April 2017
5th April 2017
12th April 2017
Answer: D
41. What is applicability of GST
a)
b)
c)
d)
Applicable all over India except Sikkim
Applicable all over India except Jammu and Kashmir
Applicable all over India
Applicable all over India except Nagaland
Answer: C
42. Money means
a)
b)
c)
d)
Indian legal tender
Foreign currency
Cheque/promissory note
All the above
Answer: D
43. non-taxable territory means
a)
b)
c)
d)
Outside taxable territory
Inside taxable territory
Inter-state taxable territory
None of the above
Answer: A
44. Person includes
a)
b)
c)
d)
Individual
HUF
LLP
All the above
Answer: D
45. Goods and Service Tax council referred in which section
a) 279A of the constitution
b) 276 of the constitution
c) 277 of the constitution
d) 279 of the constitution
Answer: A
46. Weight age of vote for centre at GST council
a) 1/4th of total votes cast
b) 1/3rd of total votes cast
c) ½ of total votes cast
d) Only B
Answer: B
47. Weightage of States ( combined together) at GST council
a)
b)
c)
d)
2/3rd of total votes cast
1/3rd of total votes cast
1/4th of total votes cast
None of the above
Answer: A
48. Who is chairperson of GST council
a)
b)
c)
d)
Finance secretary
State Finance Minister
Union Finance Minister
None of the above
Answer: C
49. Taxable turnover of below Rs.1.5 crore assessee under control of
a)
b)
c)
d)
Centre
State
Both a and b
Only c
Answer: C
50. Powers to declare certain activities/transactions as neither supply of goods nor of services
a) Schedule I
b) Schedule III
c) Schedule II
d) Schedule IV
Answer: B
51. When GST council constituted
a) 15.09.2016
b) 13.09.2016
c) 12.09.2016
d) 20.09.2016
Answer: C
52. Address for delivery
a) Recipient address mentioned in the invoice
b) Recipient address mentioned in the delivery challan
c) Recipient address not necessary
d) Recipient address mentioned in the Gate pass
Answer: A
53. Agriculturist
a) Individual or HUF
b) Individual and HUF
c) Partnership
d) All the above
Answer: A
54. Associated enterprise mentioned
a) Income tax act 1961
b) Companies Act 2013
c) Central GST Act 2017
d) State GST Act 2017
Answer: A
55. Appointed day
a) Date on which the provisions of this Act shall come into force
b) Date on which President assent
c) Date of which both houses passed the act
d) Date on which sent to Finance Ministry
Answer: A
56. Deemed exports mentioned in which section
a) Section 137
b) Section 147
c) Section 142
d) Section 145
Answer: B
57. Quarter means
a) March
b) September
c) December
d) All the above
Answer: D
58. Taxable levy in case of manufacture under composite scheme
a) Two percent
b) Three per cent
c) One per cent
d) Half per cent
Answer: C
59. Whether person opted for composite scheme collect tax under GST
a) No
b) Yes
c) Only A
d) None of the above
Answer: C
60. Participation of ITC value chain in composite scheme
a)
b)
c)
d)
With participation
Without participation
Either a or b
None of the above
Answer: B
61. Taxes paid on
a) Transaction value
b) Manufacturing cost
c) Both A and B
d) None of the above
Answer: A
62. ITC available
a) In the course or Furtherance of business
b) Other than business exp
c) Only A
d) None of the above
Answer: A
63. Input tax credit availability
a)
b)
c)
d)
On receipt of goods
On payment of taxes paid by supplier to Govt.
Taken to manufacturing site or availed services
None of the above
Answer: B
64. Input tax on capital goods
a) In one installment
b) Partly five equal installments
c) Only A
d) Equally 10% every year
Answer: C
65. Appellate Tribunal mentioned in which section
a)
b)
c)
d)
Section 109
Section 105
Section 103
Section 119
Answer: A
66. Authorised representative referred in which section
a)
b)
c)
d)
Section 110
Section 116
Section 119
Section 106
Answer: B
67. Common portal referred in which section
a)
b)
c)
d)
Section 136
Section 146
Section 143
Section 149
Answer: B
68. Debit note and credit note mentioned in which section
a)
b)
c)
d)
Section 36
Section 39
Section 34
None of the above
Answer: C
69. Electronic cash ledger and Electronic credit ledger mentioned in which section
a)
b)
c)
d)
Section 39
Section 42
Section 49
Section 47
Answer: C
70. “invoice” or “tax invoice mentioned in which section
a)
b)
c)
d)
Section 27
Section 29
Section 31
Section 47
Answer: C
71. Valid return mentioned in which section
a)
b)
c)
d)
Section 29
Section 39
Section 47
Section 49
Answer: B
72. GST Registration
a)
b)
c)
d)
Aadhar based
Passport based
Pan based
None of the above
Answer: C
73. A person is having multiple business requires registration
a) Single
b) Each business separately
c) Either A or B
d) None of the above
Answer: B
74. Deemed Registration
a) After four working days
b) After five working days
c) After three common working days
d) After seven working days
Answer: C
75. Annual Return to be filed every year
a)
b)
c)
d)
30th June
30th September
31st December
31st October
Answer: C
76. IGST tax levy means
a)
b)
c)
d)
Within state
Between two states
Only A
None of the above
Answer: B
77. IGST levy can be levied
a)
b)
c)
d)
Centre
State
Union Territory
Both a and b
Answer: A
78. The term ‘agriculturist’ includes the following persons who undertake cultivation of land:
(a) An individual
(b) A Hindu Undivided Family
(c) A co-operative society (
(d) Both (a) and (b)
Ans. (d) Both (a) and (b)
79. What are the factors differentiating composite supply & mixed supply?
(a) Nature of bundling i.e. artificial or natural
(b) Existence of principal supply
(c) Both of the above
(d) None of the above
Ans. (c) Both of the above
80. What would be the tax rate applicable in case of composite supply?
(a) Tax rate as applicable on principal supply
(b) Tax rate as applicable on ancillary supply
(c) Tax rate as applicable on respective supply
(d) None of the above
Ans. (a) Tax rate as applicable on principal supply
81. What would be the tax rate applicable in case of mixed supply?
(a) Tax rate as applicable on supply attracting the lowest rate of tax
(b) Tax rate as applicable on supply attracting the highest rate of tax
(c) Tax @ 28%
(d) None of the above
Ans. (b) Tax rate as applicable on supply attracting the highest rate of tax
82. ............of the Constitution provides that no tax shall be levied or collected except by
authority of law?
(a) Article 254
(b) Article 245
(c) Article 265
(d) Article 256
Ans. (c) Article 265
83. What are the taxes levied on an intra-State supply?
(a) CGST
(b) SGST
(c) CGST and SGST
(d) IGST
Ans. (c) CGST and SGST
84. What is the maximum rate prescribed under CGST Act?
(a) 12%
(b) 28%
(c) 20%
(d) 18%
Ans. (c) 20%
85. Who will notify the rate of tax to be levied under CGST Act?
(a) Central Government suo moto
(b) State Government suo moto
(c) GST Council suo moto
(d) Central Government as per the recommendations of the GST Council
Ans. (d) Central Government as per the recommendations of the GST Council
86. Which of the following taxes will be levied on imports?
(a) CGST
(b) SGST
(c) IGST
(d) CGST and SGST
Ans. (c) IGST
87. What is the maximum rate prescribed under UTGST Act?
(a) 14%
(b) 28%
(c) 20%
(d) 30%
Ans. (c) 20%
88. What are the supplies on which reverse charge mechanism would apply?
(a) Notified categories of goods or services or both under section 9(3)
(b) Inward supply of goods or services or both from an unregistered dealer under
section 9(4)
(c) Both the above
(d) None of the above
Ans. (a) Notified categories of goods or services or both under section 9(3) as section 9(4) has
been deferred presently.
88. Which of the following services are covered under Reverse Charge Mechanism of CGST
Act, 2017?
i.
ii.
iii.
iv.
Legal Consultancy
ii. Goods Transport Agency
iii. Manpower Supply
iv. Rent-a-Cab
(a) i & iii
(b) i & iv
(c) i & ii
(d) All the above
Ans. (c) i and ii
89. In case of GTA services provided to an Individual not registered under GST and not a
business entity, liability to pay GST is on
(a) Supplier
(b) Recipient
(c) Both
(d) Exempt
Ans. (d) Exempt vide Sl. No. 21A of Notification No. 12/2017-Central Tax (Rate), dated 28Jun-2017
90. In case of sponsorship services provided by Mr. A to M/s AB Ltd., liability to pay GST is
on:
(a) Mr. A
(b) M/s AB Ltd.
(c) Both
(d) None of the above
Ans. (b) M/s AB Ltd.
91. In case of renting of land, inside an Industrial estate, by State Government to a registered
manufacturing company, GST is:
(a) Exempted
(b) Applicable under Normal Charge
(c) Applicable under Reverse Charge
(d) None of the above
Ans. (c) Applicable under Reverse Charge
92. In case of services by an insurance agent to Ms. ABC Insurance Co. Ltd., GST is to be paid
by:
(a) Insurance Agent
(b) ABC Insurance Co. Ltd.
(c) Both
(d) None of the above
Ans. (b) ABC Insurance Co. Ltd.
93. Sitting fees received by director of XYZ Ltd., is liable for GST in the hands of the.........
(a) Director
(b) XYZ Ltd
(c) Both of above
(d) None of the above
Ans. (b) XYZ Ltd.
94. Services by a recovery agent to M/s ZZZ Bank Ltd., are liable for GST in the hands of:
(a) M/s ZZZ Bank Ltd.
(b) Recovery agent
(c) Both the above
(d) None of the above
Ans. (a) M/s ZZZ Bank Ltd.
95. In case of lottery procured from State Government by a lottery distributor, GST is payable
by:
(a) Lottery distributor
(b) State Government
(c) Both the above
(d) None of the above
Ans. (a) Lottery distributor
96. Reverse charge under section 9(3) of the CGST Act is applicable on:(a) Only on notified services
(b) Only on notified goods
(c) Notified goods & services
(d) None of the above
Ans. (c) Notified goods & services
97. If Tobacco leaves procured from an Agriculturist by a registered person, then: (a) Reverse charge is applicable
(b) Normal charge is applicable
(c) Joint charge is applicable
(d) None of the above
Ans. (a) Reverse charge is applicable
98. In case M/s. PQR Ltd., a registered person, has availed rent-a-cab service from M/s ABC
Travels (Proprietor) service then which one of the following is true:(a)
Reverse charge is applicable as this is a notified service.
(b) Reverse charge is applicable if ABC Travels is not registered.
(c) Joint charge is applicable
(d) None of the above
Ans. (b) Reverse charge is applicable if ABC Travels is not registered
99. Reverse charge is applicable:
(a) Only on intra-State supplies
(b) Only on inter-State supplies
(c) Both intra-State and inter-State supplies
(d) None of the above
Ans. (c) Both intra-State and inter-State supplies
100. Banking services provided by Department of post :
(a) Taxable & Reverse Charge Mechanism is applicable
(b) Taxable & Normal Charge is applicable
(c) Exempt from GST
(d) Nil rated
Ans. (c) Exempt from GST
101. If a supplier is under the composition scheme, does RCM still apply to the recipient
(a) Yes
(b) No
Ans. (b) No
102. If all supplies made by a supplier are covered under RCM, should they still register
under the CGST Act if the threshold exceeds the prescribed limit
(a) Yes
(b) No - Notification No. 05/2017-Central Tax dated 19.06.2017
Ans. (b) No - Notification No. 05/2017- Central Tax dated 19.06.2017.
103. When can credit for tax paid under reverse charge be taken?
(a) Same month
(b) Next month
(c) Any of the two months
Ans. (a) Same month
104. If a supplier is under the composition scheme, then whether tax will be paid under reverse
charge by the composition supplier:
(a) Yes
(b) No
Ans. (a) Yes
105. Whether services supplied by individual Direct Selling Agents (DSAs) to banks/ nonbanking financial company (NBFCs) will be covered under Reverse Charge Mechanism:
(a) Yes
(b) No
Ans. (a) Yes
106. Which of the following persons can opt for composition scheme?
(a) Person making any supply of goods which are not leviable to tax under this Act;
(b) Person making any inter-State outward supplies of goods and services(except restaurant
services);
(c) Person effecting supply of goods through an e-commerce operator liable to collect tax at
source
(d) Person providing restaurant services
Ans. (d) Presently ,Person providing restaurant services. (It may be noted that CGST Act
Amendment has provided an option to take composition scheme 10% or Rs. 5 Lacs as discussed
earlier)
107. What is the threshold limit of turnover in the preceding financial year for opting to pay tax
under composition scheme for States other than special category States ?
(a) ` 20 lacs
(b) ` 10 lacs (
c) ` 50 lacs
(d) ` 1 crore
Ans. (d) ` 1 crore [Notification No. 46/2017-Central Tax dated 13.10.2017 read with Notification
No. 08/2017-Central Tax dated 27.06.2017]
108. What is the threshold limit of turnover in the preceding financial year for opting to pay tax
under composition scheme for special category states?
(a) ` 25 lacs
(b) ` 50 lacs
(c) ` 75 lacs
(d) ` 1 crore
Ans. (c) ` 75 lacs [Notification No. 46/2017-Central Tax dated 13.10.2017 read with Notification
No. 08/2017-Central Tax dated 27.06.2017]
109. What is the rate applicable under CGST to a registered person being a manufacturer opting
to pay taxes under composition scheme?
(a) 2.5%
(b) 1%
(c) 0.5%
(d) No composition for manufacturer
Ans. (c) 0.5% [Notification No. 01/2018-Central Tax dated 01.01.2018]
110. What is the rate applicable under CGST to a registered person being a hotelier (providing
restaurant and accommodation services ) opting to pay taxes under composition scheme?
(a) 1%
(b) 0.5%
(c) 2.5%
(d) Not eligible for composition scheme thus liable to pay normal tax
Ans. (d) Not eligible for composition scheme thus liable to pay normal tax [Composition scheme
is available to restaurant only. Even composition scheme is not extended to any other service
provider]
111. Mr. Richard, a trader in Delhi has opted for composition scheme of taxation under
GST.Determine the rate of total GST payable by him under composition scheme:
(a) 0.5% CGST & 0.5% SGST
(b) 2.5% CGST & 2.5% UTGST
(c) 5% IGST
(d) 5% UTGST
Ans. (a) 0.5% CGST & 0.5% SGST
112. Can a registered person opt for composition scheme only for one out of his 3 business
verticals having same Permanent Account Number?
(a) Yes
(b) No
(c) Yes, subject to prior approval of the Central Government
(d) Yes, subject to prior approval of the concerned State Government
Ans. (b) No
113. Can composition scheme be availed if the registered person effects inter-Stat supplies?
(a) Yes
(b) No
(c) Yes, subject to prior approval of the Central Government
(d) Yes, subject to prior approval of the concerned State Government
Ans. (b) No
114. Can a registered person under composition scheme claim input tax credit?
(a) Yes
(b) No
(c) Input tax credit on inward supply of goods only can be claimed
(d) Input tax credit on inward supply of services only can be claimed
Ans. (b) No
115. Can a registered person opting for composition scheme collect tax on his outward supplies?
(a) Yes
(b) No
(c) Yes, if the amount of tax is prominently indicated in the invoice issued by him
(d) Yes, only on such goods as may be notified by the Central Government
Ans. (b) No
116. Which of the following will be excluded from the computation of ‘aggregate turnover’?
(a) Value of taxable supplies
(b)Value of exempt Supplies
(c) Non-taxable supplies
(d) Value of inward supplies on which tax is paid on reverse charge basis
Ans. (d) Value of inward supplies on which tax is paid on reverse charge basis
117. What will happen if the turnover of a registered person opting to pay taxes under
composition scheme during the year 2017-18 crosses threshold limit?
(a) He can continue under composition scheme till the end of the financial year
(b) He will be liable to pay tax at normal rates of GST on the entire turnover for the
financial year 2017-18
(c) He will cease to remain under the composition scheme with immediate effect
(d) He will cease to remain under the composition scheme from the quarter following the quarter
in which the aggregate turnover exceeds threshold limit
Ans. (c) He will cease to remain under the composition scheme with immediate effect.
118. Which one of the following is true?
(a) Entire income of any trust is exempted from GST
(b) Entire income of a registered trust is exempted from GST
(c) Incomes from specified/defined charitable activities of a trust are exempted from GST
d) Incomes from specified/defined charitable activities of a registered trust (u/s 12AA of Income
Tax Act)are exempted from GST
Ans. (d) Incomes from specified/defined charitable activities of a registered trust (u/s 12AA of
Income Tax Act ) are exempted from GST
119. Select the correct statement?
(a) Transfer of a going concern wholly is not exempt from GST
(b) Transfer of a going concern is partly exempt from GST
(c) Transfer partly as going concern is exempted from GST
(d) Transfer of a going concern is exempt from GST
Ans. (d) Transfer of a going concern is exempt from GST
120. Service by whom, by way of any activity in relation to any function entrusted to a
municipality under Article 243 W of the Constitution, is exempted?
(a) Central Government or State Government or Union territory or Local authority
(b) Governmental authority
(c) Municipality under Article 243 W of the Constitution
(d) All of above
Ans. (d) All of Above [vide NN 16/2018 dated 27-07-2018]
121.Which is a wrong statement?
(a) All services of Department of Post are exempted
(b) All services by State/Central Governments/local authorities in relation to an aircraft or a
vessel in a Port or an Airport are exempted
(c) All services by State/Central Governments/local authorities in relation to transport of
passengers are exempted (d) All the above mentioned
Ans. (d) All the above mentioned
122. Services to a single residential unit is, exempted if:
(a) It is pure labour service only
(b) It is works contract only
(c) It is a part of residential complex only
(d) It is on ground floor without further super structure
Ans. (a) It is pure labour service only
123. Which exemption option is right from the following?
(a) For letting out any immovable property
(b) For letting out any residential dwelling for use as residence
(c) For letting out any residential property irrespective of its use
(d) For none of the above
Ans. (b) For letting out any residential dwelling property for use as residence
124. Services by a hotel, inn, guest house, club or campsite are exempted for residential /
lodging purposes –
(a) If the declared actual tariff for a unit of accommodation is below ` 10,000
(b) If the declared actual tariff for a unit of accommodation is below ` 1,000
(c) If the declared actual tariff for a unit of accommodation is exactly ` 1,000
(d) If the declared actual tariff for a unit of accommodation is above ` 1,000
Ans. (b) If the declared actual tariff for a unit of accommodation is below ` 1,000
125. Transportation of passengers exempted if –
(a) It is by air-conditioned stage carriage
(b) It is by air-conditioned contract carriage
(c) It is by non-air-conditioned stage carriage for tourism, charter or hire
(d) None of the above
Ans. (d) None of the above
126. Transportation of passengers is exempted –
(a) In an air-conditioned railway coach
(b) In a vessel for public tourism purpose between places in India
(c) In a metered cab/auto rickshaw / e rickshaw
(d) In all the above mentioned
Ans. (c) In a metered cab/auto rickshaw / e rickshaw
127. Transportation of goods is not exempted if it is –
(a) by a goods transport agency / courier agency
(b) by inland waterways
(c) by an aircraft from a place outside India upto the customs station of clearance in India
(d) by all the above mentioned
Ans. (a) by a goods transport agency / courier agency
128. Transportation of agricultural produces, milk, salt and food grain including flour, pulsesand
rice, 'relief materials meant for victims of natural or man-made disasters,calamities, accidents or
mishap', newspaper or magazines registered with the Registrar of Newspapers - is exempted –
(a)If it is by a goods transport agency
(b) If it is by a rail - within India
(c) If it is by a vessel - within India
(d) If it is by all of the above
Ans. (d) If it is by all of the above
129..Which of the following is exempted –
(a)Services by way of loading, unloading, packing, storage or warehousing of rice
(b) Services by way of loading and unloading of jute
(c) Services by way of packing and storage or warehousing of rubber
(d) None of the above
Ans. (a) Services by way of loading, unloading, packing, storage or warehousing of rice
130.Whether definition of Inputs includes capital goods.
(a) Yes
(b) No
(c) Certain capital goods only
(d) None of the above
Ans. (a) No
131. Is it mandatory to capitalize the capital goods in books of Accounts?
(a) Yes
(b) No
(c) Optional (d) None of the above
Ans. (a) Yes
132. Whether credit on capital goods can be taken immediately on receipt of the goods?
(a) Yes
(b) No
(c) After usage of such capital goods
(d) After capitalizing in books of Accounts
Ans. (a) Yes
133. The term “used in the course or furtherance of business” means?
(a) It should be directly co-related to output supply
(b) It is planned to use in the course of business
(c) It is used or intended to be used in the course of business
(d) It is used in the course of business for making outward supply
Ans. (c) It is used or intended to be used in the course of business
134. Under section 16(2) of CGST Act how many conditions are to be fulfilled for the
entitlement of credit?
(a) All four conditions
(b) Any two conditions
(c) Conditions not specified
(d) None of the above
Ans. (a) All four conditions
135.Whether credit on inputs should be availed based on receipt of documents or receipt of
goods
(a) Receipt of goods
(b) Receipt of Documents
(c) Both
(d) Either receipt of documents or Receipt of goods
Ans. (c) Both
136. Input tax credit on capital goods and Inputs can be availed in one installment or in multiple
installments?
(a) In thirty-six installments
(b) In twelve installments
(c) In one installment
(d) In six installments
Ans. (c) In one installment
LONG ANSWER QUESTIONS
Q1: What is the meaning of Goods & Service Tax? How is it different from erstwhile
sales tax? State its salient features, point of incidence and limitations as well.
Q2: What is the meaning of supply as per Goods and Service tax? What are its
different forms?
Q3: What are the different categories of goods and services as per goods and service
tax act? Explain the rates of tax associated with them.
Q4: Explain the procedure of tax assessment as per GST Act. What are the different
records which are mandatorily required to be kept in it? Is record keeping too complex
in GST Act? Give justifications.
Q5: What are debit and credit notes in GST? Why are these prepared? How input tax
credit is granted to a merchant under GST?
Q6: Explain the rules pertaining to tax deduction at source in GST. What are the due
dates for depositing it? Which penalties can be levied if there is any default in making
the timely payment of TDS as per GST Act?
Q7: Discuss the conditions in GST under which inspections, search & seizure can be
initiated by the tax assessment officer. In which situation even arrest orders of the
defaulter can be issued.
Q8: Explain the following:- (a) Tax Audit (b) Appeals and revisions under GST (c)
Cascading effect of GST (d) Job work (e) Registration condition under GST
Q9: GST is relatively new in India and there are doubts and apprehensions in the
minds of small traders. As a tax consultant how shall you alleviate concerns of these
small traders? What are the myths associated with GST? How can these be removed?
Suggest.
Q10-How many types of GST assessments are available to the taxpayer?
Q11- Is assessment of GST is important?
Q12. How is the assessment made if the taxable person is not able to determine the
value of goods and/or services or determine the rate of tax?
Q14. What conditions needs to be satisfied by a taxable person for assessment of taxes
on provisional basis?
Q15. What is the time limit for passing final assessment order in case of provisional
assessment?
Q16.What is difference between Works Contract or Mixed Supply?
Q17.Is composition dealer liable to pay Reverse charge in addition to fixed percentage
of normal GST that he has to pay ?
Q18. In case of transfer of business as a going concern, what will happen to input tax
credit in the books of transferor? Will it be treated as supply and GST charged on
supply of assets and stock or will it be transferred without charging any GST?
Q19. Prepare a list of most common goods which are exempt under GST?
Q20.Explain the mechanism under the CGST Act, 2017 for claiming Input Tax Credit
while making payment of Taxes.
Q21.Dinesh Enterprises is a manufacturing company and wants to know the eligibility
of
Q22.Input Credit on fuel (Pet coke /furnace oil) used for the production of finished
products.Dinesh Enterprises is a manufacturing company and wants to know the
eligibility of
Input Credit on fuel (Pet coke /furnace oil) used for the production of finished
products.
Q23.Define the term “works contract” under the CGST Act, 2017? Can input tax
credit be availed on works contract service?
Q24.What are the prescribed offences under CGST/SGST Act?
Q25.What is the quantum of penalty provided for in the CGST /SGST Act?
Q26.What are deemed exports? Are deemed exports eligible for refund under GST? If
yes, who can file an application for refund in case of deemed export?
Q27.Under which circumstances can goods be confiscated under CGST/SGST Act.
Q28.Write a short note on Suspension of GST Registration based on return
comparison?
Q29.Zebra, a registered supplier, runs a general store in Ludhiana, Punjab. Some of
the goods sold by him are exempt whereas some are taxable. You are required to
advise him on the following issues:
a) Whether Zebra is required to issue a tax invoices in all cases, even if he is selling
the goods to the end consumers?
b) Zebra sells some exempted as well as taxable goods valuing Rs. 5,000 to a school
student. Is he mandatorily required to issue two separate GST documents?
c) Zebra wishes to know whether it’s necessary to show tax amount separately in the
tax invoices issued to the customers. Advise Accordingly?
Q30.Is it necessary for the foreign embassy’s to get registration under CGST Act,
2017?
Q31.What will be the value of supply of goods or services or both between distinct
[section 25 (4) and (5) of CGST Act, 2017] or related persons, other than through an
agent?
Q32.What is the difference between casual and non-resident taxable persons?
Q33.Explain the procedure of furnishing details of outward supplies and of revision
for rectification of errors and omissions as per CGST Act, 2017.
Q34.Who are required to file Annual Return under CGST Act 2017? Also explain the
time limit for filing such return. Is there any requirement of furnishing of the audited
annual accounts?
Q35.Is there any special document required to be carried during transportation of
taxable goods? Briefly explain provisions related to e-way bill as per CGST Act, 2017
relating to:
(i) When it is being required?
(ii) What is its validity period?
Q36.Mr. H is an exporter. He exports machinery out of India and pays 28% IGST. He
wants to know the procedure for claim and grant of refund of IGST paid on goods
exported out of India? His accountant has advised him to export machinery without
payment of IGST and claim refund of unutilized input tax credit? Is it possible, if yes,
how?
Q37.What is the purpose of Compliance rating mechanism?
Q38.Who is the person responsible to make assessment of taxes payable under the
CGST Act?
Q39.Discuss whether the following transactions/activities will be treated as supply of
goods or supply of service
a) Transfer of right to use goods
b) Works contracts and Catering services
c) Supply of software
d) Goods supplied on hire purchase basis
Q40.Discuss whether the following transactions will be considered as supply or not
under GST laws
a) An individual buys a car for personal use and after a year sells it to a car dealer.
b) A dealer of air-conditioners permanently transfers an air conditioner from his stock
in trade, for personal use at his residence.
c) Provision of service or goods by a club or association or society to its members.
Q41.V Ltd. supplied goods to S Ltd. The terms of the contract stipulated that goods
are delivered to the factory of S Ltd. Goods were removed from the factory of V Ltd.
on September 9, 2020 and were delivered to the factory of S Ltd. on September 15,
2020.V Now, the invoice was issued on September 18, 2020 and payment was
credited to V Ltd.’s account on October 20, 2020. However, the entry was made in the
books when the cheque was received, that is on September 19, 2020.Determine the
Time of Supply?
Q42.Discuss whether GST would be payable in following independent cases:
a) A Company Secretary makes payment of LLP Registration fees of Rs. 3,000/- on
behalf of their clients and charges the client his professional fee of Rs.15,000/-along
with expenses of Rs. 3,000/- incurred in form of payment to Registrar of Companies.
b) A company provides Subsidized Meal facility to employees. It pays Rs. 70/- per
plate to the caterer and deducts Rs. 10/- per plate from the employee’s salary.
c) A pharmaceutical company supplies free samples to doctors.
d) Raghunath Temple Charitable trust, registered under section 10(23C)(v) of the
Income-tax Act gives on rent a community hall, located within temple premises, to
public for organizing a Diwali Mela. Rent charged is Rs. 9,500.
e) Northstar Trucking Ltd. has given on hire 11 trucks to Jaggi Transporters of
Mumbai (a goods transport agency) for transporting goods in various parts of the
country. The hiring charges for the trucks are Rs. 10,200 per truck per day.
Q43.What is Deemed Supply? Explain with examples.
Q44. Distinguish between composite supply and mixed supply. Explain in the context
of CGST Act, the liability on composite and mixed supplies.
Q45. Discuss in brief the ‘taxable event’ and the scope of the term ‘supply’ under
GST law.
Suggested Readings:
https://www.drishtiias.com/to-the-points/paper3/goods-and-services-tax-gst-1
https://www.drishtiias.com/daily-updates/daily-news-analysis/four-years-of-the-gst
https://mrunal.org/2015/03/economy-lecture-gst-goods-services-tax.html
https://www.clearias.com/goods-and-services-tax-gst/
https://taxguru.in/tag/gst/
KEY WORDS
Indirect taxes, Destination, Supply, Job work, audit, offence, penalty, refund,
composite supply, mixed supply, ledger, deemed supply