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GOODS & SERVICES TAX
SUMMARY NOTES
FOR CS EXECUTIVE &
CS PROFESSIONAL
Address:- 2/14, 3rd Floor, Patel Nagar (In front of Patel Nagar Metro Station)
Ph. 011-45139922, 45719209, 9899259817
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GOODS & SERVICES TAX CONCEPT – 1 What is Tax
- It is an amount paid by people of India to government, which is used to provide public services.
For example, Defence, health services, provision of education, infrastructure facility like Roads/Dams etc.
- Taxes are basic source of Revenue for government.
CONCEPT – 2 There are generally two type of taxes in India DIFFERENCE BETWEEN DIRECT TAX & INDIRECT TAX
Aspect Direct Tax Indirect Tax
1. Nature Direct Taxes are the taxes directly incurred and paid by the same person.
Indirect Taxes are paid by one person (Assessee / Dealer), but the same is recovered from another person (Consumer).
2. Levied on Levied on the income of the Assessees.
Levied on Purchase / Sale / Manufacturer of goods and Provision of Services.
3. Shifting of Burden
There is no shifting of tax burden. Hence, it is directly borne by the taxpayer.
Tax burden is shifted to the subsequent user.
4. Time of Collection
Direct Taxes are collected after the income for a year is earned.
It is collected at the time of sale or purchase or rendering of services.
5. Examples Income Tax. Goods and Services Tax, Customs Duty
CONCEPT – 3
History of GST
- 19th December, 2014 The constitution 122nd Amendment bill, 2014 seeking to amend constitution to introduce the goods & services tax was introduced in lok sabha but congress object.
- Feb 2015: Sh. Arun Jaitly SET April 1st 2016 as dead line for GST Roll out.
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- 6th May 2015:
Lok Sabha passes GST Constitutional amendment bill
- 12th May 2015: The Amendment bill presented in Rajya Sabha.
- 14th May 2015 GST Bill forwarded to joint committee of Rajya Sabha & Lok Sabha.
- 3rd Aug, 2016 Rajya sabha passes constitution amendment bill by 2/3rd majority
- 8th Aug, 2016 Changes made by Rajya Sabha were unanimously passed by Lok Sabha on 8th Aug, 2016.
- On 2nd September 2016 – bill was adopted by majority of state legislature where in approval of at
least 50% of sate Assemblies was required.
- On 8th September 2016 – the president of India sh. Pranab mukherjee gave assent to constitution amendment bill & it had become constitutional (101st ament) Act, 2016
- On September 12th, the union cabinet cleared formation of GST council.
- On September 22 and 23 – the council met for 1st time
- 16th January 2017- Finance Minister announced 1st july 2017 as GST roll out dead line.
- 20 march 2017 – cabinet approved CGST, IGST, UTGST, and compensation bill.
- 27th march 2017 – Finance Minister tabled CGST/IGST/UTGST compensation bill in parliament &
all 4 key bills were passes
- April 2017 – president assented all 4 key bills.
- 1 July 2017 – GST Applicable to whole of India except J&K.
- 8th July – GST law was made applicable state of J&K. CONCEPT – 4
GOODS & SERVICES TAX Article 366 (12A) – GST means any tax on supply of goods or services except tax on supply of Alcoholic Liquor for Human Consumption
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CONCEPT – 5 Features of GST as given as below.
(i) It is a dual structure (ii) It is based on destination based concept (iii) It is levied on Goods & Services (iv) It based on value added by giving seamless credits to Recipient.
CONCEPT 6 CONSTITUTIONAL BACKGROUND 246A(1) 246A(2)
Parliament & Legislature of state have powers to make laws in respect to GST
Parliament has exclusive power to make laws IRT GST when Trade/Commerce inter-state
CONCEPT 7 Reason of GST (problems in existing law)
(i) Cenvat of central taxes against state levy (ii) Cascading effects VAT payable inclusive of excise paid at manufacturing stage (iii) Origin based tax (iv) No cross set off VAT dealers unable to set off any service tax
CONCEPT 8 Intentional scenario
France first country to levy GST 1954 Nearly 160 countries adopted GST in world Along with India Canada & Brazil also adopted Dual based GST
CONCEPT 9 Taxes sub-summed in GST
Central taxes State taxes
(i)Excise (ii) service tax (i) State VAT
(iii) Excise ( M & TP) (i) CST
(iv) Add GSI (iii) purchase tax
(v) Add T & TA (iv) Luxury Tax
(vi) CVD (v) Entry Tax
(vii) SAD (vi) Entertainment tax (except levied by local bodies)
(viii) Cess/ surcharge (vii) Tax on advertisement
(viii) Tax on lottery betting/ gambling
(ix) State Cess/ surcharge
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CONCEPT 9
Goods out of GST
Alcoholic liquor
5 petro product at any time at later Date on recommendation of council petro crude/motor spirit (petrol)/ HSD aviation turbine fuel/ natural gas
CONCEPT 10
GST council Article 279 A
CONSTITUTION
(i) Chair person union finance minister (ii) Union minister of state in charge of revenue or Finance (Member) (iii) Minister in charge of finance nominated by SG. (iv) Vice – chair man to be selected out of members themselve (v) Quorum of meeting 50% of total number of members (vi) Vote of CG 1/3 of total votes cast
vote of SG 2/3 of total votes cast (vii) For taking any decision minimum 75% of weighted votes
votes in favour of decision (viii) Matter on which council can make recommendation to Centre & State
(i) (ii) (iii) (iv) (v)
Goods to be exempted
thresh-hold limit of turnover GST not leviable
Rates
Special provision IRT north Eastern states
any other matter
CONCEPT 11 DEFINITIONS
(i) Goods 2(52) meansEvery kind of movable property except money & securities include actionable claim/ growing crops/grass, things attached/ forming part of land Which are agreed to be severed before supply or under a Contract of supply
(ii) Types of Goods
2 (19) 2 (59)
capital goods Input
Capitalized in books Other than capital goods
Used/intended to used in course or in furtherance of business
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(iii) Service section 2(102)
Means Anything other than Goods/Money/securities but include activities relating to use of money or its conversion by cash or any other mode from one form, currency, denomination to another form.
(iv) Taxable supply section 2 (108): Means supply of goods or services or both
which is leviable to tax under this Act.
(v) Outward supply IRT taxable person means supply by way of sale/trans/barter/ exchange/license rent/lease/disposal or any other mode by such person in course/furtherance of business
(vi) SECTION 2 (47): EXEMPT SUPPLY
“Exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
CONCEPT 12
SCOPE OF SUPPLY (SECTION 7)
Supply includes (Section 7 (1)) 7 (i)(a) 7 (i)(b) 7 (i)(c) 7 (i)(d)
All form of supply such as sale, transfer barter, exchange disposal lease/license/rent
Made or agreed to be made for a consideration by a person in course or furtherance of business
Import of service in course or not in course of business for consideration
Activities in Schedule I without consideration
Schedule I
Activities to be treated as supply of goods/service as referred to in schedule II
(i) permanent disposal of asset on which ITC has been taken
(ii) branch transfer or related person
(iii) principal/agent
(iv) import from related/any of his establishment located outside India
Section 7 (2) Neither supply of Goods/nor supply of services
Activities/trans in Schedule III Undertaken by CG/SG/LA in which they are engaged as public authority as may be notified by Govt. on recommendation of council.
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Section 7 (3) Govt. may on recommendations of council, Specify by notifications transactions to be treated as supply of Goods not services & supply of service not as Goods
Schedule III (i) (ii) (iii) (iv) (v) (vi)
Service by employee to Employer in course of Employment
Service by court/tribunal Established under any law for time being in force
(a) functions performed by MP/MLA/MO Panchayat member of municipal or other LA
Services of funeral, burial crematorium or mortuary including transportation of deceased
Sale of land building
Actionable claim except lottery betting gambling
(b) duties performed by any person who hold post under constitution
(c) Duties by chair person/member director in body established by CG/SG/LA
CONCEPT 13
COMPOSITE /MIXED SUPPLY Section 2 (30) Composite supply Section 2 (74) mixed supply
Supply made by taxable person to recipient consisting of 2 or more taxable supplies of goods/Services or both or combination thereof which are naturally bundled
Means Two or more individual supplies/or any combination by a taxable person for a single price where such supply do not constitute a composite supply
one of which is principal Taxability : Section 8 (a) Taxability : Section 8 (b)
Shall be treated as a supply of such principal supply Shall be treated as a supply of that particular supply which attract highest rate of tax
CONCEPT 14
Import of service
With consideration [Section 7 (1) (b)] Without consideration [Section 7 (1) (c) Schedule I]
In course or furtherance of business
Not in course or furtherance of Business
in course of furtherance of business + from related person any of his establishment located outside India
Supply Supply Supply
Section 7 (4) IGST Act import of service shall always be treated as inter-state Supply hence subject to IGST
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CONCEPT 15
OIDAR Services Section 14 IGST Act
SUPPLIER RECIPIENT
any person located in Non- taxable territory
Non-Taxable online recipient
Taxable Online recipient
Liability to pay Supplier recipient under
FCM RCM
For place of supply of OIDAR Supplies Section 13 (12), GST Act. Location of Recipient of services
CONCEPT 16 Import of Goods Subject to GST via Section 3 of custom tariff Act & on value as determine under section 14 of Custom Act. As per section 7 (2) of IGST shall be treated as inter-State unless it crosses
custom frontier.
CONCEPT 17
SUPPLY FROM PRINCIPAL TO AGENT. & VICE VERSA
Even if without
Consideration 7 (1) (c)+ Schedule I for value refer to
rule 29 Covers in scope of supply
Rule 29
Optional OMV or 90% of price charged for supply of Goods of like kind & Quality by recipient
to his customer where Goods intended for further supply, by said recipient
Otherwise Apply Rule 30 or Rule 31 in that order
CONCEPT 18 Supply of Goods or Service or both between distinct or Related person
Distinct person Related person
25 (4)
25 (5)
Explanation to Section 15
A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act
Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of an establishment, has an establishment in another State or Union territory, then such establishments shall be treated as establishments of distinct persons for the purposes of this Act
(i) Such persons are officers or directors of
one another’s businesses
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(ii) Such persons are legally recognised partners in business;
(iii) Such persons are employer and employee;
(iv) Any person directly or indirectly owns, controls or holds twenty-five per cent. Or more of the outstanding voting stock or shares of both of them
(v) One of them directly or indirectly controls the other;
(vi) Both of them are directly or indirectly controlled by a third person
(vii) Together they directly or indirectly control a third person; or
(viii)they are members of the same family;
Section 10 Composition Levy
Section 10(1) Section 10(2)
Section 10(3)
Section 10(4)
Section 10(5)
Notwith standing anything contained in this act but subject to the Provision of Sub. Section (3) and (4) of section 9, A registered Person whose aggregate Turnover in preceding financial year
Did not exceed Rs. 1 Crore May opt. scheme and pay tax at rate given under Rule 7. On turnover in a state
Person shall not be eligible to opt. scheme
Lapse of option
No credit of Input Tax
Demand and recovery
↓
option availed by Registered person U/s 10(1) shall lapse with effect from the day on which his aggregate turnover during a financial year exceed Rs 1 Crore
Composition person shall not collect any tax from Receipient in supplies made by him nor shall be entitle to any credit of input tax
If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) despite not being eligible, such person shall, in addition to any tax that may be payable by him under any other provisions of this Act, be liable to a penalty and the provisions of section 73 or section 74 shall,
Note: Reduce limit of Rs 75 Lakh have been kept for special category states. (Except J&K & Utrakhand)
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Section 10(2) Composition Levy
(a) (b) (c) (d) (e) (f) (g)
Engaged in supply of service other than - Restaurant - Mandap keeper Outdoor catering
Engaged in making any supply of goods which is not leviable to tax - Alcoholic liquor - Petroleum crude - high speed diesel - motor spirit - Natural gas - aviation turbine fuel
Engaged in making any Interstate outward supply of goods
Engaged in making any supply of goods through an ECO who is required to collect tax at source u/s 52
Manufacturer of - Tobacco - Ice-Cream - Pan Masala - Manufactured tobacco substitute
Casual taxable person or Non- Resident taxable person
Supplier who has purchased any goods or service from unregistered supplier unless he has paid GST on such goods or service on RCM Basis
Provided: - More than one registered person having SAME PAN, the registered person shall not be eligible to opt. for the scheme unless all registered person opt to pay tax under that sub-section
AGGREGATE TURNOVER
Taxable Supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis)
Exempt Supplies Exports of goods or service or both
inter-State supplies of persons having the same Permanent Account Number
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RULE 3 COMPOSITION LEVY
Rule 3 (1) of CGST Rules 2017
Migrated Taxpayer
Migrated to GST law through provisional Registration Separate intimation
Form GST CMP-01 Time Limit
Prior to appointed day, but not later than 30 days after the appointed day, or such further period as may be extended by Commissioner
Rule3(2) Of CGST Rules 2017
Fresh GST Registration
Intimate through registration application itself, which shall be considered as an intimation to pay tax under the said section
Part B of Form GST REG-01
Rule 3 (3) of CGST Rules 2017
Fresh GST Registration taken (normal scheme) & subsequently, switching over to composition
Separate intimation required (before Start of FY for which option to pay Tax is exercised)
Form GST CMP-02 Regular supplier now becoming Composition supplier : Reversals of ITC availed on stock He shall also furnish statement he shall also furnish the statement in Form GST ITC-03 (as required by Rule 44 (4)) within 60 days from the commencement of relevant FY,
RULE 4 EFFECTION DATE OF COMPOSITION LEVY Rule 4 (1) of CGST Rules, 2017
Option shall be effective from appointed day.
Rule 4 (2) of CGST Rules, 2017
Intimation shall be considered only after grant of registration. Option shall be effective fromdate of registration
Rule 4 (1) of CGST Rules, 2017
Beginning of the FY
Rule 3(5) Any intimation under sub-rule (1) or sub-rule (3) in respect of any place of business in any State or Union territory shall be deemed to be an intimation in respect of all other places of business registered on the same Permanent Account Number.
RULE 5 (1) CONDITIONS AND RESTRICTIONS FOR COMPOSITION LEVY.- The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely:-
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a) he is neither a casual taxable person nor a non-resident taxable person;
b) the goods held in stock by him on the appointed day have not been purchased in the course of inter- State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 3;
c) the goods held in stock by him have not been purchased from an unregistered supplier and where
purchased, he pays the tax under sub-section (4) of section 9;
d) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;
e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of
section 10, during the preceding financial year;
f) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and
g) he shall mention the words “composition taxable person” on every notice or signboard displayed at a
prominent place at his principal place of business and at every additional place or places of business.
RULE 6 RULE 6 (1) OF CGST RULE 2017 Once opted for, its valid for life time so long as he satisfies all the conditions mentioned in the said section and under these rules.
WITHDRAWAL OF OPTION
AUTO WITHDRAWAL (may take place at any time in the CY)
When supplier ceases to satisfy any of condition mentioned in section-10
Intimation of withdrawal shall be given of occurrence of event Form GST CMP-04
DISCRETIONARY WITHDRAWAL OF SUPPLIER (may take place at any time in the CY)
Intimation of withdrawal shall be given by supplier (before withdrawal) Form GST CMP-04
DENIAL BY PROPER OFFICER( AC/DC) (as he has reason to believe That supplier was ineligible or has contravened condition)
SCN proposing denial – FORM GST CMP-05 Reply of SCN by supplier (within 15 days-) FORM GST CMP-06 Order (within 30 days)- FORM GST CMP-07
COMPOSITION SUPPLIER NOW BECOMING REGULAR SUPPLIER : ENTITLED TO TAKE ITC ON STOCK Such person shall also furnish a statement in FORM GST ITC-01 containing details of stock in hand on the date on which composition option is withdrawn or denied.
FORM GST ITC-01
It shall be filed (within 30 days (or extended period) from the date from which the option is withdrawn or from the date of the order passed in FORM GST CMP-07,as the case may be.
CHAPTER - 2 CHARGING SECTION
1. Extent & Commencement of CGST Act/ SGST Act/ UTGST Act/ IGST Act
Applicability CGST SGST UTGST IGST
Intra-State supply Inter-State
supply
States of India
Union Territories with
State Legislature
Union Territories
without State
Legislature
2. Levy and collection of CGST/IGST
Particulars CGST IGST
Levied on Intra-State supplies of
goods/services/both
Inter-State supplies of
goods/services/both
Collected and
paid by
Taxable person
Supply
outside
purview of tax
Alcoholic liquor for human consumption
Value for levy Transaction value under section 15 of the CGST Act
Rates Rates as notified by IGST rate= CGST rate + SGST
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Government.
Maximum rate of CGST
will be 20%.
rate (more or less)
Maximum rate of IGST will
be 40%.
Supplies on
which tax to
be levied
w.e.f. a
notified date
Section 9(2)
petroleum crude
high speed diesel
motor spirit (commonly known as petrol)
natural gas and
aviation turbine fuel
Tax payable
under reverse
charge
Section
9(3)/9(4)
Supply of goods or services or both, notified by the
Government on the recommendations of the GST
Council.
Supply of taxable goods or services or both by an
unregistered supplier to a registered person
Tax payable
by the
electronic
commerce
operator
The Government may notify specific categories of services
the tax on supplies of which shall be paid by electronic
commerce operator (ECO) as if such services are supplied
through it.
Section 9(5) If the ECO is located in
taxable territory
Person liable to pay tax is the
ECO
If the ECO does not have
physical presence in the
taxable territory
Person liable to pay tax is the
person representing the ECO
If the ECO has neither the
physical presence nor any
representative in the
taxable territory
Person liable to pay tax is the
person appointed by the ECO
for the purpose of paying the
tax
Goods
imported into
India
No CGST and
SGST/UTGST payable.
IGST shall be levied and
collected on import of goods
as per the section 3 of the
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Custom Tariff Act, 1975.
NotificationNo.–17/2017
- Service by Transportation of passengers by a Radio-Taxi, Motor-Cab,
Maxi- Cab, Motorcycle.
- Service by providing accommodation in Hotel except person supplying
though Eco liable to be registered U/s 22.
- Service by house-keeping, except person supplying though Eco liable to
be registered U/s 22.
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CHAPTER - 3 PLACE OF SUPPLY (POS)
A. Place of supply of goods other than import and export [Section 10]
S.
No.
Nature of Supply Place of Supply
1. Where the supply involves the
movement of goods, whether by the
supplier or the recipient or by any
other person
Location of the goods at the time
at which, the movement of goods
terminates for delivery to the
recipient
2. Where the goods are delivered to
the recipient, or any person on the
direction of the third person by way
of transfer of title or otherwise, it
shall be deemed that the third
person has received the goods
The principal place of business of
such third person
3. Where there is no movement of
goods either by supplier or recipient
Location of such goods at the
time of delivery to the recipient
4. Where goods are assembled or
installed at site
The place where the goods are
assembled or installed
5. Where the goods are supplied on-
board a conveyance like a vessel,
aircraft, train or motor vehicle
The place where such goods are
taken on-board the conveyance
6. Where the place of supply of goods
cannot be determined in terms of
the above provisions
It shall be determined in such
manner as may be prescribed
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B. Place of supply of goods imported into, or exported from India
[Section 11]
S. No. Nature of Supply of Goods Place of Supply
1. Import Location of importer
2. Export Location outside India
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C. Place of supply of services where location of supplier and recipient is in India [Section 12]
(i) In respect of the following 12 categories of services, the place of supply is
determined with reference to a proxy; rest of the services are governed by the default provision.
1 Immovable property related-services
including accommodation in
hotel/boat/vessel
Location at which the immovable
property or boat or vessel is located or
intended to be located
If located outside India: Location
of the recipient
2 Restaurant and catering services,
personal grooming, fitness, beauty
treatment and health service
Location where the
services are actually performed
3 Training and performance Appraisal
B2B: Location of such registered Person
B2C: Location where the services are actually performed
4 Admission to an event or amusement park
Place where the event is actually held or where the park or the other place is located
5 Organisation of an event B2B: Location of such registered person
B2C: Location where the event is actually held
• If the event is held outside India: Location of the recipient
6 Transportation of goods, including mails
B2B: Location of such registered Person
B2C: Location at which such goods are handed over for their Transportation
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7 Passenger transportation B2B: Location of such registered Person
B2C: Place where the passenger embarks on the conveyance for a continuous journey
8 Services on board a Conveyance
Location of the first scheduled point of departure of that conveyance for the journey
9 Banking and other financial services
Location of the recipient of services on the records of the supplier
Location of the supplier of services if the location of the recipient of services is not available
10 Insurance services B2B: Location of such registered Person
B2C: Location of the recipient of services on the records of the supplier
11 Advertisement services to the Government
Each of States/Union Territory where the advertisement is broadcasted/displayed/run
Proportionate value in case of multiple States
Telecommunication services Services involving fixed line, circuits, dish etc: Location of such fixed equipment
Mobile/ Internet post-paid services: Location of billing address of the recipient
Sale of pre-paid voucher: Place of sale of such vouchers
Other cases: Address of the recipient in records
(ii) For the rest of the services other than those specified above, the default provision has been prescribed as under:
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Default rule for the services other than the 12 specified services S. No. Description of Supply Place of Supply
1 B2B Location of such registered person 2 B2C Where the address on record
exists: Location of the recipient Other cases: Location of the supplier of services
D. Place of supply of services where location of supplier OR location of recipient is outside India [Section 13]
(i) In respect of the following categories of services, the place of supply is
determined with reference to a proxy; rest of the services are governed by the default provision.
S. No.
Nature of Service Place of Supply
1. Services supplied in respect of goods which are required to be made physically available
Location where the services are actually performed
Services supplied in respect of goods but from a remote location by way of electronic means
Location where the goods are situated at the time of supply of services
Above provisions are not applicable in case of goods that are temporarily imported into India for repairs and exported after repairs
2. Services which require the physical presence of the recipient or the person acting on his behalf with the supplier of services
Location where the services are actually performed
3. Service supplied directly in relation to an immovable property
Place where the immovable property is located or intended to be located
4. Admission to or organisation of an event Place where the event is actually held If the above services are supplied at more than one locations. i.e., (i) Goods & individual related (ii) Immovable property-related (iii) Event related
At more than one location, including a location in the taxable territory
Location in the taxable territory
Page 19
In more than one State Each such State in proportion to the value of services provided in each State
5. Services supplied by a banking company, or a financial institution, or a NBFC to account holders
Location of the supplier of services
Intermediary services
Services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month
6. Transportation of goods, other than by way of mail or courier
Place of destination of such goods
7. Passenger transportation Place where the passenger embarks on the conveyance for a continuous journey
8. Services provided on-board a conveyance
First scheduled point of departure of that conveyance for the journey
9. Online information and database access or retrieval services
Location of recipient of service
(ii) For the rest of the services other than those specified above, a default provision has been prescribed as under:
Default rule for the cross-border supply of services other than nine specified services S. No. Description of Supply Place of Supply 1. Any Location of the recipient of
service Location of the supplier of service, if location of recipient is not available in the ordinary course of business
Page 20
Place of Supply of Goods
Other than Goods Imported into or
Exported from India
Goods Imported into or Exported from India
Goods Imported into India
Goods Exported from India
Place of supply of Goods shall
be the location of the Importer Place of supply of Goods shall be the location outside India
Supply Involves
Movement of Goods
Location of Goods where
movement terminates for
delivery
Goods are supplied by transfer of
document during Movement of Goods
Principal Place of Business of Third person on whose direction Goods
where supplied to Another person
Supply does not Involve
Movement Of Goods
Location of Goods at
the time of delivery
Goods are Assembled or Installed
at Site
Place of such installation or delivery
Goods are supplied
on Board a Conveyance
Location at which such Goods are taken on Board
Place of supply of Goods cannot be
Determined
Place of supply shall be determined in such manner
as may be prescribed
Page 21
Where the passenger
embarks on the conveyance for continuous
journey
Where the event is
actually held
Place of Supply of Services
Location of supplier of service and
recipient of service is in India
General rule
Specific situations
Supply to a registered person - Location of such person. Supply to non-registered person - Location of recipient, if address exists in records. In other cases, location of supplier
Specific Services such as Health services,
Restaurant services
Services
relating to Training &
Performance Appraisal
Organization of event and
ancillary services relation to such event or assigning of Sponsorship
Admission
to a cultural,
artistic, sporting
etc., events,
amusement
park & ancillary
services thereto
Goods transportation
services
Passenger transportation
services
Services
on Board a Conveyance
such as Aircraft,
Vessel etc.
Services directly
related to Immovable Property
Telecommunication services including
data transfer, Broadcasting, cable
and DTH
Place of Actual
Performance
Services to Registered
person
Services to Unregistered
person
Place where the event is actually held or
where the park or such other place is located
Services to
Registered person
Location of such person
Services to unregistered
person
Location
of the first scheduled point of
departure of that
conveyance
Location of such person
Services to registered
person
Place of
actual performance
Services to Unregistered
person
Services to Registered
person
Location of
recipient
Services to Unregistered
person
Place where goods are handed over for their transportation
Immovable property located in India
Immovable property located outside India
Location of such person
Event is held in India
Event is held outside
India
Location of the recipient
Fixed line / Leased circuit, Internet based
circuit
Place of Installation of such circuit
Mobile connection & Internet
services (post paid services)
Billing address of the recipient
Mobile connection & Internet
services (pre paid services)
In any other case
If provided through selling agent then place of supply is address of
such selling agent
If provided by any person to final subscriber then
location where such payment is received
Address of the recipient as per records of the
supplier
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Place of Supply of Services
Location of supplier of service and recipient of services outside India
Services provided in relation to
Goods
Specific Services
Admission
to a cultural, artistic, sporting,
educational or entertainment or
similar events
Transportation
of Goods other than by way of Mail or Courier
services
Passenger Transportation
Services
Services
on Board a Conveyance
such as Aircraft,
Vessel etc.
Services in relation to Immovable
Property , hotel accommodation, inn guest house
or grant to u se immovable
property
Online information services and
database access or retrieval services
Goods required to
be made available for providing services to
the supplier of services
Services provided
from remote location
Place
where the event is actually
held
Place of
Destination
Where the passenger embarks on the
conveyance for continuous
journey
Location of the first scheduled point of
departure of that
conveyance
Location of Immovable property
Location of Recipient of
services
Location where the
services are performed
Location where the Goods are situated
Banking services or services by
non- banking financial
companies
Intermediary Services
Services consisting of hiring of means of transport
Location of Supplier of Services
Page 23
Special order
CHAPTER-4 EXEMPTION
1. Power to exempt from tax [Section 11 of the CGST Act/ section 6 of IGST
Act]
Power to exempt from tax
by way of issuance of
Notification
• exempt generally
• either absolutely or subject to such
conditions as may be specified,
• goods and/or services of any specified
description.
exempt from payment of tax under
circumstances of an exceptional
nature to be stated in such order, in
public interest.
Special Points:-
(1) The Government may, if it considers necessary or expedient so to do for the
purpose of clarifying the scope or applicability of any notification issued under sub-
section (1) or order issued under sub-section (2), insert an explanation in such
notification or order, as the case may be, by notification at any time within one year of
issue of the notification under sub-section (1) or order under sub-section (2), and every
such explanation shall have effect as if it had always been the part of the first such
notification or order, as the case may be.
Explanation.––For the purposes of this section, where an exemption in respect of any
goods or services or both from the whole or part of the tax leviable thereon has been
granted absolutely, the registered person supplying such goods or services or both
shall not collect the tax, in excess of the effective rate, on such supply of goods or
services or both.
Page 24
CHAPTER-5 TIME OF SUPPLY
TIME OF SUPPLY WHERE TAX IS PAYABLE UNDER FORWARD CHARGE
Time of supply of goods [Section
12(2)]
Time of supply of services [Section
13(2)]
Earliest of the following:
(a) Date of issue of invoice by the
supplier or
(b) the last date on which he is
required, to issue the invoice
under section 31(1) with respect to
the supply or
(c) Date on which the supplier
receives the payment (entering
the payment in books of account or
crediting of payment in bank
account, whichever is earlier) with
respect to the supply
(a) Invoice issued within the time
period prescribed under section
31(2)
Earliest of the following:
Date of issue of invoice by the
supplier
Date of receipt of payment
(entering the payment in books
of account or crediting of
payment in bank account,
whichever is earlier)
(b) Invoice not issued within the time
period prescribed under section
31(2)
Earliest of the following:
Date of provision of service
Date of receipt of payment
(entering the payment in books
of account or crediting of
payment in bank account,
whichever is earlier)
(c) When the above events are
unascertainable
Date on which the recipient
shows the receipt of services in
his books of account
Page 25
GENERAL TIME LIMIT FOR RAISING INVOICES
Supply of goods [Section 31(1)] Supply of services [Section 31(2)]
Before or at the time of,-
(a) removal of goods for supply to
the recipient, where the supply
involves movement of goods, or
(b) delivery of goods or making
available thereof to the
recipient, in any other case
Before or after the provision of service
but within 30 days [45 days in case of
insurance cos./banking and financial
institutions including NBFCs] from the
date of supply of services
TIME OF SUPPLY WHERE TAX IS PAYABLE UNDER REVERSE CHARGE
Time of supply of goods [Section
12(3)]
Time of supply of services [Section
13(3)]
Earliest of the following:
(a) Date of receipt of goods, or
(b) Date of payment as entered in the
books of account of the recipient or
the date on which the payment is
debited to his bank account,
whichever is earlier, or
Earliest of the following:
(a) Date of payment as entered in the
books of account of the recipient or
the date on which the payment is
debited to his bank account,
whichever is earlier, or
Page 26
(c) 31st day from the date of issue of
invoice
(b) 61st day from the date of issue of
invoice
Where the above events are not ascertainable, the time of supply shall be the
date of entry in the books of account of the recipient of supply
- Import of service from associated
enterprise Date of entry in the books of
account of the recipient or the date of
payment, whichever is earlier
TIME OF SUPPLY OF VOUCHERS EXCHANGEABLE FOR GOODS AND SERVICES
Supply of vouchers exchangeable for goods and services [Sections 12(4) and 13(4)]
(a) Supply of goods or services is identifiable at the time of issue of voucher
Date of issue of the voucher
(b) Other cases
Date of redemption of the voucher
TIME OF SUPPLY OF GOODS AND SERVICES IN RESIDUAL CASES
Supply of goods and services in residual cases [Sections 12(5) and 13(5)]
(a) Where a periodical return is required to be filed
Due date of filing such return
(b) Other cases
Date of payment of tax
Page 27
TIME OF SUPPLY FOR ADDITION IN VALUE BY WAY OF INTEREST/ LATE
FEE/PENALTY FOR DELAYED PAYMENT OF CONSIDERATION
Addition in value by way of interest, late fee/penalty for delayed payment of
consideration
Time of Supply Date on which the supplier receives such addition in value
CHANGE IN RATE OF TAX
In case of change in rate of tax, determination of rate of tax depends upon three
events namely,-
Date of supply of goods or services,
Date of invoice; and
Date of receipt of payment
If any two of the above events occur before the change of rate, the time of supply
is before the change of rate. If any two of them occur after the change of rate,
the time of supply is after the change of rate and the new rate becomes
applicable to the supply. Using this principle, time of supply, in case of change
in rate of tax, can be determined as under:
Supply Issue of
invoice
Receipt of
payment
Time of supply
BEFORE BEFORE AFTER Date of issue of invoice
BEFORE AFTER BEFORE Date of receipt of payment
BEFORE AFTER AFTER Date of issue of invoice or
date of receipt of
payment, whichever is
earlier
Page 28
AFTER AFTER
BEFORE
Date of issue of invoice
AFTER
BEFORE
AFTER
Date of receipt of payment
AFTER
BEFORE
BEFORE
Date of issue of invoice or
date of receipt of
payment, whichever is
earlier
Page 29
Supply made to
unrelated person
where price is the
sole consideration
Assessable Value
= Transaction value u/s 15
+
CHAPTER-6 VALUATION
VALUE OF SUPPLY
Supply made to
related person
Supply where price
is not the sole
consideration
Supply is a
notified supply u/s
15(4)
Value to be determined under Chapter IV:
Determination of Value of Supply of CGST Rules
⇒ Taxes other than GST
⇒ Third party payments made by customer in relation to supply, which supplier was
liable to pay and were not included in the price
⇒ Incidental expenses till delivery of goods/ for supply of services, if charged to
recipient
⇒ Subsidies linked to price of supply other than the ones given by Central/State
Governments
⇒ Interest/late fee/penalty for delay in payment of consideration
⇒ Post supply discount/incentive, if not known in advance & invoice-wise
Page 30
VALUATION RULES
RULE 27: Consideration
not wholly in money
Value shall be either of the
following in the given
order:
• open market value
• total of consideration in
money + amount equal
to the consideration not
in money
• value of supplies of like
kind and quality
• consideration in money
+ money value of
consideration as per rule
30 or 31 in that order.
RULE 28: Supply
between distinct/
related persons, other
than agent
Value shall be either of the
following in the given
order:
• open market value
• value of supplies of like
kind and quality
• value as per rule 30 or
31 in that order.
♦Option to supplier to
value goods sold as such
by recipient⇒Value= 90%
of price charged by
recipient to its unrelated
customer
♦Recipient eligible for ITC
⇒ invoice value = open
market value (taxable
value)
RULE 29: Supply
made/received
through an agent
Value shall be either of
the following in the
given order:
• open market value or
90% of price charged
by recipient to his
unrelated customer
for supplies of like
kind and quality;
• value as per rule 30 or
31 in that order.
RULE 31: Residual
method (Best
Judgement Method)
Value shall be determined
using reasonable means
consistent with the
principles and general
provisions of section 15 &
valuation rules. For
services, rule 31 can be
adopted before rule 30.
RULE 34: Rate of
exchange for
determination of value
Goods = Rate notified by
CBEC under Customs Act
on the date of time of
supply of such goods;
Services = Rate as per
GAAP on the date of time
of supply of such services
RULE 30: Value based
on cost
Value shall be 110% of
cost of
production/acquisition/
provision of goods or
services
RULE 33: Supply as a
pure agent
Costs incurred by the
supplier as a pure agent of
recipient shall be excluded
from value
Rule 35: Value inclusive of taxes
Where value of supply is inclusive of CGST, SGST/UTGST or IGST, the tax amount is calculated by making back
calculations. Tax amount = (Value inclusive of GST x GST rate in % of IGST or CGST, SGST/UTGST)/100 + sum
of applicable GST rates in %)
RULE 32: Value of in respect of certain specific supplies
⇒ Purchase/sale of foreign currency: 1st method-Value = [Buying/Selling rate - RBI reference rate at that
time] x total units of currency. If no RBI reference rate, value = 1% of INR received/provided. If the currencies
exchanged are not in INR, value = lesser of the 2 amounts that would have been received by converting any
of currencies into INR at RBI reference rate OR 2nd method
Currency Value
Upto ` 1,00,000 1% or ` 250 whichever is higher
From `1,0001 to ` 10,00,000 ` 1,000 + 0.5%
From ` 10,00,001 ` 5,500 + 0.1% subject to maximum of ` 60,000
⇒ Booking of tickets by air travel agent: Value = 5% of basic fare for domestic bookings and 10% of the
basic fare for international bookings.
⇒ Life insurance business: If amount allocated for investment is intimated - Value = Gross premium less
amount allocated for investment; Single premium annuity policies where amount allocated for investment is
not intimated - Value = 10% of single premium; Other cases – Value = 25% of premium in 1st year and 12.5%
of premium in subsequent years; Policy only towards risk cover – Value = Entire premium
⇒ Buying & selling of second hand goods: Value = Selling price – Buying price (ignore if value is negative);
Purchase value of goods repossessed from unregistered borrower = Purchase price- 5% per quarter or part
thereof from date of purchase till the date of disposal by the person making repossession
⇒ Coupon/voucher: Value = money value of supplies redeemable against such voucher/ coupon
⇒ Notified services between distinct persons without consideration: Value = Nil, if ITC is available
Page 31
Services
INPUT SERVICES
INPUTS
goods other than
capital goods
CHAPTER-7 INPUT TAX CREDIT
Goods
CAPITAL GOODS
means
means means
goods value of which is
capitalized in the books of
account of person claiming ITC
services
used/intended to be
used in the course/
furtherance of business
EXEMPT SUPPLY
means includes
Supply attracting NIL rate of
tax
Supply wholly exempt
from
Non-
taxable
supply
CGST IGST
Page 32
any person supplying goods and/or
services occasionally
INPUT TAX
Means Includes Excludes
Tax payable
under forward
charge
Tax payable
under reverse
charge
IGST
leviable on
import of
goods
Composition
tax
CGST SGST UTGST IGST
NON-RESIDENT TAXABLE PERSON
means
Principal
Agent
as
In any other
capacity
having NO fixed place of
business/residence in India
Page 33
acquisition
INWARD SUPPLY
means
receipt of goods and/or services by
purchase any other means
with/without consideration
ZERO-RATED SUPPLY
Export of goods and/or services
Supply of goods and /or services to SEZ developer/ SEZ unit
Page 34
II. Provisions of section 16 relating to eligibility and
conditions for taking ITC read with relevant rules are
summarized below:
Sec-16(1) Registered
person to take credit of
tax paid on inward supplies
of goods and/or services
used/ intended to be used in
the course or furtherance of
business
Sec-16(2) if the
following four
conditions are fulfilled:
He has furnished
GSTR 3
Tax on such supply
has been paid either
in
He has received
goods and/or
services
He has valid tax
invoice/debit
note/prescribed
tax paying
document
Proviso to Sec 16(2)
Goods received
in lots – ITC
allowed upon
receipt of last lot
Proviso to Sec 16(2)
Cash Utilisation of
ITC
Sec 16(3)
If depreciation
claimed on tax
component, ITC not
allowed
Goods delivered to
third person on the
direction of the
registered person
deemed to be
received by the
registered person
⇒ ITC available to
registered person
[Bill to Ship to
Model]
Sec 16(4)
Time limit for
availing ITC - ITC
pertaining to a
particular FY can
be availed by 20th
October of next FY
or filing of annual
return, whichever
is earlier.
Exception: Re-
availment of ITC
reversed earlier
ITC to be reversed with interest @ 18% if
value + tax of goods and /or services is not
paid within 180 days of the issuance of
invoice.
Such supplies will be specified in GSTR -2 of
the month immediately following 180 days
and ITC added in the output tax liability of
the said month.
On payment, the ITC could be re-availed
without any time limit.
EXCEPTIONS
Rule 37
• Supplies under
reverse charge
• Deemed supplies
without
consideration
Page 35
Goods and/or
services
III. The provisions of section 17 relating to apportionment
of credit and blocked credits read with relevant rules
are summarized as under:
A. Apportionment of credit
Sec 17(1)
Used partly for business
and partly for non-
business purposes
Sec 17(2)
Used partly for making
taxable (including zero
rated supplies) supplies
& partly for exempt
supplies
ITC available
only as
Attributable to
business purposes
Attributable to taxable
supplies including zero
rated supplies
Sec 17(3)
Exempt supplies include supplies charged to tax under reverse charge, transactions in
securities, sale of land and sale of building when entire consideration is received post
completion certificate.
B. Special provisions for banking companies and NBFCs
Sec 17(4)
Option 1: Avail
proportionate
ITC
Option 2: Avail
50% of eligible
ITC
• Remaining 50% ITC
will lapse.
• Restriction of 50%
shall not apply to the
tax paid on supplies
made to another
registration within
the same entity.
• Option once
exercised cannot be
withdrawn during
remaining part of the
year.
Page 36
T
Total IT on I + IS
IT on I+IS used
exclusively for
non-business
purposes
IT on I+IS used
exclusively for
exempt supplies
Blocked credits u/s
17(5)
Credit attributable to I + IS
used exclusively in taxable
supplies including ZRS
Credit attributable to non-
business purpose if common I +
IS used partly for business + non
-business purposes
D2 = 5% x C2
Ineligible credits
C. Apportionment of common credit in case of inputs and input
services
Rule: 42
T1 T2 T3 C1
Remaining ITC
credited to ECrL
= T- (T1 + T2 + T3)
(i) Exempt supplies include reverse
charge supplies, transactions in T4
securities, sale of land and sale of
building when entire consideration is
received after CC.
C2
Common credit (ii) Aggregate value of exempt
supplies and total turnover exclude
the CED, SED & VAT.
= C1 – T4
D1 D2 C3
Credit attributable to exempt supplies-
D1 = x C2
E = Value of ES during tax period
F = Total turnover during tax period
If no turnover during the tax period/values
not available, values for last period may be
used.
Remaining
common credit
= C2 – (D1 + D2)
Eligible ITC
attributable to
business & taxable
supplies including
ZRS
To be added to output
tax liability
Page 37
• C3 will be computed separately for ITC of CGST, SGST/ UTGST and IGST.
• ∑ (D1 + D2) will be computed for the whole financial year, by taking
exempted turnover and aggregate turnover for the whole financial year.
If this amount is more than the amount already added to output tax
liability every month, the differential amount will be added to the output
tax liability in any of the month till September of succeeding year along
with interest @ 18% from 1st April of succeeding year till the date of
payment.
• If this amount is less than the amount added to output tax liability every
month, the additional amount paid has to be claimed back as credit in
GSTR 3 of any month till September of the succeeding year.
IT = Input tax
I = Inputs
IS = Input services
ECrl = Electronic Credit Ledger
CC = Completion Certificate
CED = Central Excise Duty
SED = State Excise Duty
ZRS = Zero rated supply
ES = Exempt supplies
Page 38
Credited to EcrL
Common credit towards exempted supplies
Te = x Tr
E → Aggregate value of exempt supplies during the
tax period; F → Total turnover during the tax period.
If no turnover during the tax period/values not
available, values for last tax period may be used.
D. Apportionment of common credit on capital goods
Rule: 43
Total input tax (IT) on capital goods (CG)
(a) (b) ‘A’
IT on CG used exclusively for non-
business/exempt supplies
IT on CG used exclusively
for taxable supplies
including zero rated
supply (ZRS)
IT on CG not covered under (a) & (b).
Useful life of CG → 5 years from date of
invoice
Not to be credited to
Electronic Credit Ledger
(ECrL) Credited to ECrL
Tc
Tm
Common credit of CG for a tax
period during their useful life
Tm = Tc/60
Common credit on CG ⇒ Tc = ∑ (A)
If CG under (a)/(b) subsequently get covered
under ‘A’, then ‘A’ = (a)/(b) – 5% of IT for a
quarter or part thereof
Tr
Common credit at the beginning of a tax period
for all CG having useful life in that tax period
Tr = Tm of such CG
Te
Added to output tax liability
along with interest
• Te will be computed separately for ITC of CGST, SGST/ UTGST and IGST.
• Exempt supplies include reverse charge supplies, transactions in securities, sale of land and sale
of building when entire consideration is received after completion certificate.
• Aggregate value of exempt supplies and total turnover excludes the central excise duty, State
excise duty & VAT.
Page 39
F & B, Out cat, BT,
HS, C & PS
EXCEPTION
Rent a cab, life
insurance and health
insurance
EXCEPTIONS
Inward supplies
received by NRTP
EXCEPTION
Section 17(5)
BLOCKED CREDITS PART-A
MV & OC
EXCEPTIONS
(A) MV & OC used for
transportation of goods
(B) MV & OC used for
making taxable supplies
of-
(i) such MV & OC
(ii) transportation of
passengers
(iii) imparting training on
driving/ flying/ navigating
such MV & OC
Where a particular
category of such
inward supplies is
used for making an
outward taxable
supply of the same
category - [Sub-
contracting] or as an
element of a taxable
composite or mixed
supply
(A) Services notified by the
Government as being
obligatory for an employer
to provide to its employees
under any law
(B) Where a particular
category of such inward
supplies is used for making
an outward taxable supply
of the same category [Sub-
contracting] or as part of a
taxable composite or mixed
supply
Goods
imported
by him
Credit available on the above exceptions
Tax paid u/s 74 (Tax short / not paid or
erroneously refunded due to fraud etc.,)
129 (Amount paid for release of goods
and conveyances in transit which are
detained) and 130 (Fine paid in lieu of
confiscation)
Goods lost/ stolen/ destroyed/
written off or disposed of by way of
gift or free samples
Inward supplies used
for personal
consumption
Page 40
WCS for construction of
immovable property
EXCEPTIONS
Cre
dit
av
ail
ab
le o
n
such
ex
ce
pti
on
s
Section 17(5) BLOCKED CREDITS PART-B
Inward supplies received by taxable person for
construction of immovable property on his own account
including when such supplies are used in the course or
furtherance of business
EXCEPTIONS
(A) WCS for P & M
(B) Where WCS for immovable
property is input service for further
supply of WCS [Sub-contracting]
(A) Construction of P & M
(B) Construction of
immovable property for
others
Inward supplies charged to
composition levy
Travel benefits to
employees on vacation
[LTC/HT]
Membership of a club/
health & fitness centre
MV&OC-Motor vehicle & other conveyance;
F&B-Food & beverages; Out cat-Outdoor
catering; BT-Beauty treatment
HS-Health services; C&PS-Cosmetic &
plastic surgery; NRTP-Non-resident taxable
person; WCS-Works contract service; LTC-
Leave Travel Concession; HT-Home town
(A) Construction includes re-construction/
renovation/ addition/ alterations/ repairs to
the extent of capitalisation to said immovable
property.
(B) P & M means apparatus, equipment, &
machinery fixed to earth by foundation or
structural supports but excludes land,
building/ other civil structures,
telecommunication towers, and pipelines laid
outside the factory premises.
Page 41
Credit entitled on
• Inputs as such held in stock
• Inputs contained in semi-
finished goods held in stock
• Inputs contained in finished
goods held in stock
IV. The provisions of section 18 read with relevant rules have
been summarized as under:
A. Special circumstances enabling availing of credit
Section 18)
Special circumstances enabling availing of credit
Registered person
switching from
composition levy to
regular scheme of
payment of taxes
Registered person's
exempt supplies
becoming taxable
Person applying for
registration within 30
days of becoming liable
for registration
Person obtaining
voluntary
registration
Credit entitled on
• Inputs as such held in stock
• Inputs contained in semi-finished goods held in
stock
• Inputs contained in finished goods held in stock
• Capital goods [In case of exempt supply
becoming taxable Capital Goods used
exclusively for such exempt supply] reduced
by 5% per quarter or part thereof from the
date of invoice
Note: ITC claimed shall be verified with the
corresponding details furnished by the corresponding
supplier.
On the day
immediately
preceding the date
from which he
becomes liable to pay
tax under regular
On the day immediately
preceding the date
from which such
supply becomes
taxable
On the day
immediately
preceding the
date from which
he becomes
liable to pay tax
On the day
immediately
preceding the
date of
registration
Section 18(2)
ITC, in all the above cases, is to be availed within 1 year from the date of issue of invoice
by the supplier.
Page 42
Amount to be reversed is equivalent to ITC on :
• Inputs held in stock/ inputs contained in semi-finished or finished goods
held in stock
• Capital goods
on the day immediately preceding the date of switch over/ date of
exemption/date of cancellation of registration
Conditions for availing above credit:
(i) Filing of electronic declaration giving details of inputs held in stock/contained in
semi-finished goods and finished goods held in stock and capital goods on the days
immediately preceding the day on which credit becomes eligible.
(ii) Declaration has to be filed within 30 days from becoming eligible to avail credit.
(iii) Details in (i) above to be certified by a CA/ Cost Accountant if aggregate claim of
CGST, SGST/ IGST credit is more than ` 2,00,000.
B. Special circumstances leading to reversal of credit/payment of amount
Special circumstances leading to reversal
of credit /payment of amount
Section 18(4) Section 18(6)
Registered person (who has
availed ITC) switching from
regular scheme of payment
of tax to composition levy
Supplies of registered
person getting wholly
exempted from tax
Cancellation of
registration
Supply of capital goods
(CG)/ plant and machinery
(P& M) on which ITC has
been taken
Section 18(5)
Manner of reversal of credit on inputs and capital goods & other
conditions
(i) Inputs ⇒ Proportionate reversal based on corresponding invoices. If such
invoices not available, prevailing market price on the effective date of switch
over/ exemption/cancellation of registration should be used with due
certification by a practicing CA/ Cost Accountant
(ii) Capital goods ⇒ Reversal on pro rata basis pertaining to remaining useful
life (in months), taking useful life as 5 years.
(iii) ITC to be reversed will be calculated separately for ITC of CGST,
SGST/UTGST and IGST.
(iv) Reversal amount will be added to output tax liability of the registered
person.
(v) Electronic credit/cash ledger will be debited with such amount. Balance
ITC if any will lapse.
Amount to be paid is
equivalent to higher of
the following:
(i) ITC on CG or P&M
less 5% per quarter or
part thereof from the
date of invoice
(ii) Tax on transaction
value of such CG or P &
M
• If amount at (i)
exceeds (ii), then
reversal amount will
be added to output
tax liability.
• Separate ITC reversal
is to be done for
CGST, SGST/UTGST
and IGST
• Tax to be paid on
transaction value
when refractory
bricks, moulds, dies,
jigs & fixtures are
supplied as scrap.
Page 43
n
l
he
o
s
Tra
nsf
er
o
f u
nu
tili
sed
IT
C o
n a
cco
un
t o
f
ch
an
ge in
co
nst
itu
tio
n o
f re
gis
tere
d p
ers
on
Section 18 (3) , RULE - 41
In case of sale, merger, amalgamation, lease or transfer of business,
unutilised ITC can be transferred to the new entity if there is a specific
provision for transfer of liabilities to the new entity. The inputs and
capital goods so transferred shall be duly accounted for by the
transferee in his books of accounts.
In case of demerger, ITC will be apportioned in the ratio of value of
assets of new unit as per the demerger scheme.
Details of change in constitution will have to be furnished on
common portal along with request to transfer unutilised ITC.
CA/Cost Accountant certificate will have to be submitted certifying
that change in constitution has been done with specific provision for
transfer of liabilities.
Upon acceptance of such details by the transferee on the common
portal, the unutilized ITC will be credited to his Electronic Credit
Ledger.
V. The provisions of section 19 relating to ITC on goods sent for job work read
with relevant rules are summarized as under:
Rule: 45
Principal can take credit o
goods (inputs and capital
goods) sent for job work.
Credit can be taken even if t
said goods are sent directly t
job worker without being first
brought to the principal'
place of business
Time limit for return of goods sent
for job work/supply from job
worker's place of business
• Inputs - 1 year
• Capital goods - 3 years
from the date of sending the same for
job work or from the date of receipt
of the same by the job worker
On failing to comply with the timelines for return of goods, the goods
will be deemed to be supplied to the job worker on the day they were
sent out.
Principal is liable to pay tax along with applicable interest on such
supply.
Time-lines for return of goods do not apply to moulds and dies, jigs
and fixtures or tools sent out for job work.
Page 44
VI. The provisions of section 20 relating to ISD are
summarized as under:
ISD is basically an office meant to receive tax invoices towards
receipt of input services and distribute the credit of taxes paid on
such input services to supplier units (having the same PAN)
proportionately
An ISD is required to
obtain a separate
registration even
though it may be
separately registered.
The threshold limit of
registration is not
applicable to ISD.
• ISD should issue an ISD invoice for
distributing ITC. It should be clearly
indicated in such invoice that it is
issued only for distribution of ITC.
• The ISD needs to issue a ISD credit
note, for reduction in credit if the
distributed credit gets reduced for
any reason.
• ITC available for distribution in a
month is to be distributed in the
same month.
• Details of distribution of credit and
all ISD invoices issued should be
furnished by ISD in monthly GSTR-6
within 13 days after the end of the
month.
• ITC of input services is distributed
only amongst those recipients to
whom the input services are
attributable.
• ITC is distributed amongst the
operational units only and in the
ratio of turnover in a State/UT of
the recipient during the relevant
period to the aggregate of
turnover of all recipients during
the relevant period to whom input
service being distributed is
attributable.
• Relevant period is previous FY or last
quarter prior to the month of
distribution for which turnover of all
recipients is available.
• Distributed ITC should not exceed the
credit available for distribution.
If the ISD has distributed excess
credit to any recipient, the excess
will be recovered from the
recipient with interest as if it was
tax not paid.
Page 45
VII. The provisions relating to availing and utilizing the ITC
are summarized as under:
A registered person is entitled to credits as under:
Transaction Credit
Intra-State supply CGST & SGST/UTGST
Inter-State-supply IGST
Imports of goods and services IGST
The protocol to avail and utilize the credit of CGST, SGST/UTGST and IGST is
as follows:
Credit of To be utilized first
for payment of
May be utilized further
for payment of
CGST CGST IGST
SGST/UTGST SGST/UTGST IGST
IGST IGST CGST, then SGST/UTGST
Credit of CGST cannot be used for payment of SGST/UTGST and credit of
SGST/UTGST cannot be utilised for payment of CGST.
Initially ITC will be credited to the
Electronic Credit Ledger (EcrL) of a
recipient provisionally for a period
of two months.
ITC matching of a month will be done
after filing of the GSTR 3 of that month
and discrepancy (claiming of excess
credit by the recipient), if any, will be
communicated to both the supplier and
the recipient.
If the supplier rectifies such discrepancy in his return
of the month in which discrepancy has been
communicated, credit will be confirmed for the
recipient else such excess credit will be added to the
recipient’s output tax liability along with interest @
18% in the return of the month succeeding the month
in which discrepancy has been communicated.
Page 46
CHAPTER-8 REGISTRATION
1. Nature of registration
The registration in GST is PAN based and State specific.
One registration per State/UT.
However, a business entity having separate business verticals in a State
may obtain separate registration for each of its business verticals.
GST identification number called “GSTIN” - a 15-digit number and a
certificate of registration incorporating therein this GSTIN is made
available to the applicant on the GSTN common portal.
Registration under GST is not tax specific, i.e. single registration for all
the taxes i.e. CGST, SGST/UTGST, IGST and cesses.
Page 47
2. Persons liable to registration (Section - 22(1)
Those who exceed threshold
limit
•Aggregate turnover > ` 20 lakh
•Aggregate turnover > `10 lakh in case of Special
Category States
Who are registered under
earlier law
In case of transfer of
business on account of
succession, etc.
•shall be liable to be registered under GST •transferee liable to be registered from the date of
succession of business
In case of amalgamation/
demerger by an order of
High Court etc.
•transferee liable to be registered from the date
on which Registrar of Companies issues
incorporation certificate giving effect to order of
High Court etc.
Taxable
Supplies
Exempt
supplies
Exports Inter State supplies
Aggregate
Turnover
Aggregate Turnover will be computed on All-India basis for same PAN
3. Compulsory registration in certain cases (Section - 24
(i) Persons making any inter-State taxable supply;
(ii) Casual taxable persons making taxable supply;
(iii) Persons who are required to pay tax under reverse charge;
(iv) Person who are required to pay tax under sub-section (5) of section 9;
(v) Non-resident taxable persons making taxable supply;
(vi) Persons who are required to deduct tax under section 51, whether or not separately registered under this Act;
(vii) Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as
an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) Persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9,
through such electronic commerce operator who is required to collect tax at source under section 52;
(x) Every electronic commerce operator;
(xi) Every person supplying online information and database access or retrieval services from a place outside India
to a person in India, other than a registered person; and
(xii) Such other person or class of persons as may be notified by the Government on the recommendations of the
Council.
Page 48
4. Persons not liable for registration (Section - 23)
- Person engaged exclusively in supplying
goods/services/both not liable to tax
- Person engaged exclusively in supplying
goods/services/both wholly exempt from tax
Agriculturist limited to supply of produce out of
cultivation of land
- Specified category of persons notified by the
Government
5. Where and by when to apply for registration? (Section - 25)
Person who is liable to be registered
under section 22 or section 24
•in every such State/UT in which he is
so liable
•within 30 days from the date on
which he becomes liable to
registration
A casual taxable person or a non-
resident taxable person
•in every such State/UT in which he is
so liable
•at least 5 days prior to the
commencement of business
6. Voluntary Registration and UIN (Section - 25)
Voluntary Registration
•Person not liable to be registered under
sections 22/24 may get himself registered
voluntarily.
Unique Identification
Number (UIN)
•In respect of supplies to some notified
agencies of United Nations organisation,
multinational financial institutions and
other organisations, a UIN is issued.
Page 49
Rule 10 7. Effective date of registration
Application submitted
within 30 days of the
applicant becoming liable
to registration
•Effective date is the date on which he
becomes liable to registration
Application submitted
after 30 days of the
applicant becoming liable
to registration
•Effective date is date of grant of
registration
8. Procedure for registration
Rule 8
How to apply for registration?
On common portal www.gst.gov.in
Part A: PAN + Mobile no. + E-mail ID
Part A
PAN Mobile No.
Email id
Temporary Reference
Number
CBDT database
OTP based verification
Complete and submit
Part B of application to
proper officer
Acknowledgment shall
be issued Electronically
in From GSTREG - 02
Page 50
Rule 9
Rule 9(1) Approval of Grant of registration - in 3 working day from date of
submission of application
Notice
GST Reg. - 03
If found in
deficient with
in 3 working
days
Rule 9(3)
Within 7 working
days
Deficient?
No
Response/
Clarification/
Documents?
Yes No
Yes
Rule 9(4)
Registration Certificate Within 7 working
days
Rejection of Registration
Application
10. Special procedure for registration of CTD and NRTD (Section - 27)
Casual Taxable Person Non-resident Taxable Person
A Casual taxable person is one
who has a registered business
in some State in India, but
wants to effect supplies from
some other State in which he is
not having any fixed place of
business.
Such person needs to register
in the State from where he
seeks to supply as a Casual
taxable person.
A Non-Resident taxable
person is one who is a
foreigner and occasionally
wants to effect taxable
supplies from any State in
India, and for that he needs
GST registration.
Page 51
Rule 9(2)
GST Reg - 06 GST Reg - 05
GST Reg - 04
Casual Taxable Person Non-resident taxable person
GST law prescribes special procedure for registration, as also for extension of the
operation period of such Casual or Non-Resident taxable persons.
They have to apply for registration at least 5 days in advance before making any
supply.
Registration is granted to them or period of operation is extended only after
they make advance deposit of the estimated tax liability.
Registration is granted to them for the period specified in the registration
application or 90 days from the effective date of registration.
11. Amendment of Registration (Sec - 28) (Rule - 19)
Except for the changes in some core information in the registration application,
a taxable person shall be able to make amendments without requiring any
specific approval from the tax authority.
In case the change is for legal name of the business, or the State of place of
business or additional place of business, the taxable person will apply for
amendment within 15 days of the event necessitating the change.
The Proper Officer, then, will approve the amendment within the next 15 days.
For other changes like the name of day-to-day functionaries, e-mail IDs,
mobile numbers etc. no approval of the Proper Officer is required, and the
amendment can be affected by the taxable person on his own on the common
portal.
Page 52
CHAPTER-9 INVOICE
1. Who can raise a tax invoice?
Registered Person
Supplying taxable
goods or services
Receiving taxable goods
or services from
unregistered supplier
2. Time limit for issuance of invoice
Taxable
supply
Goods Services
Involving
movement
of goods
No
movement
of goods
Sale or
return
supplies
Within 30 days
from the supply
of services
At the time
of removal
At the time
of delivery
Before or at the time
of supply, or within 6
months from the
removal – whichever
is earlier
Insurance,
Banking - 45
days
Page 53
In case of
continuous
supply of goods
•before/at the time each successive statements of
accounts is issued or each successive payment is
received
In case of
continuous
supply of
services
due date of payment is
ascertainable from the contract
not so ascertainable
payment is linked to the
completion of an event
on/before due date of payment
before/at the time of receipt of
payment
on/before the date of
completion of that event
3. Important contents of tax invoice
GSTIN of
supplier
Consecutive
Serial Number
& date of issue
GSTIN of
recipient, if
registered
Name &
address of
recipient, if not
registered
HSN
Description of
goods or
services
Amount of tax
charged
Quantity in
case of goods
Place of supply
Total Value of
supply
Address of
delivery where
different than
place of supply
Taxable Value
of supply
Tax payable on
reverse charge
basis
Tax rate –
Central tax &
State tax or
Integrated tax,
cess
Signature of
authorised
signatory
Page 54
Date of issuance of certificate
of registration
4. Manner of issuing the invoice
Supply of Goods Supply of services
Triplicate Duplicate
Original copy for recipient
Duplicate copy for transporter; and
Triplicate copy for supplier
Original copy for recipient; and
Duplicate copy for supplier
The serial number of invoices issued during a month / quarter shall be
furnished electronically in FORM GSTR-1.
5. Revised Tax Invoice
Revised Tax Invoices to be issued in respect of taxable supplies
effected during this period
Effective date of
registration
Consolidated Revised Tax Invoice (CTRI) may be issued in respect of taxable
supplies made to an unregistered recipient during this period
In case of inter-State supplies, CTRI cannot be issued in respect of all
unregistered recipients if the value of a supply exceeds ` 2,50,000 during this
period.
Particulars of the Debit and Credit Notes are also same as revised tax invoices
Page 55
Tax
invo
ice is
no
t re
qu
ired
to b
e iss
ued
R
eg
iste
red
Pers
on
6. Consolidated Tax Invoice
Value of supply < `200
Recipient is unregistered
Recipient does not require such
invoice
Consolidated Tax
Invoice shall be
issued for such
supplies at the close
of each day in
respect of all such
supplies
7. Bill of Supply
Supplying exempted goods or services
or both
Tax Invoice
Bill of Supply
Paying tax under composition levy
8. Receipt Voucher
Advance payment Supplier Recipient
Receipt Voucher
Where at the time of receipt of advance, rate of tax/ nature of supply is not
determinable
Where at the time of receipt of
advance
(i) rate of tax is not determinable tax shall be paid at the rate of 18%
(ii) nature of supply is not
determinable
same shall be treated as inter-State
supply
Page 56
9. Refund Voucher
Advance payment
Receipt Voucher
Supplier Supply
Tax Invoice
Recipient
Refund Voucher
10. Invoice and Payment Vouchers to be issued by recipient of
supply liable to pay tax under reverse charge
Payment Voucher
Where Recipient
is registered
Receives the supplies
taxable on Reverse
Charge basis
under section 9(3)
[Notified services]
under section 9(4)
[Unregistered supplier]
Supplier is
registered
Supplier is
unregistered
Supplier is
unregistered
Recipient shall issue a
Payment Voucher at the
time of making payment to
the supplier.
Page 57
Invoice
Where Recipient
is registered
Receives the supplies
taxable on Reverse
Charge basis
under section 9(3)
[Notified services]
under section 9(4)
[Unregistered
supplier]
Supplier is
registered
Supplier is
unregistered
Supplier is
unregistered
Recipient shall
issue Invoice
Recipient may issue a
consolidated invoice
at the end of the
month
Where aggregate
value of supplies in a
day from any/ all the
unregistered
suppliers > ` 5,000,
Page 58
Taxable value in invoice > Taxable value in respect of
such supply
Tax charged in invoice > Tax payable in respect of
such supply
11. Credit Notes Section 34
Where a tax invoice has been issued for supply of any goods or services or both
where the
goods
supplied are OR returned by
the recipient
where goods or
services or both
OR supplied are
found to be
deficient
Registered Supplier
of goods or services
or both
may issue Credit Note
Recipient of goods or
services or both
12. Debit Notes
Where a tax invoice has been issued for supply of any goods or services or both
Taxable value in invoice < Taxable value in respect of such
supply
Tax charged in invoice < Tax payable in respect of such supply
Registered Supplier
of goods or services
or both
shall issue Debit Note
Page 59
RULE 48 MANNER OF ISSUING INVOICE.-
(1) The invoice shall be prepared in triplicate, in the case of supply of goods, in the following manner, namely,-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
(2) The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner, namely,-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
(3) The serial number of invoices issued during a tax period shall be furnished electronically through the common portal in
FORM GSTR-1.
RULE 49 . BILL OF SUPPLY.-
A bill of supply referred to in clause (c) of sub-section (3) of section 31 shall be issued by the supplier containing the following
details, namely,-
a) name, address and Goods and Services Tax Identification Number of the supplier; b) a consecutive serial number not exceeding sixteen characters, 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 and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the
recipient;
e) Harmonised System of Nomenclature Code for goods or services;
f) description of goods or services or both;
g) value of supply of goods or services or both taking into account discount or abatement, if any; and
h) signature or digital signature of the supplier or his authorised representative:
Provided that the provisos to rule 46 shall, mutatis mutandis, apply to the bill of supply issued under this rule:
Provided further that any tax invoice or any other similar document issued under any other Act for the time being in force
in respect of any non-taxable supply shall be treated as a bill of supply for the purposes of the Act.
RULE 55. TRANSPORTATION OF GOODS WITHOUT ISSUE OF INVOICE.-
1) For the purposes of-
(a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known,
(b) transportation of goods for job work,
(c) transportation of goods for reasons other than by way of supply, or
(d) such other supplies as may be notified by the Board,
the consigner may issue a delivery challan, serially numbered not exceeding sixteen characters, in one or multiple series, in lieu
of invoice at the time of removal of goods for transportation, containing the following details, namely:-
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of the consignee, if
registered;
(iv) Harmonised System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the transportation is
for supply to the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature.
Page 60
2) The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner,
namely:–
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.
3) Where goods are being transported on a delivery challan in lieu of invoice, the same shall be declared
as specified in rule 138.
4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice
could not be issued at the time of removal of goods for the purpose of supply, the supplier shall issue a tax
invoice after delivery of goods.
5) Where the goods are being transported in a semi knocked down or completely knocked down
condition -
a) the supplier shall issue the complete invoice before dispatch of the first consignment;
b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the
invoice;
c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly
certified copy of the invoice; and
d) the original copy of the invoice shall be sent along with the last consignment.
SECTION 35 ACCOUNTS AND OTHER RECORDS.
1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the
certificate of registration, a true and correct account of–
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed:
Provided that where more than one place of business is specified in the certificate of registration, the accounts
relating to each place of business shall be kept at such places of business:
Provided further that the registered person may keep and maintain such accounts and other particulars in
electronic form in such manner as may be prescribed.
2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every
transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner,
consignee and other relevant details of the goods in such manner as may be prescribed.
5) Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his
accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual
accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form
and manner as may be prescribed.
SECTION 36 PERIOD OF RETENTION OF ACCOUNTS.
Every registered person required to keep and maintain books of account or other records in accordance with the
provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy-two months from the due
date of furnishing of annual return for the year pertaining to such accounts and records:
Page 61
Output
Tax
means
excludes
tax
payable
on
reverse
CGST on taxable supply
of goods and /or
services
charge
by taxable
person
by agent
of taxable
person
Taxable
Person
means
a person
who is registered liable to be
registered
under section 22
of CGST Act
under section 24
of CGST Act
CHAPTER-10 PAYMENT
Page 62
Payments to be made in GST regime
For Intra-state supply CGST & SGST
are to be paid.
For Inter-state supply
IGST to be paid,
having components of
both CGST & SGST
Wherever applicable
Interest, penalty,
fees and any other
amount also to be
paid
RULE 85 OF CGST RULE
1) The electronic liability register specified under subsection (7) of section 49 shall be maintained in FORM GST PMT-01 for
each person liable to pay tax, interest, penalty, late fee or any other amount on the common portal and all amounts payable by him
shall be debited to the said register.
2) The electronic liability register of the person shall be debited by-
(a) the amount payable towards tax, interest, late fee or any other amount payable as per the return furnished by the said person;
(b) the amount of tax, interest, penalty or any other amount payable as determined by a proper officer in pursuance of any
proceedings under the Act or as ascertained by the said person;
(c) the amount of tax and interest payable as a result of mismatch under section 42 or section 43 or section 50; or
(d) any amount of interest that may accrue from time to time.
3) Subject to the provisions of section 49, payment of every liability by a registered person as per his return shall be made by
debiting the electronic credit ledger maintained as per rule 86 or the electronic cash ledger maintained as per rule 87 and the
electronic liability register shall be credited accordingly.
4) The amount deducted under section 51, or the amount collected under section 52, or the amount payable on reverse
charge basis, or the amount payable under section 10, any amount payable towards interest, penalty, fee or any other amount under
the Act shall be paid by debiting the electronic cash ledger maintained as per rule 87 and the electronic liability register shall be
credited accordingly.
ELECTRONIC CASH LEDGER (ECL) [SECTION 49(1) & (3)] READ WITH RULE 87 1) The electronic cash ledger under sub-section (1) of section 49 shall be maintained in FORM GST PMT-05 for each
person, liable to pay tax, interest, penalty, late fee or any other amount, on the common po
rtal for crediting the amount deposited and debiting the payment therefrom towards tax, interest, penalty, fee or any other amount.
2) Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-06 on the common portal and enter
the details of the amount to be deposited by him towards tax, interest, penalty, fees or any other amount.
Page 63
[Provided that the challan in FORM GST PMT-06 generated at the common portal shall be valid for a period of fifteen
days.
3) The deposit under sub-rule (2) shall be made through any of the following modes, namely:-
(i) Internet Banking through authorised banks;
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to ten thousand rupees per challan per tax
period, by cash, cheque or demand draft:
Provided that the restriction for deposit up to ten thousand rupees per challan in case of an Over the Counter payment
shall not apply to deposit to be made by –
a) Government Departments or any other deposit to be made by persons as may be notified by the Commissioner in this
behalf;
b) Proper officer or any other officer authorised to recover outstanding dues from any person, whether registered or not,
including recovery made through attachment or sale of movable or immovable properties;
c) Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand draft
during any investigation or enforcement activity or any ad hoc deposit:
4) Any payment required to be made by a person who is not registered under the Act, shall be made on the basis of a
temporary identification number generated through the common portal.
5) Any amount deducted under section 51 or collected under section 52 and claimed in FORM GSTR-02 by the
registered taxable person from whom the said amount was deducted or, as the case may be, collected shall be credited to his
electronic cash ledger in accordance with the provisions of rule 87.
6) A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same to the
officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.
ELECTRONIC CREDIT LEDGER (ECRL) [SECTION 49(2) & (4)] READ WITH RULE 86 (1) The electronic credit ledger shall be maintained in FORM GST PMT-02 for each registered person eligible for input
tax credit under the Act on the common portal and every claim of input tax credit under the Act shall be credited to the said
ledger.
(2) The electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with the
provisions of section 49.
(3) Where a registered person has claimed refund of any unutilized amount from the electronic credit ledger in
accordance with the provisions of section 54, the amount to the extent of the claim shall be debited in the said ledger.
(4) If the refund so filed is rejected, either fully or partly, the amount debited under sub rule (3), to the extent of rejection,
shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03.
(5) A registered person shall, upon noticing any discrepancy in his electronic credit ledger, communicate the same to the
officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.
Page 64
What are E-Ledgers?
Electronic Ledgers or E-Ledgers are statements of cash and input tax
credit in respect of each registered taxpayer. In addition, each
taxpayer shall also have an electronic tax liability register.
Types of Electronic ledgers
Electronic Cash
Ledger
Electronic
Liability Register
Electronic
Ledgers
Electronic Credit
Ledger
A. Electronic Cash Ledger
Page 65
Each
Modes of Deposit in Electronic Cash Ledger
Major and Minor Heads of Payment
Major Heads
• IGST
•CGST
• SGST/UTGST
•CESS
of these Major
Heads have the five
following Minor Heads
Minor Heads
• Tax
• Interest
• Penalty
• Fee
• Others
Date of deposit of tax dues
Which date is considered as date of deposit of the tax dues ?
(i) Date of presentation of cheque ×
(ii) Date of payment ×
(iii) Date of credit of amount in
government
the account of √
Page 66
B. Electronic credit ledger
Order of utilisation of input tax credit available in electronic
credit ledger [Section 49(5) of CGST Act]
Input tax credit of IGST
IGST SGST/ UTGST
CGST
Input tax credit of CGST
CGST NO SGST/ No UTGST
IGST
Input tax credit of SGST
SGST NO CGST
IGST
Input tax credit of UTGST
UTGST NO CGST
IGST
The CGST credit cannot be utilized for payment of SGST/UTGST.
The SGST/UTGST credit cannot be utilized for payment of CGST.
Page 67
C. Electronic liability register
Order of discharge of liability of taxable person
1. All dues
related to
previous tax
period
2. All dues
related to
current tax
period
3. All dues
including
demand
determined
under section
73 and 74
Manner of making payment
Through debit of Electronic Credit
Ledger
In cash, by debit in the Electronic
Cash Ledger
Through debit of Credit Ledger of the
tax payer maintained on the Common
portal – ONLY Tax can be paid.
Payment can be made in cash, by debit
in the Cash Ledger of the tax payer
maintained on the common portal.
E-Ledgers
Electronic Cash
Ledger
Electronic Credit
Ledger
Electronic Liability
Register
•It will reflect all deposits made in cash, and TDS/TCS
made on account of the tax payer.
•This ledger can be used for making ANY PAYMENT
towards tax, interest, penalty, fees or any other
amount on account of GST.
•It will reflect Input Tax Credit as self-assessed in
monthly returns.
•The credit in this ledger can be used to make
payment of TAX ONLY i.e. output tax and not other
amounts such as interest, penalty, fees etc.
•Electronic Liability Register will reflect the total tax
liability of a taxpayer (after netting) for the particular
month.
Page 68
Payment of Tax via Electronic Ledger
A. Electronic Cash Ledger
(Assume it as an account statement provided by bank, for easy understanding)
Debit Amount (DR) Credit Amount (CR)
• Credit amount of this ledger may be used
for payment of tax, interest, fees etc.
• Remaining credit balance amount after
payment of above tax etc. will be
refunded to taxable person.
• Any deposit made towards tax,
interest, penalty, late fee etc.
via internet banking, RTGS,
fund transfer etc.
• TDS/TCS claimed
B. Electronic Credit ledger
Debit Amount (DR) Credit Amount (CR)
• Credit amount of this ledger may be
used for payment of output tax viz
IGST, CGST, SGST, UTGST in the
prescribed order.
• Input Tax credit as self-assessed
in the return in the form of IGST,
CGST, SGST, UTGST
C. Electronic Liability Register
Debit Amount (DR) Credit Amount (CR)
• Amount payable towards tax, interest,
fees etc.
• Tax or interest payable due to
mismatch
• Any other dues
• Electronic cash ledger
• Amount payable towards output tax • Electronic credit ledger
Page 69
Interest on delayed payment of tax [Section 50]
Interest Rates
If person pays the unpaid
amount on his own
Undue or excess claim of
Input tax credit or undue
or excess reduction in
output tax liability
18% per annum 24% per annum
Page 70
fa
el
CHAPTER - 11 DEFINITION OF KEY TERMS
Electronic Commerce
means including digital products over
supply of
goods
supply of
services
supply of
goods and
services
digital
network
electronic
network
Electronic
Commerce Operator
means
Any person
who
owns
operates
digital/electronic
f cility/platform for
ectronic commerce
manages
Page 71
CHAPTER 12 (TDS)
RATE OF TDS
under CGST 1%
Rate of TDS
under IGST 2%
TDS
Person liable to
deduct tax at
source
Threshold
limit Rate of
deduction
NO TDS
Due date of
payment of TDS to
Government
Central and
State
Government
Local authority
Governmental
agencies
Notified
persons
1%
Total value of
supply under a
contract > ` 2.5
lakhs, exclusive
of gst as per
invoice
When location
of supplier and
place of supply
is different from
the state of
registration of
recipient
Within 10 days
from the end
of month
Page 72
MANNER OF ACCOUNT OF TDS BY TDS DEDUCTOR
1. Such deductors needs to get compulsorily registered under section 24 of the
CGST/SGST Act.
2. They need to remit such TDS collected by the 10th day of the month
succeeding the month in which TDS was collected.
3. The amount deposited as TDS will be reflected in the electronic cash ledger
of the supplier.
4. They need to issue certificate of such TDS to the deductee within 5 days of
deducting TDS failing which fees of ` 100 per day subject to maximum of
` 5,000/- will be payable by such deductor.
MANNER OF ACCOUNT OF TDS BY SUPPLIER
Any amount shown as TDS will be reflected in the electronic cash ledger of the
concerned supplier.
He can utilize this amount towards discharging his liability towards tax, interest
fees and any other amount.
APPLICABILITY OF TDS
Situations
Supplier, place of
supply & recipient-
same State
Supplier and place
of supply-different
States
Supplier & place of
supply - same State &
recipient located in
another State
Intra-State supply
Inter-State supply Intra-State supply
TDS (CGST + SGST)
to be deducted
TDS (IGST) to be
deducted NO TDS
Page 73
CONSEQUENCES OF NOT COMPLYING WITH TDS PROVISIONS
S. No. Event Consequence
1. TDS not deducted Interest to be paid along with the TDS
amount; else the amount shall be determined
and recovered as per the law
2. TDS certificate not issued
or delayed beyond the
prescribed period of five
days
Late fee of ` 100/- per day subject to a
maximum amount of ` 5000/-
3. TDS deducted but not
paid to the Government
or paid later than 10th of
the succeeding month
Interest to be paid along with the TDS
amount; else the amount shall be determined
and recovered as per the law
Page 74
CHAPTER 13 (TCS)
RATE OF TCS
under CGST not exceeding 1%
Rate of TCS
under IGST not exceeding 2%
TCS
Person liable to
collect tax at
source
Threshold limit
Rate of collection
under CGST
Value for collection of
tax at source
Due date of
payment of TCS to
Government
Electronic
commerce
operator
Nil
Not exceeding 1%
Net value of
taxable supply
Within 10 days
from the end of
month
NET VALUE OF TAXABLE SUPPLIES
Aggregate
value of taxable
supplies of
goods and/or
services
other than notified services under section
9(5) by all registered persons
Net value of
Taxable
Supplies
taxable
supplies
returned to
supplier
Page 75
Deta
ils
of
FILING OF STATEMENTS
Statements
Monthly
GSTR - 8 Annual
GSTR - 9B
by 10th of
succeeding
month
by 31st
December of
succeeding
financial year
KEY POINTS RELATING TO TCS
(a) Every e-commerce operator is required to collect tax on behalf of actual
supplier, where consideration with respect to the supply is being
collected by the e-commerce operator.
(b) The e-commerce operator should make the collection during the month
in which supply was made.
(c) Credit of TCS in electronic cash ledger by supplier.
CONTENT OF MONTHLY & ANNUAL STATEMENTS FURNISHED BY OPERATOR
outward supplies of goods
and/or services through it
supplies of goods and/or
services returned through it
amount collected as TCS
Page 76
CHAPTER - 14 RETURNS
Penalty: Outward, Inward & Monthly Return - INR 25 per day - Up to maximum of INR 5000/-
GST Returns Penalty: Annual Returns - INR 100 per day - Up to max. of 0.25% of aggregate
turnover
Monthly Returns Annual Returns u/s 44
Misc. Returns
Normal Assessee
Outward Details u/s 37
GSTR -1(10th of next month) GSTR -1A (15th to 17th of next month)
Other Assessee
N o n - R e s i d e n t Taxable Person, Input Service Distributor, Person paying tax u/s 10, 51 & 52 (Required to file return u/s 39 only, No concept of Inward/ Outward Return)
Normal Assessee
GSTR – 9 (31st Dec. of next F.Y.)
Person liable to pay tax under Composition Levy
GSTR – 9A (31st Dec. of next F.Y.)
First Return (Sec. 40)
Every Registered person who has made outward supply in period Between <date on which he is liable for registration> Till <date on which registration has been granted>
Final Return (Sec. 45)
Every Registered person who applies for cancellation of return shall furnish final return within - 3months of Date of Cancellation - Date of Cancellation Order Whichever is later
Inward Details u/s 38
GSTR -2 (15th of next month)
Input Service Distributor
Monthly Return (within 13th of next month)
Return after Notice to Return Defaulters
Where registered person fails to furnish return u/s 39 or 44 or 45 A notice shall be issued requiring him to furnish such return within 15 days
Return u/s 39 (with Tax)
GSTR -3 (20th of next month)
Person liable to pay tax under
Composition Levy
Quarterly Return (within 18th of the month following the quarter)
N on - re s i d e nt Taxable Person 20th of Next Month or 7 days after the last day of registration u/s 27(1), whichever is earlier
Page 77
GSTR-6
GSTR-4
GSTR-5
GSTR-10
Sec- 46
Assessment
Self Assessment
Every registered person shall himself assess tax liability and furnish a return.
Provisional Assessment
Person unable to determine value of supply or rate of tax.
Payment of tax on provisional basisonexecution of bond on a request made.
Final Assessment Time: 6 months from date of communication of order Extension: 6 months by Joint Commissioner 4 years by Commissioner
Scrutiny of Returns
In order to verify accuracy of return, the Proper Officer may examine return and seek explanations.
If explanation offered is adequate, no further action.
If no adequate e x p l a n a t i o n offered or no c o r r e c t i v e measures.
Proper Action u/s Sec. 65,66,67,73 or 74.
Assessment of Non-filers of
Return
If return is not furnished even after service of notice u/s 46,
Proper officer shall assess the liability of tax within a period of 5 years from the date specified u/s 44 for furnishing of annual return.
Assessment of Unregistered
Persons
Proper officer to the best of his judgment, may issue an assessment order, within a period of 5 years from the date specified under section 44 for furnishing of the annual return.
Scrutiny Assessment in Certain Special
Cases
Proper officer may issue an a s s e s s m e n t order imposing tax liability on a person based on any evidence showing a tax liability.
If person to whom liability pertains is not ascertainable, the person in charge of goods shall be assessed.
If order is erroneous, proper officer may withdraw such order and follow the procedure laid down in section 73 or section 74.
If short paid, pay with interest u/s 50
If excess paid, refund with interest u/s 54(8)
Audit
Audit by Tax Authorities
• Commissioner or any officer authorized by himmay undertake audit of any registered person.
• Audit may be conducted at the place of businessor in their office.
• At least 15 days prior notice should be given• Time Period : 3 months from the date of conduct
of audit.• Extension : not exceeding six months.• On conclusion, registered person shall be
informed about findings, rights & obligations.• If results in demand of tax, shall be recovered
under section 73 or 74.
Special Audit
• At any stage of scrutiny, inquiry or investigation.• Assistant Commissioner is of the opinion that
the value has not been correctly declared or thecredit availed is not within the normal limits
• may nominate a chartered accountant or costaccountant
• Time period : 90 days• Extension : further 90 days• Audit will be conducted even if accounts have
already been audited.• If results in demand of tax, shall be recovered
under section 73 or 74.
Page 78
Sec-59 Sec-60 Sec-61 Sec-62 Sec-63 Sec-64
Sec-65 Sec-66
OFFENCES & PENALTIES
1 2 3
Offences related to invoices, transportation, payment of tax, ITC, refund, tax deduction or collection, furnishing of false records or information, etc.
Tax not paid, short paid or erroneously refunded or ITC has been wrongly vailed or utilized
• Aids or abets offences• Acquire possession/concerns in
dealing goods which he knows orreason to believe are in contraventionsuch as transport, remove, keeps,
(For details refer Note 1).
`10,000 or an amount equivalent to tax evaded/tax not deducted/collected/not
Fraud
Higher of ̀ 10,000 or tax due
4
Other
Higher of ̀ 10,000 or 10% of tax due
conceals, supply or purchase.• Fails to appear when summon is
issued to give evidence/produce adocument
• Fails to issue invoice or account for inaccordance with provision.
paid to the government/ITC availed, passed or distributes irregularly/fraudulent refund whichever is higher.
Prosecution
Fails to furnish information return within the period as specified in notice
Fails to furnish statistics without reasonable cause/ willfully furnishes or causes to furnish false information
`100 per day for which failure continues. Max ` 5,000
• ` 10,000• In continuing
offence `100 perday. Max ̀ 25,000
` 25,000.
No penalty is provided separately
>` 500 L `500 L < & >`200L `200 L < & > ̀ 100 L Aids/abets commission of offence
5 years and fine 3 years and fine 1 year and fine 6 months or fine
Not less than 6 Months
On 2nd Conviction Punishment will extend to 5 years and fine. Min 6 months
Note 1
1 Supplies made without invoice/ false invoice/ invoices or bills issued without any invoice/ transports taxable goods without document cover.
2 Collects tax, but fails to pay within 3 months. 3 Fails to deduct any tax or collect tax/ deduct or collect lesser amount of tax/ failed to pay the same. 4 Takes or utilizes ITC/ takes or distributes ITC in contravention of the act. 5 Obtains refund fraudulently. 6 Falsifies or substitutes financial records/ produces fake accounts/ furnishes false information with an intention to evade tax/
suppresses the turnover in order to evade tax. 7 Fails to obtain registration/ furnishes false particulars with regard to registration/ issues invoices using registration number of
another person. 8 Obstructs or prevents officer incharge of its duties. 9 Fails to keep, maintain or retain books of accounts. 10 Fails to furnish information or documents/ furnishes false information during any proceedings. 11 Supplies, transports or stores goods which has a reason to believe are liable for confiscation. 12 Tampers with or destroys any material evidence or document. Disposes off or tampers any goods that have been detained, seized
or attached.
Page 79
Sec-122(1) Sec-122(2) Sec-122(3)
Sec-123
Sec-124Sec-132Sec-125
Sec-132
Sec-122
INSPECTION, SEARCH AND SEIZURE
Proper Officer not below the rank of Joint Commissioner power to summon any person whose attendance is necessary to give evidence or to produce documents in any enquiry (Sec.70)
Will record in writing the reasons to believe that
Taxable person has supressed any transactions relating to goods, services or both
Taxable person has claimed ITC in excess of entitlement
Taxable person has contravened any provision of the act or rules
Any person has kept goods or books of accounts to cause evasion of payment of tax (Sec 67(11))
evasion of tax by the person engaged in the business of transporting goods, warehouse or godown operator / owner
Goods, Documents or things, etc are secreted & useful to any proceedings
Inspection of places of taxable as well as any person (Sec.67)
Search ,seize & confiscate goods, documents, books or things (Sec 67 (2))
business premises of registered person (Sec. 71)
Goods in movement (Sec.68)
Practicable Not practicable
Carrying out any audit, scrutiny, verification & checks to safe guard interest of revenue
On making demand authorized by proper officer
Within 15 Working Days Of Demand Or Any Further Period Allowed
person in charge must carry documents of conveyance with him
on intercepted bye the proper officer
relied upon for issue of notice
Retained by such officer for any inquiry or proceedings under this act
not relied upon (sec. 67(3))
Returned within 30 days of the issue of notice
Service an order on the owner or the custodian of the goods by proper officer
Not remove or deal with the goods except with the previous permission of officer
Liability to produce the document & devices by person in charge
Manner to release confiscated goods, documents, etc
provisional basis (Sec. 67(6))
Actual discharge when no notice issued (Sec.67 (7))
perishable or hazardous goods, constraint of storage space, etc (Sec.67 (8))
Disposed by proper officer
Execution of bond & fumishing security
Payment of applicable tax interest & penalty
within 6 months of seizure of goods
Prepare inventory of such goods(Sec. 67(9))
Page 80
Sec-67
Page | 81
PRACTICAL QUESTIONS CONCEPT I
Aggregate Turnover – Section 2(6) :- defines “aggregate turnover” as the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess
Turnover in a state – Section 2(112) :- “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Que. 1 A Kiryana merchant whose aggregate turnover in 2017-18 was Rs. 85 lakh. For April 2018 having following supplies:-
Value of exempt supply of goods 7,00,000
Value of taxable supply of goods 3,00,000
Interstate purchase of goods 9,00,000
Import of goods from outside India 6,00,000
Calculate GST assuming CGST- 9%, SGST – 9% applicable on his goods. He wants to opt for composition scheme u/s 10.
Answer: In case of trader – CGST – 0.5% of Taxable Turnover in State/Union Territory SGST – 0.5% of Taxable Turnover in State/Union Territory. Taxable Turnover in state = Rs.3 lakh CGST = 0.5% of Rs. 3 lakh = 1,500 SGST = 0.5% of Rs.3 lakh = 1,500
Note:- 1. A composition scheme dealer cannot make interstate outward supply. But inter-
state inward supply can be made.2. Import is also interstate inward supply which can be made by trader.
Page | 82
Que. 2 Ghanshyam restaurant whose aggregate turnover in 2017-18 was Rs. 95 lakh. For April 2018 having following supplies:-
Value of exempt supply of goods 7,00,000
Value of taxable supply of goods 3,00,000
Interstate purchase of goods 9,00,000
Import of goods from outside India 6,00,000
Calculate GST assuming CGST- 9%, SGST – 9% applicable on his goods. He wants to opt for composition scheme u/s 10.
Answer: In case of restaurant:- CGST = 2.5% of turnover in state/union territory SGST = 2.5% of turnover in state/union territory CGST = 2.5% of 10 lakh = 25,000 SGST = 2.5% of 10 lakh = 25,000
Note:- 1. A composition scheme dealer cannot make interstate outward supply. But inter-
state inward supply can be made.2. Import is also interstate inward supply which can be made by trader.
Que. 3 A manufacturer of computer & parts of computer whose aggregate turnover in 2017-18 was Rs. 85 lakh. For April 2018 having following supplies:-
Value of exempt supply of goods 7,00,000
Value of taxable supply of goods 3,00,000
Interstate purchase of goods 9,00,000
Import of goods from outside India 6,00,000
Calculate GST assuming CGST- 9%, SGST – 9% applicable on his goods. He wants to opt for composition scheme u/s 10.
Answer: In case of manufacturer:- CGST = 0.5% of turnover in state/union territory SGST = 0.5% of turnover in state/union territory CGST = 0.5% of 10 lakh = 5,000 SGST = 2.5% of 10 lakh = 5,000
Note:- 1. A composition scheme dealer cannot make interstate outward supply. But inter-
state inward supply can be made.2. Import is also interstate inward supply which can be made by trader.
Page | 83
Que. 4 Mr. A is a trader Registered in Delhi. His turnover in 2017-18 is Rs.1,10,00,000. It includes
(i) Intra-state Taxable supply@ 18% 10,00,000
(ii) Intra-state exempt supply of goods 20,00,000
(iii) Intra-state outward supply on which GST is payable under reverse charge 30,00,000
(iv) Intra-state inward supply on which GST is payable under reverse charge @ 18%
18,20,000
(v) CGST & SGST 1,80,000
Determine whether Mr. A is eligible for composition scheme in F.Y. 2018-19
Answer: Computation of aggregate Turnover
Total turnover 1,10,00,000
Less - Intra-state inward supply on which GST is payable under reverse charge @ 18%
18,20,000
Less - CGST & SGST 1,80,000
Aggregate Turnover 90,00,000
Since aggregate turnover doesn’t exceed Rs.1 crore during F.Y. 2017-18, Mr. A can avail composition scheme for 2018-19.
Que. 5 Mr. A, a trader having aggregate Turnover in 2017-18 Rs. 70,00,000. For year 2018-19, expected following details are available
(i) Intra-state Taxable supply@ 18% 10,00,000
(ii) Intra-state Taxable supply @ 12% 10,00,000
(iii) Intra-state exempt supply 20,00,000
(iv) Intra-state outward supply on which GST is payable under reverse charge
30,00,000
(v) Intra-state inward supply on which GST is payable under reverse charge @ 18%
5,00,000
Calculate tax liability under composition scheme
Answer: Computation of tax liability under composition scheme
(i) Intra-state Taxable supply @ 18% 10,00,000
(ii) Intra-state Taxable supply @ 12% 10,00,000
(iii) Intra-state outward supply on which GST is payable under reverse charge 30,00,000
50,00,000
CGST – 0.5% 25,000
Page | 84
SGST – 0.5% 25,000
GST on Intra-state inward supply under reverse charge @ 18% 90,000
Total GST liability 1,40,000
Que. 6 ABC Ltd. having his unit in Delhi, Haryana and U.P. in 2017-18, Aggregate Turnover was Rs. 70 lac. For year 2018-19, following details for estimated turnover of intra-state supply.
Turnover of unit in Delhi – Intra-state supply 20,00,000
Turnover of unit in Haryana – Intra-state supply 10,00,000
Turnover of unit in U.P. – Intra-state supply 40,00,000
ABC Ltd. wants to opt for composition scheme only for unit in U.P. whether it is possible?
Answer: As per sec 10(2) – All units of registered person having same PAN has to opt for composition scheme. Hence, ABC Ltd. can’t opt for composition scheme.
Que. 7
Amount (Rs.)
1 Intra-state Taxable supply @18% 80,00,000
2 Intra-state Taxable supply @12% 10,00,000
3 Intra-state exempt supply of service 20,00,000
4 Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount,
1,00,000
Determine whether Mr. A can opt for composition scheme, if he is providing service of restaurant.
Answer: Yes, value of supply of any exempt services including Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account while computing his aggregate turnover in order to determine his eligibility for composition scheme. [Order – 01/2017 – Central Tax dated 13-10-2017]
Que. 8 Rishabh Enterprises – a sole proprietorship firm – started an air-conditioned restaurant in Virar, Maharashtra in the month of February wherein the customers are served cooked food as well as cold drinks/non-alcoholic beverages. In March, the firm opened a liquor shop in Raipur, Uttarakhand for trading of alcoholic liquor for human consumption. Determine whether Rishabh Enterprises is liable to be registered under GST law with the help of the following information:
Particulars February March
(Rs.)* (Rs.)*
Serving of cooked food and cold drinks/non-alcoholic beverages in restaurant in Maharashtra
5,50,000 6,50,000
Page | 85
Sale of alcoholic liquor for human consumption in Uttarakhand 5,00,000
Interest received from banks on the fixed deposits 1,00,000 1,00,000
Supply of packed food items from restaurant in Maharashtra 1,50,000 2,00,000
*excluding GST
You are required to provide reasons for treatment of various items given above.
Answer: As per section 22 of the CGST Act, 2017, a supplier is liable to be registered in the State/Union territory from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs. 20 lakh. However, if such taxable supplies are made from any of the specified special category States, namely, States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand, he shall be liable to be registered if his aggregate turnover in financial year exceeds Rs. 10 lakh. In the given question, since Rishabh Enterprises is engaged in making taxable supplies from Maharashtra which is not a specified Special Category State, the threshold limit for obtaining registration is Rs. 20 lakh. The threshold limit is not reduced to Rs. 10 lakh in this case, as sale of alcoholic liquor for human consumption from Uttarakhand (one of the specified Special Category States) are non-taxable supplies in terms of section 9(1) of CGST Act, 2017. As per Section 2(6) of the CGST Act, 2017, aggregate turnover includes the aggregate value of:
(i) All taxable supplies, (ii) All exempt supplies, (iii) Exports of goods and/or services and (iv) All inter-state supplies of persons having the same PAN.
The above is computed on all India basis. Further, the aggregate turnover excludes central tax, State tax, Union territory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is payable under reverse charge is not taken into account for calculation of ‘aggregate turnover’.
In the light of the aforementioned provisions, the aggregate turnover of Rishabh Enterprises is computed as under:
Computation of aggregate turnover of Rishabh Enterprises
Particulars Turnover of February
Cumulative turnover of February & March
(Rs.) (Rs.)
Serving of cooked food and cold drinks/non-alcoholic beverages in restaurant in Maharashtra
5,50,000 12,00,000 [Rs. 5,50,000 + Rs. 6,50,000]
Add: Sale of alcoholic liquor for human consumption in Uttarakhand [Note – 1]
5,00,000
Add: Interest received from banks on the fixed 1,00,000 2,00,000
Page | 86
deposits [Note – 2] [Rs.1,00,000 + Rs. 1,00,000]
Add: Supply of packed food items from restaurant in Maharashtra
1,50,000 3,50,000 [Rs. 1,50,000 + Rs. 2,00,000]
Aggregate Turnover 8,00,000 22,50,000
Notes: 1. As per section 2(47) of the CGST Act, 2017, exempt supply includes non-taxable
supply. Thus, supply of alcoholic liquor for human consumption in Uttarakhand,being a non-taxable supply, is an exempt supply and is, therefore, includible whilecomputing the aggregate turnover.
2. Services by way of extending deposits, loans or advances in so far as theconsideration is represented by way of interest or discount (other than interestinvolved in credit card services) is exempt vide Notification No. 12/2017 CT (R) dated28.06.2017. Thus, interest received from banks on the fixed deposits is an exemptsupply and is, therefore, includible while computing the aggregate turnover.
Rishabh Enterprises was not liable to be registered in the month of February since its aggregate turnover did not exceed Rs. 20 lakh in that month. However, since its aggregate turnover exceeds Rs. 20 lakh in the month of March, it should apply for registration within 30 days from the date on which it becomes liable to registration.
CONCEPT II
VALUATION
Que. 9
Calculate value of taxable supply from the following information
(i) Price of machine 5,00,000
(ii) Design and engineering charges 30,000
(iii) Consultancy charges in relation to design and engineering 20,000
(iv) Pre-delivery inspection charges 10,000
(v) Primary packing 5,000
(vi) Protective packing done at buyer request 30,000
(vii) Weighment and loading charges 15,000
(viii) Discount allowed at time of removal 10,000
Ans
(i) Price of machine 5,00,000
(ii) Design and engineering charges [Note 1] 30,000
(iii) Consultancy charges in relation to design and engineering [Note 1] 20,000
(iv) Pre-delivery inspection charges [Note 1] 10,000
(v) Primary packing [Note 2] 5,000
(vi) Protective packing done at buyer request [Note 2] 30,000
Page | 87
(vii) Weighment and loading charges [Note 1] 15,000
Less - Discount allowed at time of removal [Note 3] (10,000)
6,00,000
Note
1. As per Sec 15(2)(c) – any amount charged for anything done by supplier at time of
before delivery of goods shall be included in transaction value. Hence design,
consultancy, pre-delivery, inspection, weighment charges will be included in value.
2. As per sec 15(2)(c) – cost of primary and protective packing will be included in value.
3. As per sec 15(3)(a) – Any discount given at time or before supply – recorded in
invoice excluded from value.
Que. 10
Calculate value of taxable supply from the following information
Contracted price of machine at customer place – Rs. 5 lakh
It includes
Freight and insurance charges upto place of customer 10,000
Packing charges 20,000
Subsidy received from government to sale solar equipment below cost
30,000
Subsidy received from buyer for making changes in solar equipment as per buyer
15,000
Following are the additional expenses not included above
Trade discount allowed in invoice 10,000
Commission paid to agent of seller on instruction of seller 40,000
Answer:
Calculation of value
Contracted price of machine at customer place 5,00,000
Less Subsidy received from government to sale solar equipment below cost [Note 3]
(30,000)
Less Trade discount allowed in invoice [Note 4] (10,000)
Add Commission paid to agent of seller on instruction of seller [Note 5]
40,000
Assessable value 5,00,000
Page | 88
1. As per Sec 15(2)(c) – any amount charged for anything done by supplier at time of
before delivery of goods shall be included in transaction value. Hence cost of freight
and insurance included in value.
2. As per Sec 15(2)(c) – cost of packing will be included in value.
3. As per sec 15(2)(e) – Subsidy directly linked to price included in value but subsidy
received from government not form part of value.
4. As per sec 15(3)(a) – Any discount given at time or before supply – recorded in
invoice excluded from value.
5. As per sec 15(2)(b) – any amount that the supplier is liable to pay in relation to such
supply but which has been incurred by the recipient of the supply included in value.
Hence commission paid to seller agent shall form part of value.
Que. 11
Mr. A supplied following information
Goods sold to Buyer Mr. B 2,00,000
Mr. B also made payment in kind whose value 10,000
Mr. A supplied same machine to Mr. Z including GST @ 18% 2,95,000
Identical machine supplied 2,59,600
Answer the following question
(i) Calculate assessable value
(ii) What will be the value, if open market value not available at time of supply
(iii) What will be the value, if neither open market value available nor value of
payment in kind available.
Answer:
(i) If open market value available
Value cum GST 2,95,000
Less GST – 18/118 45,000
Value of supply 2,50,000
(ii) If open market value not available
Consideration in money 2,00,000
Value of non-monetary consideration 10,000
Value of supply 2,10,000
Page | 89
(iii) .
Consideration in money 2,59,600
Less GST – 18/118 39,600
Value of supply 2,20,000
Que. 12
Mr. A sold laptop having selling price of Rs. 70,000
Consideration paid by way of
(a) Printer – open market value Rs. 20,000
(b) Paid through cheque – Rs. 45,000
Cost of manufacture of Printer is Rs. 16,000
What will be the value?
(i) If open market value is Rs. 75,000
(ii) If open market value is not available.
(iii) If value of printer not available but similar laptop sold for Rs. 70,000.
(iv) If neither open market value nor value of printer is available.
Answer:
As per Rule27 of valuation rules, where the supply of goods or services is for a consideration
not wholly in money, and the value of the supply SHALL –
(a) Be the open market value of such supply;
(b) If open market value is not available, be the sum total of consideration in money
AND any such further amount in money as is equivalent to the consideration not in
money; if such amount is known at the time of supply;
(c) If the value of supply is not determinable under clause (a) or clause (b), be the value
of supply of goods or services or both of like kind and quality;
(d) If value is not determinable under clause (a) or clause (b) or clause (c), be the sum
total of consideration in money AND such further amount in money that is
equivalent to consideration not in money as determined by application of rule 30 or
rule 31 in that order.
Hence value shall be
(i) If open market value available – value = Rs. 75,000
(ii) If open market value is not available – Value = Rs. 45,000 + 20,000 = 65,000
(iii) If value of similar laptop available – Value = Rs. 70,000
(iv) If neither open market value nor value of printer is available – Value = Rs. 45000
110% of 16000 = 62600
Page | 90
Que. 13
M/s ABC Engineer supplied service during construction of complex
Payment made to Engineer 2,00,000
Diesel supplied for his car during execution of contract
Hours devoted by engineer 50
M/s ABC charges Rs. 10,000 per hour from clients for same project. What will be the
value?
Answer:
10,000 x 50 = 5 lac
Que. 14
S Ltd. exported some goods to Truimph Inc. of USA. It received US $ 9,000 as
consideration for the same and sold it @ Rs. 44 per US dollar. Compute the value of
supply of service under rule 32(2) of CGST Rules.
(a) RBI reference rate for US dollar at that time is Rs. 45 per US dollar.
(b) RBI reference rate for US dollars is not available.
What would be the value of taxable service if US $ 9,000 are converted into UK £ 4,500.
RBI reference rate at that time for US $ is Rs. 46 per US dollar and for UK £ is Rs. 88 per UK
Pound.
Answer:
(i) Value of service would be as follows:-
(RBI reference rate for $ - Selling rate for $) x Total units of US $
= Rs (45 – 44) x 9,000 = Rs. 9,000
(b) 1% of Rs. (44 x 9,000) = Rs. 3,960
(ii) Value of service would be 1% of the lower of the following:-
(a) US dollar converted into Indian rupees = $ 9,000 x Rs. 46 = Rs. 4,14,000
(b) UK pound converted into Indian rupees = £ 4,500 x Rs. 88 = Rs. 3,96,000
Value of service = 1% of Rs. 3,96,000 = Rs. 3,960
Page | 91
Que. 15
Mr. Anupam, an authorised money-changer exchanged the following gross amount of
currency during the month of July, 2017 in each of the following independent cases:-
a. Rs. 20,000/- f. Rs. 10,00,000/-
b. Rs. 25,000/- g. Rs. 14,00,000/-
c. Rs. 50,000 h. Rs. 5,55,00,000/- [Rupees Five Crore Fifty Five Lac]
d. Rs. 1,00,000/- i. Rs. 6,00,00,000/- [Rupees Six Crores]
e. Rs. 300,000/-
Calculate Value of Service under Rule 32(2)(b)
Answer:
a. Rs. 20,000 x 1%, but Min. – 250 f. 1000 + Rs. 900,000 x 0.5% = 5500
b. Rs. 25,000 x 1% = 250 g. 5500 + Rs. 400,000 x 0.1% = 5900
c. Rs. 50,000 x 1% = 500 h. 5500 + Rs. 5,45,00,000 x 0.1% = 60000
d. Rs. 1,00,000 x 1% = 1000 i. 5500 + Rs. 5,90,00,000 x 0.1% = Max Value = 60000
e. 1000 + Rs. 200,000 x 0.5% = 2000
Que. 16
Kingfisher is providing service of Transport of passenger by Air. Amount collected from
passenger is 40 lakh in respect of Delhi to London which includes taxes 10 lakh. An airline
is giving commission @ 15% on Basic Fare. (i.e. Total collection less taxes) to its agent
STAR Air travel. However STAR Air travel, agent after retaining 12% has passed the
commission of 3% to its customer. Calculate GST for Air Travel Agent.
(i) If he wants to Pay GST on Commission
(ii) If he wants to take value under Rule 32(3) of CGST Rules
Answer:
Basic Fare = 40 lakh – 10 lakh = 30 lakh
Commission received = 15% of 30 lakh = 4.5 lakh
OPTION – (1)
CGST – 9% of 4.5 Lakh 40,500
SGST – 9% of 4.5 Lakh 40,500
Total 81,000
Page | 92
OPTION – (2) – Value under Rule 32(3) of CGST Rules
Value – 30 Lakh x 10% 3,00,000
CGST – 9% of 4.5 Lakh 27,000
SGST – 9% of 4.5 Lakh 27,000
Total 54,000
GST – Lower of (1) or (2) 54,000
Que. 17
A LIC provides the following services for the Month of July 2017
(1) Premium collected only towards Risk Cover – 70 Lakh
(2) Premium collected towards saving plan & risk (composite) policies – 300 Lakh. For
1st Year – 80 Lakh and Balance premium is towards policies issued in earlier years.
(3) Single Premium Annuity Policy – 100 lakh
Answer:
Amount
Premium collected only towards risk cover 70 lakh x 100% 70,00,000
Composite Policies – Year 1 Earlier Years Premium
80 Lakh x 25% 220 Lakh x 12.5%
20,00,000 27,50,000
Single Premium Annuity Policy 100 Lakh x 10% 10,00,000
Total value 1,27,50,000
CGST – 9% 11,47,500
SGST – 9% 11,47,500
Que. 18
Mr. Soham is dealing in Second-hand cars
Sold car after processing Rs. 4 lac
Purchase second hand car and No input tax credit taken Rs. 3 lac
Answer the following
(i) What will be the value
(ii) What will be the value if purchase at Rs. 4.5 lac
Answer:
As per Sec 9(4) of CGST Act, if the taxable goods or service are supplied by unregistered
supplier to a registered person, then recipient i.e. registered person pay GST under reverse
charge.
Page | 93
But as per exemption notification 10/2017 issued under sec 11 of CGST Act 2017, central
government exempt intra-state supply of second-hand goods received by registered person
dealing in buying and selling of second hand goods on the condition that he pays CGST on
value of outward supply determined under rule 32(5) of CGST Rules
(i) As per Rule 32(5) of CGST Rules, Where a taxable supply is provided by a person
dealing in buying and selling of second hand goods i.e. used goods as such or
after such minor processing which does not change the nature of the goods and
where no input tax credit has been availed on purchase of such goods the value
of supply SHALL BE –
Difference between the selling price and purchase price and where the value of
such supply is negative it shall be ignored.
Hence Value = Rs. 4 lac – 3 lac = Rs. 1 lac
(ii) Value = Nil, if value is in –ve, it should be ignored [Selling price (i.e. Rs. 4 lac) less
Purchase Price (i.e. Rs. 4.5 lac)]
Que. 19
Transaction value of goods (Television) sold on 01/04/18 Rs. 1 lac
Goods sold at 20 monthly instalment
Buyer defaulted after paying 8 instalment
Goods repossessed by seller on 06.12.18
Goods subsequently sold on 10.01.19
Determine value of Taxable supply
Answer:
Purchase price of Television Rs. 1 lac
Date of purchase of Television 01.04.18
Date of sale of Repossessed Television 10.01.19
Number of Quarter 4 Quarter
Value of Taxable Supply = Rs. 1 lac – 5% x 4 x Rs. 1 lac = Rs. 80,000
Que. 20
M/s purchased 20 vouchers of Rs. 5000 each from a Readymade Garment Dealer for
gifting it on Diwali. Calculate value of supply.
Answer:
Page | 94
Value of supply = Money value of goods (redeemable against voucher) = Rs. 5000 x 20 = Rs.
1 lac.
Que. 21
Suppose a Customs Broker issues an invoice for reimbursement of a few expenses and for
consideration towards agency service rendered to an importer. The amounts charged by
the Customs Broker are as below:
Sl. No. Component charged in invoice Amount (Rs.)
1 Agency Income 10,000
2 Travelling expenses, hotel expenses 15,000
3 Custom duty 55,000
4 Docks dues 5,000
In the above situation, agency income and travelling/hotel expenses shall be added for
determining the value of supply by the Customs Broker whereas Docks dues and the
Customs Duty shall not be added to the value, provided the conditions of pure agent are
satisfied.
CONCEPT III
INPUT TAX CREDIT
Que. 22
XYZ Ltd., having its head office at Mumbai, is registered as ISD. It has three units in different cities
situated in different States namely ‘Mumbai’, ‘Jabalpur’ and ‘Delhi’ which are operational in the
current year.
M/s XYZ Ltd. furnishes the following information for the month of July 20XX:
(i) CGST paid on services used only for Mumbai Unit: Rs. 3,00,000/-
(ii) IGST, CGST & SGST paid on services used for all units: Rs. 12,00,000/-
Total turnover of the units for the previous financial year are as follows:-
Unit Turnover (Rs.)
Total Turnover of three units Rs. 10,00,00,000
Turnover of Mumbai unit Rs. 5,00,00,000
Turnover of Jabalpur unit Rs. 3,00,00,000
Determine the credit to be distributed by XYZ Ltd. to each of its three units.
Answer:-
Particulars Credit distributed to all units (Rs.)
Total credit
Mumbai Jabalpur Delhi
Page | 95
available
CGST paid on services used only for Mumbai Unit 300000 300000 0 0
IGST, CGST & SGST paid on services used for all units Distribution on pro rata basis to all the units which are operational in the current year
12,00,000 6,00,000 3,60,000 2,40,000
Total 15,00,000 9,00,000 3,60,000 2,40,000
Note 1: Credit distributed pro rata on the basis of the turnover of all the units is as under:-
A:- Unit Mumbai: (R. 5,00,00,000/ Rs. 10,00,00,000) * Rs. 12,00,000 = Rs. 6,00,000
B:- Unit Jabalpur: (Rs. 3,00,00,000/ Rs. 10,00,00,000) * Rs. 12,00,000 = Rs. 3,60,000
C:- Unit Delhi: (Rs. 2,00,00,000/ Rs. 10,00,00,000) * Rs. 12,00,000 = Rs. 2,40,000
Que. 23
ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following items
during the month of July.
S. No. Items GST paid (Rs.)
I Electrical transformers to be used in the manufacturing process 5,20,000
II Trucks used for the transport of raw material 1,00,000
III Raw material 2,00,000
IV Confectionery items for consumption of employees working in the factory
25,000
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving necessary
explanations for treatment of various items.
Note:
All the conditions necessary for availing the ITC have been fulfilled.
ABC Co. Ltd. is not eligible for any threshold exemption.
Answer:
Computation of ITC available with ABC Co. Ltd. for the month of July
S. No. Items ITC (Rs.)
I Electrical transformers [Being goods used in the course or furtherance of business, ITC thereon is available in terms of section 16(1)]
II Trucks used for the transport of raw material [Though ITC on motor vehicles has been specifically disallowed under section 17(5)(a), ITC on motor vehicles used for transportation of goods is allowed under section 17(5)(a)(ii)]
III Raw material [Being goods used in the course or furtherance of business, ITC thereon is available in terms of section 16(1)]
2,00,000
IV Confectionery items for consumption of employees working in Nil
Page | 96
the factory [ITC on food or beverages is specifically disallowed unless the same is used for making outward taxable supply of the same category or as an element of the taxable composite or mixed supply-Section 17(5)(b)(i)]
Total ITC 8,20,000
Que. 24
XYZ Ltd. is engaged in manufacture of taxable goods. Compute the ITC available with XYZ Ltd. for
the month of October, 2018 from the following particulars:-
S. No. Inward supplies GST (Rs.) Remarks
I Inputs ‘A’ 1,00,000 One invoice on which GST payable was Rs. 10,000, is missing
II Inputs ‘B’ 50,000 Inputs are to be received in two instalments. First instalment has been received in October, 2018.
III Capital goods 1,20,000 XYZ Ltd. has capitalised the capital goods at full invoice value inclusive of GST as it will avail depreciation on the full invoice value.
IV Input services 2,25,000 One invoice dated 20.01.2018 on which GST payable was Rs. 50,000 has been received in October, 2018.
Note:
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) ABC Co. Ltd. is not eligible for any threshold exemption.
(iii) The annual return for the financial year 2017-18 was filed on 15th September, 2018.
Answer:
Computation of ITC available with XYZ Ltd. for the month of October, 2018-10-19
S. No. Inward supplies ITC (Rs.)
I Inputs ‘A’ [ITC cannot be taken on missing invoice. The registered person should have the invoice in its possession to claim ITC-Section 16(2)(a)]
90,000
II Inputs ‘B’ [When inputs are received in instalments, ITC can be availed only on receipt of last instalment-First proviso to section 16(2)]
Nil
Capital goods [Input tax paid on capital goods cannot be availed as ITC, if depreciation has been claimed on such tax component – Section 16(3)]
Nil
Input services [As per section 16(4), ITC on an invoice cannot be availed after the due date of furnishing of the return for the month of September following the end of financial year to which such invoice pertains or the date of filing annual return, whichever is earlier. Since the annual return for the FY 2017-18 has been filed on 15th September, 2018 (prior to due date of filing the return for September, 2018 i.e., 20th October, 2018], ITC on the invoice
1,75,000
Page | 97
pertaining to FY 2017-18 cannot be availed after 15th September, 2018.
Total 2,65,000
Que. 25
Mr. X, a supplier of goods, pays GST under regular scheme. Mr. X is not eligible for any threshold
exemption. He has made the following outward taxable supplies in a tax period:
Particulars (Rs.)
Intra-State supply of goods 8,00,000
Inter-State supply of goods 3,00,000
He has also furnished the following information in respect of purchases made by him in that tax
period:
GOODS AND SERVICES TAX
Particulars (Rs.)
Intra-State purchases of goods 3,00,000
Inter-State purchases of goods 50,000
Mr. X has following ITCs with him at the beginning of the tax period:
Particulars (Rs.)
CGST 30,000
SGST 30,000
IGST 70,000
Note:-
I. Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
II. Both inward and outward supplies are exclusive of taxes, wherever applicable.
III. All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. X during the tax period.
Make suitable assumptions as required
Answer:
Computation of GST payable by Mr. X on outward supplies
S. No. Particulars (Rs.) GST (Rs.)
(i) Intra-State supply of goods
CGST @ 9% on Rs. 8,00,000 72,000
SGST @ 9% on Rs. 8,00,000 72,000 1,44,000
(ii) Inter-state supply of goods
IGST @ 18% on Rs. 3,00,000 54,000
Page | 98
Total GST payable 1,98,000
Computation of total ITC
Particulars CGST @ 9% (Rs.)
SGST @ 9% (Rs.)
IGST @ 18% (Rs.)
Opening ITC 30,000 30,000 70,000
Add: ITC on Intra-State purchases of goods valuing Rs. 3,00,000
27,000 27,000 Nil
Add: ITC on Inter-State purchases of goods valuing Rs. 50,000
Nil Nil 9,000
Total ITC 57,000 57,000 79,000
Computation of GST payable from cash ledger
Particulars CGST @ 9% (Rs.) SGST @ 9% (Rs.) IGST @ 18% (Rs.)
GST payable 72,000 72,000 54,000
Less: ITC (57,000) – CGST (57,000) – SGST (54,000) – IGST
(15,000) – IGST (10,000) – IGST
Net GST payable Nil 5,000
Note: ITC of IGST has been used to pay IGST, CGST and SGST in that order.
Que. 26
What is the difference between Casual and non-resident taxable persons?
Answer:
Casual and Non-resident taxable persons are separately defined in the CGST/SGST Act in Sections
2(20) and 2(77) respectively. Some of the differences are outlined below:
Casual Taxable Person Non-resident Taxable Person
Occasional undertakes transactions involving supply of goods or services in a state or UT where he has no fixed Place of business.
Occasional undertakes transactions involving supply of goods or services but has no fixed place of business residence in India.
Has a PAN Number Do not have a PAN Number; A non-resident person, if having PAN number may take registration as a casual taxable person
Same application form for registration as for normal taxable persons viz GST REG-01
Separate application form for registration by non-resident taxable person viz GST REG-09
Has to undertake transactions in the course or furtherance of business
Business test absent in the definition
Has to file normal GSTR-1, GSTR-2 and GSTR-3 returns
Has to file a separate simplified return in the format GSTR-5.
Page | 99
Que. 27
M/s PQR Ltd. was paying tax under composition scheme and his Turnover crossed Rs. 1 crore on
07.04.18. Following is the information of stock on 06.04.18
CGST SGST
1 GST on input purchased on 01.01.17 2000 2000
2 GST on input purchased on 01.07.17 contained in semi-finished goods held in stock
5000 5000
3 GST on input purchased on 01.08.17 contained in Finished goods held in stock
10000 10000
4 Capital goods purchased on 10.03.18 100000 100000
Determine credit available.
Answer:
As per Sec 18(1)(c) where any registered person ceases to pay tax under section 10, he shall be
entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-
finished or finished goods held in stock and on capital goods on the day immediately preceding the
date from which he becomes liable to pay tax under section 9:
Provided that the credit on capital goods shall be reduced by such percentage points as may be
prescribed.
Further as per rule 40(a) the input tax credit on capital goods, shall be claimed after reducing the tax
paid on such capital goods by 5% per quarter of a year or part thereof from the date of the invoice or
such other documents on which the capital goods were received by the taxable person.
As per sec 18(2), Input tax credit not available, if 1 year expired from the date of issue of invoice.
Calculation of amount of credit
CGST SGST
1 GST on input purchased on 01.01.17 Nil Nil
2 GST on input purchased on 01.07.17 contained in semi-finished goods held in stock
5000 5000
3 GST on input purchased on 01.08.17 contained in Finished goods held in stock
10000 10000
4 Capital goods purchased on 10.03.18 [1 lac – 5% x 2 Quarter x 1 lac] – working note
90000 90000
105000 105000
Working note
Date of invoice of Capital goods 10.03.18
Date on which M/s PQR liable to pay tax as normal tax payer u/s 9 07.04.18
Number of Quarters from date of invoice – see note (Part of the Quarter also taken)
2
Page | 100
As per sec 2 (92) “quarter” shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year;
Que. 28
Following are the details
Transfer of business by Mr. A to Mr. B with Provision of transfer of liabilities 01.04.18
Balance unutilized in Electronic credit ledger CGST SGST
5 lac 5 lac
Balance proportionate to stock CGST SGST
4.9 lac 4.9 lac
Whether Mr. B can take credit, if yes, how much
Answer:
As per sec 18(3) – Where there is a change in the constitution of a registered person on account of
sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions
for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit
which remains unutilised in his electronic credit ledger to such sold, merged, demerged,
amalgamated, leased or transferred business in such manner as may be prescribed.
Hence Mr. B can take credit of
CGST – Rs. 5 lac, SGST – Rs. 5 lac
Condition-
As per rule 41
Mr. A furnish detail in FORM GST ITC-02 electronically on the common portal along with a request
for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee Mr. B.
(2) The transferor Mr. A shall also submit a copy of a certificate issued by a practicing chartered
accountant or cost accountant certifying that transfer of business has been done with a specific
provision for the transfer of liabilities.
(3) The transferee shall, on the common portal, accept the details so furnished by the transferor and,
upon such acceptance, the un-utilized credit specified in FORM GST ITC-02* shall be credited to his
electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his
books of account.
Que. 29
M/s PQ Ltd. demerged in to 2 units P Ltd. and Q Ltd.
Value of assets of P Ltd. – Rs. 10 lac and Q Ltd. – Rs. 30 lac
Page | 101
PQ Ltd.
Total value of assets 40,00,000
CGST 10,000
SGST 40,000
IGST 2,00,000
Determine the amount of credit available to P Ltd. and Q Ltd. due to demerger.
Answer:
As per sec 18(3) – Where there is a change in the constitution of a registered person on account of
sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions
for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit
which remains unutilized in his electronic credit ledger to such sold, merged, demerged,
amalgamated, leased or transferred business in such manner as may be prescribed.
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the
value of assets of the new units as specified in the demerger scheme.
Determination of credit available
P Ltd. Q Ltd.
CGST – 10000 in ratio of (10:30) 2500 7500
SGST – 40000 in ratio of (10:30) 10,000 30,000
IGST – 2,00,000 in ratio of (10:30) 50,000 1,50,000
62,500 1,87,500
Que. 30
Following are the details
S. No. Particulars CGST SGST IGST
1 ITC on capital goods used exclusively for non business purposes
20,000 20,000 10,000
2 ITC on capital goods used exclusively for effecting exempt supplies
20,000 20,000 10,000
Total 40,000 40,000 20,000
3 ITC on capital goods used exclusively for taxable supplies (including zero-rated supplies)
1,00,000 1,00,000 50,000
4 Aggregate value of exempt supplies for the tax period May 2018
25,00,000 25,00,000 25,00,000
5 Total Turnover of the registered person for the tax period May 2018
1,00,00,000 1,00,00,000 1,00,00,000
Capital goods used for taxable as well as exempt supply
Capital goods
Value CGST SGST IGST
A 30 lac 180000 180000
Page | 102
B 20 lac 120000 120000
C 30 lac 360000
D 2.5 lakh 30000
Calculate the amount of credit attributable for capital goods for a month
Answer:
Calculate the amount of credit attributable for capital goods
S. No. Particulars Reference CGST SGST IGST
1 ITC on capital goods used exclusively for non business purposes (Note 1)
T1 20,000 20,000 10,000
2 ITC on capital goods used exclusively for effecting exempt supplies (Note 1)
T2 20,000 20,000 10,000
Total 40,000 40,000 20,000
3 ITC on capital goods used exclusively for taxable supplies (including zero-rated supplies) (Note 1)
T3 1,00,000 1,00,000 50,000
4 ITC on capital goods whose residual life remain in beginning of tax period (Annexure A)
Tr 5,000 5,000 6,500
5 Aggregate value of exempt supplies for the tax period May 2018 (Note 2 & 3)
E 25,00,000 25,00,000 25,00,000
6 Total Turnover of the registered person for the tax period May 2018 (Note 2)
F 1,00,00,000 1,00,00,000 1,00,00,000
7 Credit attributable to exempt supplies 5000 x 25/100 ; 6500 x 25/100
Te = (E/F) * Tr
1250 1250 1,625
Credit attributable to taxable supplies 1,00,000 + 5,000 – 1250 = 103750 50,000 + 6,500 – 1,625 = 54875
Note 1: T1, T2 and T3 should be declared in Form GSTR-2. T3 alone will be credited to the electronic
credit ledger
Note 2: If the registered person does not have any turnover for May 2018, then the value of E and F
shall be considered for the last tax period for which such details are available
Note 3: Aggregate value excludes taxes
Annexure A
Capital goods
Value CGST SGST IGST Input tax credit for 1 month
CGST IGST
A 30 lac 180000 180000 180000/60 = 3000
Page | 103
B 20 lac 120000 120000 120000/60 = 2000
C 30 lac 360000 360000/60 = 6000
D 2.5 lakh 30000 30000/60 = 500
5000 6500
Que. 31
Determine credit available from following details:
CGST SGST
Food and beverage served during meeting 2000 2000
Beauty treatment, Cosmetic/plastic surgery, Health service received for front office counsellor
3000 3000
Rent-a-cab service received for pick & drop of employees of company
4000 4000
Life insurance & health insurance premium paid for policy taken for employees
5000 5000
Goods received from composite dealer who paid tax under composition scheme
7000 7000
GST paid on travel benefit extended to employee on vacation
3500 3500
Goods and services received for construction of immovable property facility
900 900
Work contract service received for construction of immovable
1800 1800
Answer:
No credit in all the above cases, since sec 17(5) denies credit in all such cases.
Que. 32
X Ltd. is in the business of manufacturer of kitchen appliances for domestic market. It is located in
Hyderabad. During January 2018, it has acquired the following –
Taxable Value of Inward supply (Rs.)
GST Charged by supplier (Rs.)
Steel from Mumbai supplier (to be used as raw material in factory)
3,00,000 54,000
Steel rods from Hyderabad supplier (to be used in factory)
70,000 12,600
50 LED lamps from Hyderabad supplier (to be used in office)
50,000 6,000
Machinery for gym from a Vijayawada supplier (gym is used by employees of X Ltd.)
6,50,000 78,000
Group mediclaim insurance policy (taken for employees and their family members)
3,00,000 54,000
Sec-17(5)
Page | 104
Calculate the amount of GST payable for January 2018 taking into consideration the following
additional information-
1. On January 1, 2018, electronics credit ledger has opening balance of Rs. 2,000 (CGST) Rs.
7000 (SGST) and Rs. 3000 (IGST).
2. On outward supply during January 2018, quantum of GST is as follows –
CGST (Rs.) SGST (Rs.) IGST (Rs.)
Invoice issued pertaining to outward supply affected during January 2018.
80,000 80,000 600
Advance received: Rs. 100000 (supply of goods to be made during March 2018) (no GST charged)
- - -
3. Apart from manufacturing kitchen appliances, X Ltd. also provide technical consultancy
pertaining to manufacture of kitchen appliances. Consultancy Services received an
advance of Rs. 50,000 from Y Ltd., Hyderabad. Consultancy work will be completed only
during March 2018. No GST is charged in amount received as advance (GST rate is 18%).
4. Out of 50 LED lamps 10 are stolen by an unknown person before installation.
Solution:
Computation of GST payable on outward supply for January 2018 –
CGST (Rs.) SGST (Rs.) IGST (Rs.)
Supply of goods affected during January 2018. 80,000 80,000 600
Advance received for supply of goods (in case of supply of goods, time of supply does not depend upon date of advance)
- - -
Advance received for supply of services (in case of supply of Services, time of supply is either date of invoice or date of Payment, whichever is earlier) (out of Advanced of Rs. 50000, CGST is Rs. 50000 * 9 / 118 similar amount is SGST)
3,814 3,814 -
Total 83,814 83,814 600
Computation of input tax credit-
CGST (Rs.) SGST (Rs.) IGST (Rs.)
Opening balance on January 1, 2018 supply during January 2018
2000 7000 3000
Add: inward supply during January 2018
Supply of Steal from a Mumbai supplier (interstate supply)
54000
Supply of steel rods from Hyderabad supplier (interstate supply)
6300 6300
Supply of 40 LED lamps (Intra State supply) (no input 2400 2400
Page | 105
credit available for stolen goods)
Supply of gym machinery (not eligible for input tax credit)
Mediclaim insurance policy (not eligible for input tax credit)
Input tax credit available on January 31st, 2018 10,700 15,700 57,000
Computation of GST payable for January 2018
CGST (Rs.) SGST (Rs.) IGST (Rs.)
GST on outward supply is computed earlier 83,814 83,814 600
Less: IGST on inward supply (balance IGST Rs. 57000 – 600 = Rs. 56400)
600
Less: CGST on inward supply 10,700
Less: SGST on inward supply 15,700
Balance 73114 68124 Nil
Less: IGST on inward supply 56400
Balance payable by electronic cash ledger 16714 68124 Nil
Que. 33
1 Date of purchase of capital goods 01.04.18
2 Value of capital goods purchased 5,00,000
3 IGST paid on purchase of Capital Goods 60,000
4 Capital goods sold after use on 12.10.18 4,00,000
Determine the amount payable on capital goods sold
Answer:
1 Date of issue of invoice 01.04.18
2 Date of supply 12.10.18
3 Number of Quarter from date of invoice 01.04.18 3 Quarter
4 Pay Amt. = Higher of 2 (i) [60,000 – 5% x 60000 x 3 Quarter] = 51,000 (ii) IGST on supply of Capital goods 12% of 4 lac = 48000
51,000
Que. 34
Calculate ITC eligible for a supplier manufacturer.
IGST paid on input used for business purposes 10,000
IGST paid on capital goods used for business purposes 30,000
IGST paid on input services used for business purposes 5,000
IGST paid on input used for exempt supply 3,000
IGST paid on input used for personal purposes 2,000
Page | 106
IGST paid on input lost, destroyed by fire 1,000
IGST paid on input stolen or written off 1,500
GST paid by supplier due to fraud, suppression of facts u/s 74. 1,200
Motor vehicle i.e. bus purchased for pick & drop of employees 1,000
Motor vehicle i.e. truck purchased for transport of raw material & finished goods.
1,500
Answer:
Calculation of input tax credit
IGST paid on input used for business purposes 10,000
IGST paid on capital goods used for business purposes 30,000
IGST paid on input services used for business purposes 5,000
IGST paid on input used for exempt supply -
IGST paid on input used for personal purposes -
IGST paid on input lost, destroyed by fire -
IGST paid on input stolen or written off -
GST paid by supplier due to fraud, suppression of facts u/s 74 -
Motor vehicle i.e. bus purchased for pick & drop of employees -
Motor vehicle i.e. truck purchased for transport of raw material & finished goods 1,500
Total 46,500
Que. 35
Mr. A provides following details
Input tax credit on input service 1,00,000
Taxable supply excluding zero rated supply 6,00,000
Export of goods – zero rated supply 4,00,000
Exempt supply 22,00,000
Supplies made on which recipient liable to pay tax on reverse charge 8,00,000
Determine the amount of input tax credit available.
Answer:
Input tax credit on input service 1,00,000
ITC attributable to exempt supply 1 lac x 30 lac / 40 lac 75,000
ITC available 25,000
Note – As per sec 17(3) – Supplies made on which recipient liable to pay tax on reverse charge will
be treated as exempt supply.
Note – as per sec 17(2) – If the goods or services used for effecting partly taxable including zero
rated and partly exempted supply, then input tax credit (ITC) allowed = ITC attributable to Taxable
including zero rated supply.
Page | 107
Que. 32
Mr. A is engaged in business of taxable, exempt & non-taxable supply.
CGST SGST IGST
Total input tax credit of input & input services 8,00,000 8,00,000 10,00,000
Input tax credit exclusively used for other than business purposes
2,00,000 2,00,000 2,00,000
Input tax credit exclusively used for exempt supply
1,00,000 1,00,000 3,00,000
ITC on Supply for which credit not available u/s 17(5)
2,00,000 2,00,000 60,000
Input tax exclusively used for taxable & zero rated supply
1,00,000 1,00,000 40,000
Exempt outward supply = 30 lakh
Taxable outward supply = 50 lakh
Zero rated supply = Rs. 20 lakh
Calculate the amount of ITC attributable to exempt & non-taxable supply and net ITC available.
Answer:
ITC credit to Electronic Credit ledger
CGST SGST IGST
Total credit on input & input services 8,00,000 8,00,000 10,00,000
Less – Input tax credit used for non business purposes 2,00,000 2,00,000 2,00,000
Less – Input tax credit used for exempt supply 1,00,000 1,00,000 3,00,000
Less – ITC on supply for which credit not available u/s 17(5)
2,00,000 2,00,000 60,000
ITC credit to electronic ledger 3,00,000 3,00,000 4,40,000
Less – Input tax exclusively used for taxable & zero rated supply
1,00,000 1,00,000 40,000
Common credit (C2) 2,00,000 2,00,000 4,00,000
Inadmissible common credit attributable to exempt supply – (D1)
60,000 60,000 1,20,000
(D1) = Common credit * Exempt supply for tax period/total supply
[2,00,000 * 30 lakh/100 lakh]
[2,00,000 * 30 lakh/100 lakh]
4,00,000 * 30 lakh/100 lakh
ITC attributable to Non Business purposes (D2) D2 = 5% of Common credit (C2)
10,000 10,000 20,000
Common credit ITC eligible (C3) = Common credit (C2) – D1 – D2
1,30,000 1,30,000 2,60,000 [4,00,000 – 1,20,000 – 20,000]
Input tax exclusively used for taxable & zero rated supply
1,00,000 1,00,000 40,000
Net credit available 2,30,000 2,30,000 3,00,000
Page | 108
Note – D1, D2 added to output tax liability
Note: If ITC related to Exempt supply & Non business supply can be calculated at invoice level, then
added to T1, T2.
CONCEPT 4
PENALTY
Que. 36
What is the punishment prescribed on commission of offences which warrant prosecution?
Answer:
Offences Punishment
Tax evaded / Wrong availment or utilisation of input tax credit / Amount of Refund wrongly taken exceeding Rs. 500 lakh
Five years imprisonment with Fine
Tax evaded / Wrong availment or utilisation of input tax credit / Amount of Refund wrongly taken exceeding Rs. 250 lakh but does not exceed Rs. 500 lakh
Three years imprisonment with Fine
Tax evaded / Wrong availment or utilisation of input tax credit / Amount of Refund wrongly taken exceeding Rs. 250 lakh but does not exceed Rs. 100 lakh
One year imprisonment with Fine
Commits or abets in Falsification or substitution of financial
records or producing fake accounts,documents or furnishes any falseinformation with an intention to evadepayment of tax;
Obstruction or prevention any officer inthe discharge of his duties
Tampering with or destroying anymaterial evidence or documents;
Six months imprisonment or Fine or both
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