Title of the Project :

Goods And Service Tax ( GST) in India

Report submitted in partial fulfilment of the requirements

for the award of the degree of
Master of Business Administration
By
Camey Aggarwal
Department of MBA
Registration No: 1515141290
Under the Supervision of
Dr. Indrajit Kumar
Assistant Professor

Department of MBA
Somany Institute of Technology and Management
Rewari, Haryana
1
 SOMANY INSTITUTE OF TECHNOLOGY & MANAGEMENT
(Approved by AICTE, Govt of India, Affiliated to M.D. University, Rohtak)

CERTIFICATE

The dissertation entitled “GOODS AND SERVICE TAX IN INDIA” submitted by Ms. Camey

Aggarwal , Reg. No. 1515141290 is presented in a satisfactory manner to warrant its acceptance as pre-

requisite for the degree of Master of Business Administration in the Dept. of MBA of Somany Institute

of Technology And Management , Rewari. It is Understood that by this approval the undersigned do

not necessarily endorse or approve any statement made , opinion expressed or conclusion drawn therein,

but only for the purpose for which it has been submitted.

BOARD OF EXAMINERS:

1. Internal Examiners

2. External Examiners

2
3
 ACKNOWLEDGEMENT

I take this opportunity to express my heartfelt gratitude and sincere thanks to my MBA supervisor Dr.

Indrajit Kumar, Assistant Professor, Department of MBA, Somany Institute of Technology And

Management, Rewari for his constant guidance, suggestion and gracious encouragement at my very

crucial stage of the training report work without him it could not become successful.

I also want to acknowledge my gratitude to my institute to provide this opportunity to learn the element

of GOODS AND SERVICE TAX.

Thereby, I would like to acknowledge the contribution and support that each person’s at AMTEK

POWERTRAIN LTD. extended to me during my training period.

I would also like to express my special thanks to my guide Mr.Sudhir Gupta (Chief General

Manager-Tax), Mr. R.K. Jaiswal, Mr. Naveen Makharia and special Thanks to Mr. Tushar Gera

who provide me valuable insight about aspect of Goods and Service Tax with respect of company and

the external environment with which it associated.

Camey Aggarwal.

Reg. No. 151514290

Place: Rewari, Haryana

4
 FOREWORD

Tax policies play an important role on the economy through their impact on both

efficiency and equity. A good tax system should keep in view issues of income

distribution and ,at the same time , also endeavor to generate tax revenues to

support government expenditure on public service and infrastructure

development .cascading tax revenues have differential impact on firms in the

economy with relatively high burden on those not getting full offsets.

This argument can be extended to international competitiveness of the adversely

affected sectors of production in the economy. Such domestic and international

factors lead to inefficient allocation of productive resources in the economy .This

result in loss of income and welfare of the affected economy.

Value added tax was first introduced by Maurice Laure, a French economist, in

1945. The tax was designed such that the burden is borne by the final consumer.

Since VAT can be applied on goods as well as services it has also been termed as

goods and service tax (GST). During the last four decades VAT has become an

important instrument of indirect taxation with 130 countries having adopted this,

resulting in one fifth of the world’s tax revenue. Tax reform in many of the

developing countries has focused on moving VAT. Most of these countries have

gained thus indicating that other countries would gain from its adoption. For a

developing economy like India it is desirable to become more competitive and

efficient in its resources usage. Apart from various other policy instruments, India

must pursue taxation policies that would maximize its economic efficiency and

minimize distortion and impediments to efficient allocation of resources,

specialization, capital formation and international trade.

5
Traditionally India’s tax regime relied heavily on indirect taxes including customs

and excise revenue from indirect taxes was the major source of tax revenue till tax

reforms were undertaken during nineties. The major argument put forth for heavy

reliance on indirect taxes was the India’s majority of populations was poor and

thus widening base of direct taxes had inherent limitations. Another argument put

forth for heavy reliance on indirect taxes income was not subjected to central

income tax and there were administrative difficulties involved in collecting taxes.

The board objectives of our report relates to analyzing the impact of introducing

comprehensive goods and services tax (GST) on economic growth and

international trade; change in rewards to the factors of production; and output,

prices, capital, employment, efficiency and international trade at the sectoral level

Analysis in this report indicates that implementation of a comprehensive GST in

India is expected to lead to efficient allocation of factors of production thus

leading to gain in GDP and exports. It will also ensure better compliance of tax

law and will remove cascading effective which is still present in taxation system.

This would translate into enhanced economic welfare and returns to the factors of

production, viz. land, labour and capital.

6
 Executive Summary

The differential multiple tax regime across sectors of production leads to

distortions in allocation of resources thus introducing inefficiencies in the sectors

of domestic production. While indirect taxes paid by the producing firms get

offsets under state VAT and CENVAT, the producers do not receive full offsets

particularly at the state level. The multiplicity of taxes further adds the difficulty

in getting full offsets.

Add to this, the lack of full offsets taxes loaded on the fob export prices. The

export competitiveness gets negatively impacted even further. Efficient allocation

of productive resources and providing full tax offsets is expected to result in gains

for GDP, returns to the factors of production and export of the economy.

The joint working Group of the Empowered Committee of the State Finance

Ministers submitted to its report on the proposed Goods and Service Tax (GST) to

the finance minister in November 2007.A dual GST, one for the entre and other

for the state was to be implemented by 1 April 2010. The new system would

replace the state VAT CENVAT and some other taxes.

The proposed GST would eliminate the cascading effect and would integrate

hitherto disjointed goods and services taxes. It will lead to uniformity in tax rates

and procedures throughout the country.it will ensure better compliance and thus

will increases the revenue of both Centre and state. The export sector will also

gain from his integration of state and Centre taxes. Consumer will be benefited in

form of lower tax rates.

There will be dual tax rate viz. Central GST (CGST) and state GST (SGST).also

for interstate sales there will be an integrated GST. However cross credits among

7
CGST and SGST are yet to be decided .It is also proposed to keep certain taxes

such as taxes on petroleum products to be kept out of purview of GST.

However, there are major challenges to introduction of GST like amendment of

constitution of India to alter power of taxation of Centre and state rates of SGST

and CGST, standardization to procedure, compensation for revenue loss to state,

etc.

8
 CONTENTS

 COVER PAGE…………………………………………………….………1
 COLLEGE CERTIFICATE……………………………………………….2
 TRAINING CERTIFICATE……………………........................................3
 ACKNOWLEDGEMENT……………………………………...................4
 FOREWORD…………………………………......................................5 - 6
 EXECUTIVE SUMMARY……………………………….…….……..7 - 8

CHAPTER - 1

 INTRODUCTION OF RESEARCH…………….……….................11 – 16

CHAPTER - 2
 COMPANY PROFILE………………………….…………….……..17 - 21
 FINANCIAL PROFILE……………………….………….................22 - 24
 BOARD OF DIRECTORS…………………….……………...………….25

CHAPTER – 3

 INTRODUCTION OF TAXATION...................................................26 - 33
a. Meaning of Taxation……………………………………….…….27
b. Characteristics of Taxation……………….……………..………..28
c. Tax applicable in India…………………………………..……29 – 33

CHAPTER - 4

 INTRODUCTION OF GST................................................................34 - 85
d. Meaning of GST…………………………….…............................35
e. History of GST……………………………….……………...36 - 40
f. Key feature of GST………………………….……………....41 - 43
g. GST Model……………………………………………..…....44 - 45
h. GST Rates……………………………………….………….….…46
i. GST Council…………………………………….………….….…47
j. GSTIN…………………………………………….………....48 - 51
k. SWOT Analysis……………………………..……………....52 – 54
l. Impacts………………………………………………………55 - 56
m. Registration of GST…………………………………………57 - 58
n. GST Return………………………………………………….59 - 69
o. Important concept of GST…………………………………...70 - 81

9
 p. Accounts And Records………………………………….…...82 - 83
q. Audit…………………………………………………………84 - 85

CHAPTER - 5

 CONCLUSION……………………………………………………...86 - 90
 ANNEXURE………………………………………………….……..91 - 97
 REFERENCE…...……………………………………………….….……98

10
 CHAPTER– 1

INTRODUCTION ABOUT RESEARCH

INTRODUCTION

Background:-

Internship is the process of working as an assistant to gain practical experience

11
and skills in an occupation. In order to expose the students to the actual working

environment, internship has been included as a compulsory requirement for the

successful completion of two-year MBA (Major in Finance) under M.D.

University. MBA (Finance) is a management program with the provision of four

semester comprising of two month industrial training. Internship is an opportunity

to observe, learn and understand the corporate culture, acquire knowledge and

skills in the respective field which helps the students in their further carrier

development. It is carried out in the organization which suits the area of

specialization. Internship provides the opportunity to understand how the

knowledge acquired through the lectures, group discussion and formal study is

applied in real working situation. It is the best way of knowledge gaining as it

provides as experience. Similarly the assigned responsibilities during the

internship period help to enhance the interpersonal and communicative skills and

boost up the confidence level as well. Even though the interns are not the

employees of the organizations, they are given an opportunity to work as if they

are the employees. The interns do what the staffs of the organizations have to do.

However, they do not have obligations or authority over anything. The interne did

there internship in under Mr.Sudhir Gupta. The interne was given the opportunity

to observe and learn about the GST Registration and Return process.

Objectives of the Study

The general objective of the study is to get practical insights of Goods and
Services Tax.

The specific objectives are as follows:

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 To learn about the GST Registration
process.

To learn how to file GST Return both

online & offline.

To help clients in the Registration

process.

To help clients in downloading the

offline return software.

Rational of the study

In college we learn the organizational structure only in theoretical basis.

Internship is the place where how theoretical knowledge are useful in real life

scenarios. For that students need to prepare resumes, write cover letters and go

through interviews as if they were applying for the job. This gives students

13
valuable experience in preparation for employment. The internship allows

opportunities for the development of practical’s skills in contexts where

professional criticism is both immediate and constructive. It also furnishes

students with opportunities to observe and understand connections between

coursework and skills needed to perform effectively in a given profession. Finally,

internship aid in the identification of knowledge and skills essential to doing well

in a particular profession.

Scope of the study

Generally, an internship consists of an exchange of services for experience

between the student and an organization Internship program is a good opportunity

to show our learning skills that we get from our school/college. Students can also

use an internship to determine if they have an interest in a particular career. It

helps to build Curriculum Vitae (CV) for the student.

Methodology

For the preparation of this report both primary and secondary sources of data are

used. The secondary data are collected from annual reports, brochures, website of

GST, different financial magazine, published documents. Most of the information

in this report is written on the basis of experience gained by the internee in the

company during the period of internship. While preparing this report I took help

from company staff and group discussion with friends. I have consulted related

departmental staff as a primary source. For the secondary data I used GST

website, financial express website, and clear tax website.

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 Organization Selection

Selection of the organization is one of the most difficult tasks. However the

specialization of the student in finance has made GST a better option for doing

internship. Since GST is related to financial transaction, it would be easy to

understand various dimensions related to services like registration, quarterly

return, monthly return, annual return. Besides this, one should have strong

reference to get enrollment in the organizations. So because of the reference of the

college.

Duration

The duration of internship period has been defined for 3 Months by the M.D.

University. The intern has completed internship from 10 th August to 10th

November in Amtek Powertrain limited.

Limitations of the Study

Even though great support was provided by the organization and the staff to the

intern during the internship period to make the work environment conducive, they

had to face various difficulties during the internship period. Due to various

unavoidable constraints, the report could not do complete justice to the study. The

interns in the organization are more focused to assist their supervisors. It restricts

the amount of information and the level of complex work assigned to its interns

owing to the confidentially and competency issues. It is because of this interns get

to learn mostly by observation and some amount of discussion with supervisor

only. The report is limited to the department in which the intern is placed it might

15
not be able to provide the comprehensive knowledge of the overall functioning of

the company.

16
 CHAPTER– 2

Company Profile

ABOUT AMTEK POWERTRAIN LTD.

17
ABOUT AMTEK POWERTRAIN LTD.

Amtek Powertrain Limited is a Public incorporated on 08 December 2006. It is

18
classified as Non-govt company and is registered at Registrar of Companies,

Delhi. Its authorized share capital is Rs. 360,000,000 and its paid up capital is Rs.

332,393,152. It is inolved in Manufacture of parts and accessories for motor

vehicles and their engines [brakes, gear boxes, axles, road wheels, suspension

shock absorbers, radiators, silencers, exhaust pipes, steering wheels, steering

columns and steering boxes and other parts and accessories n.e.c.]

Amtek Powertrain Limited's Annual General Meeting (AGM) was last held on 29

September 2018 and as per records from Ministry of Corporate Affairs (MCA),

its balance sheet was last filed on 31 March 2018.

Directors of Amtek Powertrain Limited are John Ernest Flintham, Aditya

Malhotra,,Atul Aggarwal, Gaurav Pabby, .

Amtek Powertrain Limited's Corporate Identification Number is (CIN)

U34300DL2006PLC156351 and its registration number is 156351.Its Email

address is [email protected] and its registered address is 2nd Floor,

108/1 Madangir Village New Delhi New Delhi DL 110062 IN , - , .

Current status of Amtek Powertrain Limited is – Active.

Products

Our service range includes a wide range of Automobile Engine Assemby,

Automotive Parts, Casting Iron-HPDC And GDC, Commercial

19
Machineries, Flywheel Ring Gears and Forging

20
 Company Details

CIN U34300DL2006PLC156351

Company AMTEK POWERTRAIN LIMITED

Name

Company Active
Status

RoC RoC-Delhi

Registration 156351
Number

Company Company limited by Shares

Category

Company Sub Non-govt company

Category

Class of Public
Company

Date of 08 December 2006

Incorporation

Age of 14 years, 1 month, 17 days

Company

Activity Manufacture of parts and accessories for motor vehicles and their engines [brakes,
gear boxes, axles, road wheels, sus
pension shock absorbers, radiators, silencers, exhaust pipes, steering wheels,
steering columns and steering boxes and other parts and accessories n.e.c.]

21
 FINANCIAL PROFILE

Provided here are the financial indicators for financial year ending on 31 March, 2019

Operating Revenue INR 1 cr - 100 cr

EBITDA  67.94 %

Networth  10.44 %

Debt/Equity Ratio 0.01

Return on Equity 9.46 %

Total Assets  9.46 %

Fixed Assets  25.42 %

Current Assets  -32.33 %

Current Liabilities  5.05 %

Trade Receivables  -7.93 %

Trade Payables  4.34 %

22
 Current Ratio 2.81

Amtek Powertrain Limited's operating revenues range is INR 1 cr - 100 cr for the

financial year ending on 31 March, 2016. It's EBITDA has increased by 67.94

% over the previous year. At the same time, it's book networth has increased by

10.44 %

Vision & Mission

“To become a world class engineering company in the Automotive and Non

Automotive sector. This is to be achieved by capitalizing on our superior

technology base for the benefit of our customers, suppliers and stakeholders.

About Amtek Group

The Amtek Group, headquartered in India, is one of the largest integrated

component manufacturers in India with a strong global presence. It has also

become one of the world's largest global forging and integrated machining

companies. The Group has operations across Forging, Iron and Aluminium

Casting, Machining and Sub-Assemblies. It has world-class facilities across India,

Japan, Thailand, Germany, Hungary, Italy, Romania, UK, Brazil, Mexico and US.

The Amtek Group is comprised of corporate entities Amtek Auto, JMT Auto,

Amtek Global Technologies and other subsidiaries and associates. With the

23
 infrastructure and technology platform developed over 25 years, the Group is well

positioned in the Indian Auto and Non-Auto component markets.

Director Details
DIN Director Name Designation Appointment Date

0146350 JOHN ERNEST FLINTHAM Director 23 December 2006

0

0219130 ADITYA MALHOTRA Director 19 February 2015

3

24
 DIN Director Name Designation Appointment Date

0809515 ATUL AGGARWAL Managing Director 02 April 2018

5

0719055 GAURAV PABBY Director 01 June 2018

1

The company has 3 directors and 1 reported key management personnel.

The longest serving director currently on board is John Ernest Flintham who was

appointed on 23 December, 2006. John Ernest Flintham has been on the board for

more than 14 years. The most recently appointed director is Gaurav Pabby, who

was appointed on 01 June, 2018.

Aditya Malhotra has the largest number of other directorships with a seat at a total

of 12 companies. In total, the company is connected to 19 other companies

through its directors.

25
 CHAPTER– 3

INTRODUCTION OF TAXATION

Taxation

26
The term “Taxation” comes from the Latin word “Taxatio”. It means to determine

the payable quantum on estimate. According to Justice Holmes “The price paid to

the government for living in a civilized society is the tax. According to Taylor

“taxes are the compulsory payments to government without expectation of direct

benefit to the tax payer.

Taxation is a system of raising money to finance government. All governments

require payments of money-taxes-from people. Governments use tax revenues to

pay soldiers and policy, to build dams and roads, to operate schools and hospitals,

to provide food to the poor and medical care to the elderly, and for hundreds of

other purposes. Without taxes to fund its activities, government could not exist.

Taxation is the most important sources of revenue for modern governments,

typically accounting for 90 percent or more of their income.

Taxation is a major instrument for the conduct of public policy. This is true

for both developed and developing countries . Taxation is known to

accomplish a number of objectives revenue generation for government,

economic stabilization and income re-distribution. Taxation as an instrument of

public policy is essentially concerned with the manipulation of financial operation

of both the government anti private sectors with a view of furthering certain

economic objectives.

CHARACTERISTICS OF TAX

27
Direct Tax payment has age limit

Tax is a compulsory levy that must be

paid by an individual or corporate
body

It is levied by the government or its

agencies

Tax is made for the general welfare of

the public.

TAXES APPLICABLE IN INDIA

28
29
 Direct Tax
Direct taxes are directly imposed on the tax payer. They depend on the income
and wealth of an individual or entity.

DIRECT TAX IN INDIA

This is one of the most well-known and least understood taxes. It is the tax that is

levied on your earning in a financial year. There are many facets to income tax,

such as the tax slabs, taxable income, tax deducted at source (TDS), reduction of

taxable income, etc. The tax is applicable to both individuals and companies. For

individuals, the tax that they have to pay depends on which tax bracket they fall

in. This bracket or slab determines the tax to be paid based on the annual income

of the assesse and ranges from no tax to 30% tax for the high income groups.

The government has fixed different taxes slabs for varied groups of individuals,

namely general taxpayers, senior citizens (people aged between 60 to 80, and very

senior citizens (people aged above 80).

In the Union Budget 2018, a standard deduction of Rs.40000 has been introduced

for salaried-employees for transport allowances and medical expense.

30
 reimbursement. This proposal will benefit about 2.5 crore salaried employees and

pensioners while costing Rs.8000 crore to the government.

To ease tax burden for senior citizens, there is an exemption of interest income of

up to Rs.40000 on Fixed Deposits, Recurring Deposits, and Post Office. There is

also a rise in limit for tax deduction on health insurance premium from Rs.30,000

to Rs.50,000 under Section 80D. There is no TDS required under Section 194A

Income tax slab for individual tax payers & HUF (less than 60 years old)

(both men & women)

Income Tax Slab Tax Rates

Income up to Rs.2,50,000 No Tax
Income from Rs.2,50,000-Rs.5,00,000 5%
Income from Rs.5,00,000-10,00,000 20%
Income more than Rs.10,00,000 30%
Surcharges: 10% of income tax,where total income is between Rs. 50 lakhs to 1 crore,
15% of income tax, where total income is between 1 crore to 2 crore.
25% of income tax, where total income is between 2 crore to 5 crore.
37% of income tax, where is more than 5 crore.
Rs.1crore.
Cess:-4% on total of income tax + surcharge.
*Income upto Rs.2,50,000 is exempt from tax if you are less than 60
Years old.

31
TYPES OF INDIRECT TAX

CUSTOMS DUTY: Customs Duty is a type of Indirect Tax which is levied on

goods which are imported into India. In some cases, it is also levied when the

goods are exported from India.

SERVICE TAX IN INDIA: Service Tax is a tax which is levied on the Services

provided by an entity. If an entity is providing any service, they are required to

levy Service Tax on the same. This service tax is collected from the recipient of

service and deposited with the Central Govt.

VALUE ADDED TAX: VAT stands for Value Added Tax and is levied on the

sale of mov0able goods in India. VAT is a multi-point destination based system

of taxation, with tax being levied on value addition at each stage of transaction in

the production/ distribution chain. The term ‘value addition’ implies the increase

in value of goods and services at each stage of production or transfer of goods.

VAT is a tax on the final consumption of goods or services and is ultimately

borne by the consumer.

EXCISE DUTY: Excise Duty is an indirect tax levied on those goods which are

manufactured in India. The taxable event in this case is manufacture and the

liability of central excise duty arises as soon as the goods are manufactured. It is

a tax on manufacturing which is paid by the manufacturer, who passes its

incidence on to other customers and recovers the same from them.

SERVICE TAX: Service tax is applied generally at the rate of 12.36%, which

has been revised to 14% from April 2015. This type of indirect tax is levied by

the service tax provider and paid by the recipient of the services. However, in

some cases the liability for the tax is divided between the recipient as well as the

32
provider of service.

Securities Transaction Tax (STT):

This indirect tax is imposed when stocks are sold or purchased through any Indian

stock exchange. STT was introduced in 2004 and is applicable to shares, mutual

funds, and future and options transactions. STT was imposed to reduce the short-

term capital gains tax and eliminate long-term capital gains tax.

33
 CHAPTER– 4

ABOUT THE GOODS AND

SERVICE TAX.

34
Introduction to Goods and Services Tax (GST)

About GST:

The Good and services tax (GST) is the biggest and substantial indirect tax reform

since 1947. The main idea of GST is to replace existing taxes like value-added

tax, excise duty, service tax and sales tax. GST as it is known is all set to be a

game changer for the Indian economy. India as world’s one of the biggest

democratic country follow the federal tax system for levy and collection of

various taxes. Different types of indirect taxes are levied and collected at different

point in the supply chain. The center and the states are empowered to levy

respective taxes as per the Constitution of India. The Value Added Tax (VAT)

when introduced was considered to be a major improvement over the pre-existing

Central excise duty at the national level and the sales tax system at the State level.

Now the Goods and Services Tax (GST) will be a further significant breakthrough

- the next logical step - towards a comprehensive indirect tax reform in the

country.

Several countries have already established the Goods and Services Tax. In

Australia, the system was introduced in 2000 to replace the Federal Wholesale

Tax. GST was implemented in New Zealand in 1986. A hidden Manufacturer’s

Sales Tax was replaced by GST in Canada, in the year 1991. In Singapore, GST

was implemented in 1994. GST is a value-added tax in Malaysia that came into

effect in 2015.

35
 History of GST in India

 2000: In India, the idea of adopting GST was first suggested by the Atal Bihari

Vajpayee Government in 2000. The state finance ministers formed an Empowered

Committee (EC) to create a structure for GST, based on their experience in designing

State VAT. Representatives from the Centre and states were requested to examine

various aspects of the GST proposal and create reports on the thresholds, exemptions,

taxation of inter-state supplies, and taxation of services. The committee was headed

by Asim Dasgupta, the finance minister of West Bengal. Dasgupta chaired the

committee till 2011.

 2004: A task force that was headed by Vijay L. Kelkar the advisor to the

finance ministry, indicated that the existing tax structure had many

issues that would be mitigated by the GST system.

 February 2005: The finance minister, P. Chidambaram, said that the

medium-to-long term goal of the government was to implement a

uniform GST structure across the country, covering the whole

production-distribution chain. This was discussed in the budget

session for the financial year 2005-06.

 February 2006: The finance minister set 1 April 2010 as the GST

introduction date.

 November 2006: Parthasarthy Shome, the advisor to P. Chidambaram, mentioned

that states will have to prepare and make reforms for the upcoming GST regime.

 February 2007: The 1 April 2010 deadline for GST implementation was

retained in the union budget for 2007-08.

36
 February 2008: At the union budget session for 2008-09, the finance minister

confirmed that considerable progress was being made in the preparation of the

roadmap for GST. The targeted timeline for the implementation was confirmed to be

1 April 2010.

 July 2009: Pranab Mukherjee, the new finance minister of India, announced the basic

skeleton of the GST system. The 1 April 2010 deadline was being followed then as

well.

 November 2009: The EC that was headed by Asim Dasgupta put forth the

First Discussion Paper (FDP), describing the proposed GST regime. The paper

was expected to start a debate that would generate further inputs from

stakeholders.

 February 2010: The government introduced the mission-mode project that

laid the foundation for GST. This project, with a budgetary outlay of Rs.1,133

crore, computerized commercial taxes in states. Following this, the

implementation of GST was pushed by one year.

 March 2011: The government led by the Congress party puts forth the

Constitution (115th Amendment) Bill for the introduction of GST. Following

protest by the opposition party, the Bill was sent to a standing committee for a

detailed examination.

 June 2012: The standing committee starts discussion on the Bill. Opposition

parties raise concerns over the 279B clause that offers additional powers to the

Centre over the GST dispute authority.

 November 2012: P. Chidambaram and the finance ministers of states hold

meetings and set the deadline for resolution of issues as 31 December 2012.

37
 February 2013: The finance minister, during the budget session, announces that the

government will provide Rs.9,000 crore as compensation to states. He also appeals to

the state finance ministers to work in association with the government for the

implementation of the indirect tax reform.

 August 2013: The report created by the standing committee is submitted to

the parliament. The panel approves the regulation with few amendments to the

provisions for the tax structure and the mechanism of resolution.

 October 2013: The state of Gujarat opposes the Bill, as it would have to

bear a loss of Rs.14,000 crore per annum, owing to the destination-based

taxation rule.

 May 2014: The Constitution Amendment Bill lapses. This is the same year

that Narendra Modi was voted into power at the Centre.

 December 2014: India’s new finance minister, Arun Jaitley, submits the Constitution

(122nd Amendment) Bill, 2014 in the parliament. The opposition demanded that the

Bill be sent for discussion to the standing committee.

 February 2015: Jaitley, in his budget speech, indicated that the government

is looking to implement the GST system by 1 April 2016.

 May 2015: The Lok Sabha passes the Constitution Amendment Bill. Jaitley also

announced that petroleum would be kept out of the ambit of GST for the time being.

 August 2015: The Bill is not passed in the Rajya Sabha. Jaitley mentions

that the disruption had no specific cause.

 March 2016: Jaitley says that he is in agreement with the Congress’s demand for the

GST rate not to be set above 18%. But he is not inclined to fix the rate at 18%.

38
 In the future if the Government, in an unforeseen emergency, is required to raise

the tax rate, it would have to take the permission of the parliament. So, a fixed

rate of tax is ruled out.

 June 2016: The Ministry of Finance releases the draft model law on GST to

the public, expecting suggestions and views.

 August 2016: The Congress-led opposition finally agrees to the Government’s

proposal on the four broad amendments to the Bill. The Bill was passed in the Rajya

Sabha.

 September 2016: The Honorable President of India gives his consent for the

Constitution Amendment Bill to become an Act.

 2017: Four Bills related to GST become Act, following approval in the parliament

and the President’s assent:

o Central GST Bill

o Integrated GST Bill

o Union Territory GST Bill

o GST (Compensation to States) Bill.

Goods and Services Tax (GST) is an indirect tax which was launched at midnight on

1 July 2017 by the President of India, Pranab Mukherjee and Prime Minister of India,

Narendra Modi. The launch was marked by a historic midnight (30 June-1 July)

session of both houses of the Parliament convened at the Central Hall of the

Parliament. GST is applicable throughout India which will replace multiple cascading

taxes levied by the central and state governments. It was introduced as The

Constitution (One Hundred and First Amendment) Act 2017, following the passage

39
of Constitution 122nd Amendment Act Bill.

40
 Key features of GST

 Dual Goods and Service Tax

 Destination-Based Consumption

 Computation of GST on the basis of invoice credit method

 Payment of GST

 Goods and Services Tax Network (GSTN)

 GST on Imports

 Maintenance of Records

 Administration of GST

 Goods and Service Tax Council

41
1. Dual Goods and Service Tax: CGST and SGST

2. Destination-Based Consumption Tax: GST will be a destination-based tax.

This implies that all SGST collected will ordinarily accrue to the State where the

consumer of the goods or services sold resides.

3. Computation of GST on the basis of invoice credit method : The liability

under the GST will be invoice credit method i.e. cenvat credit will be allowed on

the basis of invoice issued by the suppliers.

4. Payment of GST: The CGST and SGST are to be paid to the accounts of the

central and states respectively.

5. Goods and Services Tax Network (GSTN): A not-for-profit, Non-

Government Company called Goods and Services Tax Network (GSTN), jointly

set up by the Central and State Governments will provide shared IT infrastructure

and services to the Central and State Governments, tax payers and other

stakeholders.

6. GST on Imports: Centre will levy IGST on inter-State supply of goods and

services. Import of goods will be subject to basic customs duty and IGST.

7. Maintenance of Records: A taxpayer or exporter would have to maintain

separate details in books of account for availment , utilization or refund of Input

Tax Credit of CGST, SGST and IGST.

42
8. Administration of GST: Administration of GST will be the responsibility of

the GST Council, which will be the apex policy making body of the GST.

Members of GST Council comprised of the Central and State ministers in charge

of the finance portfolio.

Goods and Service Tax Council : The GST Council will be a joint forum of the

Centre and the States. The Council will make recommendations to the Union and

the States on important issues like tax rates, exemption list, threshold limits,

etc. One-half of the total number of Members of the Council will constitute the

quorum of GST council.

43
 GST MODEL

Central Goods And Service Tax

44
CGST means Central Goods and Service Tax. CGST is a part of goods and

service tax. It is covered under Central Goods and Service Tax Act 2016. Taxes

collected under Central Goods and Service tax will be the revenue for central

Government. Present Central taxes like Central excise duty, Additional Excise

duty, Special Excise Duty, Central Sales Tax, Service Tax etc. will be subsumed

under Central Goods And Service Tax.

State Goods and Service Tax

SGST means State Goods and Service Tax. It is covered under State Goods and

Service Tax Act 2016. A collection of SGST will be the revenue for State

Government. After the introduction of SGST all the state taxes like Value Added

Tax, Entertainment Tax, Luxury Tax, Entry Tax etc. will be merged under SGST.

For example, if goods are sold or services are provided within the State then

SGST will be levied on such transaction.

Integrated Goods and Service Tax

IGST means Integrated Goods and Service Tax. IGST falls under Integrated

Goods and Service Tax Act 2016. Revenue collected from IGST will be divided

between Central Government and State Government as per the rates specified by

the government. IGST will be charged on transfer of goods and services from one

state to another state. Import of Goods and Services will also be deemed to be

covered under Inter-state transactions so IGST will be levied on such transactions.

For example, if Goods or services are transferred from Rajasthan to Maharashtra

then the transaction will attract IGST.

45
GST Rates in India

46
 GST Council

 It is set up by president under article 279-A. It is chaired by union finance minister.

 It will constitute union minister of state in charge of revenue and minister in charge of

finance or taxation or of any other field nominated by state governments. The 2/3rd

representatives in council are from states and 1/3rd from union.

 It will make recommendations on:

o Taxes, surcharge, cess of central and states which will be integrated in GST.

o Goods and services which may be exempted from GST.

o Interstate commerce – IGST- proportion of distribution between state and center.

o Registration threshold limit for GST.

o GST floor rates.

o Special rates during calamities.

o Provision with respect to special category states specially north east states

o It may also work as Dispute Settlement Authority for GST.

 The Council would consist of 2/3rd representation of states and 1/3rd representation

of the Centre. The GST Council will take all decisions regarding tax rates, dispute

resolution, exemptions and so on. Recommendations of the GST Council (75%

votes) will be binding on the Centre and the States.

47
 Goods and Services Tax Network (GSTN)

Goods and Services Tax Network has been set up by the Government as a private

company under erstwhile Section 25 of the Companies Act, 1956. GSTN would

provide three front end services, namely Registration, Payment and Return to

taxpayers. It will also assist some State with the development of back end

modules.

Goods and Services Tax Network (GSTN) is a Section 8 (under new companies

Act, not for profit companies are governed under section 8), non-Government,

private limited company. It was incorporated on March 28, 2013. The

Government of India holds 24.5% equity in GSTN and all States of the Indian

Union, including NCT of Delhi and Pondicherry, and the Empowered Committee

of State Finance Ministers (EC), together hold another 24.5%. Balance 51%

equity is with non- Government financial institutions. The Company has been set

up primarily to provide IT infrastructure and services to the Central and State

Governments, tax payers and other stakeholders for implementation of the Goods

and Services Tax (GST). The Authorized Capital of the company is Rs.

10,00,00,000 (Rupees ten crore only).

48
 Structure of GSTN
 The GST System Project is a unique and complex IT initiative. It is

unique as it seeks, for the first time to establish a uniform interface for

the tax payer and a common and shared IT infrastructure between the

Centre and States. Currently, the Centre and State indirect tax

administrations work under different laws, regulations, procedures and

formats and consequently the IT systems work as independent sites.

Integrating them for GST implementation would be complex since it

would involve integrating the entire indirect tax ecosystem so as to

bring all the tax administrations (Centre, State and Union Territories)

to the same level of IT maturity with uniform formats and interfaces

for taxpayers and other external stakeholders. Besides, GST, eing a

destination based tax, the inter- state trade of goods and services

(IGST) would need a robust settlement mechanism amongst the States

and the Centre. This is possible only when there is a strong IT

Infrastructure and Service back bone which enables capture,

processing and exchange of information amongst the stakeholders

(including tax payers, States and Central Governments, Accounting

Offices, Banks and RBI).

 Prior to this, the Union Ministry of Finance had set up the Technical

Advisory Group for Unique Projects (TAGUP) in March 2010 to make

recommendations on the roadmap to roll out five major financial

projects including GST. TAGUP recommended setting up of National

Information Utilities as private companies with a public purpose for

implementation of large and complex Government IT projects

49
 including GST.

 In compliance of the above decision, GST Network was registered as a

non-government, not-for-profit, private limited company under section

8 (under new companies Act, not for profit companies are governed

under section 8) of the Companies Act 1956 with the following equity

structure:

Shareholder Shareholding

Central Government 24.5%

State Governments & EC 24.5%

HDFC 10%

HDFC Bank 10%

ICICI Bank 10%

NSE Strategic Investment Co 10%

LIC Housing Finance Ltd 11%

 In brief, the decision to structure GSTN in its current form was taken after

approval of the Empowered Committee of State Finance Ministers and the

Union Government after due deliberations over a long period of time.

50
 GSTIN

 Goods and Services Identification Number is a 15 digit

alphanumeric number.

 First two digit shows the State code,

 Another ten digit shows the Permanent Account Number (PAN).

 Next number shows the entity number of the same PAN holder in a

state. Next is alphabet Z by default.

 Next is the check sum digit.

GST Identification Number

1 2 3 4 5 6 7 8 9 1 1 1 1 1 1
0 1 2 3 4 5
State PAN Entity
code Code/
Check
Digit

SWOT Analysis

51
 Strengths

GST provides a comprehensive and a wider coverage of input credit set off

service tax credit could be used for the payment of tax on the sale of goods etc.

 A single GST could be used instead of other indirect taxes at the state and c entral

level.

 It would end the cascading effects.

 There would be uniformity of tax rates across the states.

 It ensures better compliance as the aggregate tax reduces.

 It helps in the reduction of prices of the goods and services to the consumer with the

reduction of tax.

 It would reduce transaction costs and unnecessary wastage to both government and

individuals.

 It encourages transparency and unbiased tax structure.

 It brings efficiency in the indirect tax mechanism.

Weaknesses

 It doesn’t include alcohol and petroleum products which would lead to incurring of

huge losses.

 It requires strong IT infrastructure which is not highly developed in India.

 Single GST rate would be high compared to individual indirect tax rate.

52
Opportunities

 Reduction in tax burden will increase the competitiveness of Indian products in the

international market.

 There would be a gradual increase in the revenues of state and the union.

 Helps reducing corruption as the implementation of GST would result in a gradual

decrease of procedures and formalities.

Threats

 It is entirely dependent on the efficiency and effectiveness of the system

 Beneficiaries of the system are uncertain. It could be either state or the center. This

would create a chaos while preparing budgets and financing polices.

 Lack of co-ordination between the Centre and the state might affect the

system and also the revenues generated.

Interpretation of the SWOT Analysis

From the above SWOT analysis it is clear that GST would create uniformity of

taxes and also reduce tax burden. This in turn would increase revenues of the

state and the union at the country level and increase competition at the

international level. But this in reality might appear to be a dual tax system and

would also require a strong IT infrastructure. Besides this, it is entirely

dependent on the efficiency of the system. Co-ordination between the Centre and

the state only can help in its implementation and execution of the proposed plan.

53
Therefore before implementation of such a tax regime, it should be carefully

examined at every levels to benefit all the stakeholders.

Impact of GST on Indian Economy

 Reduce tax burden on producers and foster growth through more production. This

double taxation prevents manufacturers from producing to their optimum capacity

and retards growth. GST would take care of this problem by providing tax credit to

54
 the manufacturer.

 Various tax barriers such as check posts and toll plazas lead to a lot of wastage for

perishable items being transported, a loss that translated into major costs through

higher need of buffer stocks and warehousing costs as well. A single taxation system

could eliminate this roadblock for them.

 A single taxation on producers would also translate into a lower final selling price for

the consumer.

 Also, there will be more transparency in the system as the customers would know

exactly how much taxes they are being charged and on what base.

 GST would add to government revenues by widening the tax base.

 GST provides credits for the taxes paid by producers earlier in the goods/services

chain. This would encourage these producers to buy raw material from different

registered dealers and would bring in more and more vendors and suppliers under the

purview of taxation.

 GST also removes the custom duties applicable on exports. Our competitive in foreign

markets would increase on account of lower cost of transaction.

 The proposed GST regime, which will subsume most central and state-level taxes, is

expected to have a single unified list of concessions/exemptions as against the current

mammoth exemptions and concessions available across goods and services.

 The introduction of Goods and Services Tax would be a very noteworthy step in the

field of indirect tax reforms in India. By amalgamating a large number of Central and

State taxes into a single tax, it would alleviate cascading or double taxation in a major

way and pave the way for a common national market.

55
 GST REGISTRATION

 A person is eligible to take registration if his aggregate turnover exceeds

Rs. 20 lakhs and for person conducting business in North-East state are

required to take registration if their aggregate turnover exceeds Rs. 9

lakhs.

 Aggregate Turnover means the aggregate value of all taxable supplies,

exempt supplies export of goods and/or services and inter-state supplies of

a person having the same PAN to be computed on all India basis.

56
 A person has to take registration in the state from where taxable goods

and/or services are supplied.

 Every person who is liable to be registered under Schedule III of this Act,

shall apply for registration in every such State in which he is liable within

30 days from the date of which he becomes liable to registration, in such

manner and subject to such conditions as may be prescribed.

 Notwithstanding anything contained in sub-section (1), a person having

multiple business verticals in a State may obtain a separate registration for

each business vertical, subject to such conditions as may be prescribed.

 A person, though not liable to be registered under Schedule III, may get

himself registered voluntary, and all provisions of this Act, as are

applicable to a registered taxable person, shall apply to such person.

 Every person shall have a Permanent Account Number issued under the

Income Tax Act, 1961 (43 of 1961) in order to be eligible for grant of

registration under subsection (1), (2) or (3).

 The registration or the Unique Identity Number, shall be granted or, as the

case may be, rejected after due verification in the manner and within such

periods as may be prescribed.

57
GST registration page

58
 GST Identification Number

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
State PAN Entity
code
Code/ Check
digit

Amendment of Registration

59
 Tax Invoice:

A registered taxable person supplying –

60
 GST RETURNS

Every registered taxable person shall, for every calendar month or part thereof,

furnish, in such form and in such manner as may be prescribed, a return,

electronically, of inward and outward supplies of goods or services, input tax

credit availed, tax payable, tax paid and other particulars as may be prescribed

within 20 days after the end of such month.

Provided that a registered taxable person paying tax under the provisions of

Section 8 of this Act shall furnish a return for each quarter or part thereof,

electronically, in such form and in such manner as may be prescribed, within 18

days after the end of such quarter.

Every registered taxable person, who is required to furnish a return under sub-

section (1), shall pay to the credit of the appropriate Government the tax due as

per such return not later than the last date on which he is required to furnish such

return.

A return furnish under the sub-section (1) by a registered taxable person without

payment of full tax due as per such return shall not be treated as a valid return for

allowing input tax credit in respect of supplies made by such person. Every

registered taxable person shall furnish a return for every tax period under sub-

section (1), whether or not any supplies of goods or services have been effected

during such tax period.

Note: Subject to the provisions of Section 25 and 26, if any taxable person after

furnishing a return discovers any omission or incorrect particulars therein, other

61
than as a result of scrutiny, audit, inspection or enforcement activity by the tax

authorities, he shall rectify such omission in the return to be filed for the month or

quarter, as the case may be, during which such omission are noticed, subject to

the payment of interest, where applicable and as specified in the Act.

62
Types of GST Returns

GSTR-1

GSTR-2

GSTR-3

GSTR-4

GSTR-5

GSTR-6

GSTR-7

GSTR-8

GSTR-9

GSTR-10

GSTR-11

63
GSTR-1
GSTR-1 is a monthly return that should be filed by every registered dealer by the

10th of the following month. It is the first or the starting point for passing input

tax credit to the dealers. It contains details of all outward supplies i.e. sales.

GSTR-1 has to be filed by "all" taxable registered persons under GST. However,

there are certain dealers who are not required to file GSTR-1, instead are required

to file other different GST returns as the case may be. These dealers are E-

Commerce operators, Non-Resident dealers and Tax deductors. It has to be filed

even in cases where there is no business conducted during the reporting month.

File GSTR-1

The Suppliers need to log in to the GSTN portal with the given User ID and

Password, following these steps:

Search for "Services" and then click on Returns, followed by

Returns Dashboard.

In the Dashboard, the dealer has to enter the financial year and the month

for which the return needs to be filed. Click on Search after that.

All returns relating to this period will be displayed on the screen.

Dealer has to select the file containing GSTR-1

After this, he will have the option either to prepare online or to upload the

return.

The dealer will now Add invoices or upload all invoices directly. Once the

entire form is filled up, the dealer shall then Click on Submit and validate

the data filled up

64
 With the data validated, dealer will now click on FILE GSTR-1 and

proceed to either E-Sign or digitally sign the form.

Another confirmation pop-up will be displayed on the screen with a yes

or no option to file the return.

Once Yes is selected, an Acknowledgement Reference Number (ARN) is

generated.

GSTR-2

It is mandatory to furnish details of inward supplies of goods/services

received during a tax period for every registered taxable person. These

details are furnished based on FORM GSTR-2A which is auto populated

on the basis of GSTR 1 filed by your supplier, electronically through the

Common Portal, either directly or from a Facilitation Centre. However,

GSTR 2A does not in itself auto populates a complete GSTR 2, as there

are certain other transactions which are to be mentioned manually in

addition to the data which is generated through GSTR 2A, viz. Details of

Inward Supplies from an Unregistered Persons on which tax is paid on the

Reverse Charge basis and Imports effected during the tax period, etc

Who can file GSTR-2

It is mandatory to file a GST Return for each and every entity registered

under the GST Act. Even in case where there are no inward supplies

during the tax period, NIL return for that period is required to be filed. In

case of failure to file the return within due period, the tax payer is

penalized with the late fees of INR 100 per day up to a maximum limit of

INR 5,000/-

65
 When to file GSTR-2 ?

 Every registered taxable person is required to furnish details of Inward Supply for a tax

period i.e. the end of the relevant month.

 This return has to be filed by the recipient of (goods/services) supplies

 within 15 days from the end of the relevant tax period.

 However to facility the ease of payment and return filing for small and medium scale

businesses with annual aggregate turnover up to Rs.1.5 crores, it has been decided

that such tax payers shall be required to file quarterly returns in Form GSTR 1,2 and

3 and pay taxes only on quarterly basis, starting from the third quarter of this

financial year.

GSTR-3
GSTR-3 is a return to be filed on monthly basis (compounding and ISD

taxpayers are exceptions). GSTR-3 is more like a pooled version of

GSTR- 1 and GSTR-2. The form captures the information of outward and

inward supply information at aggregate level which will be auto

populated through GSTR-1, GSTR-1A and GSTR-2.It will comprise of

the entire turnover related details, including, local sales turnover, export

sales turnover, exempted local sales turnover, turnover except GST and

taxable turnover. A taxpayer just has to validate this prefilled information

and make modifications if required.

GSTR-4

Compounding taxpayers would have to file a quarterly return called GSTR-4.

66
Taxpayers otherwise eligible for the compounding scheme can opt against the

compounding and file monthly returns and thereby make their supplies eligible

for ITC in hands of the purchasers. Compounding taxpayer will also file a simple

Annual return (GSTR-9).

GSTR-5

Non –Resident Taxpayers would have to file GSTR-1, GSTR-2 and GSTR-3

returns for the period for which they have obtained registration. The registration

of Non–Resident taxpayers will be done in the same manner as that of Regular

taxpayers. Non-Resident Taxpayers would be required to file GSTR-5 return for

the period for which they have obtained registration within a period of seven

days after the date of expiry of registration. In case registration period is for

more than one month, monthly return(s) would be filed and thereafter return for

remaining period would be filed within a period of seven days as stated earlier.

GSTR 6

GSTR 6 is a monthly return that has to be filed by an Input Service Distributor.

It contains details of ITC received by an Input Service Distributor and

distribution of ITC

GSTR-7

GSTR 7 is a return to be filed by the persons who is required to deduct TDS (Tax

deducted at source) under GST. GSTR 7 contains the details of TDS deducted,

TDS liability payable and paid, TDS refund claimed if any etc.

67
 GSTR-8
GSTR-8 is a return to be filed by the e-commerce operators who are required to

deduct TCS (Tax collected at source) under GST. GSTR-8 contains the details of

supplies effected through e-commerce platform and amount of TCS collected on

such supplies.

GSTR-9

GSTR 9 is an annual return to be filed once in a year by the registered taxpayers

under GST including those registered under composition levy scheme. It consists

of details regarding the supplies made and received during the year under

different tax heads i.e. CGST, SGST and IGST. It consolidates the information

furnished in the monthly/quarterly returns during the year.

Annual Return

Every registered taxable person, other than an input service distributor, a

deductors under Section 37, a casual taxable person and a non-resident taxable

person, shall furnish an annual return for every financial year electronically in

such form and in such manner as may be prescribed on or before the thirty first

day of December following the end of such financial year. Every taxable person

who is required to get his accounts audited under sub- section (4) of section 42

shall furnish, electronically the annual return along with the audited copy of the

annual accounts and a reconciliation statement, reconciling the value of supplies

declared in the return furnished for the year with audited annual financial

statement, and such other particulars as may be prescribed.

68
Challenges faced during Return Filing

Input
VAT Credit

Interaction
with govt. Once a
for Quarter
compliance
or Month

3 times
Return
every filing
month
Need to
Summary upload
of Sales or
Purchase
every
needed Transaction
.

invoice of
Not Supplier
Monitored and
Extensively Recipient
need

Availed
GST based on
Returns

69
There are three important concepts in GST

TTime
im e of
o f SSupply
u p p ly

PPlace
la c e ooff SSupply
u p p ly

VValue
a lu e ooff SSupply
u p p ly

70
 1. Time of Supply

As per Section 13 Time of supply means the point in time when goods/services

are considered supplied’. When the seller knows the ‘time’, it helps him identify

due date for payment of taxes.

CGST/SGST or IGST must be paid at the time of supply. Goods and services

have a separate basis to identify their time of supply.

Section 31(1) of the CGST Act provides that a registered person supplying

taxable goods shall, before or at the time of,

 An invoice has to be created before removal of goods as defined in Clause (96) of

Section 2 of the CGST Act. If invoice is not created time of removal shall be taken as

last date of making invoice as mentioned in Section 12.

 If invoice is created earlier than time of removal, time of supply shall be treated as

date of preparation of invoice.

 If payment is received with respect to supply of goods earlier than making of invoice,

such payment shall be treated as time of supply.

Concept of time of supply of goods provided in GST law shows a departure from

the earlier Central Excise provisions. In the Central Excise provisions invoice was

71
required to be made at the time of removal only. These provisions give liberty to

trade and industry to prepare invoice well in advance of removal of goods. Thus,

a supplier of goods may issue an invoice to recipient but removes goods only

after, say receipt of payment. If in the meantime say, payment is not received, he

can cancel the invoice as per provisions of GST laws. Such cancellation of

invoice shall not result in removal of goods, retaking or return of goods in the

supplier premises etc.

72
It consists of mainly three points

73
 A. Time of Supply of Goods

Time of supply of goods is earliest of:

1. Date of issue of invoice

2. Last date on which invoice should have been issued

3. Date of receipt of advance/ payment.

Note: GST is not applicable to advances under GST. GST in Advance is payable
at the time of issue of the invoice.

B. Time of Supply for Services

Time of supply of services is earliest of:

1. Date of issue of invoice

2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period

C. Time of Supply under Reverse Charge

In case of reverse charge the time of supply for service receiver is earliest of:

1. Date of payment

2. 30 days from date of issue of invoice for goods (60 days for services)

‘Date of Payment’ is not applicable for goods and applies only to services.

74
 Place of supply

It is very important to understand the term ‘place of supply’ for determining the
right tax to be charged on the invoice.

It is also considered 2 points.

Place Of
Place of Supply
Supply Of
of Services
Goods

Place of Supply of Goods

Usually, in case of goods, the place of supply is where the goods are delivered.

So, the place of supply of goods is the place where the ownership of goods

changes.

What if there is no movement of goods. In this case, the place of supply is the

location of goods at the time of delivery to the recipient.

75
 Place of Supply When There is Movement of Goods

Supply Place of supply

Involves movement of goods, whether Location of the goods when the

by the supplier or the recipient or by any movement of goods terminates for

other person. delivery to the recipient.

Goods are delivered by the seller to a It is assumed that the third person has

recipient on the direction of a third person received the goods and the place of

(whether agent or not) before or during supply of such goods will be the principal

movement of goods by way of transfer of place of business of third person.

documents of title to the

goods or some other way.

No Movement of Goods

76
 Supply is : Place of supply
No movement of goods, either by the supplier Location of such goods at the time of the

or the recipient. delivery to the recipient ( at the

time of transfer of ownership)

The goods are assembled or installed at Place of such installation or assembly.

site.

There is no movement of goods (work stations), so the place of supply will be the

location of such goods at the time of delivery (handing over) to the receiver.

Imports & Exports

The place of supply of goods:

Imported into India will be the location of the importer.

Exported from India shall be the location outside India.

Supply is Place of supply GST

Goods imported into Location Of the importer. Always IGST on imports.
India.
Exported from India. Location outside India. Exports are exempted.

B. Place of Supply for Services

Generally, the place of supply of services is the location of the service recipient.

In cases where the services are provided to an unregistered dealer and their

location is not available the location of service provider will be the place of

provision of service.

Special provisions have been made to determine the place of supply for the

following services:

77
  Services related to immovable property

 Restaurant services

 Admission to events

 Transportation of goods and passengers

 Telecom services

 Banking, Financial and Insurance services.

In case of services related to immovable property, the location of the property is

the place of provision of services.

Determining The Place Of Supply Of Services

GST is destination based tax i.e. consumption tax, which means tax will be levied

where goods and services are consumed and will accrue to that state.

Under GST, there are three levels of Tax, IGST, CGST & SGST and based on the

‘’place of supply’’ so determined, the respective tax will be levied. IGST is levied

where transaction is inter-state, and CGST & SGST are levied where the

transaction is intra-state. For understanding Place of Supply for Services the

following two concepts are very important namely:

 Location of Recipient of Services

 Location of Supply of Services

78
 Category of supply of services:

Domestic Transactions

These are the transactions where both the parties i.e. the supplier as well as
recipient of service are in India. Domestic transactions can be further categorized
as below:

 Inter-State (i.e. between two different states)

 Intra-State (i.e. within the same state)
General Rule

In general, the place of supply for services will be the location of the service

79
recipient (the recipient needs to be a registered person). In cases, where service is

provided to an unregistered person, the place of supply will be the:

 Location of the service recipient (if the address is available on record);

 Otherwise, location of service provider.

International Transactions

These are the transactions where either of the service recipient or the provider is

outside India. Transactions in which both the recipient as well as provider are

outside India are not covered here.

General Rule

The Place of Supply for services treated as international transactions shall be:

 The location of service recipient

 In case where the location of service recipient is not available, the place of

supply shall be location of the supplier.

3. Value of Supply of Goods or Services

Value of supply means the money that a seller would want to collect the goods

and services supplied.

The amount collected by the seller from the buyer is the value of supply.

But where parties are related and a reasonable value may not be charged, or

transaction may take place as a barter or exchange; the GST law prescribes that

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the value on which GST is charged must be its ‘transactional

value’. This is the value at which unrelated parties would transact in the normal

course of business. It makes sure GST is charged and collected properly, even

though the full value may not have been paid.

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 ACCOUNTS AND RECORDS

Every registered person shall keep and maintain, at his principal place of

business, as mention in the certificate of registration, a true and correct accounts

of production or manufacture of goods, of inward or outward supply of goods and

services, of stocks of goods, of input tax credit availed, of output tax payable and

paid, and such other particulars as may be prescribed in this behalf: 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 concerned: Provided further that the registered person may

keep and maintain such accounts and other particulars in the electronic form in

the manner as may be prescribed. The Commissioner may notify a class of

taxable persons to maintain additional accounts or documents for such purpose.

Every registered taxable 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 to the proper officer a copy of the audited

statement of accounts, the reconciliation statement under sub-section (2) of

section 30 and such other documents in the form of manner as may be prescribed

in this behalf.

Period of retention of accounts

Every registered taxable person required to keep and maintain books of account

or other records under sub-section (1) of section 42 shall retain them until the

expiry of sixty months from the last date of filing of Annual Return for the year

pertaining to such accounts and records: Provided that a taxable person, who is a

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party to an appeal or revision or any other proceeding before any Appellate

Authority or Tribunal or Court, whether filed by him or by the department, shall

retain the books of account and other records pertaining to the subject matter of

such appeal or revision or proceeding for a period of one year after final disposal

of such appeal or revision or proceeding, or for the period specified under sub-

section (1), whichever is later.

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 AUDIT
Audit by tax authorities

 The Commissioner of CGST/SGST or any officer authority by him, may undertake

audit of the business transactions of any taxable person for such period, at such

frequency and in such manner as may be prescribed.

 The tax authorities referred to in sub-section (1) may conduct audit at the place of

business of the taxable person or in their office.

 The taxable person shall be informed by way of notice, sufficient in advance, not

less than 15 working days, prior to the conduct of audit.

 The audit under sub-section (1) shall be carried out in a transparent manner and

completed within a period of three months from the date of commencement of audit.

 During the course of audit, the authorized officer may require the taxable person,

 To afford him the necessary facility to verify the books of accounts or other

documents as he may require.

 To furnish such information as he may require and render assistance for timely

completion of the audit.

 On conclusion of audit, the proper officer shall without delay inform the taxable

person, whose records are audited, of the findings, the taxable person's rights and the

obligations and the reasons for the findings.

 Where the audit conducted under sub-section (1) results in detection of tax not paid or

short paid, the officer may initiate action under section 51.

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 OFFENCES AND PENALTIES

Offences and penalties: Where a taxable person who –

 Supplies any goods or services without issue of any invoice or issue

false invoice with regard to any such supply.

 Issue any invoice or bill without supply of goods or services in violation

of the provisions of this Act .

 Collects any amount as tax but fails to pay the same to the credit of
inappropriate Government beyond a period of three months from the date on
which such payment becomes due .

 Fails to deduct the tax in terms of sub-section (1) of section 37, or

deduct the amount which is less than the amount required to be collected.

 Fraudulently obtains refund of any CGST/SGST under this Act.

 Is liable to be registered under this Act but fails to obtain

registration.

 Transport any taxable goods without the cover of documents.

 Fails to keep, maintain or retain books of account.

 Issues any invoice by using the identification number of another

taxable person.

 Destroys any material evidence.

 Supplies, transports or stores any goods which he has reason to
believe liable to confiscation under this Act;

Any person who contravenes any of the provisions of this Act or rules made
there under for which no penalty is separately provided for in this Act, shall
be liable to a penalty which may extend to Rs. 25,000/-

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 Conclusion

It can be concluded from the above discussion that GST will provide relief to

producers and consumers by providing wide and comprehensive coverage of

input tax credit set-off, service tax set off and subsuming the several taxes.

Efficient formulation of GST will lead to resource and revenue gain for both

Centre and States majorly through widening of tax base and improvement in tax

compliance. It can be further concluded that GST have a positive impact on

various sectors and industry. Centre has decided to review the existing

exemptions from Central Excise Duty so that list of goods exempt from CGST

and SGST list and 99 items exempted from VAT are taken off from both the

components of GST. VAT has to some extent reduced tax-evasion and frauds. It

is encouraging to note that most of the traders and general public are aware of

VAT. GST, the major reforms on indirect taxes, will reduce tax burden due to

cascading effect. The efficiency in tax administration will be improved, indirect

tax revenue will be increased considerably due to inclusion of more goods and

services, and at last the cost of compliance will be reduced for the dealers. The

implementation of GST will be in favor of free flow of trade and commerce

throughout the country. This single most important tax reform initiative by the

Government of India since independence provides a significant fillip to the

investment and growth of our country’s economy. To get the desired result, it

should be assured that the benefit of input credit is ultimately enjoyed by final

consumers. Although implementation of GST requires concentrated efforts of all

stake holders namely, Central and State Government, trade and industry. GST

effect the indirect taxation systems and help reduce the burden on tax payer. GST

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help to reduce the burden of record make and file maintain. Because GST cover

10-12 Tax. GST reduce the price of various goods and increase the sale. After the

implementation of GST indirect taxation.

Systems will remove and it easy to all tax payer to pay the tax to government.

Efficient formulation of GST will lead to resource and revenue gain for both

Centre and States majorly through widening of tax base and improvement in tax

compliance. It can be further concluded that GST have a positive impact on

various sectors and industry. Although implementation of GST requires

concentrated efforts of all stake holders namely, Central and State Government,

trade and industry.

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 39th GST Council Meeting Summary

The 39th GST Council meeting happened on Saturday, 14th March 2020 at New

Delhi. The Union FM Nirmala Sitharaman chaired this meeting and took

decisions on certain crucial issues under GST.

Deferment of the new GST return system and e-invoicing

The implementation of the new GST return system has been postponed to 1st

October 2020. Also, the implementation of e-invoicing and the QR code has been

deferred to 1st October 2020.

The present return system (GSTR-1, GSTR-2A & GSTR-3B) will be continued

until September 2020.

Changes in the GST rates

GST on mobile phones and specified parts was increased from 12% to 18%. This

decision was taken to avoid difficulties due to the inverted duty structure.

All types of matches have been rationalised to a single GST rate of 12%. Till

now, the handmade ones were taxed at 5% and the rest was taxed at 18%.

GST on Maintenance, Repair and Overhaul (MRO) service in respect to aircraft

was reduced from 18% to 5% with full ITC.

All these rate changes will come into effect from 01 April 2020.

Extension of GSTR-9 and 9C

The GSTR-9 & 9C deadline is extended to 30 June 2020 for FY 2018-19. Also,

the turnover limit will be increased from Rs 2 crore to Rs 5 crore for mandatory

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annual return filing. Hence, filing GSTR-9C is optional for the taxpayers having

the turnover less than Rs 5 crore.

The taxpayers with an aggregate annual turnover of less than Rs 2 crore in FY

2017-18 and FY 2018-19 will not pay any late fee for delayed filing of GSTR-9.

Waiver and extension of due dates

The GSTR-1 for 2019-20 will be waived for certain taxpayers who could not opt

for the special composition scheme (notification No. 2/2019-Central Tax (Rate)

dated 7th March 2019) by filing Form CMP-02.

The due date of Form GSTR-3B for July 2019 to January 2020 is extended till

24th March 2020 for taxpayers with a principal place of business in the Union

Territory of Ladakh. Also, a similar extension is recommended for Form GSTR-1

and Form GSTR-7.

Amendment to revocation of cancellation

Taxpayers who have cancelled their GST registration till 14th March 2020 can

file an application for revocation of cancellation of registration. The window to

fill this application is available till 30th June 2020. The extension is a one-time

measurement to facilitate those who want to continue conducting the business.

Other decisions

Infosys Chairman, Mr Nandan Nilekani to present progress updates about the

GST IT systems at the next three GST Council meetings.

The time limit for finalisation of the e-Wallet scheme for consumers is extended

till 31st March 2021.

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A special GST procedure was prescribed during the CIRP period for the GST

registered corporates who are undergoing insolvency/resolution procedure under

IBC Code, 2016.

A transition plan is laid down till 31st May 2020 for the taxpayers belonging to

Dadra and Nagar Haveli & Daman and Diu, due to the merger in January 2020.

Refund claims will now be processed in bulk for the benefit of the exporters.

Present IGST and cess exemptions on the imports made under the

AA/EPCG/EOU schemes will continue up to 31st March 2021.

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ANNEXURE

91
 QUESTIONNAIRE

My name is Camey Aggarwal. I’m an MBA student at the M.D. University

Supervised by Mrs. Rashmi. My research aims to evaluate and document the

understanding and expectations from the proposed Goods and Services Tax

(GST) to be introduced in India.

You are being invited to take part in this research because your experience with

taxation and the financial services industry coupled with your knowledge of the

proposed GST will greatly expand my understanding of the overall experience of

GST as part of my academic study.

The data from this study will be used in the completion of my Summer Training,

and it may be included in my doctoral thesis, journal articles, and presented at

conferences. Your response will be anonymous, and so anyone who takes part in

the research will not be identified.

This survey will take about 5 – 10 minutes. Most questions are multiple choice

and we ask that you simply provide us with your best answer.

Completion of the survey will be treated as explicit consent to participate in the

research. Because the survey is anonymous, it is not possible to withdraw from

the participation after the submission of questionnaire.

1. Name and address of the business

2. Name and contact details of the interviewee

3. Number of members in the tax team

□ 0-5
□ 6-10

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 □ More than 10
4. Whether separate indirect tax team?
□ Yes
□ No
□ Not Applicable
5. If yes number of members in tax team for indirect tax
□ 0-5
□ More than 5
□ Not Applicable
6. % of indirect tax paid to total tax paid by the business – By the
business/by clients
Financial % of IDT to 0-10% 11-25% 26-50% More
year total tax than 50%
FY 2011-
12
FY 2012-
13
FY 2013-
14

7. Does the department apply the existing service tax laws fairly?
□ Yes
□ No
8. Have you faced practical difficulties in compliances under the current

service tax requirements? If yes, give examples

□ Yes

□ No

Examples - __________________________________

9. Have you ever encountered technical problems with the tax (eg, uncertainty

as to whether the service tax applied to a transaction you were involved

with/your client was involved with).

93
 □ Yes

□ No

Examples -________________________________________

_______________________________________________

10. Is the available legislation in relation to the proposed GST satisfactory or

do you feel need for more clarity?

□ Yes - Satisfactory

□ No – Need more clarity

11. Can you comment on the following in relation to the existing provisions

of service taxes impacting the financial services industry:

Whether the banking services as included in the negative list is satisfactory or

not? Whether the definition can be amended to reduce litigation? (Discount

income to be specifically included – currently addressed only in the education

guide)

□ Yes satisfactory

□ No – Needs to be amended for more clarity

Whether the exclusions to the definition of services are satisfactory or not?

(Secured Debts are not specifically included – currently addressed only in the

education guide)

□ Yes satisfactory

□ No – Needs to be amended for more clarity

94
Whether the definition of securities is satisfactory? (Securities as defined by

Reserve Bank of India – ‘RBI’ are still not specifically covered – currently

addressed only in the education guide)

□ Yes satisfactory

□ No – Needs to be amended for more clarity

Whether the existing definition of banking services as included in the negative list

is very clear? – (Eg to add Income on securities and services provided to RBI)

□ Yes Very clear

□ No – Not clear

Whether taxability of financial services transactions in terms of “place of supply”

is clear and unambiguous? If yes, are you clear on the state in which the financial

service would be provided under the proposed GST regime and whether Rule 3/9

of the Place of Provision of Service Rules, 2012 – ‘POPS’ would apply?

□ Yes clear on applicability of POPS

□ No – POPS needs to be amended for more clarity

Whether it is clear that Rule 3 of place of supply rules applies to financial

services?

□ Yes clear

□ No not clear

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Whether current law is clear on the taxability of interchange income received by

issuing banks?

□ Yes

□ No

12. Are you aware of the taxing provisions for financial services under GST

regime globally? Can you suggest any provision which could be incorporate

into the Indian scenario?

□ Yes

□ No

Comments -

_____________________________________________

_____________________________________

13.The taxability of the interstate transaction under the proposed GST is based on

the following:

Central GST ‘CGST’/ State GST – ‘SGST’ and Integrated GST – ‘IGST’ C-VAT

model for interstate transactions

Which of the above do you think is a better option?

□ IGST

□ C-VAT

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 14. Do the existing POPS need to be more clear and precise for

taxability of interstate transactions?

□ Yes

□ No

15.Have you /your clients been subject to audits (CERA/EA 2000/VAT etc.) from

the department in relation to service taxes? If yes, were the issues raised resolved in

an appropriate manner?

□ Yes

□ No

Issues Resolved

□ Yes

□ No

□ Not Applicable

97
Reference

www.gst.gov.in

www.gstn.org

www.gstcouncil.gov.in

www.cbec.gov.in

www.wikipedia.com

www.cleartax.com

98