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GST Notes Semester 6

BCom (Honours) (Christ (Deemed To Be University))

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TOPICS COVERED
Introduction To Goods And Services Tax(GST)
Objectives and basic scheme of GST, Meaning – Salient features of GST
– Subsuming of taxes. Benefits of implementing GST – Constitutional
amendments - Structure of GST (Dual Model) – Central GST – State /
Union Territory GST – Integrated GST - GST Council: Structure, Powers
and Functions, Provisions for amendments.
Definition: Goods, Service, Person, Business, Capital goods, Casual
taxable person, Aggregate turnover, Reverse Charge, Works contract

Supply –Scope of Supply (Supply of Goods or Service), Negative

Supply, Composite supply and tax applicable, Mixed supply and tax
applicable, Outward supply, Zero Rated Supply, Exempt Supply
(Exempt Goods / Services). Place of Supply. Time of Supply
Valuation – Value of Taxable supply. Deemed Value. Computation of
taxable supply and tax liability. Rates of GST
Input tax – Input tax eligibility and non eligible input tax. Restricted
input tax, Conditions for availing input tax, internal set off of
CGST/SGST and IGST. Simple problems on computing tax liability.
Composition Scheme.
- Registration under GST: Procedure for registration, Persons liable
for registration, Persons not liable for registration, Compulsory
registration, Deemed registration
- Special provisions for Casual taxable persons and Non-resident
taxable persons
- Return Filing: Procedures relating to Filing the monthly/quarterly
returns, reconciliation and correction of online returns. Electronic
Cash Ledger, Electronic Credit Ledger and provisions.

INTRODUCTION OF GST IN INDIA

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Goods and Services Tax is Tax levied on supply of goods or services or both in India

A. CONCEPT / FEATURES OF GST

The basic concept of GST:
 VALUE ADDED TAX - GST is a value added tax levied on manufacture, sale and
consumption of goods and services.

 CONTINUOUS CHAIN OF TAX CREDITS - GST offers comprehensive and continuous

chain of tax credits from the producer's point/service provider's point upto the
retailer’s level/consumer’s level thereby taxing only the value added at each stage of
supply chain.

 BURDEN BORNE BY FINAL CONSUMER - The supplier at each stage is permitted to

avail credit of GST paid on the purchase of goods and/or services and can set off this
credit against the GST payable on the supply of goods and services to be made by him.

 NO CASCADING OF TAXES - Since, only the value added at each stage is taxed under
GST, there is no tax on tax or cascading of taxes under GST system.

B. TAXES THAT EXISTED PRE GST AND GOT SUBSUMED TO GST

Central Excise Duty VAT/ Sales tax
Additional Excise Duties Luxury Tax
Service Tax Entertainment Tax (except those levied by
Countervailing Duty local bodies)
Central Sales Tax Tax on lottery, betting and gambling
Central Surcharges & Cesses in so far as Entry Tax (All Forms)
they relate to supply of Goods & Services Purchase Tax
Taxes on advertisements
State surcharges and cesses on goods
GST & services

C. DEFICIENCIES IN THE EXISTING VALUE ADDED SYSTEM

Under the earlier indirect tax regime, Central Excise was levied at the Central Level and
VAT at States level. Although it was based on value added tax system, its application
remained fragmented on account of the following reasons:
a) Central Excise was levied on manufacture and then again VAT was levied on sale of
same manufactured goods resulting in double taxation of goods.
b) The input tax credit of Central Excise was not allowed beyond manufacture
c) The input tax credit of VAT of one state was not allowed against VAT of other state.
d) There was double taxation of a transaction considering it to be both goods and
services as the distinction between goods and services was often blurred. e.g. software
development, supply of food, construction etc., was liable to both VAT and service
tax,
e) There were many services on which there existed double taxation. E.g. Luxury tax and

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service tax on Convention centres, Entertainment tax and service tax on amusement /
entertainment activities.
f) State VAT was levied on the value of goods plus on Central excise on such goods
leading to cascading effect of taxes.
g) There was no uniformity in the TAX rates under VAT levied by the States.
h) Non-inclusion of several local levies in State VAT such as luxury tax, entertainment
tax, etc

D. BENEFITS OF GST
GST is win-win situation for the entire country. It brings benefits to all the stakeholders of
industry, Government and Consumers.
The Significant benefit of GST are as under:
a) The subsuming of many taxes reduces the cost of goods and services wherein the
cascading effect of taxes is eliminated.
b) GST aims to make India a common market with common tax rates and procedures
and remove the economic barriers
c) Reduction of multiplicity of taxes and fewer exemptions under GST has led to
simplification and uniformity of tax structure
d) Common and uniform classification of goods and services ensures in certainty in tax
administration
e) The automated process with greater use of Information Technology results in lesser
human interface between the tax payer and tax administration
f) The compliance cost and procedure is lesser in GST owing to uniform procedures and
uniform tax administration in whole country.
g) The removal of cascading effect will boost the manufacture and economy

E. CONSTITUTIONAL PROVISIONS
India has a three-tier federal structure, comprising the Union Government, the State
Governments and the Local Government. The power to levy taxes and duties is distributed
among the three tiers of Governments, in accordance with the provisions of the Indian
Constitution.

Power to levy and collect taxes whether, direct or indirect emerges from the Constitution of
India.

In case any tax law, be it an act, rule, notification or order is not in conformity with the
Constitution, it is called ultra vires the Constitution and is illegal and void.

The Constitution was amended in September 2016, by The Constitution (101 st Amendment) Act 2016
paving way of introduction of GST
Article 246A: Powers to make laws with respect to Goods and Services Tax:
 This article grants power to Centre and State Governments to make laws with
respect to GST imposed by Centre or such State.

 Centre has the exclusive power to make laws with respect to GST in case of inter-
State supply of goods and/or services.

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 However, in respect to the following goods, the aforesaid provisions shall apply from
the date recommended by the GST Council:
1) Petroleum Crude
2) High Speed Diesel
3) Motor Spirit (commonly known as Petrol)
4) Natural Gas
5) Aviation Turbine Fuel

F. GST COUNCIL
 Article 279A of the Constitution empowers the President to constitute a joint forum
of the Centre and States namely, Goods & Services Tax Council (GST Council).

 The GST Council shall consist of the following members, namely:

1) The Union Finance Minister is the Chairperson.
2) The Union Minister of State in charge of Revenue or Finance is the Member.
3) The Minister in charge of Finance or Taxation or any other Minister
nominated by each State Government are the Members. The state ministers
shall choose one amongst them to be Vice Chairperson.

 Decision making : The quorum of GST council will be one half of total members.
Decision is taken based on 3/4th majority of weighted votes, where in centre having
one third vote and all states having 2/3rd of weighted votes.

 The GST Council shall be a body responsible for

1) Administration of GST Laws

2) Specify the taxes, cesses and surcharges to be levied by the centre, state and
union territories;

3) Specify The goods and services that may be subjected to, or exempted from
GST;

4) Specify the GST Rates

5) The threshold limit of turnover below which goods and services may be
exempted from GST;

6) Apportionment of IGST between Centre and States

7) Imposition of additional taxes in times of calamaties and disaster

8) special provision with respect to the special category States

9) Any other matter relating to GST as the council may decide.

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G. RELEVANT DEFINITIONS:
1. “GOODS” means every kind of movable property other than money and securities
but includes actionable claims, growing crops, grass and things attached to or
forming part of the land which are agreed to be severed before supply or under a
contract of supply.

Whether actionable claim is liable to GST?

Actionable claims are considered as Goods. But all transactions of actionable claims
are covered under negative list of GST other than lottery, betting and gambling. Thus
only Lottery, betting and gambling are treated as supply for levy of GST and with
respect to all other actionable claims, GST would not be applicable.

Whether transaction in Securities be taxable in GST?

Securities have been specifically excluded from the definition of Goods as well as
Services. Thus transaction in securities shall not be liable to GST.

2. “SERVICES” means anything other than goods, money and securities but includes
activities relating to the use of money or its conversion by cash or by any other mode,
from one form, currency or denomination, to another form, currency or denomination
for which a separate consideration is charged.
Explanation–– For the removal of doubts, it is hereby clarified that the
expression “services” includes facilitating or arranging transactions in
securities.

Meaning of transaction in Money:

Example 1: A demand draft (DD) is issued by the bank on deposit of cash. This is
transaction in money. This cannot be subject to GST. But if any commission is charged
for making of such DD then it will be considered as “conversion charge” and such
charges will be liable to GST as per Note 2 above.

Example 2: A person goes to the bank for exchange of note of Rs. 2000 into 20 nos. of
notes of Rs. 100. Bank does not charge anything for change of denomination of Rs.
2000 note into Rs. 100 notes. This cannot be considered as transaction in money
because nothing is charged for such a transaction in money or for conversion and
therefore not a service. Thereby not liable to GST.

3. “CONSIDERAION” in relation to the supply of Goods or Services or both OR for

any or forbearance, includes-
a) Any payment made or to be made,
 whether in money or otherwise,
 in respect of, in response to, or for the inducement of,
 the supply of goods or services or both,
 whether by the recipient or
 by any other person

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 but shall not include any subsidy given by the Central Government or a
State Government
PROVIDED that a deposit, given in respect of the supply of goods or services or both
shall not be considered as payment made for such supply unless the supplier applies
the deposit as consideration for the said supply.

4. “BUSINESS” includes –
a) Any trade, commerce, manufacture, profession, vocation or any other similar
activity, whether or not it is for a pecuniary benefit;
b) Any activity or transaction in connection with or incidental or ancillary to (a)
above;
c) Supply or acquisition of goods including capital assets and services in
connection with commencement or closure of business;
d) Provision by a club, association, society, or any such body of the facilities or
benefits to its members, as the case may be;
e) admission, for a consideration, of persons to any premises;
f) services provided by a race club by way of totalisator or a licence to book maker
in such club
g) any activity or transaction undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public
authorities

5. “PERSONS” includes –
a) an individual
b) a Hindu Undivided Family
c) a company including a foreign company
d) a firm or LLP
e) an association of persons or a body of individuals
f) any corporation established by or under any Central Act, State Act or
Provincial Act or a Government company
g) a co-operative society
h) a local authority;
i) Central Government or a State Government;
j) a trust
k) every artificial juridical person, not falling within any of the above.

6. “TAXABLE PERSON” means a person who is registered or is liable to be

registered under the law.

7. “reverse charge” means the liability to pay tax by the recipient of supply of goods or
services or both instead of the supplier of such goods or services or both;

8. “works contract” means a contract for building, construction, fabrication,

completion, erection, installation, fitting out, improvement, modification, repair,
maintenance, renovation, alteration or commissioning of any immovable property
wherein transfer of property in goods (whether as goods or in some other form) is
involved in the execution of such contract;

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9. “aggregate turnover” 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), 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.

A. FRAMEWORK OF GST AS INTRODUCED IN INDIA

1. Dual GST:

 India has adopted a Dual GST model in view of the federal

structure of the country. Consequently, Centre and States
simultaneously levy GST on taxable supply of goods or
services or both which, takes place within a State or Union
Territory.

 GST in India comprises of:

(1) Central Goods and Services Tax (CGST) - levied and
collected by Central Government, on intra state supplies
within a state

(2) State Goods and Services Tax (SGST) - levied and

collected by State Governments/Union Territories with
Legislatures and levied on intra state supplies within a state .

(3) Union Territory Goods and Services Tax (U

TGST) - levied and collected by Union Territories without
Legislatures, on intra-State supplies within the union
territory.

(4) Integrated Goods and Services Tax (IGST) - levied by Centre

on all inter-State supplies. IGST rate is the sum total of
CGST and SGST/UTGST.

 The type of GST to be levied depends on the type of supply.

For the purpose of levy of GST, supply is categorised into:

(1)Intra State Supply : Supply of Goods / Services, where

the location of the supplier and the place of supply
(location of receiver) are in the same State or same Union
Territory shall be treated as intra – State supply of goods /
services.

(2) Inter State Supply: Supply of Goods / Services, where

the location of the supplier and the place of supply
(location of receiver) are in two different States or two

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different Union Territories or a State and a union territory

shall be treated as inter – State supply of goods / services.

2. Legislative Framework:
 There is a single legislation for levying CGST – CGST Act, 2017

 A Single legislation for levy of - IGST Act, 2017

 Union Territories without Legislatures [Andaman and Nicobar

Islands, Lakshadweep, Dadra and Nagar Haveli, Daman
and Diu and Chandigarh] are governed by UTGST Act, 2017
for levying UTGST.

 States and Union territories with their own legislatures [Delhi

and Puducherry] have their own GST legislation for levying
SGST. E.g. Karnataka GST Act, Telangana GST Act., Delhi GST
Act.,

3. Compensation Cess:
GST Compensation Cess at specified rate has been imposed under
the Goods and Services Tax (Compensation to States) Cess Act, 2017
on the specified luxury items or demerit goods, like pan masala,
tobacco, aerated waters, motor cars etc., computed on value of
taxable supply. Compensation Cess is liveable on intra-state supplies
and inter-state supplies with a view to provide for compensation to
the States for the loss of revenue arising on account of
implementation of the GST. E.g.
- All SUV vehicles – 22%; Cars exceeding 1200 CC – 15%; Cars
exceeding 1500CC 17%
- Motor cycles exceeding 350CC – 3%
- Pan masala – 60%
- Aerated drinks – 15%
- Cigarettes exceeding 70MM – 5% plus Rs. 3.668 per stick

4. GST Common Portal:

 GST Electronic Portal – www.gst.gov.in – a website managed by
Goods and Services Network (GSTN) setup by the Government
to establish a uniform interface for the tax payer and a shared
IT infrastructure between the Centre and States.

 GST Electronic Portal for furnishing electronic way bill is

www.ewaybillgst.gov.in. E-way Bill is an electronic document

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generated on the GST Portal evidencing Movement of

Goods.

5. Classification of Goods and Services:

 HSN (Harmonised System of Nomenclature) is used for
classifying the Goods under GST.

 A new Scheme of Classification of Services has been

devised wherein the services of various descriptions have
been classified under various sections, headings and groups.
Each group consists of various Service Codes (Tariff).

6. When is Tax levied?

 A Taxable Event in GST in SUPPLY OF GOODS AND
SERVICES, except
- Alcoholic Liquor for Human consumption
- Petroleum Crude,
- diesel
- petrol
- ATF and Natural Gas
- Opium, Indian hemp and other narcotic drugs and narcotics

 There is no difference between Goods and Services in terms of

taxation. There can be supply of goods or supply of services or
combination of supply of goods and services.

B. LEVY OF GST – CHARGING SECTION

1. Levy of CGST / IGST : CHARGING SECTION

Subject to certain provisions, there shall be levied a tax called Central
Goods and Service Tax / Integrated Goods and Service Tax
 on all intra – state / inter – state supplies of Goods or Services
or Both
 on value determined as per law and
 at such rates, not exceeding 20% / 40%, as may be notified by the
Government on the recommendation of the Council and
 collected in such manner as may be prescribed and
 shall be paid by the taxable person.

2. Reverse Charge under Notified Cases

The Government may,
 by notification, specify categories of supply of Goods or
Services or Both,

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 the tax on which shall be paid by reverse charge basis by the

recipient of such goods or services or both
Supply of Goods notified under reverse charge:
 cashewnuts [not shelled/peeled],
 bidi wrapper leaves,
 tobacco leaves,
 supply of lottery,
 silk yarn,
 used vehicles,
 seized and confiscated goods,
 old and used goods, waste and scrap,
 raw cotton, etc
Supply of Services notified under reverse charge:
 Transportation of goods by road, provided by Goods Transport
Agency
 Legal Services of advocate or firm of advocates to Business
Entity
 Services by Arbitral Tribunal to Business Entity
 Services provided by way of sponsorship to any body corporate
or partnership firm
 Services by Director of a Company to such Company.
 Services by an Insurance Agent to insurance company
 Supply of services by an author, music composer,
photographer, artist or the like by way of transfer or permitting
the use or enjoyment of a copyright relating to original literary,
dramatic, musical or artistic works to a publisher, Music
Company, producer or the like. etc.

3. Reverse Charge in case of supply of goods or services by unregistered

person to registered person (Note: applicability not yet notified)
The Government may,
 by notification, specify a class of registered persons who shall,
in respect of
 supply of specified categories of goods or services or both
 received from an unregistered supplier,
 pay the tax on reverse charge basis as the recipient of such
supply of goods or services or both,

4. CGST Liability of E-commerce Operator (ECO)

The Government may,
 by notification, specify categories of services
 the tax on Intra-State / Inter-State supplies of which shall be paid
by the electronic commerce operator if such services are supplied
through it,

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and all the provisions of this Act shall apply to such electronic
commerce operator as if he is the supplier liable for paying the tax in
relation to the supply of such services.
Supply of Services supplied through ECO:
 services by way of transportation of passengers by a radio-
taxi, motorcab, maxicab and motor cycle;
 services by way of providing accommodation in hotels, inns,
guest houses, clubs, campsites or other commercial places meant
for residential or lodging purposes, if such supplier is not liable for
registration;
 services by way of house-keeping, such as plumbing,
carpentering etc, if such supplier is not liable for registration;
e.g. Amazon, Flipkart, Ola, Uber, UrbanClap, makemytrip.

C. CONCEPT OF SUPPLY
The concept of ‘Supply’ is very important in GST structure.
Supply with consideration in course/ furtherance of
business Taxable Event (Supply)
Import of services with consideration whether or not in
course/ furtherance of business includes

Supply without consideration

exclude
Activities treated as Supply of goods or Supply of
services
Activities neither the supply of goods nor the supply of
services
Composite and Mixed Supplies

Meaning and Scope of Supply

Supply includes –
 all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, licence, rental, lease or disposal made or
agreed to be made for a consideration by a person in the course
or furtherance of business
 importation of services, for a consideration whether or not in
the course or furtherance of business, and
 activities to be treated as Supply even if made without
consideration (Deemed Supply):
1. Permanent transfer or disposal of Business Assets where
input tax credit has been availed on such assets

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2. Supply of goods or services between Related Persons or

between Distinct Persons, when made in course of
business
3. Supply of goods by a Principal to Agent or Agent to
Principal
4. Import of services by a person from a related person or
from any of his other establishments outside India

1. Supply of Goods or Service :

activities or Transactions to be treated as Supply of Goods or
Supply of Services.
Sl. Activity/ Type Nature of
No Transaction Supply
.

1. Transfer of Title in Goods Supply of

Goods
Any transfer of right in goods/ undivided Supply of
share in goods without transfer of title in Services
goods.
2. Any lease, tenancy, easement, licence to Supply of
occupy Land or letting out of building Services
3. Any treatment or process which is Supply of
applied to another person’s goods. – Job Services
works
5. Construction of complex, building, civil Supply of
structure Services
6. Development, design, programming, Supply of
customisation, adaptation, upgradation, Services
enhancement, implementation of IT
software
7. 2. Works Contract Service Supply of
3. Supply of goods, being Food or any Services
other article for human consumption
or any drink.

3. Negative supplies:
activities or Transactions which shall be neither Supply of Goods
nor Supply of Services – Negative List.
Sl. Activities or transactions which shall be treated
No. neither as a supply of goods nor a supply of
services

1.
Services by an employee to the employer in the
course of or in relation to his employment.

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2. Services by any Court or Tribunal established

under any law for the time being in force.
3. Functions performed by the Members of Parliament,
State Legislature, Panchayats, Municipalities and
other local authorities.
Duties performed by any person who holds any post
in pursuance of the provisions of the
Constitution in that capacity.
Duties performed by any person as a Chairperson
or a Member or a Director in a body
established by the Central Government or a
State Government or local authority and who is
not deemed as an employee before the
commencement of this clause.
4. Services of funeral, burial, crematorium or
mortuary including transportation of the deceased.
5. Sale of Land.
Sale of completed Building
6. Actionable claims , other than lottery, betting and
gambling.
7. Supply of goods from a place in the non-taxable
territory to another place in the non-taxable
territory without such goods entering into India.

4. Composite Supply
It comprises of two or more taxable supplies of Goods or Services which
are naturally bundled and supplied in conjunction with each other, in the
ordinary course of business, one of which is a principal supply. It shall be
treated as a supply of such principal supply.
e.g. Booking Train Tickets: You are booking Rajdhani train ticket
which also includes the meals on the train. This is treated as
bundle of supplies. It is a composite supply where the products
cannot be sold separately. The transportation of passenger is,
therefore, the principal supply . The rate of tax applicable to the
principal supply will be charged to the whole composite supply.
Therefore, the rate of GST applicable to the transportation of
passengers by rail will be charged by IRCTC on the booking of
Rajdhani ticket.

e.g. An air conditioner is sold and along with cost of AC, charges are
collected separately for transportation, Installation, Insurance, Annual
maintenance. The rate of tax applicable for AC is applied for all other
charges collected.

5. Mixed Supply:

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It comprises of two or more individual supplies of Goods or Services,

made in conjunction with each other for a single price where such
supply is not a composite supply. It shall be treated as supply of that
particular supply that attracts highest rate of tax.
e.g. A supply of a package consisting of canned foods, sweets,
chocolates, cakes, dry fruits, aerated drink and fruit juices when
supplied for a single price is a mixed supply. Each of these items
can be supplied separately and is not dependent on any other.
The rate of tax shall the goods on which highest rate is
applicable. It shall not be a mixed supply if these items are
supplied separately.
e.g. A single pack of tooth paste (12% GST) and Tooth brush (18%
GST) sold. The rate of tax applicable on whole value of pack is
18T.
e.g A residential flat is given on rent to a doctor, part of which is
used for his residence (GST Exempt) and other part for operating
his clinic (GST on commercial rent 18%). Whole rent taxable @
18%

6. Exempt Supply :
 Any supply of goods or service included in negative list or which is
specifically exempted by way of Notification issued is regarded as
exempt supply. In other words any supply which is not a taxable
supply is considered as exempt supply
 GST law empowers the Central Government or State Government
as the case may be to grant exemption from tax. The exemption is
granted on recommendation of the GST Council.
 Exemption can be from whole of the tax or part of the tax, with or
without conditions.
 GOODS EXEMPT FROM TAX: e.g.
a) Items such as unbranded atta/ maida/ besan, unpacked food
grains, milk, eggs, curd, lassi, fresh fruits and fresh vegetables.
b) Live animals, meat, poultry, birds, insects, fish, meat, fillets,
c) Human hair, human blood, semen, live trees and plants,
d) Jaggery of all types, bread, papad, Non aerated / mineral water,
Salt, firewood,
e) Stamp papers, envelopes, post card, Cheque books,
f) Silk worm, raw silk, Gandhi topi, Khadi yarn, Indian national flag,
Idols made of clay

 EXEMPTED SERVICES e.g.

a) Services by clinical establishment, or medical practitioner,
veterinary clinic, Ambulance services.
b) School education, college education and other Educational services
leading to recognised degree or certificate.
c) Service provided by an educational institute to its students or staff
d) Admission to a museum, national park, wildlife sanctuary,
tiger reserve or zoo.

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e) Access to a road or a bridge on payment of toll charges.

f) slaughtering of animals.
g) public conveniences such as provision of facilities of bathroom,
washrooms, lavatories, urinal or toilets.
h) renting of residential dwelling for use as residence.
i) public libraries by way of lending of books
j) Certain Services related to charitable and religious activities.
k) Agriculture related services including supply of labour for agriculture
purpose and transportation of agriculture produce.
l) Labour charges for construction of single residential house
m) Non air conditioner (other than radio taxi) passenger transportation
service
n) Railway fare other than First class and AC coach, Metro, monorail,
tramway, metered cabs, or auto rikshaws.
o) Electricity transmission

7) Zero Rated Supply:

The following supplies of are considered to be Zero Rated supply:
 Export of goods or services or both
 Supply of goods or services or both to a Developer of Special
Economic Zone or a unit in special economic zone
Difference between Exempt Supply and Zero Rated Supply
 Exempt supplies are made specifically exempted by way of
notification and includes negative supplies, whereas Zero Rated
Supplies are taxable supplies but becomes Zero Rated once it is
exported or supplied to SEZ
 Input tax used for exempt supplies is not allowed, whereas input
tax used for Zero Rated supply is fully allowed and can be claimed
as refund or can be adjusted against out tax of other taxable
supplies

8) Taxable Supply
 Any supply which is not specifically exempted or not included in
negative list is regarded as taxable supply. To consider any supply
as exempted supply it should be notified, if not the same will be
regarded as taxable supply. All taxable supplies need to be
notified.

D.PLACE OF SUPPLY
‘Place of Supply’ under GST is an important factor as it defines whether
the transaction will be treated as intra – State (i.e., within same State) or
inter – State (i.e., between two States) and accordingly chargeability of
tax i.e., levy of CGST & SGST or IGST will be determined.
While determining the levy of taxes as per the place of supply, two
things are considered:

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 Location of supplier: It is the registered place of business of the

supplier.
 Place of Supply: In general, it is the registered place of business
of the recipient.
But there are specific cases where the law has explicitly provided POS
for supply of goods and services separately.

1) Place of Supply of Goods other than supply of goods

imported into or exported from India:
Sl. Description Place of Supply (POS)
No.
1. Where the Supply involves Location of goods when
movement of goods. movement of goods
terminates.

2. Where the good are delivered by The Principal Place of

the supplier to recipient or any Business of third
other person on the direction the person.
Purchaser.
3. Where supply does not involve Location of goods at the
movement of goods. time of delivery to
recipient.

4. Where goods are assembled or Place of installation /

installed at site. assembly.
5. Where goods are supplied on Location at which such
board a conveyance, including goods are taken on
vessel, aircraft, train or motor board.
vehicle.

2) Place of Supply of Services : POS for certain services has

been listed below:
Sl. Description Place of Supply (POS)
No.
1. General rule:
(a) Supply to Registered Location of Registered
person – B2B Person

(b) Supply to person other (i) Location of Recipient if

than registered person – B2C address exists in record
(ii) Other cases, location of
Supplier

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2. Services supplied (i) Location of such

(a) in relation to immovable property in
immovable property India
(b) by way of lodging (ii) If immovable property is
accommodation outside India, then
(c) accommodation to Location of Recipient
organise marriage, religious or
business function
3. Supply of Restaurant and catering Location where service is
services, Personal grooming, performed.
Fitness, Beauty Treatment, Health
service including cosmetic and
plastic surgery.
4. Training and performance Location of Registered
appraisal service Person.
(a) To Registered Person
- B2B

(b) To person not Location where service is

registered - B2C performed.

5. Service by way of Admission to Place

cultural, artistic, sporting,  Where event is held.
scientific, educational,  Where park or other
entertainment event or place is located.
amusement park or any other
place
6. Where services are supplied on Location of First schedule
board a conveyance, including point of departure of
vessel, aircraft, train or motor conveyance.
vehicle.

E. TIME OF SUPPLY

1) TIME OF SUPPLY OF GOODS

The liability to pay tax on goods shall arise at the time of supply as determined in terms of
the provisions of GST.

i) The time of supply of Goods shall be the earlier of the following dates, namely:
a. the date of supply of goods or
b. the date of issue of invoice (on every supply required) or
c. the last date on which he is required, to issue the invoice with respect to the
supply; or
d. the date on which the supplier receives the payment

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Note: “the date on which the supplier receives the payment” shall be the date on
which the payment is entered in his books of account or the date on which the
payment is credited to his bank account, whichever is earlier

ii) In case of goods on which tax is paid on Reverse Charge Basis, the time of
supply shall be the earliest of the following dates, namely:
a. The date of the receipt of the goods, or
b. The date of payment or
c. The date immediately following thirty days from the date of issue of invoice or
any other document

iii) In case of supply of Vouchers by a supplier, the time of supply shall be:
a. the date of issue of voucher, if the supply is identifiable at that point; or
b. the date of redemption of voucher, in all other cases

iv) The time of supply to the extent it relates to an addition in the value of supply by
way of interest, late fee or penalty for delayed payment of any consideration
shall be the date on which the supplier receives such addition in value.

2) Time of supply of Services

i) The time of supply of Services if invoice issued before or within 30 days of

provision of service, shall be the earliest of the following dates, namely:
a. the date of issue of invoice by the supplier or
b. the date of receipt of payment, whichever is earlier.

ii) The time of supply of Services if invoice NOT issued before or within 30 days
of provision of service, shall be the earliest of the following dates, namely
a. the date of provision of service, or
b. the date of receipt of payment, whichever is earlier.

iii) In case of service on which tax is payable or on Reverse Charge Basis, the time
of supply shall be the earlier of the following dates, namely:
a. the date of payment
the date immediately following sixty days from the date of issue of invoice by the supplier.

VALUE OF SUPPLY
Value of supply means the money that a seller collects for the goods and
services supplied. The amount collected by the seller from the buyer is
the value of supply.
But where parties are related and a reasonable value may not be charged,
or transaction may take place as a barter or exchange; the GST law
prescribes that the value on which GST is charged must be its
‘transactional value’.
Transaction Value - This is the value at which unrelated parties would
transact in the normal course of business. It makes sure GST is charged

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and collected properly, even though the full value may not have been
paid.

A. Supplies to unrelated persons where price is the sole

consideration:

1. The value of a supply of goods or services or both shall be the

Transaction Value, which is the price actually paid or payable for
the said supply of goods or services or both where the supplier and
the recipient of the supply are not related and the price is the
sole consideration for the supply.

2. The value of supply shall include:

a. Taxes by whatever name called other than GST & GST
Compensation Cess:
b. Any amount collected by whatever name called in relation to
supply, like packing, warranty, after sales, transport, insurance
etc.,
c. Interest, late fee or penalty for delayed payment:
d. Subsidies other than Government subsidies

3. The value of the supply shall not include

a. any discount given before or at the time of the supply if such
discount has been duly recorded in the invoice
b. any discount given after the supply such discount is established
in terms of an agreement entered into at or before the time of
such supply and specifically linked to relevant invoices
c. Subsidies received from Government.

B. Supplies where value cannot be determined above and

notified supplies:

a. If the transaction is with a related party, and/or price is not the sole
consideration for the supply of goods / services, then the value will
be determined as per the Rules for Valuation. In respect of certain
notified supplies also, the value will be determined in the manner as
stipulated in the rules for valuation.
b. The specified valuation rules are:

Sl. Type of Transaction Value to be adopted for GST

No.
I Value of supply of 1. Open market value of such supply
goods or services 2. If (1) fails, then Total consideration in
where the money and any other form.
consideration is not 3. If (1) and (2) fails then, Value of supply
wholly in money. of like and kind.
4. If (1), (2) or (3) fails then IV or V in that
order
II Value of supply of 1. Open market value of such supply

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goods or services or 2. If (1) fails, then Total consideration in

both between distinct money and any other form.
or related persons, 3. If (1) and (2) fails then, then IV or V in
other than through an that order.
agent. Alternate option: If the goods are intended
for further supply, then 90% of price
charged by the receiver to the independent
person
III Value of supply of a. Open market value of such supply
goods made or Alternate option: If the goods are intended
received through an for further supply, then 90% of price
agent. charged by the receiver to the independent
person
b. If (a) fails then, then IV or V in that order.
IV Value not determinable If value not determinable by any of
under above Rules preceding rules, then the value shall be
110% of cost of production or manufacture
or purchase or service
V Value not determinable Determine using reasonable means
even under I to IV
above
VI Valuation for
Specified Supplies
Sale of Forex Option A - the value shall be the difference
in the buying rate or the selling rate, as the
case may be, and the RBI rate multiplied
by the total units of currency.
Option B –
- Up to Rs. 1,00,000, 1% of currency
exchanged or Rs. 250 whichever is
higher
- More than 1,00,000, = 1,000 + 0.5% of
value of currency exchanged
- More than 10 Lakhs = 5,500 + 0.1% of
value of currency exchanged
Booking of air tickets 5% of basic fare for Domestic ticket
by an air travel agent 10% of basic fare for International ticket
Life Insurance Business a. Single premium = 10% of single
premium charged
b. Other cases = 25% of first year premium
and 12.50% of subsequent years
premium.
c. Only risk policy: entire premium charged
from policy holder

Second hand / used the difference between the selling price

good and purchase price and where the value of
such supply is negative it shall be ignored.
Token, voucher coupon the money value of the goods or services

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or stamp etc., or both redeemable against such token,

voucher, coupon, or stamp.
VII Pure Agent Value of expenditure or cost incurred shall
be excluded subject to conditions.
VIII Value inclusive of GST The GST component shall be excluded in
determining the taxable value.

C. PRACTICE QUESTIONS
1. ND sold Machine X for 4,00,000 net in exchange of Machine Y. This
machine was purchased by ND for Rs. 6,00,000. Determine the taxable
value of Machine X in following independent scenarios:
a) Open market value of machine X is 6,80,000/-
b) Open market value not available the value of machine Y is 2,60,000
c) Open market value not available, nor value of machine Y could be
determined.

ANSWER
a) In terms of GST valuation Rules (quote Sl ‘I’ of table) the taxable
value of supply where money is not the sole consideration shall be:
(1)Open market value of such supply
(2)If (1) fails, then Total consideration in money and any other form.
(3)If (1) and (2) fails then, Value of supply of like and kind.
(4)If (1), (2) or (3) fails then IV or V in that order
Accordingly since the open market value of Machine X is given, the
same shall be taken at Rs. 6,80,000/- Clarifying that if open market
value available do not use other options, since if (1) fails next
options to be used.
b) Considering the same aforesaid valuation rule, now in this case the
open market value is not available. Now we apply (2) of valuation
rule which states that the value of money and the value of benefit
received shall be taken as taxable value. ND receives money of Rs.
4,00,000 and also the machine Y which is valued at Rs. 2,60,000/-.
Adding of the money value plus the kind value shall be the taxable
value and which shall be Rs. 6,60,000/-

c) When open market value and even the value of kind received is not
determinable, then the value shall be 110% of cost to the supplier.
Accordingly for this option the taxable value shall be 6,00,000 x
110%, which is Rs. 6,60,000

2. Mr. U is an air travel agent. Compute the value of supply of

service made by him during a month with the help of following
particulars furnished by him:

Particulars Basic Other Taxes Total

fare charg value of

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es tickets
and
fee
Domestic 1,00,9 9,51 4,990 1,15,400
Bookings 00 0
International 3,16,8 20,93 15,670 3,53,480
Bookings 80 0

As per GST valuation rules (refer to Sl No. VI of table) in case of an air

travel agent (not direct airline) the taxable value shall be 5% of basic fare
for domestic bookings and 10% of basic fare for international bookings.
All other amounts collected to be ignored. Accordingly in the given case,
the value of taxable supply will be
1,00,900 x 5% + 3,16,880 x 10% =

3. M is a used car dealer. His trading transaction during a month are:

Particulars Sale price Purchas Sales
e price commission
paid
Car A 12,00,000 10,80,0 0
00
Car B 14,00,000 11,20,00 14,000
0
Car C 15,00,000 15,50,00 0
0
Car D 16,00,000 14,50,00 10,000
0
Car E 17,00,000 16,00,00 0
0
Determine the value of supply on which GST is payable

ANSWER
A supplier dealing in second hand / used goods has option to consider
taxable value being the excess of sale price over purchase price. (refer VI
of above table) the taxable value shall be as below
Partic Sale Purchas Taxable Remarks
ulars price e price value
Car A 12,00,0 10,80,0 1,20,000 Loss to be ignored
00 00 and even cant be
Car B 14,00,0 11,20,0 2,80,000 set off against profit
00 00 of other supply.
Also no expense will
Car C 15,00,0 15,50,0 0 be allowed as
00 00

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Car D 16,00,0 14,50,0 1,50,000 deduction.

00 00
Car E 17,00,0 16,00,0 1,00,000
00 00

4. MB limited is engaged in Security supply services. Its mode of billing is

the actual salary of security guard plus 15% as its service charges. MB
supplied security guards to one of its clients AB, and the actual salary paid
for securities deployed with AB was Rs. 50,000. MB limited shows in
invoice Rs. 50,000 as reimbursement of security salary and 7,500 as its
service charges. Determine taxable value.

Answer:
The general rule for determination of taxable value of supply is
the consideration received for supply irrespective of its break up
and irrespective of whatever name called. The only exception is
amount incurred as pure agent. (particularly statutory
payments) There is no provision for deduction of re-
imbursements for determining at taxable value. In the given case
the taxable value shall be Rs. 57,500/- including the
reimbursement of salary to security guard.

5. A Company Secretary charges gross amount of Rs. 15,000/- for

incorporation serives of an LLP. Of this he makes payment of LLP
Registration fees of Rs. 3,000/- to ROC. Determine the taxable value on
which GST is payable.

ANSWER
In continuation of answer for question 4, any amount collected by
a person in the course of providing supply will not be considered
for taxable supply, if the supplier is acting as pure agent and
makes payment to 3rd party on authorisation by the recipient. Eg
: A Chartered accountant receives Rs. 40,000/- from his client
which includes Rs. 25,000 of income tax of client which is paid by
the CA. The sum of Rs. 25,000 will not be considered as taxable
value as the CA is incurring this purely on the authorisation of the
recipient and also being statutory payment. In detail refer this
link http://cbic.gov.in/resources//htdocs-
cbec/gst/51_GST_Flyer_Chapter26.pdf;jsessionid=C146E90CB640F0E95548C0F05EB058
E1.
In the given case the taxable value of supply shall only be Rs. 12,000/-

6. MTM & CO is a leading chartered accountancy firm registered with

Institute of Chartered Accountants of India (ICAI) having its head office

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at Bangalore. The firm received money from various clients for the
services rendered in the month of November
- Accounting and auditing services of Rs.1,25,000
- Representation before various statutory authorities Rs. 1,00,000
- Cost accounting and cost auditing of Rs.50,000
- Secretarial auditing Rs. 35,000
- Verification of declarations in prescribed forms of compliance for
obtaining a certificate of commencement of business Rs. 40,000
- Certificate of documents to be filed before registrar of companies
Rs. 25,000
- Ledger maintenance, non-professional services and preparation of
coaching material Rs. 20,000
- Fee for routine visits to income tax offices Rs. 55,000
- Remuneration for teaching CA students Rs. 30,000
- Fee for outsourcing work of a client such as billing and ledger
posting Rs. 75,000
- Services rendered in Delhi Rs. 70,000
Calculate GST payable, IGST 18%, CGST 9%, SGST 9%

ANSWER
Any supply which is not a negative supply, exempted supply or zero rated
supply will be taxable supply. It does not matter the kind or type of
supply. The same is taxable at the rates prescribed under GST Act.
The given case relates to a supplier engaged in supply of Chartered
Accountancy Services. In case of CA of Firm of CA no service have been
exempted under GST Act and accordingly all the services given above are
taxable. Even teaching services by any professional (but not capacity as
employee) is taxable.
The total taxable value of intra state supply Rs. 5,55,000 and the taxable
value of inter state supply is Rs. 70,000.
CGST Rs. 49,950; SGST 49,950 (555000 x 9%) and IGST Rs. 12,600
(70,000 x 18%)

7. Mr. H is a registered dealer in Jaipur. From the following particulars, find

out the taxable turnover and IGST payable under the GST Act:
- Chocolates not containing Cocoa worth Rs. 2,04,000 sold to a
registered dealer in Punjab (IGST Rate 28%)
- Mineral water worth Rs. 2,20,000 were transferred to their
branch at Kolkata (IGST Rate 18%)
- Ayurvedic medicines worth Rs. 1,64800 are sold to the registered
dealer of MP (IGST Rate 12%)
- Skimmed milk powder worth Rs. 54,000 are sold to the
registered dealer of UP (IGST Rate 5%)
- Goods amounting to Rs. 3,10,000 were sold to firm of London in
the course of export outside India
- Silver worth Rs. 5,40,000 are sold to the registered dealer of UP
(IGST Rate 5%)

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- Coffee beans worth Rs. 2,20,000 were transferred to their branch

at Kolkata
- Sale of petroleum products to a registered dealer in UP for Rs.
2,50,000
- Sale of alcoholic liquor for human consumption to a registered
dealer in MP for Rs. 4,50,000

Computation of IGST payable:

Particulars Non 5% 12% 18% 28%

GST / taxable taxable taxable taxable
exempt
Write the particulars
as given in question
1) 2,04,000
2) 2,20,000
3) 1,64,800
4) 54,000
5) 3,10,00
6) 0 5,40,00
7) 0
8) 2,20,00
9) 0
Taxable value 2,50,00
0
4,50,00
0
5,94,00 1,64,800 2,20,000 2,04,000
0
IGST 29,700 19,776 39,600 57,120

INPUT TAX

A. The GST regime promises seamless credit on goods and services

across the entire supply chain with some exceptions. ITC is
considered to be the lifeline of the GST regime. In fact, it is the
provisions of ITC which essentially make GST a value added tax
i.e., collection of tax at all points of supply chain after allowing
credit of tax paid at earlier points.

B. RELEVANT DEFINITIONS
 Input means any goods other than capital goods used or
intended to be used by a supplier in the course or furtherance
of business.

 Input service means any service used or intended to be used

by a supplier in the course or furtherance of business.
 Capital Goods means goods, the value of which is capitalised in

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the books of account of person claiming the input tax credit and
which is used or intended to be used in course or furtherance of
business.
 Input service distributor means an office of the supplier of
goods or services or both which receives tax invoices issued
towards the receipt of input services and issues a prescribed
document for the purposes of distributing the credit of central
tax, State tax, integrated tax or Union territory tax paid on the
said services to a supplier of taxable goods or services or both
having the same Permanent Account Number as that of the said
office. Eg A Ltd having registered office at Delhi has branches
at Chennai, Mumbai & Bangalore. The invoice statutory Audit
fees of A Ltd is made to the registered office which covers the
audit of branches also. Here A Ltd is referred to as input service
distributor and can distribute the credit to its branches in
prescribed manner.

 Input tax in relation to a registered person, means the

following tax charged on any supply of goods or services or both
made to him :
(a) CGST
(b) IGST, i n c l u d i n g IGST paid on import of
goods
(c) SGST / UTGST
(d) CGST / SGST/ IGST paid on reverse Charge
but does not include the tax paid under the composition levy.

C. ELIGIBILITY AND CONDITIONS FOR TAKING INPUT TAX

CREDIT
(1) The person intending to take credit shall be a registered person.
(2) The credit should not be eligible credit (See D below)
(3) If common inputs / services used for supply of both taxable and
exempted supply, then credit in proportionate to taxable value only
can be claimed.
(4) If capital goods are used for both taxable and exempted supply
then, full credit can be taken in the month of purchase, but a credit
in proportion to exempt supply to be reversed every month for 60
months.
(5) The goods, services or both are used or intended to be used in the
course or furtherance of business.
(6) He should be in possession of tax invoice or debit note issued by
the registered supper
(7) He should have received the goods or services
(8) The input tax should have actually paid to the Government by the
person issuing the invoice. (should be reflecting in GSTN Portal)
(9) The person issuing invoice should file his return

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(10) When the goods are received in instalments, credit shall be take
upon receipt of last instalment
(11) The payment for receipt of goods or services should be made within
180 days from the date of invoice. If not paid the credit already
taken shall be reversed along with interest till the date of reversal
(12) In case of capital goods, depreciation on input tax shall not be
claimed
(13) The input tax must be claimed within due date of filing GST returns
for September of next financial year.

D. INELIGIBLE INPUT TAX –

The following input tax credit is not allowed irrespective of fact of the
same being used for business purposes:
1) The credit of any goods, service or capital goods used in supply of
exempted supply or non taxable supply.
2) Motor vehicles of all kind, Vessels and aircraft unless used in
business of further sale, transportation of passengers / goods or
imparting training / driving
3) Insurance, repairs and maintenance of any vehicle, vessel or
aircraft
4) Food and beverages, outdoor catering, beauty treatment, health
services, membership of club or fitness centre
5) Rent a cab service
6) On construction of immovable property unless engaged in business
of construction.
7) Goods or services used for personal consumption
8) Input tax on stolen, lost or destroyed goods
9) Inputs tax on purchase from composition dealer.

E. SEQUENCE OF UTILISATION OF INPUT TAX

Input Tax First to be Balance to be

utilized for utilized for
IGST IGST CGST or SGST
CGST CGST IGST
SGST SGST IGST

Note : SGST can be utilized for IGST only after CGST is fully
utilized.

F. PRACTICE QUESTIONS
1) Calculate GST liability from the following information:
a) Sales made to customers outside the state – Rs. 25,00,000
b) Sales made to customers within state – Rs. 35,00,000
c) Export of goods outside India – Rs. 10,00,000
d) Purchases made from outside state – Rs. 40,00,000
e) Purchase made from within state – Rs. 30,00,000

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f) Import of goods from Germany – Rs. 5,00,000

g) Legal charges paid for import of goods – Rs. 1,50,000
h) Transportation charges separately paid on purchase of goods –
Rs. 3,00,000
GST on transportation – 5% and other transactions 18%
Note : HOW THE CREDIT TO BE UTILISED
Section 49B states that IGST credit shall first be fully utilised
against the CGST/SGST/UTGST out tax and thereafter the credit
of respective CGST/SGST/UTGST shall be utilised.
Computation of Tax
Liability
Taxable
Particulars value IGST CGST SGST
OUTPUT TAX

4,50,00
Sales outside state- Interstate 25,00,000 0

Sales within State - Intra 3,15,00 3,15,00

state 35,00,000 0 0

Export of goods 10,00,000 Exempt

4,50,00 3,15,00 3,15,00

Total GST on outward supply 0 0 0
INPUT TAX

Purchase from o/s state – 7,20,00

Interstate 40,00,000 0

Purchase within state - Intra 2,70,00 2,70,00

state 30,00,000 0 0

Import of goods 5,00,000 90,000

8,10,00 2,70,00 2,70,00

Total Input Tax 0 0 0

Net GST liability

IGST CGST SGST

4,50,00 3,15,00 3,15,00

Total out tax 0 0 0
Credit utilisation
Input
avialable

4,50,00 3,15,00
IGST 8,10,000 0 0 45,000

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2,70,00
CGST 2,70,000 - 0 NA

2,70,00
SGST 2,70,000 - NA 0

(2,70,0
Net GST payable/ Carried fwd - 00) -

Reverse charge - Cash

only

Reverse charge on transport 3,00,000 - 7,500 7,500

Reverse charge on legal 1,50,000 - 13,500 13,500

Total GST on Reverse Charge . 21,000 21,000

Total GST Payable 21,000 21,000

2) Mr. Karan a dealer submits the following information in relation to

manufacture and selling of water pumps. Compute the net GST
liability from the following information.
- Inputs purchased within the state from registered dealer at 5%
GST - Rs. 3,00,000
- Inputs purchased from a dealer who opted for composition
scheme (the rate of GST applicable to this product is 18%) Rs.
6,00,000
- Inputs purchased from a dealer in Chennai at 12% GST, Rs.
30,00,000
- Inputs purchased within the state and these goods are exempt
from GST, Rs. 10,00,000
- Capital goods procured from other state during the month 28%
GST, Rs. 20,00,000
- Finished goods sold within the state at 18% GST, Rs. 6,00,000
- Goods sold to a dealer in Kolkata at 5% GST, Rs. 20,00,000
- Goods sold to a unit of SEZ in Tumkuru rate of GST applicable is
5%, Rs. 6,00,000
- Goods sold to unregistered dealer in Karnataka at 28% GST, Rs.
10,00,000
- Goods sold to a dealer who opted for composition scheme at 5%
GST, Rs. 12,00,000
- Goods sold to a dealer in Bangalore (these goods are exempt
from GST and these goods are produced from the materials
purchased from Chennai), Rs. 4,00,000

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ANSWER
Assumption : Since it is not stated where the dealer is registered and
considering that within state details separately given, it is assumed that
all the places specifically stated in question are outside the state of
supplier and accordingly treated as inter state supply and wherever place
of supply not stated is within the state.

Computation of Tax
Liability
Taxabl
Particulars GST Rate e value IGST CGST SGST
OUTPUT TAX

6,00,00 54,00
Sale within state 18% 0 - 0 54,000

20,00,0 1,00,0
Sale to Kolkota 5% 00 00

6,00,00
Sale to SEZ 0% 0 -

10,00,0 2,80,0
Sale to unregd dealer 28% 00 00

Sale to composite 12,00,0 60,00

dealer 5% 00 0

4,00,00
Sale to Bangalore exempt 0 -

4,40,0 54,00
Total output Tax 00 0 54,000
INPUT TAX

Purchases within 3,00,00

state 5% 0 - 7,500 7,500

Purchase from 6,00,00

composite dealer 18% 0 N/E N/E

Purchases from 30,00,0 3,60,0

chennai(30-4) 12% 00 00

Purchase used for 4,00,00 (48,00

exempt supply 12% 0 0)

10,00,0
Purchase exempt Exempt 00 - -

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Capital goods 20,00,0 5,60,0

purchase 28% 00 00

8,72,0
Total input Tax 00 7,500 7,500

Net GST liability

IGST CGST SGST
Credit utilisation
Input
avialable

4,40,00 54,00 54,00

IGST 8,72,000 0 0 0

CGST 7,500 - 7,500 NA

SGST 7,500 - NA 7,500

Net GST payable/ (3,24,00 (7,500 (7,500

Carried fwd 0) ) )
(872-440-54-54 =
324)

1) The abstract of monthly transactions of San Technology engaged in

manufacture of Computers for the month Jan 2020 is as below:
Particulars Dr
INCOME
Sale of Computers within state 34,00,000
Sale of Computers outside state 36,00,000
Subsidy received from State Government on supply of computers
to a Govt school within state 1,80,000
Subsidy received from an NGO on supply of computers to Govt
school outside the state 1,20,000
Packing charges collected separately in Invoice on all supplies 2%
Warranty charges 3%
Transportation charged in invoice on supplies outside the state 2,10,000
AMC charges (all inclusive price including GST) collected within 1,42,000
state on computers sold by it.
EXPENSE/ PAYMENTS
Intra state Purchase of inputs for manufacture of computers 8,00,000
Import of inputs for manufacture of computers 14,00,000
Purchase of inputs from Composite dealer within state 6,00,000
Royalty to a company in US for software included in computers 9,00,000
Transportation charges separately paid on purchases 1,00,000
Wages 3,00,000
Rent 50,000
Administrative Salaries 2,00,000
Advertisement 60,000
Telephone Charges 10,000

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Legal Charges paid outside state 20,000

Car purchased 12,00,000
Food and beverages to employees 70,000
Cost of computer given free to a customer as promotional expense 40,000
a) All the above values are exclusive of taxes wherever applicable
b) IGST rate on computers is 12%, Transportation 5%, and other supplies
including AMC 18%
c) Customs duty of Rs. 1,08,000 and IGST of Rs. 1,34,000 is paid on import on
inputs.
d) Due to Financial constraints San Limited could pay GST liability and file its
GST returns on 10.03.2020
You are required to briefly State the consequences of non payment or non filing
of returns within prescribed dates and calculate the total GST liability of San
Limited for the month Jan 2020
Computation of GST
Liability
A Taxable Turnover Inter State Intra State
36,00,
Sale of computers 000 34,00,000
Not to be
Subsidy from Government - included
1,20,
Subsidy from NGO 000
Packing charges 2% of sale 72,
value 000 68,000
Warranty charges 3% of sale 1,08,
value 000 1,02,000
2,10,
Transport charged in invoice 000 -
41,10,
Taxable value of computers 000 35,70,000

AMC Charges (includes GST) 1,20,339

(1,42,000 / 118 x 100)
Taxable value of AMC charges 1,20,339

B GST liability
Taxable
Particulars value IGST CGST SGST
OUTPUT TAX
Sale - Computer outside
state 41,10,000 4,93,200

2,14,20
Sale - Computer within state 35,70,000 0 2,14,200

AMC Charges 1,20,339 - 10,831 10,831

Total output tax - A 2,25,031

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2,25,03
4,93,200 1
INPUT TAX

Intra state purchase 8,00,000 48,000 48,000

Import of inputs 14,00,000 1,34,000

(actual IGST on import only)

Purchase - composite dealer 6,00,000 N/E N/E

Rent 50,000 4,500 4,500

Advertisment 60,000 5,400 5,400

Telephone 10,000 900 900

Car 12,00,000 N/E N/E

Food and beverages 70,000 N/E N/E

Free computer to customer 40,000 (2,400) (2,400)

Total eligible input tax - B 1,34,000 56,400 56,400

Net GST on outward 3,59,20 1,68,6

supply (A-B) C 0 31 1,68,631

Reverse charge -Royalty

imported 9,00,000 1,62,000

Legal charges 20,000 3,600

Transportation - Purchases 1,00,000 2,500 2,500

Total GST Reverse Charge D 1,65,600 2,500 2,500

5,24,80 1,71,1
Total GST payable C+D 0 31 1,71,131
Add : Consequnce of delay

Interest @ 18% PA 19 days 4,917 1,603 1,603

Delay fees GSTR 1 - 29 days 2,900 2,900

Delay fees GSTR 3B - 19
days 475 475

5,29,71 1,76,1
Total amount payable 7 09 1,76,109

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COMPOSITION LEVY, REGISTRATION, TAX INVOICE, EWAY BILL

COMPOSITION LEVY
Composition scheme under the law is for small businesses. This is to bring
relief to small businesses so that they need not be burdened with the
compliance provisions under the law. Thus, an option has been provided
where they can opt to pay a fixed percentage of turnover as fees in lieu of
tax and be relieved from the detailed compliance of the provisions of law

The Provision relating to composition levy are as below:

A) Optional Scheme : This Scheme is optional and available only for
eligible for only certain category of taxable persons
B) Eligibility :
i) A registered person engaged in supply of goods and whose
aggregate turnover during the preceding financial year did not
exceed Rs. 1.50 Crores (75 lakhs in case of Special category states
– Meghalaya, Tripura, Sikkim, Manipur etc). Can also provide
services but not exceeding 10% turnover or Rs. 5,00,000/- which
ever is higher.
ii) A registered person engaged in supply of only Services and whose
aggregate turnover during the preceding financial year did not
exceed Rs. 50 Lakhs. Should not be engaged in supply of goods or
should be a person operating restaurant.
iii) A person providing restaurant service
iv) A Manufacturer engaged in manufacture of ice cream and other
edible ice, pan masala, Aerated water, tobacco or tobacco
substitutes not eligible
v) Should not be engaged in Inter state supply of goods or services.
C) Rates of Tax :
i) Goods – CGST 0.50% and SGST 0.50%
ii) Restaurant – CGST 2.50% and SGST 2.50%
iii) Service Provider – CGST 3.0% and SGST 3.0%

D) Conditions
i) Cannot collect tax on supply of goods or services except for
restaurant service
ii) Not eligible to take any input tax credit
iii) The option shall automatically lost once the turnover exceeds the
prescribed limits.
iv) The tax invoice must state that he is registered under composition
levy.
v) The option must be exercised at the time of registration or in case
of already registered suppler before the commencement of
financial year by filing electronic form.
REGISTRATION

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A) Persons liable for registration

i) Every supplier whose aggregate turnover in a financial year
exceeds Rs. 20 Lakhs (10 Lakhs in case of special category states).
(Note the Government has issued power to state governments to
enhance the limit for supply of goods only to Rs. 40 Lakhs and as
on date few states have notified.)
a) Aggregate turnover is the crucial parameter for deciding the
requirement of registration and also the eligibility for the
scheme of composition
b) Aggregate turnover means the value of total outward supplies
which includes the taxable supply, exempt supply, export
supplies, zero rated supply of a person having same PAN and is
computed on all India basis. The aggregate turnover shall not
include the CGST/SGST/IGST/UTGST/ Cess and the value on
which GST is payable under reverse charge.
ii) Every supplier engaged in inter state supply irrespective of his
turnover.
Eg;- MD ltd makes intra state supply of Rs. 1,95,000; inter supply
of Rs. 8,20,000; export of Rs. 2,70,000; exempt supply of
Rs.60,000; non taxable supply of Rs. 90,000. It also paid for legal
charges Rs. 50,000/- on which it is liable to pay GST on reverse
charge. Calculate aggregate turnover. Is it required to obtain
regn?
iii) Every casual trader who does not have a fixed place of business,
irrespective of his turnover
iv) A person who is required to pay tax under reverse charge
mechanism
v) E-Commerce operator, irrespective of no supplies not made on its
own.
vi) A agent who makes taxable supply on behalf of its principal
irrespective of agent’s turnover
vii) Input service distributor
viii) A person who is required to deduct tax at source or collect tax
at source.
ix) A person exclusively making supply of exempted goods or services
or non GST supply need not obtain registration irrespective of
turnover.
Eg:- N is dealer in alcoholic liquor for human consumption and its
turnover is Rs. 35,76,000. Calculate aggregate turnover and state
whether it is required to obtain registration
x) Any person not covered (turnover less than exemption limit) above
may obtain voluntary registration. If he does so, then is liable to
pay GST from the 1st supply after registration even if his total
turnover does not exceed the exemption limit.

B) Procedure for registration

i) Register online with GSTN portal with a mobile number and e mail
id

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ii) A person operating in different states / UT is required to obtain

registration separately for each state
iii) A person operating in different places within a state, MAY obtain
separate registration for each place of supply or can obtain one
registration for all places within state by declaring the additional
place of business in such one registration
iv) Submit online application for registration with GSTN Portal along
with documents like PAN Card, Adhar Card, Copy of Bank
Statement, documentary Proof of business place, Photos in case of
individuals. In case of partnership firm the partnership deed along
with details of all partners. In case of company MOA & AOA.
v) The online application to be filled with all prescribed particulars like
name of business, address, nature of goods or services to be
supplied etc.,
vi) If the application and the documents found to be in order,
registration will be granted in 3 working days. If any deficiency the
proper office will issue notice requiring clarification to be submitted
within 7 days and upon submission of clarification registration will
be granted
vii) If the officer believes that physical verification of business place is
required, he may get such verification done and only his
satisfaction shall grant registration within 15 days after verification.

TAX INVOICE & E-WAY BILL

A) Every supplier of goods or services shall compulsorily issue tax

invoice for every supply of goods or service containing the details
like description of supply, quantity of goods, value of supply, GST
charged and such other particulars as may be prescribed.
B) Electronic Way Bill (Eway Bill):
i) E way bill is a electronic document generated on the GSTN Portal
evidencing the movement of goods
ii) It is a compliance mechanism wherein the person causing the
movement of goods uploads the relevant information prior to the
commencement of movement of goods.
iii) Only a registered person can generate E way bill
iv) Every registered person who causes movement of goods in
relation to supply or reasons other than supply of a value
exceeding Rs. 50,000/- shall compulsorily raise an E way bill
containing the details in relation to such supply including the
value of supply.
v) The person in charge of conveyance of carrying the goods must
carry such E Way bill till the destined delivery and shall be
furnished for verification whenever intercepted by the proper
officer.

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vi) The validity of E way bill shall be one day for every 100 Kms and
in case of Over dimensional cargo it is one day for every 20 Kms.
Goods should the destination place within such validity period.
vii) If owing to exceptional nature like breakdown, the goods are not
delivered within the validity period then the details of same shall
be immediately uploaded in the portal.
viii) Supply of goods without E-way bill or any contravention of
provision relating to E-way bill will be liable for penalty not less
than one time and up to three times of tax involved and also
liable for confiscation of goods.

PAYMENT OF TAX & RETURNS

A) PAYMENT OF TAXES:
i) The GST shall be paid by internet banking, credit/debit cards,
NEFT or RTGS modes only. The amount so paid shall be credited
to Electronic Cash Register
ii) The deposit of money in Electronic cash register shall state
whether it is for CGST or SGST/UTGST or IGST.
iii) The amount available in Electronic cash register can be used for
payment of tax, cess, interest, penalty, fees or any other
amounts payable under GST Act. The utilisation of cash can be
used only for particular GST (like CGST, SGST, IGST for which the
cash is available)
iv) The input tax credit as self assessed and claimed by the supplier
shall be credited to Electronic Credit Register
v) The balance in Electronic Credit register can be used only for
payment Tax and not any other amounts like interest, fees or
penalty. Further the Credit of CGST cannot be used to pay SGST
or vice versa. The credit of IGST is utilised first for IGST, then for
CGST and then for SGST liability.
vi) The GST liability of a particular shall be paid within 20th of
subsequent month in case of all category of suppliers. Non
payment of same within prescribed date will be liable for interest
@ 18% PA for the number of days of delay.
vii) In case of excess or wrong claim of input tax interest @ 24% PA
shall be levied till the date of reversal of such wrong claim.

B) RETURNS:
i) Return is a statement of specified particulars of business
transactions to be submitted in prescribed manner within the
prescribed time.
ii) Every supplier shall self assess his transactions, determine his
net tax liability, pay the same and file the prescribed returns
within the due dates.
iii) Every registered supplier shall submit the following returns in
electronic form in GSTN portal:
a) GSTR 1 containing the details of outward supplies within on
monthly basis within 10th of subsequent month.

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b) GSTR 4 containing the details of outward suppliers within 18th

of subsequent month of quarter.
c) GSTR 3B containing details of all transactions on monthly
basis within 20th of Subsequent month
d) GSTR 9 Annual return for a Normal Tax payer, within 31st Dec
of next financial year
e) GSTR 9A Annual return for person registered composition levy,
within 31st Dec of next financial year

C) Consequence of Non filing returns

i) Late fees:
a) GSTR 3B – Rs. 25 CGST plus Rs 25 SGST for every day of
delay. If nil return filed without any sale or purchase, Rs. 10
CGST plus Rs. 10 SGST for every day of delay
b) GSTR 1 – Rs. 50 CGST plus Rs. 50 SGST for every day of delay
c) GSTR 9/9C – Rs. 100 CGST plus Rs. 100 SGST for every day of
delay.
ii) Interest @18% per annum for delay in payment for number days
of delay.

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