IGST (Integrated GST) : Based On The IGST Act, 2017 and The CGST Act, 2017
IGST (Integrated GST) : Based On The IGST Act, 2017 and The CGST Act, 2017
IGST (Integrated GST) : Based On The IGST Act, 2017 and The CGST Act, 2017
Based on the IGST Act, 2017 and the CGST Act, 2017
Agenda
• Inter state transactions – Present modalities
• Inter state transactions in The GST schema
• Enabling provisions in the Constitution
• The Act: Section-wise
• Questions?
Inter state transactions – Present modalities
Centre levies CST on Inter-State Sales – Art. 269 r/w Entry 92A of
List I – Collected & retained by originating State
(Art 269 - Taxes levied and collected by the Union but assigned to the States - (h) taxes on the
consignment of goods (whether the consignment is to the person making it or to any other
person), where such consignment takes place in the course of inter-State trade or commerce.
92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or
purchase takes place in the course of inter-State trade or commerce. )
Inter state transactions – Present modalities (Contd.)
(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of
inter-State trade or commerce,……, shall be levied by the Government of India and the tax so levied shall be
collected by that Government ……… in the State from which the movement of the goods commenced
(2) …….., the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any
tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, re-
asses, collect and enforce payment of tax,……..
Observations:
1. Origin-based taxation
2. Levied and Collected by Government of India
3. Enforced i.e., administered by appropriate state governments on behalf of GoI
Inter state transactions in The GST schema
• Destination based taxation
• Seamless flow of credit across state borders
• Uniform tax rates – No tax arbitrage
(2) (Case by case exemptions by Special Order) Where the Government is satisfied
that it is necessary in the public interest so to do, it may, on the recommendations of
the Council, by special order in each case, under circumstances of an exceptional
nature to be stated in such order, exempt from payment of tax any goods or services
or both on which tax is leviable.
Power to grant exemption from tax – Section 6
(3) (Clarification of exemptions) The Government may, if it considers
necessary or expedient so to do for the purpose of clarifying the scope or
applicability of any notification issued under sub-section (1) or order issued
under sub-section (2), insert an Explanation in such notification or order, as
the case may be, by notification at any time within one year of issue of the
notification under sub-section (1) or order under sub-section (2), and every
such Explanation shall have effect as if it had always been the part of the first
such notification or order, as the case may be.
Explanation.––For the purposes of this section, where an exemption in
respect of any goods or services or both from the whole or part of the tax
leviable thereon has been granted absolutely, the registered person
supplying such goods or services or both shall not collect the tax, in excess of
the effective rate, on such supply of goods or services or both.
Nature of Supply – Inter-State supply - Sec 7
(Inter-state Supply of Goods)
(1) Subject to the provisions of section 10, supply of goods, where the
location of the supplier and the place of supply are in––
(a) two different States;
(b) two different Union territories; or
(c) a State and a Union territory,
shall be treated as a supply of goods in the course of inter-State trade
or commerce.
(2) Supply of goods imported into the territory of India, till they cross
the customs frontiers of India, shall be treated to be a supply of goods
in the course of inter-State trade or commerce.
Nature of Supply – Inter-State supply - Sec 7
(Inter-state Supply of Services)
(1) Subject to the provisions of section 12, supply of services, where the
location of the supplier and the place of supply are in––
(a) two different States;
(b) two different Union territories; or
(c) a State and a Union territory,
shall be treated as a supply of services in the course of inter-State trade
or commerce.
(2) Supply of services imported into the territory of India, shall be
treated to be a supply of services in the course of inter-State trade or
commerce.
Nature of Supply – Inter-State supply - Sec 7
(Other cases of Inter-state supply)
(5) Supply of goods or services or both,––
(a) when the supplier is located in India and the place of supply is
outside India;
(b) to or by a Special Economic Zone developer or a Special Economic
Zone unit; or
(c) in the taxable territory, not being an intra-State supply and not
covered elsewhere in this section, shall be treated to be a supply of
goods or services or both in the course of inter-State trade or
commerce
Nature of Supply – Intra-State supply - Sec 7
(Intra-state Supply of Goods)
(1) Subject to the provisions of section 10, supply of goods where the location of the
supplier and the place of supply of goods are in the same State or same Union territory
shall be treated as intra-State supply:
Provided that the following supply of goods shall not be treated as intra-State supply,
namely:––
(i) supply of goods to or by a Special Economic Zone developer or a Special Economic
Zone unit;
(ii) goods imported into the territory of India till they cross the customs frontiers of
India; or
(iii) supplies made to a tourist referred to in section 15.
Nature of Supply – Intra-State supply - Sec 7
(Intra-state Supply of Services)
(2) Subject to the provisions of section 12, supply of services where the
location of the supplier and the place of supply of services are in the
same State or same Union territory shall be treated as intra-State
supply:
Provided that the intra-State supply of services shall not include supply
of services to or by a Special Economic Zone developer or a Special
Economic Zone unit.
Nature of Supply – Intra-State supply - Sec 7
(Establishment of distinct persons)
Explanation 1.––For the purposes of this Act, where a person has,––
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other
establishment outside that State or Union territory; or
(iii) an establishment in a State or Union territory and any other
establishment being a business vertical registered within that State or Union
territory, then such establishments shall be treated as establishments of
distinct persons.
Explanation 2.––A person carrying on a business through a branch or an
agency or a representational office in any territory shall be treated as having
an establishment in that territory.
Supplies in territorial waters – Sec 9
Notwithstanding anything contained in this Act,––
(a) where the location of the supplier is in the territorial waters, the
location of such supplier; or
(b) where the place of supply is in the territorial waters, the place of
supply, shall, for the purposes of this Act, be deemed to be in the
coastal State or Union territory where the nearest point of the
appropriate baseline is located.
Nature of Supply
Intra state supplies Inter state supplies
State A State B
23
Place of Supply
Place of Supply
(Chapter V)
• What are the taxable supplies involved? Are they inter-state or intra-
state?
Let us discuss!
• Taxable person (non-SEZ) located in Jaipur supplying goods to an SEZ
unit located in Jodhpur
• SEZ unit in Kolkata supplying services to another SEZ unit in Kolkata
• Lease of premises by SEZ developer in Chennai to a SEZ unit in that
same zone
• Non-SEZ Sales by SEZ unit in Kochi to a non-SEZ in Kochi
• Disposal of scrap by an SEZ developer in Mumbai to a scrap dealer in
Mumbai (outside the zone)
PoS of Services – Cross border – Sec 13
(1) The provisions of this section shall apply to determine the place of
supply of services where the location of the supplier of services or the
location of the recipient of services is outside India.
(2) (Residual Clause) The place of supply of services except the services
specified in sub-sections (3) to (13) shall be the location of the recipient
of services:
Provided that where the location of the recipient of services is not
available in the ordinary course of business, the place of supply shall be
the location of the supplier of services.
PoS of Services – Cross border – Sec 13
(3) (Performance based services) The place of supply of the following services
shall be the location where the services are actually performed, namely:—
(a) services supplied in respect of goods which are required to be made physically
available by the recipient of services to the supplier of services, or to a person
acting on behalf of the supplier of services in order to provide the services:
Provided that when such services are provided from a remote location by way of
electronic means, the place of supply shall be the location where goods are
situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply in the case of
services supplied in respect of goods which are temporarily imported into India
for repairs and are exported after repairs without being put to any other use in
India, than that which is required for such repairs;
(b) services supplied to an individual, represented either as the recipient of
services or a person acting on behalf of the recipient, which require the physical
presence of the recipient or the person acting on his behalf, with the supplier for
the supply of services.
PoS of Services – Cross border – Sec 13
(4) (Related to immovable property) The place of supply of services
supplied directly in relation to an immovable property, including
services supplied in this regard by experts and estate agents, supply of
accommodation by a hotel, inn, guest house, club or campsite, by
whatever name called, grant of rights to use immovable property,
services for carrying out or co-ordination of construction work,
including that of architects or interior decorators, shall be the place
where the immovable property is located or intended to be located
PoS of Services – Cross border – Sec 13
(5) (Event based services) The place of supply of services supplied by
way of admission to, or organisation of a cultural, artistic, sporting,
scientific, educational or entertainment event, or a celebration,
conference, fair, exhibition or similar events, and of services ancillary to
such admission or organisation, shall be the place where the event is
actually held.
PoS of Services – Cross border – Sec 13
(Multi-locational Services)
(6) Where any services referred to in sub-section (3) or sub-section (4) or
sub-section (5) is supplied at more than one location, including a location in
the taxable territory, its place of supply shall be the location in the taxable
territory.
(7) Where the services referred to in sub-section (3) or sub-section (4) or
sub-section (5) are supplied in more than one State or Union territory, the
place of supply of such services shall be taken as being in each of the
respective States or Union territories and the value of such supplies specific
to each State or Union territory shall be in proportion to the value for
services separately collected or determined in terms of the contract or
agreement entered into in this regard or, in the absence of such contract or
agreement, on such other basis as may be prescribed.
PoS of Services – Cross border – Sec 13
(8) The place of supply of the following services shall be the location of
the supplier of services, namely:––
(a) services supplied by a banking company, or a financial institution, or
a non-banking financial company, to account holders;
(b) intermediary services;
(c) services consisting of hiring of means of transport, including yachts
but excluding aircrafts and vessels, up to a period of one month.
(Definition) Intermediary – Sec 2(13)
(13) “intermediary” means a broker, an agent or any other person, by whatever name called,
who arranges or facilitates the supply of goods or services or both, or securities, between
two or more persons, but does not include a person who supplies such goods or services or
both or securities on his own account;
(9) The place of supply of services of transportation of goods, other than by way of
mail or courier, shall be the place of destination of such goods.
(10) The place of supply in respect of passenger transportation services shall be the
place where the passenger embarks on the conveyance for a continuous journey
(11) The place of supply of services provided on board a conveyance during the
course of a passenger transport operation, including services intended to be wholly
or substantially consumed while on board, shall be the first scheduled point of
departure of that conveyance for the journey.
(Definition) Continuous Journey – Sec 2(3)
• “continuous journey” means a journey for which a single or more
than one ticket or invoice is issued at the same time, either by a single
supplier of service or through an agent acting on behalf of more than
one supplier of service, and which involves no stopover between any
of the legs of the journey for which one or more separate tickets or
invoices are issued.
Explanation.––For the purposes of this sub-section, person receiving such services shall be deemed to be located in the
taxable territory, if any two of the following non contradictory conditions are satisfied, namely:––
(a) the location of address presented by the recipient of services through internet is in the taxable territory;
(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of
services settles payment has been issued in the taxable territory;
(c) the billing address of the recipient of services is in the taxable territory;
(d) the internet protocol address of the device used by the recipient of services is in the taxable territory;
(e) the bank of the recipient of services in which the account used for payment is maintained is in the taxable territory;
(f) the country code of the subscriber identity module card used by the recipient of services is of taxable territory;
(g) the location of the fixed land line through which the service is received by the recipient is in the taxable territory.
PoS of Services – Cross border – Sec 13
(13) In order to prevent double taxation or non-taxation of the supply
of a service, or for the uniform application of rules, the Government
shall have the power to notify any description of services or
circumstances in which the place of supply shall be the place of
effective use and enjoyment of a service.
Let us discuss!
• Rajamouli decides to make Bahubali 3. His production company
enters into a contract with a Hollywood based company to work as his
art department and set up props at different shooting locations in
Maharashtra, Telangana, Kerala and Himachal Pradesh. Is it an import
of service? Which is the Place of Supply?
(Definition) OIDAR – Sec 2(17)
“online information and database access or retrieval services” means services whose
delivery is mediated by information technology over the internet or an electronic
network and the nature of which renders their supply essentially automated and
involving minimal human intervention and impossible to ensure in the absence of
information technology and includes electronic services such as,––
(i) advertising on the internet; Google ad services
(ii) providing cloud services; amazon web services
(iii) provision of e-books, movie, music, software and other intangibles through
telecommunication networks or internet; gaana.com, apple istore
(iv) providing data or information, retrievable or otherwise, to any person in electronic
form through a computer network; linkedin, taxmann, tiol
(v) online supplies of digital content (movies, television shows, music and the like);
hotstar, youtube
(vi) digital data storage; and dropbox, google drive
(vii) online gaming; zapak.com
Let us discuss! – Which of these are OIDAR services?
1. Supplies of goods, where the order and processing is done electronically
2. Services of lawyers and financial consultants who advise clients through
email
3. Booking services or tickets to entertainment events, hotel
accommodation or car hire
4. Educational or professional courses, where the content is delivered by a
teacher over the internet or an electronic network
5. Online course consisting of pre-recorded videos and downloadable pdfs
6. Online course consisting of pre-recorded videos and downloadable pdfs
+ Manual instructions from teacher
7. Individually commissioned content sent in digital form eg, photographs,
reports, medical results
(Definition) NTOR - Sec 2(16)
“non-taxable online recipient” means any Government, local authority,
governmental authority, an individual or any other person not registered and
receiving online information and database access or retrieval services in
relation to any purpose other than commerce, industry or any other business
or profession, located in taxable territory.
Explanation.––For the purposes of this clause, the expression “governmental
authority” means an authority or a board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with ninety per cent. or more participation by way of equity or control, to
carry out any function entrusted to a municipality under article 243W of the
Constitution;
OIDAR supplies to NTOR – Sec 14
(1) (Cross border supply of OIDAR to NTOR) On supply of online information
and database access or retrieval services by any person located in a non-
taxable territory and received by a non-taxable online recipient, the supplier
of services located in a non-taxable territory shall be the person liable for
paying integrated tax on such supply of services:
Provided that in the case of supply of online information and database
access or retrieval services by any person located in a non-taxable territory
and received by a non taxable online recipient, an intermediary located in
the non-taxable territory, who arranges or facilitates the supply of such
services, shall be deemed to be the recipient of such services from the
supplier of services in non-taxable territory and supplying such services to
the non-taxable online recipient (Intermediary in OIDAR supplies to NTOR)
OIDAR supplies to NTOR – Sec 14
(Exceptions of intermediary not being supplier in OIDAR supplies)
except when such intermediary satisfies the following conditions, namely:––
(a) the invoice or customer’s bill or receipt issued or made available by such
intermediary taking part in the supply clearly identifies the service in
question and its supplier in non-taxable territory;
(b) the intermediary involved in the supply does not authorise the charge to
the customer or take part in its charge which is that the intermediary neither
collects or processes payment in any manner nor is responsible for the
payment between the non-taxable online recipient and the supplier of such
services;
(c) the intermediary involved in the supply does not authorise delivery; and
(d) the general terms and conditions of the supply are not set by the
intermediary involved in the supply but by the supplier of services.
OIDAR supplies to NTOR – Sec 14
(2) The supplier of online information and database access or retrieval
services referred to in sub-section (1) shall, for payment of integrated tax,
take a single registration under the Simplified Registration Scheme to be
notified by the Government:
Provided that any person located in the taxable territory representing such
supplier for any purpose in the taxable territory shall get registered and pay
integrated tax on behalf of the supplier:
Provided further that if such supplier does not have a physical presence or
does not have a representative for any purpose in the taxable territory, he
may appoint a person in the taxable territory for the purpose of paying
integrated tax and such person shall be liable for payment of such tax.
Refund to International Tourist – Sec 15
The integrated tax paid by tourist leaving India on any supply of goods
taken out of India by him shall be refunded in such manner and subject
to such conditions and safeguards as may be prescribed.
Explanation.––For the purposes of this section, the term “tourist”
means a person not normally resident in India, who enters India for a
stay of not more than six months for legitimate non-immigrant
purposes
Apportionment & Settlement – Sec 17
(1) (Centre’s share) Out of the integrated tax paid to the Central Government,––
(a) in respect of inter-State supply of goods or services or both to an unregistered person or to a
registered person paying tax under section 10 of the Central Goods and Services Tax Act;
(b) in respect of inter-State supply of goods or services or both where the registered person is not
eligible for input tax credit;
(c) in respect of inter-State supply of goods or services or both made in a financial year to a
registered person, where he does not avail of the input tax credit within the specified period and
thus remains in the integrated tax account after expiry of the due date for furnishing of annual
return for such year in which the supply was made;
(d) in respect of import of goods or services or both by an unregistered person or by a registered
person paying tax under section 10 of the Central Goods and Services Tax Act;
(e) in respect of import of goods or services or both where the registered person is not eligible for
input tax credit;
(f) in respect of import of goods or services or both made in a financial year by a registered person,
where he does not avail of the said credit within the specified period and thus remains in the
integrated tax account after expiry of the due date for furnishing of annual return for such year in
which the supply was received,
the amount of tax calculated at the rate equivalent to the central tax on similar intra-State supply
shall be apportioned to the Central Government.
Apportionment & Settlement – Sec 17
(2) (State’s share) The balance amount of integrated tax remaining in the integrated
tax account in respect of the supply for which an apportionment to the Central
Government has been done under sub-section (1) shall be apportioned to the,––
(a) State where such supply takes place; and
(b) Central Government where such supply takes place in a Union territory:
Provided that where the place of such supply made by any taxable person cannot be
determined separately, the said balance amount shall be apportioned to,–– (a) each
of the States; and (b) Central Government in relation to Union territories, in
proportion to the total supplies made by such taxable person to each of such States
or Union territories, as the case may be, in a financial year:
Provided further that where the taxable person making such supplies is not
identifiable, the said balance amount shall be apportioned to all States and the
Central Government in proportion to the amount collected as State tax or, as the
case may be, Union territory tax, by the respective State or, as the case may be, by
the Central Government during the immediately preceding financial year.
Apportionment & Settlement – Sec 17
(Enabling apportionment and settlement)
(3) The provisions of sub-sections (1) and (2) relating to apportionment of
integrated tax shall, mutatis mutandis, apply to the apportionment of interest,
penalty and compounding amount realised in connection with the tax so
apportioned.
(4) Where an amount has been apportioned to the Central Government or a State
Government under sub-section (1) or sub-section (2) or sub-section (3), the amount
collected as integrated tax shall stand reduced by an amount equal to the amount so
apportioned and the Central Government shall transfer to the central tax account or
Union territory tax account, an amount equal to the respective amounts
apportioned to the Central Government and shall transfer to the State tax account
of the respective States an amount equal to the amount apportioned to that State,
in such manner and within such time as may be prescribed.
(5) Any integrated tax apportioned to a State or, as the case may be, to the Central
Government on account of a Union territory, if subsequently found to be refundable
to any person and refunded to such person, shall be reduced from the amount to be
apportioned under this section, to such State, or Central Government on account of
such Union territory, in such manner and within such time as may be prescribed
Transfer of ITC – Sec 18
On utilisation of credit of integrated tax availed under this Act for payment of,––
(a) central tax in accordance with the provisions of sub-section (5) of section 49 of the Central Goods and
Services Tax Act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit
so utilised and the Central Government shall transfer an amount equal to the amount so reduced from the
integrated tax account to the central tax account in such manner and within such time as may be prescribed;
(b) Union territory tax in accordance with the provisions of section 9 of the Union Territory Goods and Services
Tax Act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit so
utilised and the Central Government shall transfer an amount equal to the amount so reduced from the
integrated tax account to the Union territory tax account in such manner and within such time as may be
prescribed;
(c) State tax in accordance with the provisions of the respective State Goods and Services Tax Act, the amount
collected as integrated tax shall stand reduced by an amount equal to the credit so utilised and shall be
apportioned to the appropriate State Government and the Central Government shall transfer the amount so
apportioned to the account of the appropriate State Government in such manner and within such time as may
be prescribed.
Explanation.––For the purposes of this Chapter, “appropriate State” in relation to a taxable person, means the
State or Union territory where he is registered or is liable to be registered under the provisions of the Central
Goods and Services Tax Act.
Let us discuss!
• The Range Officer gets a request for adjustment of IGST amount paid
against CGST amount since both are collected by Central Government.
Is it possible to do the adjustment?
Manjunath A N
[email protected]