GST: A MODERN THOUGHT OF 21st CENTURY

DR.
ShaileSh KumaR SinGh

PROF. PeeYuSh PanDeY
Changes of 21st century: GST 1
Dedicated to
My Mother & Father

PREFACE
The subject Changes of 21st Century:
GST has become very popular among
service & tax during the last one year
decades in India. The various concepts,
methods and techniques regarding services
and tax have been put to effective use with a
view to present biggest reforms of 21st
centaury GST as accurately as possible. The
book put special emphasis on the tax of
goods and services. A sincere attempt has
been made to present the basic concept &
process of GST in a simple and easy to-
understand style. All the chapters have been
logically arranged and sub-divided
necessary, into sections for enabling the
students to grasp the basics of the subject
fairly easily.
Given the vastness of the syllabus, a special
care has been taken to keep the discussion
simple and at the required levels only. At the

same time, fundamental concepts, ideas &
rationales are made crystal clear with the
help of figures and charts. It would be a
great satisfaction for us, author as well as
the publisher of this volume, if we would
have succeeded in our endeavour.
I Extend my deep thanx to Honble Vice
Chancellor Prof. P.K. Bharti, Dr. Meera
Singh (Associate Professor, U.P. College,
Varanashi) and Dr. Sapan Asthana (Head
of Department, FOCM), Dr. D.k. Goswami,
Dr. Anand Kumar, Ms. Archna Singh, Mr.
Rakesh Pratap Singh for their untiring
contribution and support throughout.
I am also Thankful to Prof. H.K. Singh
for the valuable help in bringing out this
Book. At last but not least I am thankful to
my father Mr. Sunil Kumar Singh & mother
Mrs. Meera Singh, wife Mrs. Neetu Singh &
younger brother Mr. Mukesh Pratap Singh,
sister Ms. Pratiksha Singh for motivating me

and helping me at every step whenever
required.
However, the errors left despite best
efforts will be solely our responsibility.
Being the first edition, there must be scope
for improvement. All the constructive
suggestions in this regard will be duly
acknowledged and appreciated.
Prof. Peeyush Kumar Pandey Dr. Shailesh Kumar Singh
Professor & Registrar Assistant Professor,

Faculty of Commerce & Management,
Maharishi University of Information
Technology, Lucknow (U.P.)

CONTENTS
Sr. Preface Page

N.
1 Introduction 6-8
2 One Tax One Nation 9-31
3 Composition Scheme 32-

43
4 GST MECHANISM ( Accounts, 44-

Payments & Procedure Under 52
GST)
5 GST Rates & HSN Codes 53-

59
6 Impact of GST on Business 60-

Scenario (Manufacturers, 66
Distributors & Retailers)
7 Comparison with other countries 67-
when one tax system is running 74
8 Future Aspect of GST in India 75-

80
9 GST News Notification & 81-

Announcements 88
Short, FAQ & Objective 89-

Question 113

CHAPTER 1
INTRODUCTION
Indias biggest tax reform is now reality.
A comprehensive duel goods and service
Tax (GST) has replaced the complex
multiple indirect tax structure from 1st July
2017. Goods and Service Tax (GST) is a
comprehensive tax levy on manufacture,
sale and consumption of goods and service
at a national level. To uphold a country's
political and economical stability,
governments often implement policies.
There are many different types of policies
that a government would implement to
stabilize their country. However, one
significant policy that almost every country
uses is tax.
GST was first introduced by France in
1954 and now it is followed by more than
160 countries. In Indian idea of GST was
mooted by BJP Govt. in year 2000 and
constitution amendment for same was
passed by the "Loksabha" on 6th May, 2015.
The constitution amendment bill for Goods
and Services Tax (GST) has been approved
by the President of India Sri Pranav
Mukhargee (Rajyasabha on 3rd August
2016 and Loksabha on 8th August, 2016).
The Government on India was committed
and successfully replaced the indirect taxes
on goods and services tax on 1st July 2017.
India is now 3rd largest economy so GST is
most significant tax reform since
Independence. It will increase revenues and
growth stimulates investment and makes
investment doing business in India easier.
According to Finance Ministry GST will
increase India's GDP by around 2%.

At Present Central Government levies
tax on manufacture i.e. Central Excise Duty,
provision of services i.e. Service Tax, states
levy tax on retail sales i.e. VAT, entry of
goods in the State i.e. Entry Tax, Luxury
Tax, Purchase Tax, etc. It can be said that
different variety tax laws and different tax
rates divides the country into separate
economic atmosphere. In addition, the large
number of taxes arise high cost for the tax
payers.GST is proposed to be a dual levy
where the Central Government will collect
Central GST (CGST) and the State will levy
and collect State GST (SGST). The Centre
will also collect Integrated GST (IGST) for
inter-state supply of goods and services.
That's why it is the appropriate time that
there should be one tax to solve number of
these problems to a large extent. GST is
proposed to be a dual levy where the Central
Government will levy and collect Central
GST (CGST) and the State will levy and
collect State GST (SGST). The Centre will
also levy and collect Integrated GST (IGST)
for inter-state supply of goods and services.
GST is the most logical steps towards
the comprehensive indirect tax reform in our
country since independence. GST is livable
on all supply of goods and provision of
services as well combination thereof. All
sectors of economy whether the industry,
business including Govt. departments and
service sector shall have to bear impact of
GST.

All sections of economy viz., big,
medium, small scale units, intermediaries,
importers, exporters, traders, professionals
and consumers shall be directly affected by
GST. One of the biggest taxation reforms in
India -- the Goods and Service Tax (GST) --
is all set to integrate State economies and
boost overall growth. GST will create a
single, unified Indian market to make the
economy stronger. Experts say that GST is
likely to improve tax collections and Boost
Indias economic development by breaking
tax barriers between States and integrating
India through a uniform tax rate. Under
GST, the taxation burden will be divided
equitably between manufacturing and
services, through a lower tax rate by
increasing the tax base and minimizing
exemptions.

CHAPTER 2
ONE TAX ONE NATION
Indias biggest tax reform is now reality.

A comprehensive duel goods and service
Tax (GST) has replaced the complex
multiple indirect tax structure from 1st July
2017. The concept of GST was visualized
for the first time in 2000. on 8 August 2016,
The constitutional Amendment Bill for roll
out of GST was passed by Parliament
followed by rectification of the bill by the
more than 15 states and enactment of the bill
in early September.
The GST council consisting of
representation from the Central as well as
state government, met on 18 occasions in
last 10 months and has cleaned.
GST Laws
GST Rules
Tax Rate exemptions
Clarifications of goods and services
into different rate slabs
Exemptions
Thresholds
Tax administrations
on 12 April 2017, the central government in
acted four GST Bills:-
Central GST (CGST)
Integrated GST (IGST)
Union Territory GST (UTGST)
Bill to compensate stats
In a short span of time, all the notes
(Excluding Jammu and Kashmir) approved
their state GST (SGST) laws. Union
territory with legislature i.e. Delhi &
Pondicherry have all opted SGST act and
the balance union territory without
legislature have adopted UTGST Act.
The Government has also notified GST
rules, tax rates on goods and service,
exemptions list, and categories of service on
which reverse change is applicable.
GST was first introduced by France in
1954 and now it is followed by more than
160 countries. In Indian idea of GST was
mooted by BJP Govt. in year 2000 and
constitution amendment for same was
passed by House of the people "Loksabha"
on 6th May, 2015. The constitution
amendment bill for Goods and Services Tax
(GST) has been approved by the President
of India Sri Pranav Mukhargee (Council
of states Rajya Sabha on 3rd August
2016 and House of the people Loksabha
on 8th August, 2016).
The Government on India was
committed and successfully replaced the

indirect taxes on goods and services tax on
1st July 2017.India is now 3rd largest
economy so GST is most significant tax
reform since Independence. It will increase
revenues and growth stimulates investment
and makes investment doing business in
India easier. According to Finance Ministry
GST will increase India's GDP by around
2%. The services sector currently makes up
for 60% of the GDP. Considering that, the
GST is likely to have a deep impact on this
sector. The life insurance industry forms a
part of the service sector, which, as a result,
will also be greatly affected by the GST.
What is GST?
Goods & Service Tax or GST is a value
added tax which will subsume and replace
all the current indirect taxes levied in India.
Hailed as one of the biggest fiscal reforms in
the country, GST will be applicable to all
businesses, small and large. With GST, there
will be no scope for variable taxation
anymore and the entire nation will follow a
unified tax structure.
GST will be levied on both goods and
services. India will follow a dual system of
GST to keep the Centre and State fiscally
independent of each other. The GST
Council, consisting of the Union Finance
Minister and various State Finance
Ministers, has devised a four-tiered tax
structure for the country with tax slabs of
5%, 12%, 18%, and 28% for different
categories of products.
GST COUNCIL:- Setting up of GST
Council was a major big development. It is
an apex body including Centre and the State
for GST. It has the power to finalize nitty-
gritty of GST and to resolve disputes Union
Finance Minister is the head of the Council
while the Union Finance Minister of State
(In- charge of revenue) and the Minister in
charge of finance or taxation or any other
Minister nominated by each State
Government will be members. The council
will have two members including the
Chairman from the centre and one member
each from 29 States and the 2 Union
Territories (with legislature) taking the total
strength to 33. The Union Revenue
Secretary will be Ex- officio Secretary to the
GST Council while the Chairperson, Central
Board of Excise and Customs (CBEC) will
be a permanent invitee (non-voting) to all
proceedings of the Council. The Council
will make recommendations to the Union
and the States on important issues related to
GST :
a) Goods and Services that may be
subjected or exempted from GST.
b) Model GST laws.
c) Principles that govern Place of
Supply, threshold limits.
d) GST rates including the floor rates
with bands
e) Special rates for raising additional
resources during natural calamities /
disasters.
f) Special provisions for certain States, etc.
Every decision of the Council will be
taken at a meeting, by a majority of not less
than three-fourths of the weighted votes of
the members present and voting. The vote of
the Central Government will have a weight
age of one-third of the total votes cast, and
the votes of all the State Governments
(including the Union Territories with
legislatures) taken together shall have a
weight age of two-thirds of the total votes
cast.

Which Taxes will GST Replace?
It will replace all the following taxes and
bring them under one umbrella to make
compliance easier:
(i) Taxes currently levied and collected by
the Centre:
1. Central Excise duty
2. Additional Duties of Customs
(commonly known as CVD)
3. Special Additional Duty of Customs
(SAD)
4. Service Tax
(ii) Taxes currently levied and collected
by the State:
1.State VAT
2.Central Sales Tax
3.Entertainment and Amusement Tax
(except when levied by the local bodies)
4.Taxes on lotteries, betting and gambling

GST Framework
Framework:
Type of levies & Impact ooff GST on
pricing of products as compared to
current system: - In this figure we find
that there are three type of levies under
GST.
India will follow dual form of GST (like
Canada and Brazil)

At the intra-state level (goods/services
are sold within the state)-
CGST (Central Goods and Services
Tax) and SGST (State Goods and
Services Tax) will be levied.
At the inter-state level, IGST (Or
Integrated Goods and Services Tax)
shall be levied.
Imports shall be considered as inter-state
supply and IGST will be applicable.
However, basic customs duty will apply
on imports
Exports shall be zero-rated.
Supplies to SEZ will be zero-rated

CGST (central GST), SGST (state GST)
& IGST (Integrated GST)
Let us we should take an example to
understand how to calculate current levies
and the new GST.
CURRENT SYSTEM GST (Avoidance of
(Cascading Taxes) double taxation)
1.Product sold from 1.Product sold from
BALLIA to BALLIA to
VARANASHI price VARANASHI
is Rs. 10,000=00 price is Rs.
10,000=00
2.VAT is @ 12%= Rs. 2.CGST is @6%=
10,000*12%= 1200 Rs.10,000*6%=60
0 and SGST is
@6%=
Rs.10,000*6%=60
0
3.Product sold from 3.Product sold from

VARANASHI to VARANASHI to
NEW DELHI cost is NEW DELHI cost
Rs. is Rs.
10,000+1200(i.e. 10,000+(600+600
VAT)= Rs. 11,200 i.e. CGST and
SGST)= Rs.
11,200
4.Profit = Rs 10,000 4.Profit = Rs 10,000
5.Sell price = 5.Sell price =
11,200+10,000=21, 11,200+10,000=21
200 ,200
6.CST is @ 12%= Rs. 6.IGST is @12%=
21,200*12%=2,544 Rs.
21,200*10%=2,54
4-(600+600 i.e.
CGST and SGST
)= 1344
7.Total Cost of 7.Total Cost of
Product Product Rs.

Rs. 21,200+2,544= 21,200+1344=22,5
23,744 44
In the above example we can conclude

that the tax paid on sale within state can be
claim against tax paid on sale outside state
in GST system, which is not in present tax
system.
The credit of CGST cannot be taken
against SGST and credit of SGST cannot be
taken against CGST but both credit can be
taken against IGST.
Benefits of GST
An important benefit of the introduction
of GST will be the removal of the cascading
tax effect. In simple words cascading tax
effect means tax on tax. Under the current
regime, service tax paid on input services
cannot be set off against output VAT. Under
GST, input tax credit can be availed
smoothly across goods and services thus
reducing the tax burden and removing
cascading effect.
Also, the current tax regime has excise
VAT and service tax, each of which has
their own returns and compliances. GST will
unify all these reducing the number of
returns and compliances.
Taxable Person
A taxable person under GST, is a
person who carries on any business at any
place in India and who is registered or
required to be registered under the GST
Act. GST registration is mandatory for
(amongst others)-
Any business whose turnover in a
financial year exceeds Rs 20 lakhs (Rs
10 lakhs for North Eastern and hill
states)
Input service distributor (see below)
E-commerce operator or aggregator
Person who supplies via e-commerce
aggregator
GST Registration
Every business carrying out a taxable
supply of goods or services under GST
regime and whose turnover exceeds the
threshold limit of Rs. 20 lakh/ 10 lakh as
applicable will be required to register as a
normal taxable person. This process is of
registration is referred as GST registration.

GSTN-
The Goods and Service Tax Network (or
GSTN) is a non-profit, non-government
organization. It will manage the entire IT
system of the GST portal, which is the
mother database for everything GST. This
portal will be used by the government to
track every financial transaction, and will
provide taxpayers with all services from
registration to filing taxes and maintaining
all tax details.
GST IN-
So far, for any dealer registered under
state VAT law, a unique TIN number is
issued by the respective state tax authorities.
Similarly, a service provider is assigned a
service tax registration number by the
Central Board of Excise and Custom
(CBEC).
Going forward, in the new GST regime,
all these taxpayers will get consolidated into
one single platform for compliance and
administration purposes and will be assigned
registration under a single authority. The
government has set up GSTNa special
purpose vehicle to provide the IT
infrastructure necessary to support GST
digitally. It is expected that 8 million
taxpayers will be migrated from various
platforms into GST. All of these businesses
will be assigned a unique Goods and
Services Tax Identification Number
(GSTIN). But most are yet not aware of the
new registration process and the
identification number.
According to Prof. H.K. Singh, An
expected 8 million taxpayers will migrate
from various platforms into GST. All of
these business will be assigned a unique
Goods and Services Tax Identification
Number (GSTIN). But most are yet not
aware of the new registration process and
the identification number.
Each taxpayer will be allotted a state-
wise PAN-based 15-digit Goods and
Services Taxpayer Identification Number
(GSTIN). PAN is absolutely mandatory for
GST. A person without PAN must first
obtain a PAN before registering for GST.
Proposed GST Identification Number

(GSTIN)
Heres a complete break-up of the
proposed GST Identification Number. As
per example Tripathi Super Store (TSS),
Madhupuram, Lucknow, GSTIN:
09AICPT1640D1ZH. Each taxpayer will be
allotted a state-wise PAN-based 15-digit
Goods and Services Taxpayer Identification
Number (GSTIN).
The first two digits of this number will
represent the state code as per Indian
Census 2011

The next ten digits will be the PAN
number of the taxpayer
The thirteenth digit will be assigned
based on the number of registration
within a state
The fourteenth digit will be Z by default
The last digit will be for check code. It
may be an alphabet or a number.
A format of proposed GST IN has been
shown in the image below.

Using this guide, you can easily simulate
the GSTIN that is going to be issued under
the new GST regime. For further queries on
the registration process for GST, you may
also refer the FAQ on migration issued
by GSTN.
Reverse Charge-
Normally, the supplier pays the tax on
supply. In certain cases, the receiver
becomes liable to pay the tax, i.e., the
chargeability gets reversed which is why it
is called reverse charge. The concept of
reverse charge mechanism is already present
in service tax. In GST regime, reverse
charge will be applicable for goods (new) as
well as services.
Mixed Supply & Composite Supply
Under GST-
This is a new concept introduced in GST
which will cover all supplies made together,
in a bundle, whether the supplies are related
or not. The concept of composite supply in
GST regime is similar to the concept of
bundled services under Service Tax Laws.
However, the concept of mixed supply is
entirely new.
Composite Supply-
Composite supply means a supply
comprises two or more goods/services,
which are naturally bundled and supplied
with each other in the ordinary course of
business, one of which is a principal supply.
The items cannot be supplied separately.
Mixed Supply- Mixed supply under
GST means two or more individual supplies
of goods or services, or any combination,
made together with each other by a taxable
person for a single price. Each of these items
can be supplied separately and is not
dependent on any other.
Continuous Supply- The goods/services are
supplied periodically and the payments are
also made periodically, often monthly. For
example, supplying bricks to builders is a
continuous supply of goods because there
will be a periodic supply for a long time.
Telecom and internet services provided by
telecom companies are other examples of
continuous supply of services.
GST Compliance Rating
According to the model GST law, refund
claims under the GST regime will also be
processed on merit basis, i.e on the GST
compliance rating of the registered taxpayer.
It is expected that certain slabs rates will be
maintained for various taxpayers falling
under various bandwidths of compliance
rating and the instant refunds will be made
in terms of percentage amount based on the
individual rating of the taxpayer. For
example, a taxpayer with rating 8 will get
80% instant refund.

GST Return- Filing GST return under the
GST regime will be most critical business
activity as it will also determine compliance
rating and timely refunds. A return is a
document that a taxpayer is required to file
as per the law with the tax administrative
authorities. Under the GST law, a normal
taxpayer will be required to furnish three
returns monthly and one annual return.
Similarly, there are separate returns for a
taxpayer registered under the composition
scheme, taxpayer registered as an Input
Service Distributor, a person liable to deduct
or collect the tax (TDS/TCS).
What Are the Returns Applicable Under
GST?
In the table below, we have provided
details of all the returns which are required
to be filed under the GST Law.
Return What to By Whom? By When?
Form file?
GSTR- Details of Registered 10th of the
1 outward Taxable next month
supplies of Supplier
taxable
goods and/or
services
effected
GSTR- Details of Registered 15th of the

2 inward Taxable next month
supplies of Recipient
taxable
goods and/or
services
effected
claiming
input tax
credit.
GSTR- Monthly Registered 20th of the

3 return on the Taxable next month
basis of
finalization Person
of details of
outward
supplies and
inward
supplies
along with
the payment
of amount of
tax.
GSTR- Quarterly Composition 18th of the

4 return for Supplier month
compounding succeeding
taxable quarter
person.
GSTR- Return for Non- 20th of the

5 Non- Resident next month
Resident Taxable
foreign Person
taxable
person
GSTR- Return for Input Service 13th of the

6 Input Service Distributor next month
Distributor
GSTR- Return for Tax 10th of the

7 authorities Deductor next month
deducting tax
at source.
GSTR- Details of E-commerce 10th of the

8 supplies Operator/Tax next month
effected Collector
through e-
commerce
operator and
the amount
of tax
collected
GSTR- Annual Registered 31st

9 Return Taxable December
Person of next
financial
year
GSTR- Final Return Taxable Within

10 person three
whose months of
registration the date of
has been cancellation
surrendered or date of
or cancelled. cancellation
order,
whichever
is later.
GSTR- Details of Person 28th of the

11 inward having UIN month
supplies to be and claiming following
furnished by refund the month
a person for which
statement is
having UIN filed
Invoicing Under GST-

Under GST invoicing rules and formats
have been notified covering details such as
suppliers name, shipping and billing
address, HSN Code, place of supply, rate. In
this article we will be covering all aspects of
invoicing under GST.
Time limit to for invoicing under GST
The GST Model law has defined
the time limit for issue of GST tax invoices,
revised bills, debit notes and credit note.
Following are the due dates for issuing an
invoice to customers:
Supply of Goods (Normal case)- On or
before date of removal/ delivery

Supply of Goods (Continuous Supply)-
On or before date of issue of account
statement/ payment
Supply of Services (General case)-
within 30 days of supply of services
Supply of Services (Banks & NBFCs)-
within 45 days of supply of services
Revise Already Issued Invoices under
pre-GST regime
Revised tax invoices can be issued by a
registered taxable person within one month
from issuance of certificate of registration
i.e. GST Registration. It will be issued
against the invoice already issued during the
period starting from the effective date of
registration till the date of issuance of
certificate of registration to him
Bill of Supply-
Tax invoice is generally issued to charge
the tax and pass on the credit. In GST there
are some instances where the supplier is not
allowed to charge any tax and hence a Tax
invoice cant be issued instead another
document called Bill of Supply is issued.
How to raise aggregate invoices?
Where the value of invoice is less than
Rs 200 and the recipient is an unregistered,
registered taxpayer, he or she can issue an
aggregate invoice for such multiple invoices
on a daily basis. For example, you may have
issued 3 invoices in a day of Rs.80, Rs90
and Rs120. In such a case you can issue a
single invoice, totaling to Rs290, to be
called an aggregate invoice.
When is debit note issued?
Debit note is to be issued by supplier:
1.Original tax invoice has been issued and
taxable value in the invoice is less than
actual taxable value.

tax charged in the invoice is less than
actual tax to be paid.
When is credit note issued?
Credit note is to be issued by supplier:
taxable value in the invoice exceeds
actual taxable value.
tax charged in the invoice exceeds actual
tax to be paid.
3.Recipient refunds the goods to the
supplier
4.Services are found to be deficient
What are the specific mandatory fields in
an GST compliant invoice?
To issue and receive a GST compliant
invoice is a prerequisite to claim ITC. If a
taxpayer does not issue such invoice his
customer loses ITC claim and the taxpayer
loses its customers. Here we menti
mention
on the
mandatory fields in an invoice:
1.Invoice
Invoice number and date
2.Customer
Customer name
3.Shipping
Shipping and billing address
4.Customer
Customer and taxpayers GSTIN
5.Place
Place of supply
6.HSN code
7.Taxable
Taxable value and discounts
8.Rate
Rate and amount of taxes i.e. CGST/
SGST/ IGST
9.Item
Item details i.e. ddescription,
escription, unit price,
quantity
What are the various types of invoices or
supporting documents?
All different types of GST compliant
invoices such as:
sales invoices
purchase invoices
bill of supply
credit notes
debit notes
advance receipts
refund vouchers
delivery challans (for supply on
approval, supply of liquid gas, job work
and other).

Manner of issuing invoices
Whats the diff between invoice date and

due date?
Invoice date refers to the date when the
invoice is created on the bill book, while the
due date is when the payment is due against
the invoice.
How to issue an invoice under reverse
charge?

Here, you not issue an invoice different
from usual sales or purchase invoices. The
only additional requirement is that you need
to mention on the invoice that tax is paid on
reverse charge.
Is it mandatory to maintain invoice serial
number?
Yes, invoice serial number must be
maintained strictly. For example, if invoice
is being issued with serial number as
INV001, the same format must be
maintained. You may change the format by
providing a written intimating the GST
department officer along with reasons for
the same
What all details are required to be
mentioned in GSTR-1 for documents
issued?
For the following nature of documents
issued number of documents prepared,

cancelled and net issued along with serial
number of each must be mentioned:
1.Invoices for outward supply
2.Invoices for inward supply from
unregistered person
3.Revised Invoice
4.Debit Note
5.Credit Note
6.Receipt voucher
7.Payment Voucher
8.Refund voucher
9.Delivery Challan for job work
10. Delivery Challan for supply on
approval
11. Delivery Challan in case of liquid
gas
12. Delivery Challan in cases other than
by way
Can I sign my invoice through DSC?
Yes, you may digitally sign your at our
software through DSC and authentic your
invoice. In case you do not have a DSC, we
also provide an option to sign through
Aadhaar number.
Transition to GST
Overview- Every business is waiting to
make the transition to the new laws
under GST. Taxpayers already registered
under VAT/Service tax also need to register
under GST. Each entity registered under the
previous indirect tax laws shall get a
certificate of registration on the provisional
basis. This certificate issued would be valid
for a period of 6 months. Businesses having
a turnover of more than Rs 20 Lakhs have to
get registered mandatorily under GST. Small
businesses can either opt for composition
scheme or they can
get voluntarily registered under GST.
All compliances have to be done online.
The process of deduction, payment, and
refund of indirect taxes under GST would be
carried out electronically. Every business
should have a fully computerized office for
ease of compliance under GST. We have
various articles explaining the need/process
of registration for all different kind of
businesses.
Transition of Input Tax Credit
Input tax credit claimed in the return
filed under previous laws for the period
prior to the appointed day (1 July 2017)
would be transferred to the electronic credit
ledger.
Registered persons who were registered
under previous law and under GST:
Existing manufacturers/dealers can claim the
CENVAT credit in respect of input held in
stock, semi-finished or finished goods held
in stock if the following conditions are
satisfied-:
(i) ITC is allowed under GST Act as well as
previous acts
(ii) All the returns required under the
previous law for six months immediately
preceding 1st July have been filed
(iii) The credit does not relate to goods
manufactured and cleared
under such exemption notifications as are
notified by the Government.
Registered persons who were not
registered under previous law: A
registered dealer (unregistered under
previous law) or who was engaged in the
manufacture of exempted goods or provision
of exempted services, or who was providing
works contract service and was availing of
the benefit of notification No. 26/2012
Service Tax, dated the 20th June, 2012 or a
first stage dealer or a second stage dealer or
a registered importer or a depot of a
manufacturer can also enjoy ITC of inputs in
stock held on 1st July if the following
conditions are satisfied:

Such inputs and/or goods are used or
intended to be used for making taxable
supplies under GST.
The said taxable person passes on the
benefit of such credit by way of reduced
prices to the recipient.
The said taxable person is eligible for
input tax credit on such inputs under
GST.
The said taxable person is in possession
of invoices and/or other prescribed
documents evidencing payment of duty
under the earlier the law in respect of
such inputs.
Such invoices and/or other prescribed
documents were issued not earlier than
twelve months immediately preceding
the appointed day.
The supplier of services is not eligible
for any abatement under GST.

Input Tax Credit
One of the
fundamental features
of GST is the
seamless flow of
input credit across
the chain (from the
manufacture of
goods till it is consumed) and across the
country. When you buy a product/service
from a registered dealer you pay taxes on
purchase, while making sales, tax is
collected and periodically the same is
adjusted with the tax you already paid at
time of purchase and balance liability of tax
(tax on sales (minus) tax on purchase) is to
be paid to the government. This mechanism
is called utilisation of input tax credit (tax on
purchase adjustment against tax liability on
output i.e. sales).

The law has laid down conditions to avail
GST input tax credit on supply of goods or
services. All of the following conditions
need to be satisfied to avail GST Input
credit:
The dealer should be in possession of
Tax Invoice / Debit or Credit Note /
Supplementary Invoice issued by a
supplier registered under GST Act.
The said goods/services have been
received.
Returns (GSTR-3) have been filed.
The tax charged has been paid to the
government by the supplier.
ITC on Goods Sent Before Appointed
Date-
Input tax credit can be claimed by the
manufacturer/dealer for those goods
received after the appointed day, the tax on
which has already been paid under previous
law. Above credits would only be allowed if
the invoice/tax paying document is recorded
in the accounts of such person within thirty
days of the appointed day. A thirty-day
extension may be granted by the competent
authority on grounds of sufficient cause for
delay.
Refunds and Arrears-
Any claims/appeals pending for the
refund on the due amount of CENVAT
credit, tax or interest paid before the
appointed day shall be disposed of according
to the previous laws. Any amount found to
be payable under previous law will be
treated as arrears of GST and be recovered
according to GST provisions.
Other Scenarios
Job Work
Inputs, semi-finished goods removed
for job work for carrying certain processes
and returned on or after the appointed date.
In case any inputs or semi-finished goods
had been removed before the appointed date
from the factory of the manufacturer and
sent to a job worker for carrying further
processing, testing, repair or for a similar
purpose, and the same is received on or after
the appointed date, no tax shall be payable if
the following conditions are satisfied:
Underlying goods are returned to the
factory within 6 months from the
appointed date (extendable for a
maximum period of 2 months).
Declaration of the goods held by job
worker is done in Form TRANS-1
Supply of semi-finished goods is done
only on payment of tax in India or the
goods are exported out of India within 6
months from the appointed date
(extendable by not more than 2 months).

Finished goods removed before appointed
date for carrying certain processes and
returned on or after the appointed date.
In case any excisable goods had been
removed without payment of duty for
carrying out tests or other processes not
amounting to manufacture, no tax shall be
payable if the goods, after undergoing
manufacturing processes or otherwise, are
returned to the said place within six months
from the appointed day. If the underlying
inputs, semi-finished goods or finished
goods are not returned within 6 months or
extended period, input tax credit shall be
recovered respectively.
Credit Distribution by ISD
In the case of services received prior to
the appointed date AND invoices received
on or after appointed date, transition
provisions will apply. ISD will be eligible to
distribute input tax credit under GST.
CHAPTER 3
COMPOSITION SCHEME
On July 1st the Goods and Services Tax

(GST) came into effect, which has stated to
affect the prices of almost all consumer
products and services currently offered. GST
is abbreviation for Goods and Service Tax.
GST is also known as Value Added Tax
(VAT) in few countries. To uphold a
country's political and economical stability,
governments often implement policies.
There are many different types of policies
that a government would implement to
stabilize their country. However, one
significant policy that almost every country
uses is tax (i.e. Direct or Indirect tax).
Claimed to be the biggest indirect tax reform
since the Indian independence, experts are
of the view that the GST is likely to have a
positive impact on the Indian economy, with
its power to reform the taxation apparatus in
the country. Credit of eligible duties and
taxes on inputs held in stocks switching over
from composition scheme to a taxable
person. Taxpayers registered under
composition scheme in the current tax
regime will be allowed to take credit of
input held in stock, or in semi-finished
goods or in finished goods on the day
immediately preceding the date from which
he opts to be taxed as a regular taxpayer,
subject to certain conditions.
GST Composition Scheme
Every tax administration aims towards
timely recovery of taxes, filing of returns,
simplified generation and maintenance of
records, invoices and others documents.
Such elements are often a challenge for
small businesses. To overcome this
shortcoming a composition scheme was
introduced under the respective State VAT
Laws with conditions applied on eligibility
for the scheme accordingly. GST
Composition Scheme also contains an
option for a registered taxable person having
turnover less than the limit to pay tax
ta at a
lower rate respect to certain specified
conditions.
Know About GST Composition Scheme

GST
Composition
Scheme is an option
available to a
registered taxpayer
who needs to
inform the tax
authorities of his
intention to be registered under the scheme.
In case the registered taxpayer fails to
comply with the same he would be treated a
normal tax payer and administered
accordingly. Such option needs to be for all
businesses of the tax paypayers
ers ie both for
goods as well as services.
Turnover and Rate of Tax Under GST
Composition Scheme
A registered taxpayer, whose aggregate
turnover does not exceed Rs seventy five
lakh in the preceding financial year pay tax
at a rate more than 1% for manufacturer,
manufac
2.5% for restaurant sector and 0.5% for
other suppliers of turnover.
Taxable Persons Excluded from the

Composition Scheme
Following taxable persons are not granted
permission to opt for the scheme who:
Supplies goods not livable under the Act
Supplies services
Makes a supply of goods other than intra
state i.e. interstate or import/ export
Makes a supply of goods through
Electronic Commerce Operator i.e.
Ecommerce and liable to collect taxes
Manufactures such goods as may be
notified
Further, it is also if in case a taxable
person has different business segments
having same PAN as held by the taxable
person, he must register all such businesses
under the scheme. If an individual has
different business segments such as:
1.Textile
2.Electronics and accessories
3.Groceries

Then he must register all the above
segments collectively under the composite
scheme or simply opt not for the scheme.
No Tax, No Credit
No Credit of Input Tax There has been
no provision of input credit on B2B
transactions. Thus, if any taxable person
is carrying out business on B2B model,
such person will not be allowed the
credit of input tax paid from the output
liability. Also, the buyer of such goods
will not get any credit of tax paid,
resulting in price distortion and
cascading. This will further result into a
loss of business as buyers might avoid
purchases from a taxpayer under
composition scheme. Scheme holder
cannot claim input tax credit even if he
makes taxable purchases from a regular
taxable dealer. Ideally, the taxable

amount would be added to the composite
tax payers cost.
No Collection of Tax Though the rate of
composition tax is kept very nominal at
0.5% or 1% or 2.5%, a taxpayer under
composition scheme is not allowed to
recover such tax from his buyer, as he is
not allowed to raise a tax invoice.
Consequently, the burden of such tax is
kept on the taxpayer himself and this
must be paid out of his own pocket.
Thus, the fundamental principle of
limited compliance and tax burden on
small taxpayer is defeated here.
Lesser Compliance
A normal taxpayer is required to submit
a minimum of three returns on monthly
basis and one yearly consolidated return i.e.
37 returns in a whole year non-filing of
which will attract penalty. Under the scheme
a tax payer is required to file one return in
each quarter, he need not worry on record
keeping and focus more on his business.
Since a scheme holder is not required to pay
taxes at regular rates, he is not liable to issue
a Tax Invoice rather issue a Bill of Supply
making this a more convenient option as
lesser details are required.
Strict Penal Provisions
Under GST if in the opinion of proper
officer, it is found that a taxable person not
being eligible for the scheme have opted for
the scheme, he shall be liable to pay
differential taxes along with penalty and
provisions of demand and recovery will
apply to him.
This means that before opting for the
scheme a taxable person must be free from
any or all doubts of his eligibility for the
scheme to avoid such penal provisions.
However, if a small taxpayer who has
limited knowledge of tax laws and

compliance makes any mistake under
composition scheme, he shall be liable to
pay tax at standard rate on his total turnover
along with a penalty which will be equal to
the total tax liability.
Merits of the Scheme
Below are some of the prominent reasons
why you should choose to get registered as a
supplier under the composition scheme:
Limited Compliance: Lesser
compliance w.r.t. furnishing of returns,
maintenance of books of records,
issuance of invoices more focus on
business
Limited Tax Liability: on comparison
with regular taxpayers, person taxed
under Composite Scheme will be liable
to pay tax at a rate not more than 2.5%
instead of a standard rate of 18%.
High Liquidity: Unlike normal tax
payers, tax payers under Composite
Scheme will be liable to pay taxes at a
lower rate resulting in lesser chunk on
his working capital.
Demerits of the Scheme
The demerits of registering under Composite
Scheme by a taxable person are as follows:
Limited Territory for Business: A
taxpayer registered under the
composition scheme is barred from
carrying out inter-state transactions and
cannot affect import-export of goods and
services.
No Credit of Input Tax: Under the
scheme, the credit of input tax paid on
the purchases of inputs from a normal
tax payer will not be allowed. The buyer
of goods supplier by scheme holder will
also not enjoy input tax credit resulting
in price distortion, cascading, loss of
business to scheme holders.

No Collection of Tax: Though the rate
of tax for a scheme holder is lower the
burden of such tax is kept on the
taxpayer himself, leading to higher cost
of sales.
Penal Provision: As per the Model
GST Law, if the taxpayer who has
previously been given registration under
composition scheme is found to be not
eligible to the composition scheme or if
the permission granted earlier was
incorrectly granted, then such taxpayer
will be liable to pay the differential tax
along with a penalty
Not applicable to the supplier supplying
goods through E-commerce.
GST Composition Scheme Transition
Provision:
As current regime provides for the
composition scheme subject to certain
conditions, GST Composition Scheme
transition provision provides for allowance
of credit of eligible duties and taxes on
inputs heldd in stock subject to certain
conditions.
GST PENALTIES AND APPEALS

Overview- To
prevent tax evasion
and
corruption, GST has
brought in strict
provisions for
offenders regarding
penalties, prosecution and arrest.
Offences: There are 21 offences under
GST apart from the penalty under section
8 covering fake/wrong invoices, fraud, tax
evasion and others. A few are mentioned
here. For the entire list please go to our main
article on offences.

Supply of any goods/services without
any invoice or issue of a false invoice.
Issue of invoices by a taxable person
using the identification number of other
bona fide taxpayer(s).
Submission of false information while
registering under GST.
Submission of fake financial
records/documents or files, or fake
returns to evade tax.
Obtaining refunds by fraud.
Deliberate suppression of sales to evade
tax.
Non-registration under GST by a
taxpayer, although required to by law.
Opting for composition scheme even
though a taxpayer is ineligible.

Penalty: For cases with no intention of
fraud or tax evasion . An offender not
paying tax or making short payments has to
pay a penalty of 10% of the tax amount due
subject to a minimum of Rs. 10,000.
For cases of fraud
An offender has to pay a penalty amount of
tax evaded/short deducted etc.,
i.e., 100% penalty, subject to a minimum of
Rs. 10,000.
Additional penalties as follows-
Tax amount 50 lakhs 100 250
involved lakhs lakhs
Jail term Upto 1 Upto Upto 5

year 3 year
years

Fine In all three cases
Cases of fraud also face penalties,

prosecution and arrest.
Inspection Under GST
If Joint Commissioner of SGST/CGST (or a
higher officer) has reasons to believe that
In order to evade tax, a person has
suppressed any transaction or claimed
excess input tax credit etc., then he can
authorize any other officer of CGST/SGST
(in writing) to inspect places of business.
Search & Seizure Under GST

Joint Commissioner of SGST/CGST can
order for a search on the basis of results of
inspection or any other reason, if he has
reasons to believe
There are goods which are liable for
confiscation
Any documents or books or other things
which will be useful during proceedings
and are hidden somewhere.
Goods in Transit
The person in charge of a vehicle
carrying goods exceeding a specified value
is required to carry certain prescribed
documents. The proper officer has the power
to intercept goods in transit and inspect the
goods and the prescribed documents.
If the goods are in contravention to the
GST Act then the goods, related documents,
and the vehicle carrying them will be seized.
The goods will be released only on payment
of tax and penalty u/s 89. Before
confiscating the goods, the tax officer shall
give an option of paying a fine instead of
confiscation.
Compounding of Offences Under GST
Compounding of offences is a short cut
method to avoid litigation. In case of
prosecution for an offence in a criminal
court, the accused has to appear before the
Magistrate at every hearing through an
advocate. Compounding will save time and
money. However compounding is not
available for cases where the value involved
exceeds 1 crore.
Prosecution Under GST
Prosecution is the conducting of legal
proceedings against someone in respect of a
criminal charge. A person committing an
offence with the deliberate intention of
fraud, becomes liable to prosecution, i.e.,
face criminal charges. A few examples of
these offences are-
1.Issue of an invoice without supplying
any goods/services- thus taking input
credit or refund by fraud
2.Obtaining refund of any CGST/SGST by
fraud.
3.Submitting fake financial
records/documents or files, and fake
returns to evade tax.
4.Helping another person to commit fraud
under GST.
Arrest Under GST
If the Commissioner of
CGST/SGST believes a person has
committed an offence u/s 92 above, he can
be arrested by any authorised CGST/SGST
officer. The arrested person will be informed
about the grounds of his arrest. He will
appear before the magistrate within 24 hours
in case of a cognizable offence.

What are the offences u/s 132 where
arrest provisions become applicable?
Offenses u/s 132 where arrest provisions
become applicable-
1.A taxable person supplies any
goods/services without any invoice or
issues a false invoice
2.He issues any invoice or bill without
supply of goods/services in violation of
the provisions of GST
3.He collects any GST but does not submit
it to the government within 3 months
4.Even if he collects any GST in
contravention of provisions, he still has
to deposit it to the government within 3
months. Failure to do so will be an
offense under GST
5.He has already been convicted of an
earlier u/s 132 i.e., this is his 2nd offense
On reading section 132 with arrest
provisions, it essentially stands that a person
can be arrested only where the tax evasion is
more than 100 lakhs rupees or where a
person has earlier been convicted of an
offence u/s 132.
What is the difference between a
cognizable and a non-cognizable offense?
Cognizable offenses are those where the
police can arrest a person without any arrest
warrant. They are serious crimes like murder
robbery, counterfeiting. Non-
cognizable offenses are those, where a
police officer cannot arrest a person without
a warrant issued by competent
authority. They are less serious crimes like
public nuisance, assault.
Cognizance of offense under GST
A court cannot take cognizance of any
offense punishable without the prior
permission of the designated authority. Only

a Magistrate of the First Class (and above)
can try such an offense.
Is bail available?
For non-cognizable and bailable offenses,
the arrested person can be released on bail.
Who can summon someone for evidence?
The proper officer can summon any
person to give evidence or produce a
document. Any person summoned, has to
attend on his own or through an authorized
representative. They will appear under oath.
Who can access business premises and
inspect books?
The Joint Commissioner of CGST/SGST
will authorise a CGST/SGST officer to have
access to any place of business of a
registered taxable person. The officer can
inspect books of account, documents,
computers and other required things to carry

out any audit, verification in the interest of
revenue.
Which officers are required to assist
CGST/SGST officers?
All officers of
Police
Railways
Customs
State/Central Government
officers engaged in collection of
GST
Officers collecting land revenue
Village officers
-are required to assist the CGST/SGST
officers.
The Commissioner of CGST/SGST can also
require any other class of officers to assist
the CGST/SGST officers.

OPINION
The provisions of seizure and arrest
seem rather harsh as GST is an economic
legislation, i.e.,
., a tax law and not a criminal
legislation. The Commissioner has the
power to arrest on the basis of reasons to
believe.. The
wording is
subjective (i.e.,
depending on the
opinion). An honest
taxpayer who, for
example, did not
pay GST because he genuinely believed
GST was not applicable to him might get his
goods seized and get arrested. It could be a
case of wrong interpretation of the law for
which penalty might apply but arrest seems
too harsh. GST law should have more clarity
on the occasions when a per person
son can be
arrested considering that it is a new law and
there are bound to be genuine errors.
Appeals
A person unhappy with any decision or
order passed against him under GST by an
adjudicating authority can appeal to the First
Appellate Authority. If they are not
happy with the decision of the First
Appellate Authority they can appeal to the
National Appellate Tribunal, then to the
High Court, and finally to the Supreme
Court.

CHAPTER 4
GST MECHANISM
ACCOUNTS, PAYMENTS &
PROCEDURE UNDER GST
Under GST all indirect taxes (excise,

VAT, service tax) will get subsumed into
one GST, thus reducing the number of
accounts required to be maintained. In our
article, we have listed the various accounts
to be maintained and other records that
businesses need to keep under GST.
For example, under GST, a trader has to
maintain the following a/cs (a part from
accounts like purchase, sales, stock)
Input CGST a/c
Output CGST a/c
Input SGST a/c
Output SGST a/c
Input IGST a/c
Output IGST a/c
Electronic Cash Ledger (to be
maintained on Government GST portal
to pay GST)
For the entire list of accounts to be
maintained please read here.
Accounting Under GST
While there will be initial transition
challenges, GST will bring in much clarity
in many areas of business. One of the areas
is accounting and bookkeeping. While the
number of accounts is more apparently
under GST, once you go through the
accounting you will find it is much easier for
record keeping. One of the biggest
advantages a trader will have is that he
canset offf his input tax on service with his
output tax on the sale.
Read our discussions on the accounting
treatment of various transactions under GST
answering queries on how to record and pass
entries for the inter-state sale of goods, how
to record utilization of input tax credit etc.
Electronic Cash & Credit Ledger

Under this section we will discuss the
mechanism of GST e-ledger and how does it
work. E-ledger or electronic ledger is
statement of cash and input tax credit in
respect of a registered taxpayer. Once a
taxpayer makes GST tax payment by cash,
cheque, internet banking, RTGS or NEFT
the amount is credited in their respective
electronic ledgers namely:
Electronic Cash Ledger
Electronic Credit Ledger
These two e-ledgers are generated once after
registering with common portal of GST
called GSTN by a taxpayer.

Period for Retention
Retention: This sections talks
about the period for which the said books of
accounts and other
records have to be
maintained, i.e. how
long the records need
to be saved by the
business entity.
As per th the GST
law every registered taxable person required
to keep and maintain books of account or
other records will maintain the books for at
least 60 months, counted from the last date
of filing of Annual Return of following year.
Consequences of Not Maintaini
Maintaining
ng Proper
Records
This section talks about the
consequences on defaults in case of non-
non
maintenance of proper records, improper
treatment in books of accounts and other
related provisions.

GST Analysis and Opinions
GST is purported to bring in the one nation
one tax system, but its effect on various
industries will be slightly different. The first
level of differentiation will come in
depending on whether the industry deals
with manufacturing,
distributing and
retailing
ling or is
providing a service.
GST PROCEDURE
PROCEDURE-
Goods and Service
Tax (GST)) will bring
in One nation one tax to unite indirect
taxes under one umbrella and facilitate
Indian businesses to become globally
competitive. The Indian GST is structured
for efficient tax collection, reduction in
corruption, easy inter
inter-state
state movement of
goods etc. Like the present indirect tax
system, GST also provides for self- self

assessment to facilitate easy compliance and
payment of taxes. The GST Model Law also
explains the notices and the demand and
recovery provisions when the taxes are
unpaid/short paid and returns are not filed.
Audit:
Audit under GST is the examination of
records maintained by the taxable person to
verify the correctness of information
declared, taxes paid and to assess the
compliance with the provisions of GST.
Audit can be done by the taxpayer himself
or by the tax authorities. Every registered
taxable person turnover during a financial
year exceeds the prescribed limit [as per the
draft rules turnover limit is above Rs 1
crore] must get his accounts audited by a CA
or a CMA.
Audit by tax authorities: Tax authorities
can conduct audit of the taxpayer if

authorised by the Commissioner of
CGST/SGST.
Special audit: Special audit can be initiated
based on the opinion of the tax
authorities that the value has not been
correctly declared or the wrong credit has
been availed. It will be initiated if during
any stage of investigation, the proper officer
considers the nature and complexity of the
case and interest of revenue and has an
opinion that it is required.
Assessment: Assessment means
determination of tax liability under GST. It
covers-
Self-assessment
Provisional assessment
Scrutiny assessment
Summary assessment
Best judgment assessment
o Assessment of non-filers of returns
o Assessment of unregistered persons

Self-assessment: Under GST, every
registered taxable person shall assess the
taxes payable by them on their own, and
furnish a return for each tax period.
Provisional assessment: An assessee can
request the officer for provisional
assessment if he is- unable to determine
value or rate of tax. The proper officer can
allow the assessee to pay tax on a
provisional basis at a rate or a value
specified by him.
Scrutiny of returns: The proper officer can
scrutinize the return to verify its correctness.
It is a pre-adjudication process. The officer
will ask for explanations on any
discrepancies noticed in the returns.
Best Judgment Assessment
Assessment of non-filers
If the registered taxable person does not
file his return even after getting a notice, the
proper officer will assess the tax liability to
the best of his judgment using the available
relevant material.
Assessment of unregistered persons: This
is concerning a taxable person who fails to
obtain registration even though he is liable
to do so. The officer will assess the tax
liability of such persons to the best of his
judgment. The taxable person will receive a
show cause notice and an opportunity of
being heard.
Summary assessment in certain special
cases-
This is done when the assessing officer
comes across sufficient grounds to believe
any delay in showing a tax liability can harm
the interest of the revenue. To protect the
interest of the revenue, he can pass the
summary assessment with the prior
permission of the additional/joint
commissioner.
Demand and Recovery
Since GST is absolutely new and it
is payable on self-assessment basis, it is
possible that the taxable person may have
made some errors. He might not have paid
the tax correctly or may not have paid the
tax at all. He might have got the wrong
refund of tax or input tax credit. In these
cases, demand and recovery provisions
become applicable. The proper officer will
issue a show cause notice along with a
demand for payment of tax (also penalty for
fraud cases).
Demands can arise in the following cases-
Demands for unpaid/short paid tax or
wrong refund (without any fraud)
Demands for unpaid/short paid tax or
wrong refund (for fraud cases)
Tax collected but not deposited with the
Central or a State Government
CGST/SGST paid when IGST was
payable and vice versa.

Recovery of Tax
Tax: If demand is not paid, the
IT department can start recovery
proceedings.
Advance Ruling
Ruling: It is issued
ued by tax
authorities to corporations and individuals
who request for clarification of certain tax
matters. Advance tax ruling is applied
for before starting the proposed
activity. This helps to reduce costly
litigation.
Process of Advance Ruling

under GST
As per GST Model Law, advance ruling is a
written decision given by the tax authority to
an applicant on
questions relating to
the supply of
goods/services.
GST PAYMENTS & REFUNDS
Overview-
There are less than 4 months left for the
implementation of GST on July 1. GST
would streamline the process of tax
payments and refunds, bringing in
transparency and accountability. The GST
Council, appointed by the government of
India, has an uphill task of setting the rates
so that the tax revenues of both the center
and state are not affected. The first step
towards decoding the rates under GST was
to decide on the revenue neutral rate (RNR).
Revenue neutral rate is calculated on the
basis of total revenue desired and the total
consumption expenditure of the country.
The Subramanian committee studied
three different approaches in order to figure
out the revenue neutral rate. According to
the latest recommendation from the
Subramanian committee, the revenue neutral
rate should be fixed around 18%. Currently,
there are four different tax rates expected
under GST depending on the type of
good/service. The four rates are
5%,12%,18%, and 28%.
There is a significant change in the
calculation of tax under GST. CGST, SGST,
IGST are the three new terms which are
introduced under the new tax laws. CGST
refers to Central Goods and Service Tax,
SGST refers to State Goods and Service
Tax, and IGST is the Integrated Goods and
Service tax, which would be charged on the
inter-state goods/services. Goods/services
sold or resold within the state would be
liable to pay only CGST and SGST.
This table shows the tax liability under
different circumstances-
CIRCUMSTANCES CGST SGST IGST

Goods sold from Delhi NO NO YES
to Bombay
Goods sold within YES YES NO

Bombay
Goods sold from YES YES NO

Bombay to Pune
Payment of Tax Under GST

Currently, companies pay VAT tax on a
monthly/quarterly basis depending on the
state and their turnover. CST is paid when
crossing state borders and it is not allowed
as input tax credit under the current tax
laws. Excise duty is also levied on the
capital goods.
GST would subsume all the above-
mentioned taxes. Tax payment would be due
at the time of supply of goods under GST.
As per the updated GST model law Every
deposit made towards tax, interest, penalty,
fee or any other amount by a taxable person
by internet banking or by using credit/debit
cards or National Electronic Fund Transfer
or Real Time Gross Settlement or by any
other mode, subject to such conditions and
restrictions as may be prescribed in this
behalf, shall be credited to the electronic
cash ledger of such person to be maintained
in the manner as may be prescribed. It
states that the taxpayer can pay the tax due
through electronic modes and it will be
automatically debited to his electronic cash
ledger. Electronic cash ledger, electronic
input tax credit ledger, and tax liability
ledger have to be maintained by each person
registered under GST.
Electronic cash ledgers will record data
of tax, interest, penalty, fees paid and
payment under CGST, SGST, and IGST.
Details of the input tax credit available
under all heads would be available in the
Electronic Input Tax credit ledger. Tax
liability ledger is to be also maintained
electronically for any outstanding liability
arising out of the regular return, notices,
penalties.
Credit available under the electronic
input tax credit ledger can be utilised in
the following ways:
1.Fulfillment of liability arising due to a
regular return under GST.
2.Credit reversed due to a mismatch in
invoice or amount of credit.
3.Payment of any liability which arose due
to receipt of demand notices.
Input tax credit not claimed for up to one
year from the date when tax invoice was
raised shall be considered as expired.

Refund Under GST
Currently, the refund for the excess of
VAT/CST paid is claimed annually. Refund
on the excess of excise duty paid is paid
through the duty drawback scheme. There
are a lot of delays under the current system
in providing the refund for
excise/VAT/CST. GST would improve the
system of calculation, application, and
processing of the refund. Refunds would be
calculated for each major head (CGST,
SGST, IGST) separately. An application
form has to be filed on the GSTN portal for
claiming the refund. Since all the data will
be uploaded electronically, calculation of
refunds would become automated.
As stated in the GST Model Law, If
any tax ordered to be refunded under section
48 to any applicant is not refunded within
sixty days from the date of receipt of
application under sub-section (1) of that
section, interest at such rate as may be
specified in the notification issued by the
Central or a State Government on the
recommendation of the Council shall be
payable in respect of such refund from the
date immediately after the expiry of sixty
days from the date of receipt of application
under the said subsection till the date of
refund of such tax. The processing time for
a refund application has been kept as sixty
days under GST model law but it could be
as early as two weeks.

CHAPTER 5
GST RATES & HARMONIZED
SYSTEM NOMENCLATURE (HSN)
CODES
GST council has made the much-awaited

announcements around tax rates on various
categories of goods on day one of a two-day
meeting of the said council at Srinagar.
There has been a hype around these rates for
a while and now these rates are finally in the
public domain.
As soon as the GST rates were
announced a huge wave of curiosity hit
across industry and trade bodies. Everyone
is evaluating their position as a result of this
change. So in this article, we bring you our
analysis of these GST rates. We already
know that the GST slabs are pegged at 5%,
12%, 18% & 28%. According to the latest

news from the GST council, the tax structure
for common-use goods are as under:
GST Rates Structure-
Tax
Rates Products
0% Milk Kajal
Eggs Educations Services
Curd Health Services
Lassi Childrens Drawing &

Colouring Books
Unpacked Unbranded Atta

Foodgrains

Tax
Rates Products
Unpacked Unbranded Maida

Paneer
Gur Besan
Unbranded Prasad
Natural
Honey
Fresh Palmyra Jaggery

Vegetables
Salt Phool Bhari Jhadoo
5% Sugar Packed Paneer

Tax
Rates Products
Tea Coal
Edible Oils Raisin
Domestic Roasted Coffee Beans

LPG
PDS Skimmed Milk

Kerosene Powder
Cashew Footwear (< Rs.500)

Nuts
Milk Food Apparels (< Rs.1000)

for Babies

Tax
Rates Products
Fabric Coir Mats, Matting &

Floor Covering
Spices Agarbatti
Coal Mishti/Mithai (Indian

Sweets)
Life-saving Coffee (except

drugs instant)
12% Butter Computers
Ghee Processed food
Almonds Mobiles

Tax
Rates Products
Fruit Juice Preparations of

Vegetables, Fruits,
Nuts or other parts of
Plants including
Pickle Murabba,
Chutney, Jam, Jelly
Packed Umbrella
Coconut
Water
18% Hair Oil Capital goods
Toothpaste Industrial
Intermediaries

Tax
Rates Products
Soap Ice-cream
Pasta Toiletries
Corn Flakes Computers
Soups Printers
28% Small cars High-end motorcycles

(+1% or 3% (+15% cess)
cess)
Consumer Beedis are NOT

durables included here
such as AC
and fridge

Tax
Rates Products
Luxury & sin items

like BMWs, cigarettes
and aerated drinks
(+15% cess)
In addition to the above, a few other

items were mentioned in the Councils
announcement of rates. These items, and the
applicable rates on them are as follows:
Sugar, Tea, Coffee and Edible oil will
fall under the 5 per cent slab, while
cereals, milk will be part of the exempt
list under GST. This is to ensure that
basic goods are available at affordable
prices. However, instant food has been
kept outside this bracket so, no relief for
Maggie lovers!
The Council has set the rate for capital
goods and industrial intermediate items
at 18 per cent. This will positively
impact domestic manufacturers as
seamless input credit will be available
for all capital goods. Indeed, it is time
for Make In India.
Coal to be taxed at 5 percent against
current 11.69 per cent. This will prove
beneficial for the power sector and
heavy industries which rely on coal
supply. This will also help curb inflation.
Expect a good run for Coal India
tomorrow.

Toothpaste, hair oil, and soaps will all be
taxed at 18 percent, where currently they
are taxed at 28 percent. Most of the
cosmetics and fast moving consumer
goods (FMCG) brands should get the
benefit of this tax reduction. After all,

Fair and Lovely might seem fairer in its
pricing from now on!
The mithai from the neighbouring
sweet shop might lose some of its
flavour as Indian sweets will now be
taxable at 5 per cent. If you have a sweet
tooth, this could hurt your pocket a wee
bit in the coming days.
Plus, it was announced that:
for restaurants serving alcohol, the tax
bracket will be 18 per cent
education, healthcare are going to be
exempted from GST
services on Non-AC restaurants will be
12 per cent

CHAPTER 6
IMPACT
MPACT OF GST ON BUSINESS
SCENERIO (MANUFACTURERS,
MANUFACTURERS,
DISTRIBUTOR
DISTRIBUTORS & RETAILERS)
RETAILER
GST is expected to boost

competitiveness and performance in Indias
manufacturing sector. Declining exports and
high infrastructure spending are just some of
the concerns of this sector. Multiple indirect
taxes have also increased the administrative
costs for manufacturers and distributors and
it is being hoped that with GST in place, the
compliance burden will ease and this sector
will grow more strongly.
Indirect taxes in India
have driven businesses to
restructure and model their
supply chain and systems
owing to multiplicity of
taxes and costs involved.
With hopes that the Goods and Services Tax
(GST) will see the light of the day, the way
India does business will change, forever.
Total tax collection in India (direct &

indirect), currently stands at Rs 14.6 lakh
crore, of which almost 34 per cent comprises
indirect taxes, with Rs 2.8 lakh crore coming
from excise and Rs 2.1 lakh crore from
service tax. With the implementation of the
GST (Goods and Services Tax), the entire
indirect tax system in India (excise, state-
level VAT, service tax) is expected to
evolve.
The tax revenue mix can change as per the
economic condition of the country. In
developing countries, indirect taxes
comprise a higher share of total taxes; in
developed countries, their contribution is
significantly lower. For example in
Australia, indirect tax contributes just 13 per
cent of total tax collection. After GST, the
percentage of indirect tax is expected to
increase in India.
Not covered under the GST purview:
1. Petroleum products
2. Entertainment and amusement tax levied
and collected by panchayat
/municipality/district council
3. Tax on alcohol/liquor consumption
4. Stamp duty, customs duty
5. Tax on consumption and sale of
electricity

GST objectives:-
1. Ensuring availability of input credit

across the value chain
2. Minimising cascading effect of taxation
3. Simplification of tax administration and
compliance
4. Harmonisation of tax base, laws, and
administration procedures across the
country
5. Minimising tax rate slabs to avoid
classification issues
6. Prevention of unhealthy competition
among states
7. Increasing the tax base and raising
compliance
Implementation challenges:-
1. Lack of adaptation
2. Lack of trained staff
3. Double registration can increase
compliances and cost
4. Lack of clear mechanism to control tax
evasion
5. Hard to estimate the exact impact of GST
Impact of GST on Service Providers-

As of March 2014, there were 12, 76,861
service tax assessees in the country out of
which only the top 50 paid more than 50%
of the tax collected nationwide. Most of the
tax burden is borne by domains such as IT
services, telecommunication services,
Insurance industry, business support

services, Banking and Financial services etc.
These pan-India businesses already work in
a unified market, and while they will see
compliance burden becoming lesser there
will apparently not be much change in the
way they function even after GST
implementation.
Sector-wise Impact Analysis
Logistics
In a vast country like India, the logistics
sector forms the backbone of the
economy. We can fairly assume that a well
organized and mature logistics industry has
the potential to leapfrog the Make In India
initiative of the Government of India to its
desired position.
E-com-
The e-com sector in India has been
growing by leaps and bounds. In many
ways, GST will help the e-com sectors
continued growth but the long-term effects
will be particularly interesting because the
model GST law specifically proposes a tax
collection at source (TCS) mechanism,
which e-com companies are not too happy
with. The current rate of TCS is at 1% and
itll remain to be seen if it dilutes the rapid
boom in this sector in any way in the future.
Pharma-
On the whole, GST is expected to
benefit the pharma and healthcare industries.
It will create a level playing field for generic
drug makers, boost medical tourism and
simplify the tax structure. If there is any
concern whatsoever, then it relates to the
pricing structure (as per latest news). The
pharma sector is hoping for a tax respite as it
will make affordable healthcare easier to
access by all.
Telecommunications-
In the telecom sector, prices are
expected to come down after GST.
Manufacturers will save on costs through
efficient management of inventory and by
consolidating their warehouses. Handset
manufacturers will find it easier to sell their
equipment as GST will negate the need to
set up state-specific entities, and transfer
stocks. The will also save up on logistics
costs.

Textile-
The Indian textile industry provides
employment to a large number of skilled and
unskilled workers in the country. It
contributes about 10% of the total annual
export, and this value is likely to increase
under GST. GST would affect the cotton
value chain of the textile industry which is
chosen by most small medium enterprises as
it currently attracts zero central excise duty
(under optional route).
Real Estate-
The real estate sector is one of the most
pivotal sectors of the Indian economy,
playing an important role in employment
generation in India. The probable impact of
GST on the real estate sector cannot be fully
assessed as it largely depends on the tax
rates. However, it is a given that the sector
will see substantial benefits from GST
implementation, as it will bring to the

industry much required transparency and
accountability.
Agriculture-
Agricultural sector is the largest
contributing sector the overall Indian GDP.
It covers around 16% of Indian GDP. One of
the major issues faced by the agricultural
sector, is transportation of agri products
across state lines all over India. It is highly
probable that GST will resolve the issue of
transportation. GST may provide India with
its first National Market for the agricultural
goods. However, there are a lot of
clarifications which need to be provided for
rates for agricultural products.
FMCG-
The FMCG sector could see significant
savings in logistics and distribution costs as
the GST will eliminate the need for multiple
sales depots. The GST rate for this sector is
expected to be around 17% which is way

lesser than the 24-25% tax rate paid
currently by FMCG companies. This
includes excise duty, VAT and entry tax
all of which will be subsumed by GST.
Freelancers-
Freelancing in India is still a nascent
industry and the rules and regulations for
this chaotic industry are still up in the air.
But with GST, it will become much easier
for freelancers to file their taxes as they can
easily do it online. They will be taxed as
service providers, and the new tax structure
will bring about coherence and
accountability in this sector.
Automobiles-
The automobile industry in India is a
vast business producing a large number of
cars annually, fueled mostly by the huge
population of the country. Under the current
tax system, there are several taxes applicable
on this sector like excise, VAT, sales tax,

road tax, motor vehicle tax, registration duty
which will be subsumed by GST. Though
there is still some ambiguity due to tax rates
and incentives/exemptions provided by
different states to the manufacturers/dealers
for manufacturing car/bus/bike, the future of
the industry looks rosy.
Startups-
With increased limits for registration, a
DIY compliance model, tax credit on
purchases, and a free flow of goods and
services, the GST regime truly augurs well
for the Indian startup scene. Currently, many
Indian states have very different VAT laws
which can be confusing for companies that
have a pan-India presence, specially the e-
com sector. All of this is expected to change
under GST with the only sore point being
the reduction in the excise limit.

BFSI-
Among the services provided by Banks
and NBFCs, financial services such as fund
based, fee-based and insurance services will
see major shifts from the current scenario.
Owing to the nature and volume of
operations provided by banks and NBFC vis
a vis lease transactions, hire purchase,
related to actionable claims, fund and non-
fund based services etc., GST compliance
will be quite difficult to implement in these
sectors.

CHAPTER 7
COMPARISON WITH OTHER
COUNTRIES WHEN ONE TAX
SYSTEM IS RUNNING
Goods and service tax is taking India by

the storm. GST will bring in One nation
one tax to unite indirect taxes under one
umbrella and facilitate Indian businesses to
be globally competitive. The Indian GST
case is structured for efficient tax collection,
reduction in corruption, easy inter-state
movement of goods etc.
France was the first country to implement
GST to reduce tax- evasion. Since then,
more than 140 countries have implemented
GST with some countries having Dual-GST
(e.g. Brazil, Canada etc.) model. India has
chosen the Canadian model of dual GST.

How Indian GST model compares with GST
in other countries
India
Particul (proposed
ars ) Canada UK
Name of Goods and Federal Value

GST in Service tax Goods and Added
the Service Tax
country Tax &
Harmonize
d Sales
Tax
Standar 0% (for GST 5% 20 %

d Rate food and HST Reduce
staples), varies d rates-
5%, 12%, from 0% 5 %,
18% and to 15% exempt,

India
Particul (proposed
ars ) Canada UK
28%(+cess zero
for luxury rated
items)
Thresho 20 lakhs Canadian $

ld (10 lakhs 30,000 73,000
exempti for NE (Approx (Approx
on states) Rs. 15.6 Rs.
Limit lakhs in 61.32
INR) lakhs)
Liability Accrual Accrual Accrual

arises basis: basis: The Basis:
on Issue of date of Invoice
invoice issue of OR

India
Particul (proposed
ars ) Canada UK
OR invoice Paymen
Receipt of OR the t
payment date of OR
-earlier receipt Supply
of -
payment- earliest
earlier. Cash
basis
(T/O
upto
1.35mn)
:
Paymen
t

India
Particul (proposed
ars ) Canada UK
Returns Monthly Monthly, Usually

and and 1 quarterly quarterl
payment annual or annually y. Small
s return based on business
turnover option-
annual
Reverse Apply on Reverse Applica

charge goods charge ble
Mechan (new) as applies to
ism well as importatio
services n of
(currently services
under and
Service intangible

India
Particul (proposed
ars ) Canada UK
tax) properties.
Exempt Manufactu Real Medical

services re of estate, ,
exempted Financial Educati
goods or Services, on,
Provision Rent Finance,
of (Residence Insuran
exempted ), ce,
services Charities, Postal
(to be Health, services
notified) Education

India
Particul (proposed Malaysi
ars ) Singapore a
Name of Goods and Goods and Goods

GST in Service tax Service And
the Tax Services
country Tax
Standar 0% (for 7% 6%
d Rate food Reduced
staples), rates- Zero
5%, 12%, rated,
18% and exempt
28%(+cess
for luxury
items)
Thresho 20 lakhs Singapore MYR

India
Particul (proposed
ars ) Canada UK
ld (10 lakhs $ 1 million 500,000

exempti for NE (Approx (Approx
on states) Rs. 4.8 Rs. 75
Limit crore) lakhs)
Liability Accrual Accrual Accrual

arises basis: Basis: Basis:
on Issue of Issue of Deliver
invoice invoice y of
OR OR goods
Receipt of Receipt of OR
payment payment Issue of
-earlier OR Supply invoice
- earliest OR
Cash Receipt

India
Particul (proposed
ars ) Canada UK
basis:(T/O of
upto paymen
SGD$1mn t
): Payment
Returns Monthly Usually Large

and and 1 quarterly organsat
payment annual Business ions-
s return option- Monthl
Monthly y
returns.
Reverse Apply on Reverse Reverse

charge goods charge charge
Mechan (new) as applies to applies

India
Particul (proposed
ars ) Canada UK
ism well as supply of to

services services importe
(currently d
under services
Service
tax)
Exempt Manufactu Real Basic

services re of estate, food,He
exempted Financial alth
goods or services, Transpo
Provision Residential rtation,
of rental Residen
exempted tial
services property

India
Particul (proposed
ars ) Canada UK
(to be ,
notified) Agricult
ural
land
**USA does not have GST as it ensures

high autonomy for the states
Thus we find GST model across the
commonwealth countries are similar with
some variations. Unlike India, other
countries have a much higher threshold for
GST applicability thus reducing the burden
for small businesses. This will bring in
challenges for our SMEs.

Indian GST vs Foreign GST: Difference
Explained-
The upcoming
Goods and
service tax in
India is now
finally
becoming real
as the council
and all the dignitaries have drafted over
most of the laws. The taxation regime will
significantly subsume all the additional
indirect taxes currently levied on the
interstate movement of good and also the
centre will compensate if any revenue loss
occurred in the transition. This single tax
scheme is supposed to include all the taxes
like central excise duty, state-level taxes like
VAT or sales tax, entertainment tax, entry
tax, purchase tax, luxury tax, and octroi.
This new tax scheme has assured that it
will certainly bring the neutrality in the
unified market which will subsume many
taxes aforementioned. As in GST India, the
tax is paid at the final point of consumption
in which at every stage of sales and purchase
in the supply chain, the tax is added and
submitted on value added goods and
services is done via a tax credit system.
With the Goods and service tax coming to
India, there is a justified cost
competitiveness as all the market players are
obliged to come under the GST framework
which will for sure improve the economic
conditions of the nation as well as interstate
differences in the tax paying duties.
And now if one acknowledges the working
of GST in other nations for understanding
the GST implication, first of all, it is a
known fact that more than 160 nations have
brought up GST and as a matter of fact

European tax economy has conceived the
GST more than 50 years ago.
In the Asia Pacific geography, the
taxation scheme is popularly and a broadly
accepted subject of taxation. But the most
important and questionable thought over this
discussion concludes that there are above 40
model of GST applications which are
currently running through the system of
various economies in the world which
includes a diverse set of rules and
regulations.
As again watching over the difference
in Indian GST vs Foreign GST, countries
like New Zealand and Singapore have been
applying the taxes on everything at a single
and consistent rate. While Indonesia has a
total of five possible accepted rates with
zero rates included and also bearing above
30 exemptions within it. After the European
and Asia pacific market, the China has
maintained the GST applications over goods
and the conditioned provision of repairs,
processing and replacement assisted
services, which also means that it is
restrictedly collected on goods which are
consumed in the manufacturing process as
the fixed asset goods and service tax in
foreign country like china is not under
recoverable terms.
Going to the far shores, in Australia, the
GST is a federal tax which is collected by
the supreme authority and thus divided
further among the states without any conflict
arising through the process. Now looking to
Canada model of GST, the country governs
the taxation regime under 3 schemes i.e.
Federal GST, Joint federal and separate
federal. Federal tax is generally accepted tax
system while joint federal is run on the basis
of synchronized behavior of the economy
and states and the last one separate federal
which only applies to the Quebec as it is
deemed as a quasi-independent province.
Talking about the Brazil model of GST,
it is much independent and carefree in
comparison to other nations and has a
dividing rule of taxes between the states and
the center. In all cases, GST rates are
prefixed between 16 to 20 percent and India
has somehow taken the cues from this and
jotted down the similar pattern. Finally, the
great beginning is about to flash in the
Indian economy because the speculated
taxpaying community is likely to get a
growth of 5 to 6 times than the current
figure.
Reference:
http://blog.saginfotech.com/gst-
india-vs-foreign-gst
Updated on April 6, 2017 Subodh
Kumawat GST Articles

CHAPTER 8
FUTURE ASPECT OF GST IN INDIA
Amidst economic crisis across the globe,

India has posed a beacon of hope with
ambitious growth targets, supported by a
bunch of strategic undertakings such as the
Make in India and Digital India campaigns.
The Goods and Services Tax (GST) is
another such undertaking that is expected to
provide the much needed stimulant for
economic growth in India by transforming
the existing base of indirect taxation towards
the free flow of goods and services. GST is
also expected to eliminate the cascading
effect of taxes. India is projected to play an
important role in the world economy in the
years to come. The expectation of GST
being introduced is high not only within the
country, but also within neighboring

countries and developed economies of the
world.
Benefits of GST to the Indian Economy
Removal of bundled indirect taxes such as
VAT, CST, Service tax, CAD, SAD, and
Excise.
Less tax compliance and a simplified tax
policy compared to current tax structure.
Removal of cascading effect of taxes i.e.
removes tax on tax.
Reduction of manufacturing costs due to
lower burden of taxes on the
manufacturing sector. Hence prices of
consumer goods will be likely to come
down.
Lower the burden on the common man i.e.
public will have to shed less money to buy
the same products that were costly earlier.
Increased demand and consumption of
goods.

Increased demand will lead to increase
supply. Hence, this will ultimately lead to
rise in the production of goods.
Control of black money circulation as the
system normally followed by traders and

shopkeepers will be put to a mandatory
check.
Boost to the Indian economy in the long
run.
These are possible only if the actual benefit
of GST is passed on to the final consumer.
There are other factors, such as the sellers
profit margin, that determines the final price
of goods. GST alone does not determine the
final price of goods.
Q: How will GST impact the Indian
Economy?
Reduces tax burden on producers and
fosters growth through more production.
The current taxation structure, pumped
with myriad tax clauses, prevents

manufacturers from producing to their
optimum capacity and retards growth. GST
will take care of this problem by providing
tax credit to the manufacturers.
Different tax barriers, such as check posts
and toll plazas, lead to wastage of
unpreserved items being transported. This
penalty transforms into major costs due to
higher needs of buffer stock and
warehousing costs. A single taxation
system will eliminate this roadblock.
There will be more transparency in the
system as the customers will know exactly
how much taxes they are being charged
and on what base.
GST will add to the government revenues
by extending the tax base.
GST will provide credit for the taxes paid
by producers in the goods or services
chain. This is expected to encourage
producers to buy raw material from
different registered dealers and is hoped to

bring in more vendors and suppliers under
the purview of taxation.
GST will remove the custom duties
applicable on exports. The nations
competitiveness in foreign markets will
increase on account of lower costs of
transaction.
A Brighter Economy
The introduction of the Goods and Services
Tax will be a very noteworthy step in the
field of indirect tax reforms in India. By
merging a large number of Central and State
taxes into a single tax, GST is expected to
significantly ease double taxation and make
taxation overall easy for the industries. For
the end customer, the most beneficial will be
in terms of reduction in the overall tax
burden on goods and services. Introduction
of GST will also make Indian products
competitive in the domestic and
international markets. Last but not least, the

GST, because of its transparent character,
will be easier to administer. Once
implemented, the proposed taxation system
holds great promise in terms of sustaining
growth for the Indian economy.
Impact on Small and Medium Business:
The Goods and Services Tax (GST) has

been heralded as the biggest indirect tax
reform in India after Independence. After
much deliberation, the GST bill has been
passed in the Rajya Sabha and is set to be
discussed in the state legislative assemblies
in this winter session. With the ball set to
roll for a unified country-wide tax reform,
the market is filled with new found
optimism amongst industry leaders and
government officials. This sets the necessary
momentum for the passage of the two
BillsCentral GST (CGST) and Integrated
GST (IGST) Billsduring the winter
session along with the State GST Bill by
different state assemblies. According to
industry experts and government sources,
the GST rollout date of April 1, 2017 is
likely to be met. With this, enterprises,
particularly SMEs, across a wide range of
industries are caught in a state of flux. The
comprehensive indirect tax GST will replace
various other taxes such as Excise, Vat and
Service Tax with a single tax structure.
Driven by wide-ranging skepticism, several
startups and SMEs are wary of the adverse
impacts that may come into the picture with
the GST rollout. According to various state
governments the GST regime will benefit
SMEs the most. As opined by industry
experts, the much proclaimed benefits of
eliminating the cascading effect of multiple
central and state taxes and the ease of
starting a business will impact them the
most. However, market optimism aside, they
are not very sure of the ways the new tax

regime will affect their business and alter
their bottom line. To comprehend the full
repercussion of the tax reform, it becomes
crucial to know the intricate aspects of GST
and the associated tax reform in detail.
What is GST Salient Features:
GST is destination-based consumption
tax levied at multiple stages of production
and distribution of goods and services. It
combines various other taxes such as state
and local tax, entertainment tax, excise duty,
surcharges, octroi and others. The tax is
applicable on transaction value which
includes packaging, commission and other
expenses incurred during sales. It allows full
tax credit from inputs and capital goods on
procurement which can later be set off
against the GST output liability.
A salient feature of GST would be that
goods and services are considered alike and
within the supply chain, they are taxed at a

flat single rate till the customers can access
them. The tax reform thus gives equal
footing to large enterprises and SMEs and
taxes the stock transfers uniformly.
Another salient feature of the GST
rollout in India is that it will be dual based
that is, both center and various state
governments will levy GST separately. The
central government will levy CGST and the
state governments will levy SGST
respectively. However, the basis for
classification of taxes, measure of levy and
chargeability of taxes will be same for both.
This is necessary keeping in mind the
federal structure of the government,
provided the governments at both levels
have the liberty to administer their own
taxes. In addition, GST will be levied on
import of goods and services into India.
Another key feature of GST that needs
mention is the elimination of the cascading
effect of various state and central taxes.

State taxes that will be subsumed within the
GST are VAT, entertainment tax, entry tax,
luxury tax, tax on betting and gambling.
Various central taxes that will be subsumed
are Central Excise Duty, Additional Excise
Duty, Service tax, Additional Custom Duty,
Special Additional Duty and Central Sales
tax.
Positive Impact of GST on SMEs and
Startups-
As per industry experts, SMEs and startups
will be affected the most with the rollout of
the GST and the impact will be favorable in
ways more than one. Some of the ways GST
will benefit SMEs and startups are:
Ease of starting business: A business
having operations across different state
needs VAT registration. Different tax rules
in different states only add to the
complications and incur a high procedural
fees. GST enables a centralized registration

that will make starting a business easier
and the consequent expansion an added
advantage for SMEs.
Reduction of tax burden on new
business: As per the current tax structure,
businesses with a turnover of more than
rupees 5 lakh need to pay a VAT
registration fee. The government mulls the
exemption limit under GST to twenty five
lakh giving relief to over 60% of small
dealers and traders.
Improved logistics and faster delivery of
services: Under the GST bill, no entry tax
will be charged for goods manufactured or
sold in any part of India. As a result,
delivery of goods at interstate points and
toll check posts will be expedited.
According to an estimate by CRISIL, the
logistics cost for manufacturers of bulk
goods will get reduced significantlyby
about 20%. This is expected to boost
ecommerce across the nation.

Elimination of distinction between goods
and services: GST ensures that there is no
ambiguity between goods and services.
This will simplify various legal
proceedings related to the packaged
products. As a result, there will no longer
be a distinction between the material and
the service component, which will greatly
reduce tax evasion.
Impact on Manufacturing Sector:
According to Deskera, a leading cloud-
based business management software
provider catering to SMEs in South East
Asia, the GST will enhance competitiveness
of enterprises in the manufacturing sector by
mainly mitigating the cascading effect of
various taxes. Headquartered in Singapore,
the company offers GST ready Enterprise
Resource Planning software to global SME
markets, with small and medium enterprises
contributing over 70% of the companys

business across the world. A prominent
provider of cloud ERP solutions, Deskera
has been extensively working with various
organizations in countries such as Singapore
and Malaysia with their GST requirements.
The company offers Deskera MRP, a fully
GST compliant MRP solution in India to
help manufacturers and traders to seamlessly
migrate to the new regime once the GST law
is implemented across the nation.
India is a global manufacturing hub and
SMEs form around 90% of the industrial
units in the country, according to IBEF. The
Make In India campaign promoted by the
Indian government will get a boost with the
rollout of the GST. Currently, excise duty on
pre-packaged products for retail
consumption is levied not on the transaction
value at the ex-factory but on a fixed
percentage of the maximum retail price
(MRP) on the package. This leads to a
higher MRP, which indicates a higher cost

burden for the consumers. Under the GST
regime, tax is paid by the manufacturers
while purchasing raw materials for the
products. The amount can be credited for
subsequent resellers till the product reaches
the final consumer. This will ease the tax
burden significantly. Read Deskera becomes
the first GST compliant cloud-based
enterprise in India to know more about GST
impact on manufacturing sector.
Challenges for SMEs:
A sizeable portion of SMEs are of the
opinion that GST is not all good for the
sector and their fears may not be totally
vacuous. The tax neutrality that the SMEs
enjoy may be one of the prominent benefits.
However, reduction in duty threshold is one
of the key concerns that has led them to be
wary of the GST bill. Under the existing
excise tax, no duty is paid by a manufacturer
having a turnover of less than rupees 1.50

crores. But, post GST implementation, the
exemption limit will get significantly
lowered. During a speech at a news
conference, Finance Minister, Arun Jaitley
estimate said, the limit can be as low as
rupees 25 lakh. As a result, a large number
of SMEs and startups will be mandated to
come under the tax net and will have to pay
a large chunk of their earnings towards tax.
Furthermore, there are other flipsides to the
proposed tax neutrality. GST regime wont
differentiate between luxury goods and
normal goods; this will it hard for the SMEs
to compete against large enterprises. GST
that is ultimately levied on supply will not
be available for input credit. This will lead
to an increase in the cost of the products for
businesses that supply directly to end users.
The Final Verdict:
Unarguably, GST rollout will open up a
can of worms and the impact on SMEs

across various industries will vary greatly. It
is quite natural for a pervasive, country-wide
tax reform, as GST is, to have a mixed
opinion. Furthermore, the revolutionary tax
regime will have acceptance that will vary
from state to state. Overall, the new tax
proposals under GST will have a mixed
verdict. In essence, the GSTs effect on the
entire Indian economy will have to be
scrutinized in totality to reach a widely
accepted conclusion.
References:
http://www.deskera.in/gst-impact-
on-sme/Positiv

CHAPTER 9
GST NEWS,
EWS, NOTIFICATION &
ANNOUNCEMENTS
GST was first announced in 2000 by the

then government. Seventeen years later it is
now a reality with the date for
implementation set for July 1, 2017. Since
3rd August, 2016, when the council of
states Rajyas
Rajyasabha
first passed the bbill
introducing GST in
the 122nd Amendment
of the Constitution,
there have been many
changes in the
proposed GST
bill and the rules and regulations pertaining
to it. We regularly publish all GST related
news here.

Central Tax Notifications
Composition Scheme- Notification 3 &
8/2017
Composition scheme threshold has been
notified to be 75 lakhs (earlier recommended
only). This will be beneficial to small
businesses Notification 3 contains the
composition scheme rules which had been
issued ealrier on 17th May.
Reverse Charge- Notification 5/2017
The persons who only supply
goods/services on which reverse charge
applies, are exempted from registering under
GST registration. For example, For example,
Ola Cabs enlist drivers to ply their cars.
Drivers are providing chauffeur/driving
services to Ola and Ola is the service
receiver.
Ola pays GST on the drivers services on
reverse charge basis. Drivers are not
required to register under GST thus
removing the burden of tax compliance from
individuals with limited resources (drivers)
to large companies (Ola) with enough
resources.
Sections coming into force-Notification 1
& 9/2017 - With the Notification of
19th June and 28th June, most of the CGST
Act is now in force. Only sections 51 & 52
(TDS & TCS respectively) are not
applicable as the government has relaxed
TDS & TCS provisions for the time being to
give more time to the e-commerce sellers.
Sections 42(9) & 43(9) are not applicable.
These clauses say that if the output tax
liability is reduced (or input tax credit is
increased) due to a debit note (or a credit
note) [mismatch of invoices reconciliation]
then such amount shall be refunded by
crediting electronic ledger. This is not
applicable right now as there will not be any
reconciliation for 2 months.
Rules-Notification 10/2017
CBEC has issued the rules on valutation,
transisition, refunds etc. in a 247 page
document.
HSN Codes-Notification 12/2017
Every registered person with turnover
more than 1.5 crores must mention the HSN
Codes in each and every invoice. However,
the numbers of digits to be mentioned in the
Invoice depends on the annual turnover in
the preceding financial year.
Turnover in previous FY No. of digits
Upto Rs. 1.50 Cr NIL
More than Rs. 1.50 Cr. 2 digits

& upto Rs. 5 Cr
More than Rs. 5 Cr 4 digits
This is effective from 1st July, i.e., all

invoices from 1st July must be GST
compliant and have details of HSN codes.
The same notifications have also been made
under IGST (notification 5).
Rates of interest-Notification 13/2017-
The rates of interest are same as
mentioned in the Act. The notification
ratifies the rates. This notification shall
come into force from the 1st day of July,
2017
Sections Interes
t p.a.
Sec 50(1)- Failure to pay tax 18%
Sec 50(3)- Less tax paid/ excess 24%

ITC availed
Sec 54(12)- Interest on refunds 6%

withheld in an appeal later given

Sec 56- Interest on delayed refunds 6%
Proviso to 56- Interest on refunds 9%

ordered in an appeal
The same notification has also been made

under IGST (notification 6).
Common Portal- Notification 4 /2017
It is notified that the website of the
Common Portal is www.gst.gov.in managed
by Goods and Services Tax Network.
Modes of verification-Notification 6 &
11/2017
The modes of verification are-
Aadhaar based Electronic Verification
Code (EVC)
Electronic verification code generated
through net banking login on the
common portal

Electronic verification code generated on
the common portal
[Points ii & iii replacing the earlier Bank
account based OTP as per earlier
notification]
Central Tax Rate
Notification (28.06.2017)
1.Most of the goods are kept at the same
rates as announced by the GST council
earlier but rough or nonindustrial
unworked diamond or precious stones
will be charged CGST at the rate of
0.125%.
2.List of goods exempt from CGST. No
change in the list.
3.Oil, gas, coal and petroleum licenses and
sub-contract licenses and leases will be
charged GST at the rate of 2.5%.
4.The person liable to deduct TDS as per
the GST law supplying intrastate goods

or services to an unregistered person
would be exempt from CGST.
5.Cashew nuts, not shelled or peeled, Bidi
wrapper leaves (tendu), Tobacco leaves,
silk yarn, Supply of lottery would have
reverse charge applicable under GST.
6.Refund of the unutilized ITC would not
be provided in the case of the tax on
output being lower than the tax on inputs
for certain goods mainly related to the
textile and railways.
7.The supply of goods by CSD to unit run
canteens and authorized customers and
supply of goods by the unit run canteens
to the authorized customers.
8.50% of the tax paid on inward supplies
of goods by the CSD for further supply
to unit run canteens or authorized
customers can be claimed as refund
under GST.
9.Person liable to deduct TDS as per the
GST law supplying intra goods or

services to an unregistered person would
be exempt from CGST.
10. Intrastate supply of second hand
goods by a registered person who deals
in selling second hand goods to an
unregistered person would be exempt
from CGST.
Integrated Tax
Sections in force-Notification No. 3/2017-
The Central Government has notified
that provisions of sections 4 to 13, 16 to 19,
21, 23 to 25 of The Integrated Goods and
Service Tax Act, 2017 shall come into force
from 1st July 2017.
Provisions of CGST will also apply for
IGST- Notification No. 4/2017- The
Integrated Goods and Services Tax Rules,
2017 have been notified and are deemed to
have come into force retrospectively from
22nd June 2017.

The Central Goods and Services Tax
Rules, 2017, for carrying out the provisions
specified in section 20 of the Integrated
Goods and Services Tax Act, 2017 shall, so
far as may be, apply in relation to integrated
tax as they apply in relation to central tax.
Section 20 mentions the CGST provisions
that will apply mutatis mutandis for IGST.
Integrated Tax (Rates) Notifications-
Cases where the e-commerce operator
will pay IGST- Notification No. 14/2017-
E-commerce operator will pay the IGST in
the following services-
Transportation of passengers by a radio-
taxi, motorcab, maxicab and motor cycle
(Eg. Ola outstation from Bangalore to
Chennai)
Providing accommodation in hotels, inns
and other commercial places meant for
residential or lodging purposes. For
example a small hotel registered on Oyo
rooms. Oyo rooms will pay IGST
However, if the person (hotel) supplying
such service through e-commerce is
liable for registration under GST then
that person will pay. Eg, Ibis Hotel is a
large multi-chain hotel also registered on
Oyo rooms. Then Ibis Hotel will pay.
It will come into force with effect from the
1st July, 2017.
Goods on which reverse charge applies-
Notification No.4/2017
A list of goods on which reverse charge
applies is issued by CBEC. When the supply
is made by the specified person, then IGST
will be payable on reverse charge basis by
the recipient of the intra-state supply of
such goods. All the provisions of will apply
to such recipient.
No ITC for Construction- Notification No.
12/2017

No refund of unutilized ITC will be
allowed input tax credit shall be allowed for
IGST in construction of a complex, building
etc. (works contract). Except in cases where
the entire consideration has been received
after issuance of completion certificate or
after its first occupation, whichever is
earlier.
This is in keeping with the provision of not
allowing ITC. This will come into force with
effect from the 1st day of July, 2017.
Reverse Charge- Notification No. 10/2017
List of services on which reverse
charge is applicable is issued. It is the same
as issued under CGST Act.
Army Canteens- Notification No. 6 &
7/2017
In the public interest exempts, the following
are exempted from IGST (& also CGST)-

The supply of goods by the Canteen
Stores Department (CSD) to the Unit
Run Canteens or
The supply of goods by the CSD/Unit
Run Canteens to the authorized
customers
The CSD can claim a refund of 50% on
IGST of all input goods received by it for
subsequent supply of such goods to the Unit
Run Canteens or to the authorized customers
of the CSD. This notification shall come into
force with effect from the 1st July, 2017.
Inverted Rate Structure- Tax On
Inputs>Tax On Outputs- Notification
No.5/2017
Refund of un utilised ITC will NOT be
allowed, when the ITC is accumulated due
to rate of tax on inputs being higher than the
rate of tax on the output goods (except nil
rated or fully exempted goods).

High tax on the imported raw materials
compels manufacturers to raise price. On the
other hand, foreign finished goods have
lower tax rate.. In conclusion, manufactured
goods by the domestic industry becomes
uncompetitive against imported finished
goods.
List of goods on which this notification
applies.
For UIN & Diplomats Notification No.
13/2017
This notification specifies the conditions
applicable
UN or specified international
organisations and
Foreign diplomats in India
Panchayat services- Notification No.
11/2017- Constitutional services of the
Panchayat are not covered under GST.

News on GST Act-
The entire framework of GST is based
on GST Act. It was devised by the GST
Council, which is a committee consisting of
the Union Finance Minister (Chairperson),
the Union Minister of State, the minister in-
charge of finance or taxation or any other
minister nominated by each State
Government.
News on Rule Changes
The GST is a constitutional amendment,
and any change in the law will also affect
the rules therein. Rules for invoicing, rules
for penalty, rules defining the point of
taxation these are just some of the
examples of any rule change in the model
law.

SHORT QUESTION
1.What is Invoice Matching Under Goods

and Services Tax?
Ans- Every purchase invoice in GST
regime must reconcile with sale invoice
of the supplier on GST common portal
for availing input tax credit.
2.What is a Bill of Supply?
Ans- Bill of supply is issued when
selling exempted goods or if he is
registered under composition levy. There
are certain details a bill of supply must
contain.
3.GST Invoice Details: Essential
Information-
Ans- A registered person must issue a
tax invoice before, or at the time of
sales. There are 16 mandatory GST
invoice details required.
4.What is Debit Note, Credit Note and
Revised Invoice? And how to revise
already issued invoices under GST?
Ans.- Last updated on 22nd March,
2017.Here we have discussed the
concept of revised invoice, debit note,
credit note and how to revise already
issued invoice?
5.Time limit to Issue Invoices, Bill of
Supply, Debit Notes, Credit Notes etc
under GST-
Ans.- GST law has prescribed time limit
to issue tax invoices, revised bills, debit
note, credit note etc under GST. Find the
various time limits here.
6.HSN Codes and Its Implication under
GST?
Ans.- Learn about the implication of
Harmonized System of Nomenclature
under GST

7.Time limit to Issue Invoices, Bill of
Supply, Debit Notes, Credit Notes etc
under GST-
Ans.- GST law has prescribed time limit
to issue tax invoices, revised bills, debit
note, credit note etc under GST. Find the
various time limits here.
8.What is Invoicing under GST (Supply of
Services)?
Ans.- Invoice for services has to be
issued within 30days of rendering
service and in case of NBFCs and banks
within 45 days. Learn about format,
details to be covered in the invoice etc
here.
9.What is Invoicing Under GST (Supply
of Goods)?
Ans.- Understand how to do invoicing
under GST, the details to be covered in
the invoice and find format of a valid
GST Tax invoice.

10. Importance of Filing VAT and
Service Tax Returns for June 2017-
Filing VAT and Service Tax returns for
June 2017 is very important. It is
required to carry forward ITC in VAT or
Service Tax to GST.
11. What is Credit Transfer Document
(CTD) in GST?
Ans.- What happens to the CENVAT
Credit when a dealer who was not
registered under Excise Act receives
goods cleared before 1st July 2017?
Learn more...
12. Transition Forms TRAN 1 & TRAN
2 Format How to Claim ITC on Stock?
Ans.- ITC claim on stock and transition
forms, TRAN-1, TRAN-2 to be filed
depending on registered under pre-GST
regime, possession of document
evidencing tax pay

13. 6 Things to Remember While
Transitioning to GST Regime- This is a
short list of things, provisions and laws
to remember while transitioning to GST.
Read to find out more.
14. Transition Provisions for Goods in
Transit under GST-
Goods leaving a seller when VAT is
applicable might reach buyers after GST
is live. Read more on the transition
provisions of goods in transit under
GST.
15. Transitional Provisions in Certain
Cases under GST-
The GST Law has an entire chapter on
transition provisions. Learn more about
the provisions related to works contract,
ISDs, and goods lying with agents.
16. What Happens if Contract Price is
Revised after GST Implementation?
Ans.- In an ongoing business dealing
with contracts, contract price revision is
very common. What happens when
contract price is revised after GST?
17. Goods Sent on Approval Basis
before Transition to GST- Businesses
are worried about the taxability of goods
sent on approval basis before GST and
returned after GST implementation.
18. Revision of VAT Returns after
GST Implementation- Revision of
VAT returns and other returns of old tax
regime will be allowed after GST is
implemented, with certain restrictions.
19. Can Unregistered Persons Claim ITC
of Excise Duty by Registering under
GST?
Ans.- Unregistered persons can claim
CENVAT credit upon registering under
GST. Read to find out how much input
tax credit you can avail.
20. Can An Unregistered Person Claim
ITC of VAT by Registering under GST?

Ans.- Unregistered persons now can
claim VAT credit under GST on
registration. Read to find out how much
input tax credit you can avail.
21. Post GST implementation- Lessons
learnt from other countries-
More than 140 countries have
implemented GST. Now let us take a
look at what the other countries faced
post implementation of gst.
22. Tax on Goods Returned after
GST- Tax on Goods Return after GST
provisions for refunds and tax payable
on the type of goods returned by a
registered taxpayer or unregistered
taxpayer
23. GST ITC on Stock Transition
Provision- Under GST ITC on stock
transition provision provides credit of
duties held in inputs, semi-finished
goods, finished goods available to
eligible taxpayers
24. What is GST ITC Transition
Provision?
Ans.- Major concerns is the availability
and eligibility for claim of ITC available
for utilization, when the current indirect
tax regime changes to GST.
25. What do you mean by Post GST
implementation?
Ans.- More than 140 countries have
implemented GST. Now let us take a
look at what the other countries faced
post implementation of GST.
26. What is GST Transition Process
Simplified?
Ans.- A detailed guide on how SMEs
can migrate from the current tax regimes
to GST.

General FAQs - You Must Know Before
GST
Goods and
service tax is
approaching
towards its
scheduled deadline
and is in
the headlines of every news and publishing.
While there are various queries and doubts
regarding the information and rules
regulation, there are general FAQs which
might solve the questions of public in a easy
and simple manner.
Q: What is Goods and Services Tax?
A: It is a final consumer based tax levied on
the consumption of the goods and services
which are under the provision to be
applicable at all the steps starting from the
producer to the final consumer setting off all
the credit of taxes paid at earlier stages
available. Only the value addition will be
levied with tax and the final consumer will
bear the taxes.
Q: How will GST Bill Work?

GST will work in a very simple process as it
is an indirect tax of nation, that combines
several indirect taxes including vat
tax, services tax, central Excise tax, customs
tax etc. It means that removing other indirect
taxes the government will collect a single
tax on the sale of all goods and services.
Q: What is the Deadline of GST Panel?
Present government has fixed the deadline
for rolling out the GST Bill on April 1 2016.
But by some reasons, GST bill could miss
out its deadline. Main opposition party,
Congress wants to reduce the GST rate at 18
percent and also wants to scrap the
additional tax of 1% levy for manufacturing
states.
Q: Why the GST Bill is stuck till date?
Ans.- The Constitutional Amendment bill
requires to be rolled-out in both houses of
Parliament. Therefore, the GST bill has been
passed in the lower house (Lok Sabha) in
May, 2015. But it is stuck in the Rajya
Sabha that is also known as upper house of
Parliament due to oppositions objections.
The coalition of NDA has less majority (48
member of BJP) in the upper house, while
the main opposition, Congress (67 members)
has much majority and without the
collaboration of Congress the Bill could not
be implemented in the Rajya Sabha.
Therefore, the Central government will have
to accept the demands of Congress.

Q: What is the concept of a destination-
based tax on the consumption?
A: The tax will be originated to the tax
department which has the jurisdiction on the
place of consumption of the goods and
services and which is also known as a place
of supply.
Q: Which of the taxes will be subsumed
under GST?
Ans.- There are multiple taxes which will be
subsumed under the GST. The central taxes
are:
Central Excise duty
Duties of Excise (Medicinal and Toilet
Preparations)
Additional Duties of Excise (Goods of
Special Importance)
Additional Duties of Excise (Textiles
and Textile Products)

Additional Duties of Customs
(commonly known as CVD)
Special Additional Duty of Customs
(SAD)
Service Tax
Central Surcharges and Cesses so far as
they relate to supply of goods and
services
The state taxes which are subsumed under
the GST:
State VAT
Central Sales Tax
Luxury Tax
Entry Tax (all forms)
Entertainment and Amusement Tax
(except when levied by the local bodies)
Taxes on advertisements
Purchase Tax
Taxes on lotteries, betting, and gambling

State Surcharges and Cesses so far as
they relate to supply of goods and
services
Q: What were the major principles
followed to subsume the taxes
aforementioned?
Ans.: Numerous state and central level taxes
are subsumed into the GST, and the decision
was taken on the principles like:
The taxes should of indirect taxes in
nature either on the supply of goods or
services rendered.
The taxes must originate from import/
manufacture/ production of goods or
provision of services to the consumption
of the goods and services within a
transaction chain.
A free flow of tax credit in intra and
inter-State levels must be a result after
the subsuming of the taxes and levies.

The center and the states will be
attempting for a revenue neutrality.
Q: What are the products which are kept
outside the GST?
Ans.: As mentioned in the Article 366(12A)
of the Constitution as amended by 101 st
Constitutional Amendment Act, 2016, the
GST will be applicable on both goods and
services except the alcohol for the human
consumption. The list also includes Five
petroleum products i.e. petroleum crude,
motor spirit (petrol), high-speed diesel,
natural gas and aviation turbine fuel.
Q: What will be the type of GST which is
proposed under the GST act?
Ans.: The proposed GST will be the dual
controlled type and the GST to be levied by
the Union government on the intra-State
supply of goods and/or services would be
called Central GST (CGST) and that duties
levied by the States/ Union territory would
be called the State GST (SGST)/ UTGST.
On the same front, Integrated GST (IGST)
will be levied and controlled by Centre on
every interstate supply of goods and
services.
Q: How the dual GST will work?
Ans.: Both the state and central levels of
Government have different duties and
responsibilities to act according to the
division of powers mandated in the
Constitution. A dual GST model will keep
the constitutional regulations of the fiscal
federalism.
Q: What are the benefits of GST for the
nation?
Ans.: GST will be eliminating the cascading
effects of the taxes which were earlier
applicable at every state, by adjoining the
central and state level taxes into a single tax.

The consumers will see a reduction in
overall taxes for up to 25 to 30 percent.
While the GST will surely boost the
economy, the other effects also include
transparent execution of it will further
improve the administration practices.
Q: What is Integrated GST?
Ans.: An Integrated GST (IGST) would be
levied and collected by the Centre on the
inter-State supply of goods and services.
Also as included under Article 269A of the
Constitution, the GST on supplies in the
course of inter- State trade or transactions
shall be levied and collected by the
Government of India and such tax shall be
apportioned between the Union and the
States in the manner as may be provided by
Parliament by law on the recommendations
of the Goods and Services Tax Council.

Q: What is the role of GST council?
Ans.: The GST council is a committee to
discuss and assist the government in
carrying out the GST implementation. The
committee is headed by Union Finance
Minister (who will be the Chairman of the
Council), the Minister of State (Revenue)
and the State Finance/Taxation Ministers
making the rules and regulation in
accordance with the state and union
government. The role of GST council is to:
Decide the taxes, cesses and surcharges
levied by the Centre, the States and the
local bodies which may be subsumed
under GST.
Ascertain the goods and services that
may be subjected to or exempted from
the GST.
Preparing model GST laws, principles of
the levy, apportionment of IGST and the
principles that govern the place of
supply.
Deciding the threshold limit of turnover
below which the goods and services may
be exempted from GST.
Q: How the decisions will be taken at the
GST council?
Ans.: The Constitution (one hundred and
first amendment) Act, 2016 mentions that
every decision of the GST Council shall be
taken at a meeting by a majority of not less
than 3/4th of the weighted votes of the
Members present and voting. The vote of the
Central Government shall have a weight of
1/3rd of the votes cast and the votes of all
the State Governments taken together shall
have a weight of 2/3rd of the total votes cast
in that meeting.
Q: Who all are included in the GST
framework to pay the taxes?
Ans.: All the business units who crosses the
threshold limit of INR 20 lakh is subjected
to pay the GST while 10 lakhs for NE &
Special Category States. Also, there are
some provisions which require the business
unit to pay the GST even if it has not
crossed the threshold limit.
Q: How the goods and services can be
categorized in the GST?
Ans.: HSN (Harmonised System of
Nomenclature) code will be used for
classifying the goods under the GST.The
taxpayers whose turnover is above Rs. 1.5
crores but below Rs. 5 crores shall use the 2-
digit code and the taxpayers whose turnover
is Rs. 5 crores and above shall use 4-digit
code. While taxpayers whose turnover is
below INR 1.5 crores are not required
to mention HSN Code in their invoices.

Q: How imports and exports will be taxed
under the GST?
Ans.: Imports under the GST will be
assumed as interstate GST and the
destination state will accrue the SGST where
the goods or services are consumed. While
on the other hand, exports will be treated as
zero rates supply and there will be no tax
payable on the exports of goods and
services. But the input tax credit and refund
will be available to the exports.
Q: What is composition scheme under
GST?
Ans.: Small and medium taxpayers and
business units with a turnover in an earlier
financial year up to INR 50 lakh shall
be eligible for composition scheme. Under
this scheme, a taxpayer shall pay tax as a
percentage of his turnover in a state during
the year without the benefits of ITC. The
rate of tax for CGST and SGST/UTGST
shall not be less than [1% for manufacturer
& 0.5% in other cases; 2.5% for specific
services as mentioned in para 6(b) of
Schedule II viz Serving of food or any other
article for human consumption]. A taxpayer
opting for composition levy shall not collect
any tax from his customers. The government
may increase the above-said limit of 50
lakhs rupees to up to one crore rupees, on
the recommendation of GST Council while
business units making inter- state supplies or
making supplies through e-commerce who
are required to collect tax at source (TCS)
shall not be eligible for composition scheme.
Q: What is the role of Goods and services
tax network in GST?
Ans.: GSTN which is said for Goods and
service tax network is built for supporting
the GST scheme by the means of IT
infrastructure and the services to cater the
state and central government along with the
taxpaying community and the stakeholders.
The features of GSTN are:
Facilitating registration.
Forwarding the returns to Central and
State authorities.
Computation and settlement of IGST.
Matching of tax payment details with
banking network.
Providing various MIS reports to the
Central and the State Governments
based on the taxpayer return
information.
Providing analysis of taxpayers profile.
Running the matching engine for
matching, reversal and reclaim of input
tax credit.
Q: What is compliance rating
mechanism?
Ans.: It is the tax strict rule for the proper
tax compliance by the means of measuring
the compliance record of a particular
taxpayer. As per Section 149 of
the CGST/SGST Act, every registered
person shall be assigned a compliance rating
based on the record of compliance in respect
of specified parameters. The ratings will be
disclosed through public domain and the
clients approaching can first check through
the history of the supplier based on which
they can ascertain to make a deal with the
particular supplier.
Q: What will be the influence of GST on
economy?
ANS.: Every kind of person wants to know
about the GSTs impacts on the economy.
Some people think that it will be negative
and some say that GST will have positive
effect. But the sources said that there will be
a good impact on the economy due to the
following-
Business cost might be lower.

Gross Domestic Product will be
increased.
We will gain of competitive pricing.
Prices of fixed goods and services might
be less.
The Finance Minister Mr. Arun Jaitley said
that Gross Domestic Product will be
increased by 2 percent. All companies will
pay a single tax instead of the multiple
indirect tax.
Q. How GST will beneficial for the
companies and individuals?
Ans.: In the GST, the Centre and State will
levy a single tax on the manufacturing and
the sale of products. And the prices of
products are likely to be less. When prices
of products will be low then consumption of
products will increase and more
consumption means more production.
Therefore, the companies will growth
rapidly.
Q: What is Anti profiteering clause in
GST?
Ans.: According to the section 171 of the
CGST/SGST Act, any reduction in the rate
of tax on any supply of goods or services or
the benefit of input tax credit shall be passed
on to the recipient by way of commensurate
reduction in prices. The anti-profiteering
clause is a step to check that the reduced
price after the tax implication benefits the
final consumers. A committee is also under
the talk to ensure proper implication of the
anti-profiteering clause and to check if input
tax credit availed by taxpayer or tax rate
reduction is not passed to the consumer.
Refrencess:
http://blog.saginfotech.com/general-
faqs-on-gst-india-you-must-
know: Subodh Kumawat GST Faqs.

http://blog.saginfotech.com/gst-
overview-economical-effects-on-govt-
companies-and-individuals

OBJECTIVE QUESTION
1). In India GST came effective from July

1st, 2017. India has chosen _________
model of dual GST.
a) USA
b) UK
c) Canadian
d) China
e) Japan
Answer: (C).
2). How many countries have dual GST

model?
a) 5
b) 8
c) 10
d) 14
e) None of these
Answer: (E). Till now Canada only has dual
GST model but now India also started to use

dual-GST model.
3). Which of the following country is the

first one to implement GST?
a) USA
b) France
c) China
d) Switzerland
e) Germany
Answer: (B). France implemented GST in
1954.
4). Around how many countries adopted

GST?
a) 90
b) 120
c) 140
d) 160
e) 200
Answer: (D).
5). Which of the following country has the

maximum GST tax slab?
a) Greece
b) China
c) USA
d) Australia
e) India
Answer: (E). India has the maximum tax
slab (28%) compared to other countries.
6). Which of the following country has the

second highest tax slab?
a) Australia
b) Netherland
c) Argentina
d) Ireland
e) South Korea
Answer: (C). Argentina has the second
highest tax slab 27%
7). Indian GST model has _________rate

structure.
a) 3

b) 4
c) 5
d) 6
e) 2
Answer: (B). In India GST model has 4 rate
structure. They are 5%, 12%, 18% and 28%
8). How many types of taxes will be in

Indian GST?
a) 2
b) 3
c) 4
d) 5
e) 6
Answer: (B). Central GST (CGST), State
GST (SGST) and IGST are three types of
taxes.
9). What does I stands for in IGST?

a) International
b) Internal
c) Integrated

d) Intra
e) Innovation
Answer: (C).
10). The tax IGST charged by

_________Government.
a) Central
b) State
c) Concerned department
d) Both a and b
e) All a, b and c
Answer: (A).
11). The maximum rate prescribed under

IGST is _________.
a) 5%
b) 12%
c) 18%
d) 28%
e) No such limit
Answer: (D).

12). In India GST was first proposed in
_________.
a) 1993
b) 1996
c) 1999
d) 2000
e) 2002
Answer: (D).
13). GST is a _________ based tax on

consumption of goods and services.
a) Duration
b) Destination
c) Dividend
d) Development
e) Destiny
Answer: (B). main objective of GST is
eliminate excessive taxation
14). GST comes under which amendment

bill?
a) 118

b) 120
c) 122
d) 115
e) 129
Answer: (C).
15). Under which Act GST was introduced?

a) 100
b) 101
c) 102
d) 103
e) 104
Answer: (B)
16). GST council formation based on Article

number _________.
a) 279A
b) 289A
c) 266A
d) 255A
e) 286A
Answer: (A)

17). The headquarters of GST council is
_________.
a) Mumbai
b) New Delhi
c) Ahmadabad
d) Hyderabad
e) Lucknow
Answer: (B).
18). Who is the chairman of GST council?

a) President of India
b) Prime Minister
c) Finance Minister
d) RBI Governor
e) Finance secretary
Answer: (C). Arun Jaitley is the current
chairman of GST council
19). _________ is GST Finance Ministers

Panel Chairman.
a) Amit Mitra

b) Amit Malhodra
c) Amit Chandresekar
d) Amit Sastri
e) Amit kohli
Answer: (A). Amit Mitra(West Bengal
Finance Minister) is the Finance Ministers
Panel Chairman.
20). _________ is the first state to ratify

GST bill.
a) Andhra Pradesh
b) Assam
c) Arunachal Pradesh
d) Bihar
e) Telangana
Answer: (B)
21). _________ is the first state that passed

GST Bill.
a) Andhra Pradesh
b) Gujarat
c) Uttar Pradesh

d) Bihar
e) Telangana
Answer: (E).
22). GST threshold limit of North Eastern

States is _________ lakh
a) 5
b) 10
c) 12
d) 15
e) 20
Answer: (B).
23). GST threshold limit of Normal States is

_________ lakh
a) 12
b) 15
c) 20
d) 25
e) 30
Answer: (C).

24). The Central Board of Excise and
Customs (CBEC) announced that every year
_________ will be considered as GST Day.
a) April 1
b) March 1
c) June 1
d) July 1
e) January 1
Answer: (D)
25). Smart Phones will be taxed at

_________ under GST.
a) 0%
b) 5%
c) 12%
d) 18%
e) 28%
Answer: (C).
26). Under GST, Insurance is taxed

_________ percent.
a) 0%

b) 5%
c) 12%
d) 18%
e) 28%
Answer: (D).
27). Which of the following comes under sin

tax?
a) Pan Masala
b) Tobacco
c) Alcohol
d) Both a and c
e) All a, b and c
Answer: (E).
28). A special purpose vehicle _________

has been launched to cater the needs of
GST.
a) GSTC
b) GSTN
c) GSTM
d) GSTR

e) GSTS
Answer: (B). GSTN - Goods and Service
Tax Network.
29). GSTN comes under which Act?

a) Banking Regulation Act 1949
b) RBI Act 1934
c) Indian Partnership Act, 1932
d) Limitation Act, 1963
e) Companies Act, 2013
Answer: (E).
30). Combined Stake of Central and State

Government in GSTN is _________.
a) 20%
b) 25%
c) 49%
d) 51%
e) 100%
Answer: (C). The remaining 51% stake is
divided among five financial institutions
LIC Housing Finance with 11% stake and

ICICI Bank, HDFC, HDFC Bank and NSE
Strategic Investment Corporation Ltd with
10% stake each.
31). What does N stands for in HSN?

a) Network
b) Nationalization
c) Nominee
d) Nomenclature
e) Nomination
Answer: (D). HSN - Harmonized System of
Nomenclature. HSN code will be used for
classifying under the GST regime.
32). Coal comes under which rate Structure?

a) 0%
b) 5%
c) 12%
d) 18%
e) 28%
Answer: (C).

BIBILIOGRAPHY

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GST: A MODERN THOUGHT OF 21st CENTURY

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DR.

ShaileSh KumaR SinGh

Changes of 21st century: GST 2

Changes of 21st century: GST 3

Changes of 21st century: GST 4

Prof. Peeyush Kumar Pandey Dr. Shailesh Kumar Singh

Professor & Registrar Assistant Professor,

Changes of 21st century: GST 5

Sr. Preface Page

2 One Tax One Nation 9-31

3 Composition Scheme 32-

4 GST MECHANISM ( Accounts, 44-

5 GST Rates & HSN Codes 53-

6 Impact of GST on Business 60-

8 Future Aspect of GST in India 75-

9 GST News Notification & 81-

Short, FAQ & Objective 89-

Changes of 21st century: GST 7

Changes of 21st century: GST 9

Changes of 21st century: GST 11

Changes of 21st century: GST 13

Indias biggest tax reform is now reality.

Changes of 21st century: GST 16

Changes of 21st century: GST 20

Changes of 21st century: GST 21

Changes of 21st century: GST 22

Changes of 21st century: GST 23

Changes of 21st century: GST 24

Changes of 21st century: GST 25

In the above example we can conclude

Changes of 21st century: GST 28

Proposed GST Identification Number

Changes of 21st century: GST 31

Changes of 21st century: GST 32

Changes of 21st century: GST 35

GSTR- Details of Registered 15th of the

GSTR- Monthly Registered 20th of the

GSTR- Quarterly Composition 18th of the

GSTR- Return for Non- 20th of the

GSTR- Return for Input Service 13th of the

GSTR- Return for Tax 10th of the

GSTR- Details of E-commerce 10th of the

GSTR- Annual Registered 31st

GSTR- Final Return Taxable Within

GSTR- Details of Person 28th of the

Invoicing Under GST-

Changes of 21st century: GST 41

Changes of 21st century: GST 43

Changes of 21st century: GST 46

Whats the diff between invoice date and

Changes of 21st century: GST 47

Changes of 21st century: GST 48

Changes of 21st century: GST 52

Changes of 21st century: GST 53

Changes of 21st century: GST 54

Changes of 21st century: GST 57

On July 1st the Goods and Services Tax

Know About GST Composition Scheme

Taxable Persons Excluded from the

Changes of 21st century: GST 63

Changes of 21st century: GST 64

Changes of 21st century: GST 66

Changes of 21st century: GST 68

GST PENALTIES AND APPEALS