GST Book by Rahul PDF

Tribute to my Beloved Elder Brother
SACHIN GARG
(Inspiration for me and all my students)
who left for heavenly abode on 3rd May, 2015
CA Rahul Garg B.Com, FCA, LCS, ACMA, CFA (ICFAI), DISA (ICAI), MBA, Adv Dip Mgt.
Gold Medalist All India Rankholder in CA, CS, CMA (incl Rank 1) +91-9876932270
Powered by TCPDF (www.tcpdf.org)
Chandigarh Toppers of With ICAI(Cost)
Cost FM (May 2016) President Sh.
1. Shreshtha (on Left) – Kunal Banerjee
91 Marks (for getting All India
Rank 1)
2. Iram (on Right) – 73
Marks
Awarded by Chief Being Awarded with

Justice Sh. CA Degree by ICAI
P.N.Bhagwati in President Sh.
presence of Sh. Atal Amarjit Chopra
Bihari Vajpayee
“Economic & Labour Laws” book being released by Education Minister of UT Sh. VK Singh (IAS) in presence
of then Chairman of Chandigarh chapter of ICAI, ICSI, ICAI (Cost)
“Industrial, Labour & General Laws” book being released by Dr. Girish Ahuja (A Renowned Personality in
Direct Taxes) and Dr. D.C. Arya (Director Finance of Indian Railway)
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A brief about Rahul Garg
1. Broke LIMCA BOOK OF RECORDS by being youngest in India to clear all the 3
professional courses CA, CS, CMA at the age of 22 years 7 months with Ranks (A
Record).
2. 5 times All India Rankholder in Professional Exams (A Record).
3. Scored SINGLE DIGIT RANK 3 times (including All India Rank 1).
4. Undisputed achiever of all 3 professional exams with ALL INDIA RANK in ALL.
5. Achieved exemption in 40+ papers out of total 50 papers held by CA, CS, CMA
institutes in his academic career.
6. Awarded by Mr. Atal Bihari Vajpayee in 2010 for exceptional performance in
Academics.
7. One of the best motivator in India.
8. Covered by the National Magazine ‘Career 360’ amongst 12 National Toppers in
2010.
9. Specialist in Time management and Stress management skills.
Love for the subject GST
1. Multi Colour Theory notes.

2. Tabular and Diagrammatic presentation of Theory to create interest.
3. Important points of theory Specially marked for last minute revision.
4. Simple and lucid language in theory for easy understanding.
5. Only one in India to cover more than 500 Questions in CA INTER GST.
6. Focus on 100% conceptual clarity and maximum practice of questions.
7. Special focus on Presentation and “How to Attempt” to score more than average
marks.
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RANK Certificate for All India Rank 41 (May 06) in CA PE II Exam (now CA Inter)
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RANK Certificate for All India Rank 4 (June 08) in CS Inter Exam
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RANK Certificate for All India Rank 13 (June 09) in CS Professional (Final) Exam
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RANK Certificate for All India Rank 1 (June 08) in CMA Inter Exams
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Institute’s Gold Medal for All India Rank 1 (June 08) in CMA Inter Exams
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RANK Certificate for All India Rank 3 (June 09) in CMA Final Exams
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PREFACE
Dear Students,
It gives me immense pleasure and satisfaction to present the publication on subject matter “Goods and Service Tax (GST)”.
The book will specifically cater to the needs of CA Intermediate (IPCC) Students. It covers the theoretical aspects of the subject
matter in an informative and lucid manner.
It’s difficult for the students to understand the intricate provisions of law, thus the effort has been made to present the matter under
suitable headings and sub headings with sufficient detail in a manner that can be grasped by the students easily and quickly. The unique
style of presentation adopted makes the learning easy and interesting for the students.
The book has been drafted in a student friendly approach as a lot of charts, tables and diagrams have been put up systematically so as
to facilitate easy and quick understanding of the subject matter.
Though considerable care has been taken to make the book error free yet some unintended errors may have crept in for which I feel
apologies. But as ‘the road to improvement is never ending’, I would welcome the suggestions, criticism and feedback of this book for
the incorporation of necessary changes in a timely manner. The readers may post their suggestions, feedback and queries on email id
rahulgarg.ca@gmail.com.
I believe in words of Carlson Gracie “If you want to be a Lion, you must train with Lions”.
This publication stands as a tribute to my elder brother Beloved Sachin Garg, who left for
heavenly abode on 3rd May, 2015.
With Best Wishes
CA RAHUL GARG
ALL INDIA RANKHOLDER in CA, CS, CMA
+91 - 9876932270
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A Special thanks is due to my biggest strength,
my wife SHIKHA GARG;
who has always been my side in all the challenges.
This publication could not have been possible without her.
I am also thankful to
my mother Smt. Prem Lata Garg and father Sh. Pawan Kumar Garg,
who have provided me best education, constant love and affection since
childhood and making me what I am today.
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DISTINGUISHING FEATURES OF THE BOOK
• Strictly as per CA Intermediate (IPCC) syllabus
• Analysis of each section supported by Bare Act provision
• Word by Word Logical Analysis of all sections
• 100% Theory in Multi-color for better retention
• Comprehensive coverage of the syllabus
• All topics of module covered
• Simple & lucid language
• Important points highlighted for Last Minute Revision
• Unique presentation to create interest
• Tabular and diagrammatic Presentation for easy understanding
• All topics categorized under suitable headings and sub headings
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INDEX
Topic Page No.

Basics of Taxation 1
Introduction to GST 5
Constitutional Provisions 9
Model of GST 17
Structure of GST Acts 21
Important Definitions 31
Theory Questions 42
Practical Questions 45
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What is Tax?
Meaning Tax is the money that people have to pay compulsorily to the Government, which
is then used to provide public services.
Revenue Taxes are the basic source of revenue for the Government.
Definition A tax may be defined as a
✓ pecuniary burden
✓ laid upon individuals or property owners
✓ to support the Government,
✓ a payment exacted by legislative authority.
Why Tax is Collected?

Government needs funds for various purposes like maintenance of law and order, defence, social/ health services,
provision of education, infrastructure facilities such as roads, dams etc. Government obtains funds from various
sources to meet its above financing needs, and one of the major source is tax.
Thus, it is an instrument through which the social and economic objectives of a welfare State(nation) are
achieved.
Any Categories of Tax!!!

Tax Features
Direct Tax A direct tax is imposed directly on the taxpayer and paid directly to the
Government by the persons on whom it is imposed.
It cannot be shifted by the taxpayer to someone else.
It is levied on the income or property.
The amount of tax being paid is certainly known by the taxpayer.
It is purely a central govt. subject.
Indirect Tax An indirect tax is one that can be shifted by the taxpayer to someone else.
Its incidence is borne by the consumers who ultimately consume the product or
the service, while the immediate liability to pay the tax may fall upon another
person such as a manufacturer or provider of service or seller of goods.
It is levied on consumption, expenditure or privilege.
The amount of tax being paid may not be certainly known to the person.
The state govt. is also involved with the central govt. in administration and
collection of few indirect taxes.
Features of Direct Taxes

Feature Description
Major source of Direct taxes contribute a huge portion in the total tax revenues of Indian
revenue Government.
Tax on Income It is levied on income or wealth of the individuals.
and property
Shifting of The amount of direct tax is paid and borne by one and the same person.
burden
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Certainty in As the person paying the amount and bearing the burden is same, thus the
amount of tax amount of tax is known with certainty.
Progressive in These are progressive in nature i.e. the burden falls different on the rich and
nature the poor. As these depend on the paying capacity, so a rich person is taxed
more as compared to poor person.
Balanced The government can reduce the amount of taxes on the assesses undertaking
Regional specified activities or located in backward areas etc. as a part of it’s drive to
Development
promote any area or industry.
No No intermediary is present between the actual taxpayer (on whom the ultimate
Intermediaries burden falls) and the government.
Difficult Direct taxes are mainly on income/ wealth of individuals, firms or corporate
Administration bodies, where millions of transactions are carried out in lakhs of places and
keeping an eye over all such transactions is virtually impossible.
Tax Evasion Tax evasion is comparatively more in direct taxes in an unorganized sector, since
control is difficult.
Cost of Collection cost of direct taxes as percentage of tax collected are higher in direct
collection taxes as compared to indirect taxes.
Time of The amount of direct taxes is collected after the end of year.
Collection
Resistance to Resistance to pay direct taxes is much more as compared to resistance in
Pay indirect taxes.
Features of Indirect Taxes

Feature Description
Major source of Indirect taxes contribute more than 50% of the total tax revenues of Central
revenue and State Governments in India. As India is moving towards Consumption
oriented tax regime, it’s collection is certain to increase.
Tax on It is levied on
commodities - commodities at the time of manufacture or purchase or sale or
and services
import/export thereof. Hence, it is also known as commodity taxation.
- provision of services.
Shifting of The amount of indirect tax is paid by one person and actually borne by the
burden other person. The burden is shifted to the final consumer.
Uncertainty in The person paying the tax may not know the amount of tax with certainty as
amount of tax it is already inbuilt in the price of the goods or services.
Regressive in These are regressive in nature i.e. the burden falls same on the rich and the
nature poor. As these don’t depend on the paying capacity, it may lead to the income
disparities between both the sections of society.
Balanced The government can reduce the amount of taxes on goods manufactured in small
Regional scale units; lowering the taxes in backward areas etc. as a part of it’s drive to
Development
promote any area or industry.
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Lot of A lot of intermediaries may be present between the actual taxpayer (on whom
Intermediaries the ultimate burden falls) and the government.
Wider Tax Base As the majority of the products or services are subject to indirect taxes, it
leads to huge amount of revenue collection.
Promotes Social Government imposes high taxes on the consumption of harmful products (whose
Welfare consumption is not favourable to the society), to keep a check on the
consumption of the same. It also results in savings as the wasteful expenditure
is controlled.
Convenient Manufacturing activities are carried out mainly in organized sector, where
Administration records and controls are better. Thus, it becomes convenient for the
government to administer.
Tax Evasion As the amount of tax is already inbuilt in the price of the article or service,
the evasion on the part of taxpayer becomes little difficult which leads to easy
collection of the taxes.
Less Cost of Collection costs of indirect taxes as percentage of tax collected are lower in
collection indirect taxes as compared to direct taxes.
Time of The amount of indirect taxes is collected at the time of sale or purchases or
Collection rendering of services.
Resistance to Resistance to pay indirect taxes is much less as compared to resistance in direct
Pay taxes.
Demerits ✓ High customs/ excise duty increases smuggling, havala trade which is harmful
in many ways.
✓ Tax on goods and services reduces the demand of goods and services by
increasing its prices. Lesser demand means lower growth of industrialization.
✓ Indirect taxes increase the prices of products and hence are often perceived as
inflationary.
Direct Tax Vs. Indirect Tax……… A Ready Reference…

S. Basis of Direct Tax Indirect Tax
No. Difference
1. Meaning Direct Taxes are those where the Indirect Taxes are those where incidence
incidence and impact falls on the same and impact falls on two different persons.
person.
2. Taxable Earning taxable income or having the Supply of goods or provision of services
Event property with the assessee attracts direct attract indirect tax.
tax.
3. Shifting of The amount of direct tax is paid and The amount of indirect tax is paid by one
burden borne by one and the same person. person and actually borne by the other
person.
4. Certainty in As the person paying the amount and The person paying the tax may not know the
amount of bearing the burden is same, thus the amount of tax with certainty as it is already
tax amount of tax is known with certainty. inbuilt in the price of the goods or services.
5. Nature These are progressive in nature i.e. the These are regressive in nature i.e. the
burden falls different on the rich and the burden falls same on the rich and the poor.
poor.
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6. Interme- No intermediary is present between the A lot of intermediaries may be present
diaries actual taxpayer and the government. between the actual taxpayer and the
government.
7. Difficult Direct taxes are mainly on income/ Manufacturing activities are carried out
Adminis- wealth whose transactions are carried mainly in organized sector, where records
tration out in large number and keeping track of and controls are better. Thus, it becomes
all is virtually impossible. convenient for the government to
administer.
8. Tax Evasion Tax evasion is comparatively more in As the amount of tax is already inbuilt in the
direct taxes in an unorganized sector, price of the article or service, the evasion on
since control is difficult. the part of taxpayer becomes little difficult.
9. Collection The collection is difficult as it is As the price of commodity or service is
psychologically very difficult for a person already inclusive of indirect taxes, the
to pay some amount after it is received in ultimate tax payer does not feel a direct
his hands. pinch while paying indirect taxes; thus it
leads to easy collection of the taxes.
10. Cost of Collection cost of direct taxes as a Collection costs of indirect taxes as a
collection percentage of tax collected are higher in percentage of tax collected are lower in
direct taxes as compared to indirect indirect taxes as compared to direct taxes.
taxes.
11. Time of The amount of direct taxes is collected The amount of indirect taxes is collected at
Collection after the end of year. the time of sale or purchases or rendering of
services.
12. Resistance Resistance to pay direct taxes is much Resistance to pay indirect taxes is much less
to Pay more as compared to resistance in as compared to resistance in direct taxes.
indirect taxes.
13. Inflation Direct taxes do not affect prices of goods Indirect taxes increase the prices of
effect and service. products and hence are often perceived as
inflationary.
14. Charge It is charged directly by the government. It is charged indirectly by the government.
15. Invoice Invoice is not prepared. Invoice is mandatory and fundamental
document.
16. Example Income Tax, Wealth Tax etc. GST, Customs Duty etc.
17. Receiver of Entire revenue goes to central Revenue is shared by the central as well as
Revenue government of India. the state governments.
18. Highest Central Board of Direct Taxes (CBDT) Central Board of Excise and Customs (CBEC)
Body plays an important role in planning & plays an important role in planning &
implementing direct taxes policy in India. implementing indirect taxes policy in India.
Some Basic Terms!

Basis Rules Regulations Notification Circular
Framed Central govt. Board (CBDT/ Central govt. Board (CBDT/ CBEC)
by
CBEC)
Purpose To support the To support the To bring amendment in To clarify the
Act Act and the Rules Act, Rules and interpretation of
Regulations laws/ rules
Legality Can’t override Can’t override the Can override the Act It can’t override Act/
the Act Act and rules because it brings Rules/ Regulations
amendment in the Act
and thus it becomes
part of the Act
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Binding On assessee and On assessee and On assessee and Binding on
force
department department department department BUT NOT
on assessee and
appellate authority
History of GST
Here is a brief flash back mentioning the key milestones of the journey of GST in India:
2000 The concept of GST was suggested by Atal Bihari Vajpayee Government. State Finance Ministers
formed an Empowered Committee(EC) to create a structure for GST, based on their experience in
designing state VAT. The committee was headed by Asim Dasgupta, the Finance Minister of West
Bengal. Dasgupta chaired the committee till 2011.
2003 The Kelkar Task Force on Indirect Tax had suggested a comprehensive Goods and Services Tax (GST)
based on VAT principle.
2004 A Taskforce that was headed by Vijay L. Kelkar the advisor to the Finance Ministry, indicated that the
existing law structure had many issues that would be mitigated by the GST system.
Feb 2005 Finance Minister, P. Chidambaram, said that the medium-to-long term goal of the government was to
implement a uniform GST structure across the country.
Feb 2007 An announcement was made by the then Hon’ble Union Finance Minister in the Central Budget (2007-
08) to the effect that GST would be introduced with effect from April 01, 2010.
Sept 2009 The Empowered Committee (EC) decided to constitute a Working Group consisting of Principal
Secretaries/ Secretaries (Finance/ Taxation) and Commissioners of Trade Taxes of all States/ UTs to
give their recommendations on :
✓ the commodities and services that should be kept in the exempted list;
✓ the rules and principles of taxing the transactions of services including the transactions in inter-
State services; and
✓ finalization of the model suggested for inter-state transaction/ movement of goods including stock
transfers in consultation with the State Bank of India and some other nationalized banks.
Nov 2009 Based on inputs from Government(s) of Centre and States, Empowered Committee released its First
Discussion Paper on GST.
Mar 2011 The Constitution (One Hundred and Fifteenth Amendment) Bill, 2011 to give concurrent taxing powers
to the Union and States was introduced in Lok Sabha. The Bill suggested the creation of Goods and
Services Tax Council and a Goods and Services Tax Dispute Settlement Authority. The Bill was lapsed
in 2014 and was replaced with the Constitution (122nd Amendment) Bill, 2014.
Nov 2012 A “Committee on GST Design”, consisting of the officials of the Government of India, State
Governments and Empowered Committee (EC) was constituted.
Jan 2013 The Empowered Committee deliberated on the proposed design including the Constitution (115th)
Amendment Bill and submitted the report. Based on this Report, the EC recommended certain changes
in the Constitution Amendment Bill and decided to constitute three below mentioned Committees of
Officers to discuss and Report on various aspects of GST :
✓ Committee on Place of Supply Rules and Revenue Neutral Rates;
✓ Committee on dual control, threshold and exemptions;
✓ Committee on IGST and GST on imports.
Mar 2013 A not for profit, non-Government, private limited company was incorporated in the name of Goods
and Services Tax Network (GSTN) as special purpose vehicle setup by the Government primarily to
provide IT infrastructure and services to the Central and State Government(s), tax payers and other
stakeholders for implementation of the Goods and Services Tax (GST).
Aug 2013 The Parliamentary Standing Committee submitted its Report to the Lok Sabha. The recommendations
of the Empowered Committee and the recommendations of the Parliamentary Standing Committee
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were examined by the Ministry in consultation with the Legislative Department. Most of the
recommendations made by the Empowered Committee and the Parliamentary Standing Committee
were accepted and the Draft Amendment Bill was suitably revised.
Sept 2013 The final draft Constitutional Amendment Bill incorporating the above stated changes was sent to the
Empowered Committee(EC) for consideration.
Jun 2014 The draft Constitution Amendment Bill in March, 2014 was sent to the Empowered Committee after
approval of the new Government.
Dec 2014 The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 seeking to amend the
Constitution to introduce the Goods and Services Tax (GST) and subsume state Value Added Tax,
octroi and entry tax, luxury tax, etc. was introduced in the Lok Sabha on December 19, 2014.
May 2015 Constitution Amendment (122nd) Bill was passed by Lok Sabha on May 06, 2015.
July 2015 Select Committee submitted its report to Rajya Sabha on July 22, 2015.
June 2016 On June 14, 2016, the Ministry of Finance released draft model law on GST in public domain for views
and suggestion.
Aug 2016 The changes made by Rajya Sabha were unanimously passed by Lok Sabha, on August 08, 2016.
Sept 2016 The Bill was adopted by majority of State Legislatures wherein approval of at least 50% of the State
Assemblies was required.
Sept 2016 Final assent of Hon’ble President of India was given on 8th September, 2016 and the Constitution
(122nd Amendment) Bill, 2014 became (101st Amendment) Act, 2016.
Mar 2017 Parliament passed the following four bills:
✓ Central Goods and Services Tax (CGST)Bill.
✓ Integrated Goods and Services Tax (IGST) Bill.
✓ Union Territory Goods and Services Tax (UTGST)Bill.
✓ Goods and Services Tax (Compensation to States) Bill.
Apr 2017 President’s assent was given to four key legislations on Goods and Services tax and respective Bills
were enacted.
July 01 GST law was made applicable in India.
2017
July 08 GST law was made applicable to the State of Jammu and Kashmir.
2017
Taxes Subsumed Under GST

GST is a comprehensive indirect tax levy subsuming all central and state levies with a single unified value added tax
transforming the nation into one single market. Major Central and State taxes are subsumed into GST which will
reduce the multiplicity of taxes, and thus bring down the compliance cost.
Principles adopted for subsuming the taxes
The various Central, State and Local levies were examined to identify their possibility of being subsumed
under GST. While identifying, the following principles were kept in mind :
✓ Taxes or levies to be subsumed should be primarily in the nature of indirect taxes, either on the supply of
goods or on the supply of services.
✓ Taxes or levies to be subsumed should be part of the transaction chain which commences with import/
manufacture/ production of goods or provision of services at one end and the consumption of goods and
services at the other.
✓ The subsumation should result in free flow of tax credit in intra and inter-State levels. The taxes, levies
and fees that are not specifically related to supply of goods & services should not be subsumed under GST.
✓ Revenue fairness for both the Union and the States individually would need to be attempted.
Central Levies Central Excise Duty & Additional Excise Duties
Duties of Excise (Medicinal and Toilet Preparations)
Additional Duties of Excise (Goods of Special Importance)
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Additional Duties of Excise (Textiles and Textile Products)

Additional Duties of Customs (commonly known as CVD)
Special Additional Duty of Customs (commonly known as SAD)
Service Tax
Central surcharges & Cesses in so far as they relate to supply of goods &
services
State Levies State VAT
Central Sales Tax
Entertainment Tax (except those levied by local bodies)
Tax on lottery, betting and gambling
Entry Tax (All Forms)
Purchase Tax
Luxury Tax
Taxes on advertisements
State surcharges & cesses in so far as they relate to supply of goods & services
Concept of GST
Value Added GST is a value added tax levied on manufacture, sale and consumption of goods
Tax and services.
Consumption GST is a consumption based tax, i.e. tax will be payable in the State in which
based tax goods and services or both are finally consumed. Exports are not taxable, because
the place of consumption is outside India. Imports are taxable, because the place
of consumption is in India.
Continuous GST offers comprehensive and continuous chain of tax credits from the
chain of tax producer's point/ service provider's point upto the retailer's level/ consumer’s
credits
level thereby taxing only the value added at each stage of supply chain.
Burden borne The supplier at each stage is permitted to avail credit of GST paid on the
by final purchase of goods and/ or services and can set off this credit against the GST
consumer
payable on the supply of goods and services to be made by him. Thus, only the
final consumer bears the GST charged by the last supplier in the supply chain,
with set-off benefits at all the previous stages.
No cascading Since, only the value added at each stage is taxed under GST, there is no tax
of taxes on tax or cascading of taxes under GST system. GST does not differentiate
between goods and services and thus, the two are taxed at a single rate.
Need for GST in India/ Deficiencies in earlier system

GST is a Cure for ills of existing Indirect Tax. Cascading effect of tax is one of the vital cause-to-cause ill of existing
Indirect Tax. It means, a tax that is levied on a good at each stage of the production process up to the point of being sold
to the final consumer. It is also known as tax on tax. 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.
As per Statement of Objects and Reasons appended to the Constitutional Amendment bill, the object of GST is :
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(a) to have common national market, and
(b) avoid cascading effect of taxes.
Non-inclusion of several local levies in State VAT such as luxury tax, entertainment tax, etc.
Cascading of taxes on account of
(i) levy of Non-VATable CST and
(ii) inclusion of CENVAT in the value for imposing VAT
No CENVAT after manufacturing stage
Non-integration of VAT & service tax
Double taxation of a transaction as both goods and services
Advantages of GST
MAKE IN ✓ Will help to create a unified common national market for India, giving a boost to Foreign
INDIA investment and “Make in India” campaign;
✓ Will prevent cascading of taxes as Input Tax Credit will be available across goods and services at
every stage of supply;
✓ Harmonization of laws, procedures and rates of tax;
✓ It will boost export and manufacturing activity, generate more employment and thus increase
GDP with gainful employment leading to substantive economic growth;
✓ Ultimately it will help in poverty eradication by generating more employment and more
financial resources;
✓ More efficient neutralization of taxes especially for exports thereby making our products more
competitive in the international market and give boost to Indian Exports;
✓ Improve the overall investment climate in the country which will naturally benefit the
development in the states;
✓ Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating rate
arbitrage between neighboring States and that between intra and inter-State sales;
✓ Average tax burden on companies is likely to come down which is expected to reduce prices and
lower prices mean more consumption, which in turn means more production thereby helping
in the growth of the industries. This will create India as a “Manufacturing hub”.
EASE OF ✓ Simpler tax regime with fewer exemptions;
DOING ✓ Reductions in the multiplicity of taxes that are at present governing our indirect tax system
BUSINESS leading to simplification and uniformity;
✓ Reduction in compliance costs as no requirement of multiple record keeping for a variety of
taxes, and hence lesser investment of resources and manpower in maintaining records;
✓ Simplified and automated procedures for various processes such as registration, returns,
refunds, tax payments, etc;
✓ All interaction to be through the common GSTN portal, so less public interface between the
taxpayer and the tax administration;
✓ Common procedures for registration of taxpayers, refund of taxes, uniform formats of tax
return, common tax base, common system of classification of goods and services will lend
greater certainty to taxation system;
✓ Timelines to be provided for important activities like obtaining registration, refunds, etc;
✓ Electronic matching of input tax credits all-across India thus making the process more
transparent and accountable.
TO THE ✓ Broadening Tax base
GOVERN- ✓ Improved compliance and revenue collections
MENT ✓ Efficient use of Resources
✓ Investments out of savings by consumers (mitigation in the cascading effects of taxes will
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contribute to increase in availability of funds out of savings of consumer which may be used for
financing development activities)
TO TRADE ✓ Reduction in multiplicity of taxes
✓ Mitigation of cascading/ double taxation
✓ More efficient neutralization of taxes especially for exports
✓ Development of Common National Market or Common Economic market
✓ Simpler tax regime with fewer rates and exemptions
✓ Increase in cost competitiveness for domestic industries with reduction in tax cost and also
reduced cost of compliance.
TO ✓ Reduction in cost of goods and services due to elimination of cascading effect of taxes
CONSUMER ✓ Increase in purchasing power and real income
✓ Increase in savings due to decrease in cost
✓ Increase in investments due to increase in savings
Constitutional Provisions
Nature of constitution
 A constitution means a document having special legal sanctity, which sets out the frame-work and the principle
functions of the organs of Government and declares the principles governing the operation of those organs.
 It was the 26th January, 1950 when the present constitution of India was brought into force.
 India is a socialist, democratic and republic state.
 Indian republic is governed by the constitution.
 Constitution of India is a comprehensive document containing almost 448 articles, divided into 25 parts and 12
schedules (at its commencement, it had 395 articles in 22 Parts & 8 schedules).
 All the public authorities legislative, administrative and judicial derive powers directly or indirectly from it and the
constitution derives it’s authority from the people.
 Constitution of India is supreme law of land.
 All other laws are subordinate to the Constitution of India.
Part XI : Relations Between The Union and The States

Chapter I: 245. Extent of laws made by Parliament and by the Legislatures of States
Legislative 246. Subject-matter of laws made by Parliament and by the Legislatures of States
Relations 246A: Power to make laws with respect to Goods and Services Tax
248. Residuary powers of legislation
254. Inconsistency between laws made by Parliament and laws made by the Legislatures of States
Part XII: Finance, Property, Contracts and Suits
Chapter I: Finance 265. Taxes not to be imposed save by authority of law
268. Duties levied by the Union but collected and appropriated by the States
269A : Levy and collection of goods and services tax in course of inter-State trade or commerce
270. Taxes levied and distributed between the Union and the States
271: Surcharge on certain duties and taxes for purposes of the Union
279A : Goods and Services Tax Council
286. Restrictions as to imposition of tax on the sale or purchase of goods
Part XIX: Miscellaneous
366. Definitions
Part XX: Amendment of The Constitution
368. Power of Parliament to amend the Constitution and procedure therefor
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Relevance w.r.t. Taxes

Power to levy and collect taxes whether, direct or indirect emerges from the Constitution of India.
Thus, any tax law which is framed in India shall be valid only if there is an entry regarding this in the constitution. If
there is no mention about the particular tax in the constitution, the govt. cannot legally collect those taxes. In case any
act, rule, notification or order is not in conformity with the Constitution, it is called ultra vires the Constitution and is
illegal and void.
Article It states that “no tax shall be levied or collected except by authority of law”.
265 The term “authority of law” means that tax proposed to be levied must be within the
legislative competence of the Legislature imposing the tax.
Article 265 of the Constitution of India prohibits arbitrary collection of tax.
Article Article The power for enacting the laws is conferred on the Parliament and on the
245 245(1) State Legislature as follows :
Subject to the provisions of the Constitution,
: Parliament may make laws for the whole or part of the territory of India &
: Legislature of a state may make laws for the whole or any part of state.
Article No law made by the Parliament shall be deemed to be invalid on the ground
245(2) that it would have extra territorial operation.
Article It gives the respective authority to the Union and State Governments for levying tax.
246
Division of Powers relating to Tax

Article India has a three-tier federal structure, comprising the Union Government, the State
246 Governments and the Local Government.
The power to levy taxes and duties is distributed among the three tiers of
Governments, in accordance with the provisions of the Indian Constitution.
Article Parliament has exclusive powers to make laws with respect to any of matters
246(1) enumerated in List I in the Seventh Schedule to Constitution.
Article Parliament and State Legislature has the powers to make laws with respect
246(2) to any of matters enumerated in List III in the Seventh Schedule to
Constitution.
Article State Legislature has exclusive powers to make laws for State with respect
246(3) to any matter enumerated in List II of Seventh Schedule to Constitution.
Article Parliament has power to make laws with respect to any matter for any part
246(4) of the territory of India (not included in a State) notwithstanding that such
matter is a matter enumerated in the State List.
Seventh It contains 3 lists which enumerate the matters under which the union and state
Schedule governments have the authority to make laws.
Union List State List Concurrent List
List No. List I List II List III

List Name Union List State List Concurrent List
List Description It contains the matters in respect It contains the matters in It contains the matters in
of which the Parliament (Central respect of which the State respect of which both the
P a g e | 11
Government) has the exclusive Government has the Central & State Governments
right to make laws. exclusive right to make have power to make laws.
laws.
Total Entries 97 66 47
Taxation Entries 82 to 92C 45 to 63 N.A.
Constitutional Amendments
Earlier Regime
The Constitutional provisions hitherto had delineated separate powers for the Centre and the States to impose various taxes.
Excise Duty It’s a tax on manufacture of goods and was levied by Central Govt.
Custom It’s a tax on import or export of goods and was levied by Central Govt.
Duty
Central It’s a tax on inter state sales. Though the power to levy this tax was with
Sales Tax centre, but it was collected and retained entirely by the States.
Value Added It’s a tax on intra state sales and was levied by the State Govt.
Tax
Service Tax It’s a tax on provision of services and was levied by Central Govt.
Others There were State specific levies like entry tax, Octroi, luxury tax, entertainment
tax, lottery and betting tax, local taxes levied by Panchayats etc.
Need for Constitutional Amendment
Introduction of the GST required amendment in the Constitution so as to enable integration of the central excise duty
including additional duties of customs, State VAT and certain State specific taxes and service tax levied by the Centre
into a comprehensive Goods and Services Tax and to empower both Centre and the States to levy and collect it.
Consequently, Constitution (101st Amendment Act), 2016 (hereinafter referred to as Constitution Amendment Act)
was passed.
New Article 246A : Power to make laws with respect to Goods & Services Tax
(1) Notwithstanding anything contained in Articles 246 and 254, Parliament, and, subject to
clause (2), the Legislature of every State, have power to make laws with respect to
goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where
the supply of goods, or of services, or both takes place in the course of inter-State trade
or commerce.
Explanation - The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of
article 279A, take effect from the date recommended by the Goods and Services Tax Council.
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Amended Article 248 : Residuary powers of legislation

(1) Subject to article 246A, Parliament has exclusive power to make any law with respect to
any matter not enumerated in the Concurrent List or State List.
(2) Such power shall include the power of making any law imposing a tax not mentioned in
either of those Lists.
Amended Article 268 : Duties levied by the Union but collected and
appropriated by the States
(1) Such stamp duties and such duties of excise on medicinal and toilet preparations as are
mentioned in the Union List shall be levied by the Government of India but shall be
collected
(a) in the case where such duties are leviable within any Union territory, by the
Government of India, and
(b) in other cases, by the States within which such duties are respectively leviable.
(2) The proceeds in any financial year of any such duty leviable within any State shall not
form part of the Consolidated Fund of India, but shall be assigned to that State.
New Article 269A : Levy and collection of goods and services tax in course of
inter-State trade or commerce
(1) Goods and services tax on supplies in the course of inter-State trade or commerce 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.
Explanation.—For the purposes of this clause, supply of goods, or of services, or both in
the course of import into the territory of India shall be deemed to be supply of goods,
or of services, or both in the course of inter-State trade or commerce.
(2) The amount apportioned to a State under clause (1) shall not form part of the
Consolidated Fund of India.
(3) Where an amount collected as tax levied under clause (1) has been used for payment of
the tax levied by a State under article 246A, such amount shall not form part of the
Consolidated Fund of India.
(4) Where an amount collected as tax levied by a State under article 246A has been used for
payment of the tax levied under clause (1), such amount shall not form part of the
Consolidated Fund of the State.
(5) Parliament may, by law, formulate the principles for determining the place of supply, and
when a supply of goods, or of services, or both takes place in the course of inter-State
trade or commerce.
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Amended Article 270 : Taxes levied and distributed between the Union and
the States
(1) All taxes and duties referred to in the Union List, except the duties and taxes referred
to in articles 268, 269 and 269A, respectively, surcharge on taxes and duties referred
to in article 271 and any cess levied for specific purposes under any law made by
Parliament shall be levied and collected by the Government of India and shall be
distributed between the Union and the States in the manner provided in clause (2).
(1A) The tax collected by the Union under clause (1) of article 246A shall also be distributed
between the Union and the States in the manner provided in clause (2).
(1B) The tax levied and collected by the Union under clause (2) of article 246A and article
269A, which has been used for payment of the tax levied by the Union under clause (1) of
article 246A, and the amount apportioned to the Union under clause (1) of article 269A,
shall also be distributed between the Union and the States in the manner provided in clause
(2).
(2) Such percentage, as may be prescribed, of the net proceeds of any such tax or duty in
any financial year shall not form part of the Consolidated Fund of India, but shall be
assigned to the States within which that tax or duty is leviable in that year, and shall be
distributed among those States in such manner and from such time as may be prescribed.
Amended Article 271 : Surcharge on certain duties and taxes for purposes of
the Union
Notwithstanding anything in articles 269 and 270, Parliament may at any time increase any of
the duties or taxes referred to in those articles‘ ‘except the goods and services tax under article
246A,’’ by a surcharge for purposes of the Union and the whole proceeds of any such surcharge
shall form part of the Consolidated Fund of India.
New Article 279A : Goods and Services Tax Council

(1) The President shall, within sixty days from the date of commencement of the
Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a
Council to be called the Goods and Services Tax Council.
(2) The Goods and Services Tax Council shall consist of the following members, namely:—
(a) the Union Finance Minister as Chairperson;
(b) the Union Minister of State in charge of Revenue or Finance as Member;
(c) the Minister in charge of Finance or Taxation or any other Minister nominated by
each State Government as Members.
(3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of
clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-
Chairperson of the Council for such period as they may decide.
(4) The Goods and Services Tax Council shall make recommendations to the Union & the
P a g e | 14
States on :
(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies
which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to, or exempted from the goods and
services tax;
(c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and
Services Tax levied on supplies in the course of inter-State trade or commerce under
article 269A and the principles that govern the place of supply;
(d) the threshold limit of turnover below which goods and services may be exempted
from goods and services tax;
(e) the rates including floor rates with bands of goods and services tax;
(f) any special rate or rates for a specified period, to raise additional resources during
any natural calamity or disaster;
(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu
and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal
Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council may decide.
(5) The Goods and Services Tax Council shall recommend the date on which the goods and
services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel.
(6) While discharging the functions conferred by this article, the Goods and Services Tax
Council shall be guided by the need for a harmonised structure of goods and services tax
and for the development of a harmonised national market for goods and services.
(7) One-half of the total number of Members of the Goods and Services Tax Council shall
constitute the quorum at its meetings.
(8) The Goods and Services Tax Council shall determine the procedure in the performance of
its functions.
(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a
majority of not less than three-fourths of the weighted votes of the members present
and voting, in accordance with the following principles, namely :
(a) the vote of the Central Government shall have a weightage of one-third of the total
votes cast, and
(b) the votes of all the State Governments taken together shall have a weightage of
two-thirds of the total votes cast, in that meeting.
(10) No act or proceedings of the Goods & Services Tax Council shall be invalid merely by
reason of :
(a) any vacancy in, or any defect in, the constitution of the Council; or
(b) any defect in the appointment of a person as a Member of the Council; or
(c) any procedural irregularity of the Council not affecting the merits of the case.
(11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute :
P a g e | 15
(a) between the Government of India and one or more States; or
(b) between the Government of India and any State or States on one side and one or
more other States on the other side; or
(c) between two or more States,
arising out of the recommendations of the Council or implementation thereof.
Amended Article 286

1. No Law of a State shall impose, or authorise the imposition of, a tax on the sale or
purchase of goods where such sale or purchase takes place "the supply of goods or of
services or both, where such supply takes place"
(a) outside the State; or
(b) in the course of the import of the goods goods or services or both into, or export
of the goods goods or services or both out of, the territory of India.
2. Parliament may by law formulate principles for determining when a sale or purchase of
goods takes place in any of the ways mentioned in clause (1).
Article 366 : Definitions

Goods and Goods and services tax means any tax on supply of goods, or services or both except taxes on the
services tax supply of the alcoholic liquor for human consumption.
[Article Consequently, GST can be levied on supply of all goods and services except alcoholic liquor for human
366(12A)] consumption.
Services Services means anything other than goods.
[Article
366(26A)]
State [Article State, with reference to articles 246A, 268, 269, 269A and article 279A, includes a Union territory with
366(26B)] Legislature.
Goods [Article Goods includes all materials, commodities, and articles.
366(12)]
Detailed Description of Lists

LIST Tax Entry No. Entry Description
List I Income tax 82 Taxes on income other than agricultural income
Customs 83 Duties of customs including export duties
Duties
Central 84 Duties of excise on tobacco and other goods
Excise Duties manufactured or produced in India except alcoholic liquors for human
consumption; opium, Indian hemp and other narcotic drugs and
narcotics, but including medicinal and toilet preparations containing
alcohol or opium/Indian hemp/narcotic drugs/narcotics
Duties of excise on the following goods manufactured or
produced in India, namely :
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
P a g e | 16
(d) natural gas;

(e) aviation turbine fuel; and
(f) tobacco and tobacco products.
Wealth Tax 86 Taxes on capital value of assets, exclusive of agricultural land, of
individuals and companies
Tax on 92 Taxes on the sale or purchase of newspapers and on advertisements
newspapers published therein
and advert- OMITTED
isements
Central 92A Taxes on the sale or purchase of goods other than newspapers, where
Sales Tax such sale or purchase takes place in the course of inter-State trade or
commerce
Tax on 92C [Amendment passed by the Parliament on 15.1.2004, but yet not made
services effective]
OMITTED
Residuary 97 Any other matter not enumerated in List II or List III including any tax
not mentioned in either of those Lists
List II Agricultural 46 Tax on agricultural income
Tax
State Excise 51 Duties of excise on alcoholic liquors for human consumption; opium,
Duties Indian hemp and other narcotic drugs and narcotics but excluding
medicinal and toilet preparations containing alcohol, opium, Indian
hemp and other narcotic drugs and narcotics
Entry Tax/ 52 Tax on entry of goods into a local area for consumption, use or sale
Octroi therein
OMITTED
State Level 54 Taxes on the sale or purchase of goods (excluding newspapers) except
VAT tax on inter-State sale or purchase
Taxes on the sale of petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural gas, aviation turbine fuel
and alcoholic liquor for human consumption, but not including sale in
the course of inter-State trade or commerce or sale in the course of
international trade or commerce of such goods."
Advertise- 55 Tax on advertisements other than advertisements in newspapers
ment Tax
OMITTED
Entertain- 62 Taxes on luxuries, including taxes on entertainments, amusements,
ment Tax betting and gambling.
Taxes on entertainments and amusements to the extent levied
and collected by a Panchayat or a Municipality or a Regional Council or
a District Council.
A Gist!
GST Excise Sales Tax
Alcoholic liquor for human Never Yes Yes
consumption [Article 366(12A)] (Entry 51 of List II) (Entry 54 of List II)
Tobacco & tobacco products Yes Yes No
(Entry 84 of List I) (Entry 54 of List II)
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Petroleum crude No Yes Yes

High speed diesel [Article 279A(5)] (Entry 84 of List I) (Entry 54 of List II)
Motor spirit (commonly known as
petrol)
Natural gas
Aviation turbine fuel
Others Yes No No
Opium, Indian hemp and other Yes Yes No
narcotic drugs and narcotics (Entry 51 of List II) (Entry 54 of List II)
One Nation, one tax

History of After the constitutional amendment bill was passed and majority of the states
GST Bills gave their assent in September 2016, Lok Sabha passed GST Bills on 29th
March 2017 and Rajya Sabha passed the same on 6th April 2017. President
gave his assent to same on 12th April 2017.
GST Bills The Central GST Bill, 2017;
The Integrated GST Bill, 2017;
The GST (Compensation to States) Bill, 2017; and
The Union Territory GST Bill, 2017
Acts coming Certain provisions of the act came into force on 22.6.17 and remaining
in force provisions on 1.7.17 as notified by the Central Government and hence appointed
day for the CGST Act, IGST, UTGST Acts, SGST Acts was 1st July, 2017.
However, appointed day for State of Jammu and Kashmir was 8th July, 2017.
Special GST will extend to whole of India including the State of Jammu and Kashmir.
emphasis on J On 7th July, 2017, the Jammu and Kashmir Goods and Services Tax Bill, 2017
&K
was passed by the State Legislature, empowering the State to levy State GST
on intra-state supplies with effect from 8th July, 2017.
With this, the State of Jammu and Kashmir has become part of the GST
regime, making GST truly a “one nation, one tax” regime.
Dual GST
India has adopted “Concurrent dual GST” model. The need for Dual GST model is based on the following premise:
 At existing framework, both levels of Government, that is, Centre and State, as per Constitution holds
concurrent powers to levy tax on domestic goods and services.
 The Concurrent Dual GST model would be a dual levy imposed concurrently by the Centre and the States, but
independently;
 Both Centre and State will operate over a common base, that is, the base for levy and imposition of duty/tax
liability would be identical.
Under the Concurrent Dual GST Model taxes shall be levied as per place of supply of goods and services.
P a g e | 18
Notes :
1. Area upto 12 nautical miles inside the sea is part of State or Union Territory which is nearest, so SGST or UTGST will
be payable.
2. In area inside the sea between 12 nautical miles to 200 nautical miles, IGST will be payable.
Details of Taxes
Tax Legislation Imposition of CGST, SGST, UTSGST & IGST
CGST Central CGST is levied and collected by Central Government. It is a revenue
Goods and source to the Central Government of India, on intra-state supplies of
Services Tax
taxable goods or services or both.
Act, 2017
SGST State Goods SGST is levied and collected by State Governments and Union
and Services Territories with State Legislatures (namely Delhi and Pondicherry) on
Tax Act,
intra-state supplies of taxable goods or services or both. It is a revenue
2017
source of the respective State Government.
Though there are multiple SGST legislations, the basic features of law, such as
chargeability, definition of taxable event and taxable person, classification and
valuation of goods and services, procedure for collection and levy of tax and the
like are uniform in all the SGST legislations, as far as feasible. This is necessary to
preserve the essence of dual GST.
UTGST Union UTGST is levied and collected by Union Territories without State
Territory Legislatures, on intra-state supplies of taxable goods or services or both.
Goods and
To replicate the law similar to State GST to Union Territories without Legislature,
Services Tax
the Parliament has the powers under Article 246(4) to make such laws.
Alternatively, the President of India may use his general powers to formulate
such laws. Hence, law same as similar to State GST can be formulated for Union
Territory without Legislature, by the Parliament.
IGST Integrated IGST would be levied and collected by the Central Government on all
Goods and inter-State transactions of taxable goods or services. The revenue of
Services Tax
inter-state sales will not accrue to the exporting state and the
Act, 2017
exporting state will be required to transfer to the Centre the credit of
SGST/ UTGST used in payment of IGST. Equivalent IGST will be
imposed on imports.
P a g e | 19
IGST is a mechanism to monitor the inter-state trade of goods and services and
ensure that the SGST component accrues to the Consumer State. It would
maintain the integrity of ITC chain in inter-state supplies. The IGST rate would
broadly be equal to CGST rate plus SGST rate. IGST rates will be same all over
India and will not vary State to State Revenue from IGST will be apportioned
among Union and States by the Parliament on the basis of recommendation of
Goods and Service Tax council.
States and U.T.s…. An Analysis!

PART I : THE UNION AND ITS TERRITORY
Article 1. Name and territory of the Union
(1) India, that is Bharat, shall be a Union of States.
(2) The States and the territories thereof shall be as specified in the First Schedule.
(3) The territory of India shall comprise
(a) the territories of the States;
(b) the Union territories specified in the First Schedule; and
(c) such other territories as may be acquired.
India is a Union of States.
The territory of India comprises of the territories of the States and the Union Territories.
Currently, there are 29 States and 7 Union Territories.
States Andhra Pradesh Arunachal Pradesh Assam
Bihar Goa Gujarat
Haryana Himachal Pradesh Jammu & Kashmir
Karnataka Kerala Madhya Pradesh
Maharashtra Manipur Meghalaya
Mizoram Nagaland Orissa
Punjab Rajasthan Sikkim
Tamil Nadu Tripura Uttar Pradesh
West Bengal Chattisgarh Uttarakhand
Jharkhand Telangana
Union Union Territories with State Delhi
Territories Legislature Puducherry (Pondicherry)
Union Territories without Chandigarh
State Legislature Lakshadweep
Daman and Diu
Dadra and Nagar Haveli
Andaman and Nicobar Islands
GSTN
Meaning Goods and Services Tax Network (GSTN) is a non-Government, private limited
company (formed u/s 8 of the Companies Act, 2013) which is technology
backbone for GST in India.
It has been set by the Government to establish a uniform interface for the tax
payer and a common & shared IT infrastructure between the Centre and States.
Reason for its GST being a destination based tax, the inter- state trade of goods and services
formation
(IGST) would need a robust settlement mechanism amongst the States and the
P a g e | 20
Centre. This is possible only when there is a strong IT Infrastructure and Service
back bone which enables capture, processing and exchange of information amongst
the stakeholders (including tax payers, States and Central Governments,
Accounting Offices, Banks and RBI).
Website portal There is a Common GST Electronic Portal www.gst.gov.in which is accessible over
Internet (by taxpayers and their CAs/ Tax Advocates etc.) and Intranet by Tax
Officials etc. The portal is one single common portal for all GST related services.
Primary GSTN provides three front end services to the taxpayers namely
category of - registration,
services
- payment and
- return
Functions The functions of the GSTN include:
✓ 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; and running the matching engine for
matching, reversal and reclaim of input tax credit.
GSPs/ ASPs
GSTN has selected certain IT, ITeS and financial technology companies, to be called GST Suvidha Providers
(GSPs). GSPs develop applications to be used by taxpayers for interacting with the GSTN.
They facilitate the tax payers in uploading invoices as well as filing of returns and act as a single stop shop for
GST related services.
They customize products that address the needs of different segment of users. GSPs may take the help of
Application Service Providers (ASPs) who act as a link between taxpayers and GSPs.
Scheme of Input Tax Credit

A supplier making intra-State, inter-State and imported purchases will be eligible for ITC as under :
P a g e | 21
The supplier will use the ITC to pay tax as under :
Cross-utilization of credit is available only between CGST and IGST and SGST/ UTGST and IGST. The main
restriction is that the CGST credit cannot be utilized for payment of SGST/ UTGST and SGST/ UTGST credit
cannot be utilized for payment of CGST.
Structure of The Central Goods and Services Tax Act, 2017

Chapter No. Related Chapter Sections
I Preliminary 1–2
II Administration 3–6
III Levy and Collection of Tax 7 – 10
IIIA Classification & Exemption 11
IV Time and Value of Supply 12 - 15
V Input Tax Credit 16 – 21
VI Registration 22 – 30
VII Tax Invoice, Credit and Debit Notes 31 – 34
VIII Accounts and Records 35 – 36
IX Returns 37 – 48
X Payment of Tax 49 – 53
XI Refunds 54 – 58
XII Assessment 59 – 64
XIII Audit 65 – 66
XIV Inspection, Search, Seizure and Arrest 67 – 72
XV Demands and Recovery 73 – 84
XVI Liability to Pay in Certain Cases 85 – 94
XVII Advance Ruling 95 – 106
XVIII Appeals and Revision 107 – 121
XIX Offences and Penalties 122 – 138
XX Transitional Provisions 139 – 142
XXI Miscellaneous 143 – 174
Schedules
Schedule No. Schedule Description
I Activities to be treated as supply even if made without consideration
II Activities to be treated as supply of goods or supply of services
III Activities or transactions which shall be treated neither as a supply of goods nor a supply of services
P a g e | 22
Central Goods and Services Tax Rules

S. No. Rule No. of Rules Related Chapter
1. Preliminary 1–2 Chapter I
2. Composition 3–7 Chapter III
3. Registration 8 – 26 Chapter VI
4. Determination of Value of Supply 27 – 35 Chapter IV
5. Input Tax Credit 36 – 45 Chapter V
6. Tax Invoice, Credit and Debit Notes 46 – 55 Chapter VII
7. Accounts and Records 56 – 58 Chapter VIII
8. Returns 59 – 84 Chapter IX
9. Payment of Tax 85 – 87 Chapter X
10. Refund 88 – 97A Chapter XI
11. Assessment and Audit 98 – 102 Chapter XII & Chapter XIII
12. Advance Ruling 103 – 107A Chapter XVII
13. Appeals and Revision 108 – 116 Chapter XVIII
14. Transitional Provisions 117 – 121 Chapter XX
15. Anti-Profiteering 122 – 137 Chapter XXI
16. E-way 138 – 138D -
17. Inspection, Search and Seizure 139 – 141 Chapter XIV
18. Demands and Recovery 142 – 161 Chapter XV
19. Offences and Penalties 162 Chapter XIX
Structure of The Integrated Goods and Services Tax Act, 2017

Chapter No. Related Chapter Sections
I Preliminary 1–2
II Administration 3–4
III Levy and Collection of Tax 5–6
IV Determination of Nature of Supply 7–9
V Place of Supply of Goods or Services or Both 10 – 14
VI Refund of Integrated Tax to International Tourist 15
VII Zero Rated Supply 16
VIII Apportionment of Tax and Settlement of Funds 17 – 19
IX Miscellaneous 20 – 25
Detailed view of The Central Goods And Services Tax Act, 2017
CHAPTER I: PRELIMINARY
1 Short title, extent and commencement
2 Definitions
CHAPTER II: ADMINISTRATION
3 Officers under this Act
4 Appointment of officers
5 Powers of officers
6 Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances
CHAPTER III: LEVY AND COLLECTION OF TAX
7 Scope of supply
8 Tax liability on composite and mixed supplies
9 Levy and collection
10 Composition levy
CHAPTER IIIA: CLASSIFICATION & EXEMPTION
P a g e | 23
11 Power to grant exemption from tax

CHAPTER IV: TIME AND VALUE OF SUPPLY
12 Time of supply of goods
13 Time of supply of services
14 Change in rate of tax in respect of supply of goods or services
15 Value of taxable supply
CHAPTER V: INPUT TAX CREDIT
16 Eligibility and conditions for taking input tax credit
17 Apportionment of credit and blocked credits
18 Availability of credit in special circumstances
19 Taking input tax credit in respect of inputs and capital goods sent for job-work
20 Manner of distribution of credit by Input Service Distributor
21 Manner of recovery of credit distributed in excess
CHAPTER VI: REGISTRATION
22 Persons liable for registration
23 Persons not liable for registration
24 Compulsory registration in certain cases
25 Procedure for registration
26 Deemed registration
27 Special provisions relating to casual taxable person and non-resident taxable person
28 Amendment of registration
29 Cancellation of registration
30 Revocation of cancellation of registration
CHAPTER VII: TAX INVOICE, CREDIT AND DEBIT NOTES
31 Tax invoice
32 Prohibition of unauthorised collection of tax
33 Amount of tax to be indicated in tax invoice and other documents
34 Credit and debit notes
CHAPTER VIII: ACCOUNTS AND RECORDS
35 Accounts and other records
36 Period of retention of accounts
CHAPTER IX: RETURNS
37 Furnishing details of outward supplies
38 Furnishing details of inward supplies
39 Furnishing of Returns
40 First return
41 Claim of input tax credit and provisional acceptance thereof
42 Matching, reversal and reclaim of input tax credit
43 Matching, reversal and reclaim of reduction in output tax liability
44 Annual return
45 Final return
46 Notice to return defaulters
47 Levy of late fee
48 Goods and services tax practitioners
CHAPTER X: PAYMENT OF TAX
49 Payment of tax, interest, penalty and other amounts
50 Interest on delayed payment of tax
51 Tax deducted at source
52 Tax Collected at Source
53 Transfer of input tax credit
CHAPTER XI: REFUNDS
P a g e | 24
54 Refund of tax
55 Refund in certain cases
56 Interest on delayed refunds
57 Consumer Welfare Fund
58 Utilisation of Fund
CHAPTER XII: ASSESSMENT
59 Self-assessment
60 Provisional assessment
61 Scrutiny of Returns
62 Assessment of non-filers of returns
63 Assessment of unregistered persons
64 Assessment of unregistered persons
CHAPTER XIII: AUDIT
65 Audit by tax authorities
66 Special audit
CHAPTER XIV: INSPECTION, SEARCH, SEIZURE AND ARREST
67 Power of inspection, search and seizure
68 Inspection of goods in movement
69 Power to arrest
70 Power to summon persons to give evidence and produce documents
71 Access to business premises
72 Officers to assist proper officers
CHAPTER XV: DEMANDS AND RECOVERY
Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or
73
utilised for any reason other than fraud or any wilful misstatement or suppression of facts
Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or
74
utilised by reason of fraud or any wilful misstatement or suppression of facts
75 General provisions relating to determination of tax
76 Tax collected but not paid to the Government
77 Tax wrongfully collected and paid to the Central or a State Government
78 Initiation of recovery proceedings
79 Recovery of tax
80 Payment of tax and other amount in instalments
81 Transfer of property to be void in certain cases
82 Tax to be first charge on property
83 Provisional attachment to protect revenue in certain cases
84 Continuation and validation of certain recovery proceedings
CHAPTER XVI: LIABILITY TO PAY IN CERTAIN CASES
85 Liability in case of transfer of business
86 Liability of agent and principal
87 Liability in case of amalgamation or merger of companies
88 Liability in case of company in liquidation
89 Liability of directors of Private Company
90 Liability of partners of firm to pay tax
91 Liability of guardians, trustees, etc.
92 Liability of Court of Wards, etc.
93 Special provisions regarding liability to pay tax, interest or penalty in certain cases
94 Liability in other cases
CHAPTER XVII: ADVANCE RULING
95 Definition clause – interpretation
96 Authority for Advance Ruling
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97 Application for Advance Ruling

98 Procedure on receipt of application
99 Appellate Authority for Advance Ruling
100 Appeal to Appellate Authority
101 Orders of Appellate Authority
102 Rectification of advance ruling
103 Applicability of advance ruling
104 Advance ruling to be void in certain circumstances
105 Powers of Authority and Appellate Authority
106 Procedure of Authority and Appellate Authority
CHAPTER XVIII: APPEALS AND REVISION
107 Appeals to Appellate Authority
108 Powers of Revisional Authority
109 Constitution of Appellate Tribunal and Benches thereof
110 President and Members of Appellate Tribunal, their qualification, appointment, conditions of service, etc.
111 Procedure before Appellate Tribunal
112 Appeals to Appellate Tribunal
113 Orders of Appellate Tribunal
114 Financial and administrative powers of President
115 Interest on refund of amount paid for admission of appeal
116 Appearance by authorised representative
117 Appeal to High Court
118 Appeal to Supreme Court
119 Sums due to be paid notwithstanding appeal, etc.
120 Appeal not to be filed in certain cases
121 Non-appealable decisions and orders
CHAPTER XIX: OFFENCES AND PENALTIES
122 Penalty for certain offences
123 Penalty for failure to furnish information return
124 Fine for failure to furnish statistics
125 General penalty
126 General disciplines related to penalty
127 Power to impose penalty in certain cases
128 Power to waive penalty or fee or both
129 Detention, seizure and release of goods and conveyances in transit
130 Confiscation of goods or conveyances and levy of penalty
131 Confiscation or penalty not to interfere with other punishments
132 Punishment for certain offences
133 Liability of officers and certain other persons
134 Cognizance of offences
135 Presumption of culpable mental state
136 Relevancy of statements under certain circumstances
137 Offences by companies
138 Compounding of offences
CHAPTER XX: TRANSITIONAL PROVISIONS
139 Migration of existing taxpayers
140 Transitional arrangements for input tax credit
141 Transitional provisions relating to job work
142 Miscellaneous transitional provisions
CHAPTER XXI: MISCELLANEOUS
143 Job work procedure
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144 Presumption as to documents in certain cases

145 Admissibility of micro films, facsimile copies of documents & computer printouts as documents & as evidence
146 Common Portal
147 Deemed exports
148 Special procedure for certain processes
149 Goods and services tax compliance rating
150 Obligation to furnish information return
151 Power to collect statistics
152 Bar on disclosure of information
153 Taking assistance from an expert
154 Power to take samples
155 Burden of proof
156 Persons deemed to be public servants
157 Protection of action taken under this Act
158 Disclosure of information by a public servant
159 Publication of information in respect of persons in certain cases
160 Assessment proceedings, etc., not to be invalid on certain grounds
161 Rectification of errors apparent on the face of record
162 Bar on jurisdiction of Civil Courts
163 Levy of fee
164 Power of Government to make rules
165 Power to make regulations
166 Laying of rules, regulations and notifications
167 Delegation of powers
168 Power to issue instructions or directions
169 Service of notice in certain circumstances
170 Rounding off of tax, etc.
171 Anti-profiteering measure
172 Removal of difficulties
173 Amendment of Act 32 of 1994
174 Repeal and saving
Detailed view of Central Goods and Services Tax (CGST) Rules, 2017
1 Short title and Commencement
2 Definitions
CHAPTER II: COMPOSITION
3 Intimation for composition levy
4 Effective date for composition levy
5 Conditions and restrictions for composition levy
6 Validity of composition levy
7 Rate of tax of the composition levy
CHAPTER III: REGISTRATION
8 Rate of tax of the composition levy
9 Verification of the application and approval
10 Issue of registration certificate
11 Separate registration for multiple business verticals within a State or a Union Territory
12 Grant of registration to persons required to deduct tax at source or to collect tax at source
13 Grant of registration to non-resident taxable person
14 Grant of registration to a person supplying online information and database access or retrieval services from
P a g e | 27
a place outside India to a non-taxable online recipient

15 Extension in period of operation by casual taxable person and non-resident taxable person
16 Suo moto registration
17 Assignment of Unique Identity Number to certain special entities
18 Display of registration certificate and Goods and Services Tax Identification Number on the name board
19 Amendment of registration
20 Application for cancellation of registration
21 Registration to be cancelled in certain cases
22 Cancellation of registration
23 Revocation of cancellation of registration
24 Migration of persons registered under the existing law
25 Physical verification of business premises in certain cases
26 Method of authentication
CHAPTER IV: DETERMINATION OF VALUE OF SUPPLY
27 Value of supply of goods or services where the consideration is not wholly in money
28 Value of supply of goods or services or both between distinct or related persons, other than through an agent
29 Value of supply of goods made or received through an agent
30 Value of supply of goods or services or both based on cost
31 Residual method for determination of value of supply of goods or services or both
32 Determination of value in respect of certain supplies
33 Value of supply of services in case of pure agent
34 Rate of exchange of currency, other than Indian rupees, for determination of value
35 Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax
CHAPTER V: Input Tax Credit
36 Documentary requirements and conditions for claiming input tax credit
37 Reversal of input tax credit in the case of non-payment of consideration
38 Claim of credit by a banking company or a financial institution
39 Procedure for distribution of input tax credit by Input Service Distributor
40 Manner of claiming credit in special circumstances
41 Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
42 Manner of determination of input tax credit in respect of inputs or input services and reversal thereof
43 Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases
44 Manner of reversal of credit under special circumstances
44A Manner of reversal of credit of Additional duty of Customs in respect of Gold dore bar
45 Conditions and restrictions in respect of inputs and capital goods sent to the job worker
Chapter VI: TAX INVOICE, CREDIT AND DEBIT NOTES
46 Tax invoice
46A Invoice-cum-bill of supply
47 Time limit for issuing tax invoice
48 Manner of issuing invoice
49 Bill of supply
50 Receipt voucher
51 Refund voucher
52 Payment voucher
53 Revised tax invoice and credit or debit notes
54 Tax invoice in special cases
55 Transportation of goods without issue of invoice
Chapter VII: ACCOUNTS AND RECORDS
56 Maintenance of accounts by registered persons
57 Generation and maintenance of electronic records
58 Records to be maintained by owner or operator of godown or warehouse and Transporters
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Chapter VIII: Returns

59 Form and manner of furnishing details of outward supplies
60 Form and manner of furnishing details of inward supplies
61 Form and manner of submission of monthly return
62 Form and manner of submission of quarterly return by the composition Supplier
63 Form and manner of submission of return by non-resident taxable person
64 Form and manner of submission of return by persons providing online information and database access or
retrieval services
65 Form and manner of submission of return by an Input Service Distributor
66 Form and manner of submission of return by a person required to deduct tax at source
67 Form and manner of submission of statement of supplies through an e-commerce operator
68 Notice to non-filers of returns
69 Matching of claim of input tax credit
70 Final acceptance of input tax credit and communication thereof
71 Communication and rectification of discrepancy in claim of input tax credit & reversal of claim of input tax
credit
72 Claim of input tax credit on the same invoice more than once
73 Matching of claim of reduction in the output tax liability
74 Final acceptance of reduction in output tax liability and communication thereof
75 Communication and rectification of discrepancy in reduction in output tax liability and reversal of claim of
reduction
76 Claim of reduction in output tax liability more than once
77 Refund of interest paid on reclaim of reversals
78 Matching of details furnished by the e-Commerce operator with the details furnished by the supplier
79 Communication and rectification of discrepancy in details furnished by the ecommerce operator and the
supplier
80 Annual return
81 Final Return
82 Details of inward supplies of persons having Unique Identity Number
83 Provisions relating to a goods and services tax practitioner
84 Conditions for purposes of appearance
Chapter IX: Payment of Tax
85 Electronic Liability Register
86 Electronic Credit Ledger
87 Electronic Cash Ledger
88 Identification number for each transaction
Chapter X: Refund
89 Application for refund of tax, interest, penalty, fees or any other amount
90 Acknowledgement
91 Grant of provisional refund
92 Order sanctioning refund
93 Credit of the amount of rejected refund claim
94 Order sanctioning interest on delayed refunds
95 Refund of tax to certain persons
96 Refund of integrated tax paid on goods exported out of India
96A Refund of integrated tax paid on export of goods or services under bond or Letter of Undertaking
97 Consumer Welfare Fund
Chapter XI: ASSESSMENT AND AUDIT
98 Provisional Assessment
99 Scrutiny of returns
100 Assessment in certain cases
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101 Audit
102 Special Audit
Chapter XII: Advance Ruling
103 Qualification and appointment of members of the Authority for Advance Ruling
104 Form and manner of application to the Authority for Advance Ruling
105 Certification of copies of advance rulings pronounced by the Authority
106 Form and manner of appeal to the Appellate Authority for Advance Ruling
107 Certification of copies of the advance rulings pronounced by the Appellate Authority
Chapter XIII: APPEALS AND REVISION
108 Appeal to the Appellate Authority
109 Application to the Appellate Authority
110 Appeal to the Appellate Tribunal
111 Application to the Appellate Tribunal
112 Production of additional evidence before the Appellate Authority or the Appellate Tribunal
113 Order of Appellate Authority or Appellate Tribunal
114 Appeal to the High Court
115 Demand confirmed by the Court
116 Disqualification for misconduct of an authorised representative
Chapter XIV: TRANSITIONAL PROVISIONS
117 Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day
118 Declaration to be made under clause (c) of sub-section (11) of section 142
119 Declaration of stock held by a principal and job-worker
120 Details of goods sent on approval basis
121 Recovery of credit wrongly availed
Chapter XV: ANTI-PROFITEERING
122 Constitution of the Authority
123 Constitution of the Standing Committee and Screening Committees
124 Appointment, salary, allowances and other terms and conditions of service of t Chairman and Members of
the Authority
125 Secretary to the Authority
126 Power to determine the methodology and procedure
127 Duties of the Authority
128 Examination of application by the Standing Committee and Screening Committee
129 Initiation and conduct of proceedings
130 Confidentiality of information
131 Cooperation with other agencies or statutory authorities
132 Power to summon persons to give evidence and produce documents
133 Order of the Authority
134 Decision to be taken by the majority
135 Compliance by the registered person
136 Monitoring of the order
137 Tenure of Authority
CHAPTER XVI: E-WAY RULES
138 Information to be furnished prior to commencement of movement of goods and generation of e-way bill
138A Documents and devices to be carried by a person-in-charge of a conveyance
138B Verification of documents and conveyances
138C Inspection and verification of goods
138D Facility for uploading information regarding detention of vehicle
Chapter XVII: INSPECTION, SEARCH AND SEIZURE
139 Inspection, search and seizure
140 Bond and security for release of seized goods
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141 Procedure in respect of seized goods

Chapter XVIII: DEMANDS AND RECOVERY
142 Notice and order for demand of amounts payable under the Act
143 Recovery by deduction from any money owed
144 Recovery by sale of goods under the control of proper officer
145 Recovery from a third person
146 Recovery through execution of a decree, etc.
147 Recovery by sale of movable or immovable property
148 Prohibition against bidding or purchase by officer
149 Prohibition against sale on holidays
150 Assistance by police
151 Attachment of debts and shares, etc.
152 Attachment of property in custody of courts or Public Officer
153 Attachment of interest in partnership
154 Disposal of proceeds of sale of goods and movable or immovable property
155 Recovery through land revenue authority
156 Recovery through court
157 Recovery from surety
158 Payment of tax and other amounts in instalments
159 Provisional attachment of property
160 Recovery from company in liquidation
161 Continuation of certain recovery proceedings
Chapter XIX: OFFENCES AND PENALTIES
162 Procedure for compounding of offences
Detailed view of The Integrated Goods And Services Tax Act, 2017
1 Short title, extent and commencement
2 Definitions
CHAPTER II: ADMINISTRATION
3 Appointment of officers
4 Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances
CHAPTER III: LEVY AND COLLECTION OF TAX
5 Levy and Collection
6 Power to grant exemption from tax
CHAPTER IV: DETERMINATION OF NATURE OF SUPPLY
7 Inter-State supply
8 Intra-State supply
9 Supplies in territorial waters
CHAPTER V: PLACE OF SUPPLY OF GOODS OR SERVICES OR BOTH
10 Place of supply of goods other than supply of goods imported into, or exported from India
11 Place of supply of goods imported into, or exported from India
12 Place of supply of services where location of supplier and recipient is in India
13 Place of supply of services where location of supplier or location of recipient is outside India
Special provision for payment of tax by a supplier of online information and database access or retrieval
14
services
CHAPTER VI: REFUND OF INTEGRATED TAX TO INTERNATIONAL TOURIST
15 Refund of integrated tax paid on supply of goods to tourist leaving India
CHAPTER VII: ZERO RATED SUPPLY
16 Zero rated supply
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CHAPTER VIII: APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS

17 Apportionment of tax and settlement of funds
18 Transfer of input tax credit
19 Tax wrongfully collected and paid to Central Government or State Government
CHAPTER IX: MISCELLANEOUS
20 Application of provisions of Central Goods and Services Tax Act
21 Import of services made on or after the appointed day
22 Power to make rules
23 Power to make regulations
24 Laying of rules, regulations and notifications
25 Removal of difficulties
Important Definitions as per CGST Act

Section Heading Definition
2(1) actionable claim shall have the same meaning as assigned to it in section 3 of the Transfer of
Property Act, 1882.
2(2) address of delivery means the address of the recipient of goods or services or both indicated on
the tax invoice issued by a registered person for delivery of such goods or
services or both.
2(3) address on record means the address of the recipient as available in the records of the supplier.
2(4) adjudicating means any authority, appointed or authorised to pass any order or decision
authority under this Act, but does not include the Central Board of Excise and Customs,
the Revisional Authority, the Authority for Advance Ruling, the Appellate
Authority for Advance Ruling, the Appellate Authority and the Appellate
Tribunal.
2(5) agent means a person, including a factor, broker, commission agent, arhatia, del
credere agent, an auctioneer or any other mercantile agent, by whatever name
called, who carries on the business of supply or receipt of goods or services or
both on behalf of another.
2(6) aggregate turnover means the aggregate value of all taxable supplies (excluding the value of inward
supplies on which tax is payable by a person on reverse charge basis), exempt
supplies, exports of goods or services or both and inter-State supplies of
persons having the same Permanent Account Number, to be computed on all
India basis but excludes central tax, State tax, Union territory tax, integrated tax
and cess.
2(7) Agriculturist means an individual or a Hindu Undivided Family who undertakes cultivation of
land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under
personal supervision or the personal supervision of any member of the family.
2(8) Appellate means an authority appointed or authorised to hear appeals as referred to in
Authority section 107.
2(9) Appellate Tribunal means the Goods and Services Tax Appellate Tribunal constituted under section
109.
2(10) appointed day means the date on which the provisions of this Act shall come into force.
2(11) assessment means determination of tax liability under this Act and includes self-
assessment, re-assessment, provisional assessment, summary assessment and
best judgment assessment.
2(12) associated shall have the same meaning as assigned to it in section 92A of the Income-tax
enterprises Act, 1961.
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2(13) audit means the examination of records, returns and other documents maintained or
furnished by the registered person under this Act or the rules made thereunder
or under any other law for the time being in force to verify the correctness of
turnover declared, taxes paid, refund claimed and input tax credit availed, and
to assess his compliance with the provisions of this Act or the rules made
thereunder.
2(14) authorised bank shall mean a bank or a branch of a bank authorised by the Government to
collect the tax or any other amount payable under this Act.
2(15) authorised means the representative as referred to in section 116.
representative
2(16) Board means the Central Board of Excise and Customs constituted under the Central
Boards of Revenue Act, 1963.
2(17) business includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager
or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to
sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not
there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in
connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription
or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been
accepted by him in the course or furtherance of his trade, profession or
vocation;
(h) services provided by a race club by way of totalisator or a licence to book
maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public
Authorities.
2(18) business vertical means a distinguishable component of an enterprise that is engaged in the
supply of individual goods or services or a group of related goods or services
which is subject to risks and returns that are different from those of the other
business verticals.
Explanation.––For the purposes of this clause, factors that should be
considered in determining whether goods or services are related include– :
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including
banking, insurance, or public utilities.
2(19) capital goods means goods, the value of which is capitalised in the books of account of the
person claiming the input tax credit and which are used or intended to be used
in the course or furtherance of business.
2(20) casual taxable means a person who occasionally undertakes transactions involving supply of
person goods or services or both in the course or furtherance of business, whether as
principal, agent or in any other capacity, in a State or a Union territory where
he has no fixed place of business.
2(21) central tax means the central goods and services tax levied under section 9.
2(22) cess shall have the same meaning as assigned to it in the Goods and Services Tax
P a g e | 33
(Compensation to States) Act.

2(23) chartered means a chartered accountant as defined in clause (b) of sub-section (1) of
accountant section 2 of the Chartered Accountants Act, 1949.
2(24) Commissioner means the Commissioner of central tax and includes the Principal
Commissioner of central tax appointed under section 3 and the Commissioner
of integrated tax appointed under the Integrated Goods and Services Tax Act.
2(25) Commissioner in means the Commissioner referred to in section 168.
the Board
2(26) common portal means the common goods and services tax electronic portal referred to in
section 146.
2(27) common working in respect of a State or Union territory shall mean such days in succession which
days are not declared as gazetted holidays by the Central Government or the
concerned State or Union territory Government
2(28) company secretary means a company secretary as defined in clause (c) of sub-section (1) of section
2 of the Company Secretaries Act, 1980.
2(29) competent means such authority as may be notified by the Government.
authority
2(30) composite supply means a supply made by a taxable person to a recipient consisting of two or
more taxable supplies of goods or services or both, or any combination thereof,
which are naturally bundled and supplied in conjunction with each other in the
ordinary course of business, one of which is a principal supply.
Illustration.— Where goods are packed and transported with insurance, the
supply of goods, packing materials, transport and insurance is a composite
supply and supply of goods is a principal supply.
2(31) consideration in relation to the supply of goods or services or both includes––
(a) any payment made or to be made, whether in money or otherwise, in
respect of, in response to, or for the inducement of, the supply of goods or
services or both, whether by the recipient or by any other person but shall not
include any subsidy given by the Central Government or a State Government;
(b) the monetary value of any act or forbearance, in respect of, in response to,
or for the inducement of, the supply of goods or services or both, whether by
the recipient or by any other person but shall not include any subsidy given by
the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or
both shall not be considered as payment made for such supply unless the
supplier applies such deposit as consideration for the said supply.
2(32) continuous supply means a supply of goods which is provided, or agreed to be provided,
of goods continuously or on recurrent basis, under a contract, whether or not by means
of a wire, cable, pipeline or other conduit, and for which the supplier invoices
the recipient on a regular or periodic basis and
includes supply of such goods as the Government may, subject to such
conditions, as it may, by notification, specify.
2(33) continuous supply means a supply of services which is provided, or agreed to be provided,
of services continuously or on recurrent basis, under a contract, for a period exceeding
three months with periodic payment obligations and includes supply of such
services as the Government may, subject to such conditions, as it may, by
notification, specify.
2(34) conveyance includes a vessel, an aircraft and a vehicle.
2(35) cost accountant means a cost accountant as defined in clause (c) of sub-section (1) of section 2
of the Cost and Works Accountants Act, 1959.
2(36) Council means the Goods and Services Tax Council established under article 279A of the
Constitution.
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2(37) credit note means a document issued by a registered person under sub-section (1) of
section 34.
2(38) debit note means a document issued by a registered person under sub-section (3) of
section 34.
2(39) deemed exports means such supplies of goods as may be notified under section 147.
2(40) designated means such authority as may be notified by the Board.
authority
2(41) document includes written or printed record of any sort and electronic record as defined
in clause (t) of section 2 of the Information Technology Act, 2000.
2(42) drawback in relation to any goods manufactured in India and exported, means the rebate
of duty, tax or cess chargeable on any imported inputs or on any domestic
inputs or input services used in the manufacture of such goods.
2(43) electronic cash means the electronic cash ledger referred to in subsection (1) of section 49.
ledger
2(44) electronic means the supply of goods or services or both, including digital products over
commerce digital or electronic network.
2(45) electronic means any person who owns, operates or manages digital or electronic facility
commerce operator or platform for electronic commerce.
2(46) electronic credit means the electronic credit ledger referred to in sub-section (2) of section 49.
ledger
2(47) exempt supply means supply of any goods or services or both which attracts nil rate of tax or
which may be wholly exempt from tax under section 11, or under section 6 of
the Integrated Goods and Services Tax Act, and includes non-taxable supply.
2(48) existing law means any law, notification, order, rule or regulation relating to levy and
collection of duty or tax on goods or services or both passed or made before
the commencement of this Act by Parliament or any Authority or person having
the power to make such law, notification, order, rule or regulation.
2(49) family means,––
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are
wholly or mainly dependent on the said person.
2(50) fixed means a place (other than the registered place of business) which is
establishment characterised by a sufficient degree of permanence and suitable structure in
terms of human and technical resources to supply services, or to receive and
use services for its own needs.
2(51) Fund means the Consumer Welfare Fund established under section 57.
2(52) goods means every kind of movable property other than money and securities but
includes actionable claim, growing crops, grass and things attached to or
forming part of the land which are agreed to be severed before supply or under
a contract of supply.
2(53) Government means the Central Government.
2(54) Goods and means the Goods and Services Tax (Compensation to States) Act, 2017.
Services Tax
(Compensation to
States) Act
2(55) goods and services means any person who has been approved under section 48 to act as such
tax practitioner practitioner.
2(56) India means the territory of India as referred to in article 1 of the Constitution, its
territorial waters, seabed and sub-soil underlying such waters, continental
shelf, exclusive economic zone or any other maritime zone as referred to in the
Territorial Waters, Continental Shelf, Exclusive Economic Zone and other
P a g e | 35
Maritime Zones Act, 1976, and the air space above its territory and territorial
waters.
2(57) Integrated Goods means the Integrated Goods and Services Tax Act, 2017.
and Services Tax
Act
2(58) integrated tax means the integrated goods and services tax levied under the Integrated Goods
and Services Tax Act.
2(59) input means any goods other than capital goods used or intended to be used by a
supplier in the course or furtherance of business.
2(60) input service means any service used or intended to be used by a supplier in the course or
furtherance of business.
2(61) Input Service means an office of the supplier of goods or services or both which receives tax
Distributor invoices issued under section 31 towards the receipt of input services and
issues a prescribed document for the purposes of distributing the credit of
central tax, State tax, integrated tax or Union territory tax paid on the said
services to a supplier of taxable goods or services or both having the same
Permanent Account Number as that of the said office.
2(62) input tax in relation to a registered person, means the central tax, State tax, integrated
tax or Union territory tax charged on any supply of goods or services or both
made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5
of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9
of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7
of the Union Territory Goods and Services Tax Act, but does not include the tax
paid under the composition levy.
2(63) input tax credit means the credit of input tax.
2(64) intra-State supply shall have the same meaning as assigned to it in section 8 of the Integrated
of goods Goods and Services Tax Act.
2(65) intra-State supply shall have the same meaning as assigned to it in section 8 of the Integrated
of services Goods and Services Tax Act.
2(66) Invoice or tax means the tax invoice referred to in section 31.
invoice
2(67) inward supply in relation to a person, shall mean receipt of goods or services or both whether
by purchase, acquisition or any other means with or without consideration.
2(68) job work means any treatment or process undertaken by a person on goods belonging to
another registered person and the expression “job worker” shall be construed
accordingly.
2(69) local authority means––
(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other
authority legally entitled to, or entrusted by the Central Government or any
State Government with the control or management of a municipal or local
fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
(e) a Regional Council or a District Council constituted under the Sixth Schedule
to the Constitution;
(f) a Development Board constituted under article 371 of the Constitution; or
P a g e | 36
(g) a Regional Council constituted under article 371A of the Constitution.

2(70) location of the means—
recipient of services (a) where a supply is received at a place of business for which the registration
has been obtained, the location of such place of business;
(b) where a supply is received at a place other than the place of business for
which registration has been obtained (a fixed establishment elsewhere), the
location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the
place of business or fixed establishment, the location of the establishment most
directly concerned with the receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence of the
recipient.
2(71) location of the means,—
supplier of services (a) where a supply is made from a place of business for which the registration
has been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for
which registration has been obtained (a fixed establishment elsewhere), the
location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the
place of business or fixed establishment, the location of the establishment most
directly concerned with the provisions of the supply; and
supplier.
2(72) manufacture means processing of raw material or inputs in any manner that results in
emergence of a new product having a distinct name, character and use and the
term “manufacturer” shall be construed accordingly.
2(73) market value shall mean the full amount which a recipient of a supply is required to pay in
order to obtain the goods or services or both of like kind and quality at or about
the same time and at the same commercial level where the recipient and the
supplier are not related.
2(74) mixed supply means two or more individual supplies of goods or services, or any combination
thereof, made in conjunction with each other by a taxable person for a single
price where such supply does not constitute a composite supply.
Illustration.— A supply of a package consisting of canned foods, sweets,
chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a
single price is a mixed supply. Each of these items can be supplied separately
and is not dependent on any other. It shall not be a mixed supply if these items
are supplied separately.
2(75) money means the Indian legal tender or any foreign currency, cheque, promissory
note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money
order, postal or electronic remittance or any other instrument recognised by
the Reserve Bank of India when used as a consideration to settle an obligation
or exchange with Indian legal tender of another denomination but shall not
include any currency that is held for its numismatic value.
2(76) motor vehicle shall have the same meaning as assigned to it in clause (28) of section 2 of the
Motor Vehicles Act, 1988.
2(77) non-resident means any person who occasionally undertakes transactions involving supply of
taxable person goods or services or both, whether as principal or agent or in any other
capacity, but who has no fixed place of business or residence in India
2(78) non-taxable means a supply of goods or services or both which is not leviable to tax under
supply this Act or under the Integrated Goods and Services Tax Act.
2(79) non-taxable means the territory which is outside the taxable territory.
territory
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2(80) notification means a notification published in the Official Gazette and the expressions
“notify” and “notified” shall be construed accordingly.
2(81) other territory includes territories other than those comprising in a State and those referred to
in sub-clauses (a) to (e) of clause (114).
2(82) output tax in relation to a taxable person, means the tax chargeable under this Act on
taxable supply of goods or services or both made by him or by his agent but
excludes tax payable by him on reverse charge basis.
2(83) outward supply in relation to a taxable person, means supply of goods or services or both,
whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or
any other mode, made or agreed to be made by such person in the course or
2(84) person includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or
not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or
Provincial Act or a Government company as defined in clause (45) of section 2
of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside
India;
(i) a co-operative society registered under any law relating to co-operative
societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
2(85) place of business includes––
(a) a place from where the business is ordinarily carried on, and includes a
warehouse, a godown or any other place where a taxable person stores his
goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by
whatever name called.
2(86) place of supply means the place of supply as referred to in Chapter V of the Integrated Goods
and Services Tax Act.
2(87) prescribed means prescribed by rules made under this Act on the recommendations of the
Council.
2(88) principal means a person on whose behalf an agent carries on the business of supply or
receipt of goods or services or both.
2(89) principal place of means the place of business specified as the principal place of business in the
business certificate of registration.
2(90) principal supply means the supply of goods or services which constitutes the predominant
element of a composite supply and to which any other supply forming part of
that composite supply is ancillary.
2(91) proper officer in relation to any function to be performed under this Act, means the
Commissioner or the officer of the central tax who is assigned that function by
the Commissioner in the Board.
2(92) quarter shall mean a period comprising three consecutive calendar months, ending on
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the last day of March, June, September and December of a calendar year.
2(93) recipient of supply of goods or services or both, means—
(a) where a consideration is payable for the supply of goods or services or both,
the person who is liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to
whom the goods are delivered or made available, or to whom possession or use
of the goods is given or made available; and
(c) where no consideration is payable for the supply of a service, the person to
whom the service is rendered,
and any reference to a person to whom a supply is made shall be construed as
a reference to the recipient of the supply and shall include an agent acting as
such on behalf of the recipient in relation to the goods or services or both
supplied.
2(94) registered person means a person who is registered under section 25 but does not include a
person having a Unique Identity Number.
2(95) regulations means the regulations made by the Board under this Act on the
recommendations of the Council.
2(96) removal in relation to goods, means—
(a) despatch of the goods for delivery by the supplier thereof or by any other
person acting on behalf of such supplier; or
(b) collection of the goods by the recipient thereof or by any other person
acting on behalf of such recipient.
2(97) return means any return prescribed or otherwise required to be furnished by or under
this Act or the rules made thereunder.
2(98) reverse charge means the liability to pay tax by the recipient of supply of goods or services or
both instead of the supplier of such goods or services or both under sub-section
(3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of
section 5 of the Integrated Goods and Services Tax Act.
2(99) Revisional means an authority appointed or authorised for revision of decision or orders
Authority as referred to in section 108.
2(100) Schedule means a Schedule appended to this Act.
2(101) securities shall have the same meaning as assigned to it in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956.
2(102) services means anything other than goods, money and securities but includes activities
relating to the use of money or its conversion by cash or by any other mode,
from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged.
2(103) State includes a Union territory with Legislature.
2(104) State tax means the tax levied under any State Goods and Services Tax
Act.
2(105) supplier in relation to any goods or services or both, shall mean the person supplying
the said goods or services or both and shall include an agent acting as such on
behalf of such supplier in relation to the goods or services or both supplied.
2(106) tax period means the period for which the return is required to be furnished.
2(107) taxable person means a person who is registered or liable to be registered under section 22 or
section 24.
2(108) taxable supply means a supply of goods or services or both which is leviable to tax under this
Act.
2(109) taxable territory means the territory to which the provisions of this Act apply.
2(110) telecommunication means service of any description (including electronic mail, voice mail, data
service services, audio text services, video text services, radio paging and cellular
mobile telephone services) which is made available to users by means of any
P a g e | 39
transmission or reception of signs, signals, writing, images and sounds or

intelligence of any nature, by wire, radio, visual or other
electromagnetic means.
2(111) the State Goods means the respective State Goods and Services Tax Act, 2017.
and Services Tax
Act
2(112) turnover in State means the aggregate value of all taxable supplies (excluding the value of inward
or turnover in supplies on which tax is payable by a person on reverse charge basis) and
Union territory exempt supplies made within a State or Union territory by a taxable person,
exports of goods or services or both and inter-State supplies of goods or
services or both made from the State or Union territory by the said taxable
person but excludes central tax, State tax, Union territory tax, integrated tax
and cess.
2(113) usual place of means––
residence (a) in case of an individual, the place where he ordinarily resides;
(b) in other cases, the place where the person is incorporated or otherwise
legally constituted.
2(114) Union territory means the territory of—
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli;
(d) Daman and Diu;
(e) Chandigarh; and
(f) other territory.
Explanation.––For the purposes of this Act, each of the territories specified in
sub-clauses (a) to (f) shall be considered to be a separate Union territory.
2(115) Union territory means the Union territory goods and services tax levied under the Union
tax Territory Goods and Services Tax Act.
2(116) Union Territory means the Union Territory Goods and Services Tax Act, 2017.
Goods and
Services Tax Act
2(117) valid return means a return furnished under sub-section (1) of section 39 on which self-
assessed tax has been paid in full.
2(118) voucher means an instrument where there is an obligation to accept it as consideration
or part consideration for a supply of goods or services or both and where the
goods or services or both to be supplied or the identities of their potential
suppliers are either indicated on the instrument itself or in related
documentation, including the terms and conditions of use of such instrument.
2(119) works contract means a contract for building, construction, fabrication, completion, erection,
installation, fitting out, improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any immovable property wherein
transfer of property in goods (whether as goods or in some other form) is
involved in the execution of such contract.
Important Definitions as per IGST Act

Section Heading Definition
2(1) Central Goods means the Central Goods and Services Tax Act, 2017.
and Services
Tax Act
2(2) central tax means the tax levied and collected under the Central Goods and Services Tax Act.
2(3) continuous means a journey for which a single or more than one ticket or invoice is issued at the
P a g e | 40
journey same time, either by a single supplier of service or through an agent acting on behalf
of more than one supplier of service, and which involves no stopover between any
of the legs of the journey for which one or more separate tickets or invoices are
issued.
Explanation.––For the purposes of this clause, the term “stopover” means a place
where a passenger can disembark either to transfer to another conveyance or break
his journey for a certain period in order to resume it at a later point of time;
2(4) customs means the limits of a customs area as defined in section 2 of the Customs Act, 1962.
frontiers of
India
2(5) export of goods with its grammatical variations and cognate expressions, means taking goods out of
India to a place outside India
2(6) export of means the supply of any service when,––
services (i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments
of a distinct person in accordance with Explanation 1 in section 8;
2(7) fixed means a place (other than the registered place of business) which is characterised by
establishment a sufficient degree of permanence and suitable structure in terms of human and
technical resources to supply services or to receive and use services for its own
needs;
2(8) Goods and means the Goods and Services Tax (Compensation to States) Act, 2017.
Services Tax
(Compensation
to States) Act
2(9) Government means the Central Government.
2(10) Import of with its grammatical variations and cognate expressions, means bringing goods into
goods India from a place outside India.
2(11) Import of It means the supply of any service, where––
services (i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India.
2(12) Integrated tax means the integrated goods and services tax levied under this Act.
2(13) Intermediary means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates the supply of goods or services or both, or securities, between
two or more persons, but does not include a person who supplies such goods or
services or both or securities on his own account.
2(14) Location of the means,––
recipient of (a) where a supply is received at a place of business for which the registration has
services been obtained, the location of such place of business;
(b) where a supply is received at a place other than the place of business for which
registration has been obtained (a fixed establishment elsewhere), the location of
such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the receipt of the supply; and
recipient.
2(15) Location of the means,––
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supplier of (a) where a supply is made from a place of business for which the registration has
services been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for which
registration has been obtained (a fixed establishment elsewhere), the location of
such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provision of the supply; and
supplier.
2(16) Non-taxable means any Government, local authority, governmental authority, an individual or
online any other person not registered and receiving online information and database
recipient access or retrieval services in relation to any purpose other than commerce, industry
or any other business or profession, located in taxable territory.
Explanation.––For the purposes of this clause, the expression “governmental
authority” means an authority or a board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with ninety per cent. or more participation by way of equity or control, to carry out
any
function entrusted to a municipality under article 243W of the Constitution;
2(17) online means services whose delivery is mediated by information technology over the
information internet or
and database an electronic network and the nature of which renders their supply essentially
access or automated and involving minimal human intervention and impossible to ensure in
the absence of information technology and includes electronic services such as,––
retrieval
(i) advertising on the internet;
services (ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through
telecommunication networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in
electronic form through a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;
2(18) Output tax in relation to a taxable person, means the integrated tax chargeable under this Act
on taxable supply of goods or services or both made by him or by his agent but
excludes tax payable by him on reverse charge basis.
2(19) Special shall have the same meaning as assigned to it in clause (za) of section 2 of the
Economic Special Economic Zones Act, 2005.
Zone
2(20) Special shall have the same meaning as assigned to it in clause (g) of section 2 of the Special
Economic Economic Zones Act, 2005 and includes an Authority as defined in clause (d) and a
Zone developer Co-Developer as defined in clause (f ) of section 2 of the said Act.
2(21) Supply shall have the same meaning as assigned to it in section 7 of the Central Goods and
Services Tax Act.
2(22) Taxable means the territory to which the provisions of this Act apply.
territory
2(23) Zero-rated shall have the meaning assigned to it in section 16.
supply
P a g e | 42
Section 20 of IGST Act [Application of provisions of Central Goods and

Services Tax Act]
Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act
relating to,–
i. scope of supply;
ii. composite supply and mixed supply;
iii. time and value of supply;
iv. input tax credit;
v. registration;
vi. tax invoice, credit and debit notes;
vii. accounts and records;
viii. returns, other than late fee;
ix. payment of tax;
x. tax deduction at source;
xi. collection of tax at source;
xii. assessment;
xiii. refunds;
xiv. audit;
xv. inspection, search, seizure and arrest;
xvi. demands and recovery;
xvii. liability to pay in certain cases;
xviii. advance ruling;
xix. appeals and revision;
xx. presumption as to documents;
xxi. offences and penalties;
xxii. job work;
xxiii. electronic commerce;
xxiv. transitional provisions; and
xxv. miscellaneous provisions including the provisions relating to the imposition of interest and penalty,
shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they
are enacted under this Act:
Theory Questions
Question 1
Differentiate between direct and indirect taxes.
Question 2
Enumerate different types of direct and indirect taxes.
Question 3
Explain the salient features of indirect taxes.
Question 4
Write a short note on various Lists provided under Seventh Schedule to the Constitution of India.
Question 5
Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws.
Question 6
Enumerate the deficiencies of the existing indirect taxes which led to the need for ushering into GST regime.
Question 7
Discuss the dual GST model to be introduced in India.
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Question 8
List the Central and State levies which will be subsumed in GST in India.
Question 9
What is Goods and Services Tax (GST)?
Question 10
What exactly is the concept of destination based tax on consumption?
Question 11
Which of the existing taxes won’t to be subsumed under GST?
Question 12
What principles were adopted for subsuming the above taxes under GST?
Question 13
Which are the commodities proposed to be kept outside the purview of GST?
Question 14
What will be the status in respect of taxation of above commodities after introduction of GST?
Question 15
What will be status of Tobacco and Tobacco products under the GST regime?
Question 16
What type of GST is proposed to be implemented?
Question 17
Why is Dual GST required?
Question 18
Which authority will levy and administer GST?
Question 19
Why was the Constitution of India amended recently in the context of GST?
Question 20
What are the benefits which the Country will accrue from GST?
Question 21
What would be the role of GST Council?
Question 22
What is the guiding principle of GST Council?
Question 23
How will decisions be taken by GST Council?
Question 24
Briefly explain features of GST in India.
Question 25
What do you mean by CGST, IGST, SGST and UTGST?
Question 26
How is ITC to be utilized under GST?
Question 27
Briefly state the provisions of Article 246A.
Question 28
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Define GST as per constitution.
Question 29
How is the nature of transaction to be decided as to intra or inter state?
Question 30
Which are the UTs with State Legislature?
Question 31
What is GSTN?
Question 32
Enumerate the functions to be performed by GSTN.
Question 33
Explain the provisions of Article 269A of the constitution.
Question 34
Define ‘Consideration’.
Question 35
State any 3 taxes of List II.
Question 36
How is alcoholic liquor proposed to be taxed after GST?
Question 37
At the time of introduction of GST, how many states and UTs are there in India?
Question 38
What are the schedules appended to CGST Act?
Question 39
How is CGST Act structured at its inception?
Question 40
How is IGST Act structured at its inception?
Question 41
What is the taxable event under GST?
Question 42
Define ‘Business’ and ‘Business Vertical’.
Question 43
State any 3 taxes of List I.
Question 44
Define ‘Goods’ and ‘services’.
Question 45
Define ‘works contract’.
Question 46
What does section 20 of IGST Act imply?
Question 47
What does the government collect taxes?
Question 48
Distinguish between rules and regulations.
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Question 49
Distinguish between notifications and circulars.
Question 50
Define ‘actionable claim’ and ‘money’.
Practical Questions
Question 1
Mr. Rajni of Chennai supplied goods for Rs. 20,000 to Mr. Kanth of Madurai. SGST and CGST rate on supply of goods
and services is 9% each. IGST rate is 18%. Find the following:
(a) Total price charged by Mr. Rajni.
(b) Who is liable to pay GST?
Question 2
Mr. Laddu of Tamil Nadu supplied goods/services for Rs. 20,000 to Mr. Barfi of Maharashtra. SGST and CGST rate
on supply of goods and services is 9% each. IGST rate is 18%. Find the following:
(a) Total price charged by Mr. Laddu.
(b) Who is liable to pay GST?
Question 3
Mr. Dolu of Mumbai supplied goods/services for Rs. 24,000 to Mr. Golu of Nasik. Mr. M purchased goods/services for
Rs. 23,600 (inclusive of CGST 9% and SGST 9%) from Mr. Bholu of Chennai. Find the following:
(a) Total price charged by Mr. M for supply of goods/services and
(b) Who is liable to pay GST.
(c) Net liability of GST.
Question 4
Mr. Ashwin of Chennai purchased goods at intra state as well as at inter state level by paying SGST Rs. 6,000, CGST
Rs. 6,000 and IGST Rs.12,000. Subsequently Mr. Ashwin sold these goods to Mr. Chahal of Ludhiana (Trader) for Rs.
2,00,000 (IGST applicable @18%). Thereafter Mr. Chahal of Ludhiana sold these goods to Mr. Kuldeep of Jalandhar
(Consumer) for Rs. 3,00,000 (CGST & SGST @18%). Find the Net GST liability of Mr. Ashwin and Mr. Chahal. Also
find net revenue to the State and Central Government.
Question 5
Mr. Rahul registered person under GST located in Tamil Nadu, sold goods worth Rs. 10,000 after manufacture to Mr.
Swapnil of Chennai. Subsequently, Mr. Swapnil sold these goods to Mr. Harshad of Hyderabad for Rs. 17,500. Mr.
Harshad being a trader finally sold these goods to customer Mr. Anand of Secunderabad for Rs. 30,000. Applicable
rates of CGST 9%, SGST 9% and IGST 18%. Find the net tax liability of each supplier of goods and revenue to the
government.
Question 6
Mrs. Katrina of Maharashtra supplied goods/services for Rs. 35,000 to Mrs. Priyanka of Pune. Mrs. Katrina purchased
goods/services for Rs. 23,600 (inclusive of IGST 18%) from Mrs. Deepika of Tamil Nadu. SGST and CGST rate on
supply of goods and services is 9% each. Find the following:
(a) Total price charged by Mrs. Katrina for supply of goods/services and
(b) Who is liable to pay GST.
(c) Net liability of GST.
Question 7
The below case pertains to the supply of goods/ services. Rate applicable for CGST and SGST is 9% respectively.
1. Kohli of State 1 made a supply of Rs. 10,000 to Dhoni of State 1.
2. Dhoni of State 1 made value addition of 20% and supplied the goods to Sehwag of State 2.
In each case
(a) Find the amount charged by seller from buyer.
(b) Find the amount of CGST, SGST or IGST charged and amount payable to government.
(c) Also, prepare statement of revenue earned by Central and State Government.
Question 8
The below case pertains to the supply of goods/ services. Rate applicable for CGST, SGST and IGST is 9%, 9% and
18% respectively.
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1. Salman of State 1 made a supply of Rs. 10,000 to Amir of State 1.
2. Amir of State 1 made value addition of 20% and supplied the goods to Vivek of State 2.
3. Vivek of State 2 made value addition of 20% and supplied the goods to Abhishek of State 2.
In each case
(a) Find the amount charged by seller from buyer.
(b) Find the amount of CGST, SGST or IGST charged and amount payable to government.
(c) Also, prepare statement of revenue earned by Central and State Government.
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LEVY AND COLLECTION OF TAX

The incidence of tax is the foundation stone of any taxation system. It determines the point at which tax would be levied,
i.e. the taxable event.
Under the old regime, taxable events for various taxes were different. For example, for excise, the taxable event was
manufacture or production of goods in India, for service, the taxable event was provision of service and under VAT/
CST it was sale of goods. To replace such multiplicity, GST has brought a single and unified taxable event which is
supply, i.e., tax would be payable on the supply of goods or services.
Provisions regarding above are contained in

CGST Act
Chapter III - Levy and Collection of Tax
Section 7 Scope of supply
Section 8 Tax liability on composite and mixed supplies
Schedules
I Activities to be treated as supply even if made without consideration
II Activities to be treated as supply of goods or supply of services
III Activities or transactions which shall be treated neither as a supply of goods nor a supply of services
Bare Text of Section 7

(1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made
or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1),–
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which
they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be
treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by
notification, the transactions that are to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
Basics…
The term, “supply” has been inclusively defined in the Act. The meaning and scope of supply under GST can be understood
in terms of following six parameters, which can be adopted to characterize a transaction as supply:
1. Supply of goods or services. Supply of anything other than goods or services does not attract GST.
2. Supply should be made for a consideration.
3. Supply should be made in the course or furtherance of business.
4. Supply should be made by a taxable person.
5. Supply should be a taxable supply.
6. Supply should be made within the taxable territory
Distortion of above parameters

✓ There are certain transactions which are deemed to be supply even without consideration.
✓ Import of services for a consideration is treated as supply, whether or not in the course or furtherance of business.
✓ There are certain transactions which are not considered supply despite the existence of the above parameters, i.e. they are
outside the scope of GST.
✓ Also, few activities are to be treated either as supply of goods or as supply of services. Government is also empowered to
P a g e | 48
notify transactions that are to be treated as a supply of goods and not as a supply of services, or as a supply of services and
not as a supply of goods.
Analysis of Section 7(1)(a)
Provision Supply includes all forms of supply of goods or services or both such as sale, transfer,
barter, exchange, licence, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business.
Modes of Supply
Sale Meaning The term sale was defined under various state VAT laws. Sale means
a sale of goods made within the State for cash or deferred payment
or other valuable consideration but does not include a mortgage,
hypothecation, charge or pledge.
Sale involves transfer of property in goods from one person to
another person for consideration. Under CGST Law sale is treated as
supply leviable to GST. However, the definition of Sale has not been
provided under the GST Law.
Note : Mortgage, hypothecation, charge or pledge is not supply and hence GST will not be levied.
Example Mr. Rahul sold laptop worth Rs. 1,00,000 and issued invoice in favour of
Mr. Swapnil. Now ownership in laptop is transferred to Mr. Swapnil. Such
transaction shall be covered in sale. It is a supply of goods leviable to GST.
Transfer Meaning The definition of Transfer has not been provided under the GST Law.
The term transfer means, where the ownership may not be
transferred but the right in the goods is transferred.
Example Mr. Asaram is the owner of Xerox machine. He transferred the right to
operate the Xerox machine to Mr. Salman for a consideration of Rs.
10,000 per month for four months. Hence, ownership of the machine is
not transferred but the right in the machine is transferred. It is supply of
service leviable to GST.
Barter Meaning Barter means the exchange of goods and productive services for other
goods and productive services, without the use of money.
Example Mr. Rahul, a practicing Chartered Accountant provided services to M/s

Lenovo Ltd., dealer of laptops. In return M/s Lenovo Ltd. gave a laptop to
Mr. Rahul. Here, two-way supply takes place. Mr. Rahul is making taxable
supply of service and M/s Lenovo Ltd., is making taxable supply of goods.
Hence, tax is payable by both.
P a g e | 49
Exchange Meaning When two persons mutually transfer the ownership of one thing for
the ownership of another, neither thing nor both things being money
only, the transaction is called an exchange. Exchange offers on
products such as televisions, mobile phones and refrigerators are
leviable under GST.
Example Mr. Kukku is a dealer of new cars. He sells new cars for Rs. 8,25,000 but
agrees to reduce Rs. 1,25,000 on surrendering of old car. Mr. Pukku who
intends to buy new car worth Rs. 8,25,000 agreed to exchange his old
car with new car. Under GST law, it will be treated as Mr. Pukku has made
supply of old car to dealer Mr. Kukku and Mr. Kukku has made supply of
new car to Mr. Pukku. If Mr. Pukku is registered person, he will be liable
to pay GST on Rs. 1,25,000. Mr. Kukku will be liable to pay GST on Rs.
8,25,000 whether Mr. Pukku is a registered person or not.
Licence Meaning Where one person grants to another, or to a definite number of

other persons, a right to do or continue to do in or upon the
immovable property of the granter, the right is called a licence.
Example Mr. Zaheer is a developer of information technology software and holder of

licence thereon. License to use software was given to different clients and
total considerations was Rs. 18 lakhs; hence, Mr. Zaheer is liable to pay
GST.
Rental Meaning Rental means a periodical payment for use of another’s property.
Example Mr. Sehwag owns a large vacant land in prime commercial locality. He gives
it on rent of Rs. 1,80,000 per month to a parking contractor, Mr. Afridi
who has set up a parking facility on the said land. It is a taxable supply of
service and hence, Mr. Sehwag is liable to pay GST.
Lease Meaning A lease is an agreement whereby the lessor conveys to the lessee,
the right to use an asset for an agreed period of time in return for
a payment or series of payments. A lease may be financial lease or
operating lease.
Example M/s Karma Ltd. gives an asset worth Rs. 5,00,000 on lease to M/s
Dharma Ltd. The total payments by Dharma Ltd. over the time of lease
amount to Rs. 6,50,000. Thus, it’s a finance lease and GST is payable.
Licenses, leases and rentals of goods were earlier treated as services where the goods were transferred without transfer of right
to use (effective possession and control over the goods) and were treated as sales where the goods were transferred with
transfer of right to use. Under the GST regime, such licenses, leases and rentals of goods with or without transfer of right to
use are covered under the supply of service because there is no transfer of title in such supplies.
P a g e | 50
Disposal Meaning Disposal consists of selling the assets when the organization is about
to close down. Such transactions will also be considered as supply and
liable to tax under GST Law.
Example Smart Ltd. wants to shut down its business owing to depression phase. It
is selling various assets at Rs. 60,00,000. GST will be payable.
Consideration
Insights One of the essential conditions for the supply of goods and/ or services to fall
within the ambit of GST is that a supply is made for a consideration.
However, consideration does not always mean money. It covers anything which
might be possibly done, given or made in exchange for something else. Thus,
consideration includes non-monetary consideration.
Further, a consideration need not always flow from the recipient of the supply. It
can also be made by a third person.
Example Alia Travels Pvt. Ltd., a travel agent books ticket for a customer Mr. Ranvir. Travel
agent raises invoice on customer Mr. Ranvir for transportation of passenger by air of Rs.
10,000 and his commission of Rs. 500. The entire amount of Rs. 10,500 is not his
consideration. The amount of Rs. 500 retained by the air travel is to be considered as
his consideration.
A Sports Club agrees to hire services of cricket player Mr. Dravid for a consideration of
Rs. 2 crores. In addition to this, the agreement provides that the player shall be
provided with the car valued for Rs. 20 lakhs. The entire value of Rs. 2.20 crores will
be considered as consideration and subject to tax.
Exclusions The following generally not considered as consideration:

• Grant of pocket money
• Gift or reward (which has not been given in terms of reciprocity) or
• Amount paid on alimony for divorce
In Course or Furtherance Of Business

In course of Meaning Every person carries out certain activities regularly for running trade
business or commerce, such activities undertaken are considered to be in
course of business.
Example CA Ankita, a practicing CA in Pune carries out the activity of Accounting,

Auditing, Filing returns, Certifying documents and so on. These activities
can be considered as performed in the course of business.
Furtherance Meaning Every business person takes steps to develop his business or carrying
of business out new activities. Such activities may be termed as furtherance of
business.
P a g e | 51
Example CA Ankita wants to open a new office in Mumbai for which she appointed
Mr. Patni as a consultant for searching, evaluting and shortlisting places for
prospective office. Amount paid by Yamini to Mr. Y shall be liable to GST.
Insights GST is essentially a tax only on commercial transactions. Hence, only those
supplies that are in the course or furtherance of business qualify as supply under
GST.
Refer Business under section 2(17).
Sale in Meaning Any supplies made by an individual in his personal capacity do not
Personal come under the ambit of GST unless they fall within the definition
Capacity of business as defined in the Act.
Example Ishant Sharma buys a car for his personal use and after a year sells it to a
car dealer. Sale of car by Ishant to car dealer is not a supply under GST
because supply is not made by Ishant in the course or furtherance of
business.
Sale as Meaning Sale of goods or service even as a vocation is a supply under GST.
Vocation
Example If a famous politician paints paintings for charity and sells the paintings
even as a one-time occurrence, the sale would constitute supply.
Service by Meaning Services provided by the club/association to its members for

Club consideration is a supply.
Example A Resident Welfare Association provides the service of depositing the

electricity bills of the residents in lieu of some nominal charges. Provision
of service by a club or association or society to its members is treated as
supply as this is included in the definition of ‘business’.
Supply by a taxable person

Basic A supply to attract GST should be made by a taxable person. Hence, a supply
between two non-taxable persons does not constitute taxable supply under GST.
Supplier vs. The restriction of being a taxable person is only on the supplier whereas the
Recipient recipient can be either taxable or non-taxable. Thus, supply can be made to a
non-taxable person also.
Further, there is no condition that supply needs to be made to another person, i.e. supplies made to self are also
taxable.
Taxable A “taxable person” is a person who is registered or liable to be registered under

person section 22 or section 24. Hence, even an unregistered person who is liable to be
P a g e | 52
registered is a taxable person. Similarly, a person not liable to be registered, but

has taken voluntary registration and got himself registered is also a taxable
person.
Taxable Supply
General For a supply to attract GST, the supply must be taxable. Taxable supply has been
broadly defined and means any supply of goods or services or both which, is
leviable to tax under the GST Law.
Exception Exemptions may be provided to the specified goods or services or to a

specified category of persons/ entities making supply.
Analysis of Section 7(1)(b)

Provision Section 7(1)(b) brings in the ambit of supply “the importation of services for a
consideration whether or not in the course or furtherance of business”.
Exception This is the only exception to the condition of supply being in course or
Conditions 1. It is applicable only for services and not for goods.

to attract
the section 2. It should be import of service (as referred under Section 2(11) of IGST Act,
2017), where
(a) The supplier of service is located outside India.
(b) The recipient of service is located in India.
(c) The place of supply of service is in India.
3. Services shall be provided with consideration.
4. Services may be in the course or furtherance of business or not in the

course or furtherance of business.
Example Ammy, a proprietor, has received the architect services for his house from an architect
located in New York at an agreed consideration of $ 5,000. Import of services by Ammy
is supply under section 7(1)(b) though it is not in course or furtherance of business.
Import (Downloading) of a song is done for consideration for personal use by Mrs. Shikha.
It is supply of service and IGST will be levied.
Timing of Notable (1) As per the provisions contained in Section 21 of the IGST Act, 2017, all imports of services made
Imports Points on or after the appointed day (i.e. 1st July 2017) will be liable to IGST regardless of whether the
transactions for such import of services had been initiated before the appointed day.
P a g e | 53
(2) If the tax on such import of services had been paid in full under the existing law [i.e. as per
Finance Act, 1994 (Service Tax)], no tax shall be payable on such import under the IGST Act.
(3) In case the tax on such import of services had been paid in part under the existing law, the
balance amount of tax shall be payable on such import under the IGST Act.
Example A supply of service for Rs. 1 crore was initiated prior to the introduction of
GST, a payment of Rs. 20 lacs has already been made to the supplier and
service tax has also been paid on the same, then IGST shall have to be paid
on the balance Rs. 80 lacs.
Analysis of Section 7(1)(c)

Provision Supply includes the activities specified in Schedule I, made or agreed to be made without
a consideration.
Basic In the past regime, in every tax statute, “consideration” played the most
important role for levying taxes. For eg., if any service was provided for free to a
person, such service was not subject to service tax. But, Section 7(1)(c) of CGST
Act read with Schedule I specifically provides for supplies even if made without
consideration.
Schedule I Activities To Be Treated As Supply Even If Made Without Consideration

1. Permanent transfer or disposal of business assets where input tax credit has been
availed on such assets.
2. Supply of goods or services or both between related persons or between distinct

persons as specified in section 25, when made in the course or furtherance of
business:
Provided that gifts not exceeding Rs. 50,000/- in value in a financial year by an
employer to an employee shall not be treated as supply of goods or services or
both.
3. Supply of goods—
(a) (a) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or
(b) (b) by an agent to his principal where the agent undertakes to receive such goods
on behalf of the principal.
4. Import of services by a taxable person from a related person or from any of his other
establishments outside India, in the course or furtherance of business.
Permanent Transfer/ Disposal of Business Assets

Insights Any kind of disposal or transfer of business assets made by an entity on
permanent basis even though without consideration qualifies as supply. This clause
is wide enough to cover transfer of business assets from holding to subsidiary
company for nil consideration.
However, it is important to note that this provision would apply only if input tax credit has been availed on such
assets.
P a g e | 54
Example Garg Ltd. donates old laptops to Charitable Schools, it will qualify as supply provided input
tax credit has been availed by XYZ & Co. on such laptops.
A cloth retailer gives clothes from his business stock to his friend free of cost. In this
case, transfer of business stock would amount to ‘supply’ if he had claimed input tax
credit on his purchase of the business asset.
Supply between related person or distinct persons

Insights Supply of goods or services or both between related persons or between distinct
persons as specified in section 25, will qualify as supply provided it is made in the
course or furtherance of business.
Related As per explanation to section 15, related persons have been defined as follows:
Persons
Example M/s Amitabh Ltd., holds 30,000 shares in M/s Abhishek Ltd. and 25,000
shares in Aishwarya Ltd. Share Capital of M/s Abhishek Ltd. is 1,00,000
Equity Shares of Rs.10 each and Share Capital of M/s Aishwarya Ltd. is
80,000 Equity Shares of Rs.10 each. Since, M/s Amitabh Ltd., holds more
than 25% of the share in the company Abhishek Ltd. and Aishwarya Ltd.,
they will be considered as related persons.
Services by Employee to Employer
By virtue of the definition of related person given above, employer and employee
are related persons. However, services provided by an employee to the employer in
P a g e | 55
the course of or in relation to his employment are not treated as supply of

services as per Schedule III of CGST Act.
Example Babu has received a sum of Rs. 5,00,000 from his employer on premature
termination of his contract of employment. It will not be considered as
supply.
Mr. Jaanu, an employee provides his service on contract basis to an

associate company of Dildar Enterprises, the employer. The above activity is
being carried out in lieu of specific monetary consideration. It will be
considered as supply of service.
Position of
Directors
Distinct Meaning Every place of business of a person where separate registration is

Persons obtained for output supply will be considered as distinct person.
Section 25(4),”A person who has obtained or is required to obtain
more than one registration, whether in one State or Union
Territory or more than one State or Union Territory shall, in
respect of each such registration, be treated as distinct persons for
the purposes of this Act.”
Section 25(5),”Where a person who has obtained or is required to
obtain registration in a State or Union Territory in respect of an
P a g e | 56
establishment, has an establishment in another State or Union

Territory, then such establishments shall be treated as
establishments of distinct persons for the purposes of this Act.”
Example Rahul, a Chartered Accountant, has a registered head office in Chandigarh.

He has also obtained registration in the State of Maharashtra in respect of
his newly opened branch office. Rahul shall be treated as distinct persons in
respect of registrations in Chandigarh and Maharashtra.
Stock transfers or branch transfers

Insights In view of the aforesaid discussion, transactions between different
locations (with separate GST registrations) of same legal entity
(eg., stock transfers or branch transfers) will qualify as ‘supply’
under GST which is in contrast to the earlier regime.
Example Ranbir Fabrics transfers 1000 shirts from his factory located in Lucknow to
his retail showroom in Delhi so that the same can be sold from there. The
factory and retail showroom of Ranbir Fabrics are registered in the States
where they are located. Although no consideration is charged, supply of
goods from factory to retail showroom constitutes supply.
Gifts by Meaning of The term ‘gift’ has not been defined in the GST law. In common
employer to gift parlance, gift is made without consideration, is voluntary in nature
employee and is made occasionally.
Relationship The services by an employee to the employer in the course of or in

of employer relation to his employment is outside the scope of GST (neither
and
supply of goods or supply of services).
employee
Position Schedule I provides that gifts not exceeding Rs. 50,000 in value in
w.r.t. gifts a financial year by an employer to an employee shall not be treated
as supply of goods or services or both.
However, gifts of value more than Rs. 50,000 made without
consideration are subject to GST, when made in the course or
Insights Supply by the employer to the employee in terms of contractual agreement entered into
between the employer and the employee, will not be subjected to GST.
It follows, therefore, that if the services (like membership of a club, health and fitness centre)
are provided free of charge to all the employees by the employer then the same will not be
subjected to GST, provided appropriate GST was paid when procured by the employer.
P a g e | 57
The same would hold true for free housing to the employees, when the same is provided in
terms of the contract between the employer and employee and is part and parcel of the cost-to
company (C2C).
Supply to Provision Supply of goods by a principal to his agent, without consideration,

agents or where the agent undertakes to supply such goods on behalf of the
by agents principal is considered as supply.
Similarly, supply of goods by an agent to his principal, without
consideration, where the agent undertakes to receive such goods on
behalf of the principal is considered as supply.
Notable Only supply of goods is covered here.

Point
Example Rahul Ltd. engages Vishal & Sons as an agent to sell goods on its behalf.
For the purpose, Rahul Ltd. has supplied the goods to Vishal & Sons
located in Haryana. Supply of goods by Rahul Ltd. to Vishal & Sons will
qualify as supply even though Vishal & Sons has not paid any consideration
yet.
Honda Cars Ltd. engages Michael & Co. as an agent to sell cars on its
behalf. Honda Cars Ltd. has supplied 50 cars to the showroom of Michael
& Co., located in Chennai. Supply of cars by Honda Cars Ltd. to Michael &
Co., will qualify as supply and the same is leviable to GST.
Importation Provision Import of services by a taxable person from a related person or

of services from his establishments located outside India, without consideration,
in the course or furtherance of business shall be treated as
“supply”.
Example Bhansali Associates received legal consultancy services from its head office
located in Malaysia. The head office has rendered such services free of cost
to its branch office. Since Bhansali Associates and the branch office are
related persons, services received by Bhansali Associates will qualify as supply
even though the head office has not charged anything from it.
Apte Ltd. is located in India and holding 51% of shares of Akshay Ltd., a
USA based company. Akshay Ltd. provides Business Auxiliary Services to
Apte Ltd., will be treated as supply.
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Section 7(1)(b) vs Section 7(1)(c) of CGST Act, 2017
Analysis of Section 7(1)(d)

Provision Supply includes the activities to be treated as supply of goods or supply of services as
referred to in Schedule II.
Basic Schedule II appended to the CGST Act enlists the matters or transactions to be
treated as Supply of either goods or services. These matters are primarily those
which were of complex nature in the earlier regime and susceptible to double
taxation.
Schedule II Activities To Be Treated As Supply Of Goods Or Supply Of Services

1. Transfer
(a) any transfer of the title in goods is a supply of goods;
(b) any transfer of right in goods or of undivided share in goods without the transfer of
title thereof, is a supply of services;
(c) any transfer of title in goods under an agreement which stipulates that property in
goods shall pass at a future date upon payment of full consideration as agreed, is a
supply of goods.
2. Land and Building

(a) any lease, tenancy, easement, licence to occupy land is a supply of services;
(b) any lease or letting out of the building including a commercial, industrial or
residential complex for business or commerce, either wholly or partly, is a supply of
services.
3. Treatment or process
Any treatment or process which is applied to another person's goods is a supply of
services.
4. Transfer of business assets

(a) where goods forming part of the assets of a business are transferred or disposed of by
or under the directions of the person carrying on the business so as no longer to form
part of those assets, whether or not for a consideration, such transfer or disposal is a
supply of goods by the person;
(b) where, by or under the direction of a person carrying on a business, goods held or
used for the purposes of the business are put to any private use or are used, or made
available to any person for use, for any purpose other than a purpose of the business,
whether or not for a consideration, the usage or making available of such goods is a
supply of services;
(c) where any person ceases to be a taxable person, any goods forming part of the
assets of any business carried on by him shall be deemed to be supplied by him in
the course or furtherance of his business immediately before he ceases to be a
P a g e | 59
taxable person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a
taxable person.
5. Supply of services
The following shall be treated as supply of services, namely:—
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of completion certificate,
where required, by the competent authority or after its first occupation, whichever is
earlier.
Explanation.—For the purposes of this clause—
(1) the expression "competent authority" means the Government or any authority
authorised to issue completion certificate under any law for the time being in force
and in case of non-requirement of such certificate from such authority, from any of
the following, namely:—
(i) an architect registered with the Council of Architecture constituted under the
Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or
development or planning authority;
(2) the expression "construction" includes additions, alterations, replacements or
remodelling of any existing civil structure;
(c) temporary transfer or permitting the use or enjoyment of any intellectual property
right;
(d) development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of information technology software;
(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation,
or to do an act; and
(f) transfer of the right to use any goods for any purpose (whether or not for a specified
period) for cash, deferred payment or other valuable consideration.
6. Composite Supply
The following composite supplies shall be treated as a supply of services, namely:—
(a) works contract as defined in clause (119) of section 2; and
(b) supply, by way of or as part of any service or in any other manner whatsoever, of
goods, being food or any other article for human consumption or any drink (other
than alcoholic liquor for human consumption), where such supply or service is for
cash, deferred payment or other valuable consideration.
7. Supply of Goods
The following shall be treated as supply of goods, namely:—
Supply of goods by any unincorporated association or body of persons to a member
thereof for cash, deferred payment or other valuable consideration.
Type of Transaction Supply of Supply of

Goods Service
Transfer
Transfer of the title in goods. Yes No
Transfer of right in goods or share (undivided) in goods without the transfer of No Yes
title.
Transfer of title in goods under an agreement which stipulates that property in Yes No
goods shall pass at a future date upon payment of full consideration as agreed.
P a g e | 60
Land and Building

Lease, tenancy, easement, licence to occupy land No Yes
Lease or letting of any building including for business or commerce. (Building No Yes
might be a commercial, industrial or residential complex rent out wholly or
partly)
Treatment or process
Any treatment or process which is applied to another person’s goods No Yes
Transfer of business assets
Goods forming part of business assets are transferred or disposed off by/ Yes No
under directions of person carrying on the business so as no longer to form part
of those assets, whether or not for consideration
Goods held/ used for business are put to private use or are made No Yes
available to any person for use for any purpose other than business,
by/ under directions of person carrying on the business, whether or not for
consideration
Goods forming part of assets of any business carried on by a person who ceases Yes No
to be a taxable person, shall be deemed to be supplied by
him, in the course or furtherance of his business, immediately before he
ceases to be a taxable person.
This is not applicable when:-

(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to
be a taxable person.
Supply of Services
Renting of immovable property (however, residential dwelling is exempted from No Yes
GST)
Construction of a complex, building, civil structure or a part thereof, including a No Yes
complex or building intended for sale to a buyer, wholly or partly, except
where the entire consideration has been received after issuance of completion
certificate, where required, by the competent authority or after its first
occupation, whichever is earlier.
Temporary transfer or permitting the use or enjoyment of any intellectual No Yes
property right;
Development, design, programming, customization, adaptation, upgradation, No Yes
enhancement, implementation of information technology software;
Agreeing to the obligation to refrain from an act, or to tolerate an act or a No Yes
situation, or to do an act
Transfer of the right to use any goods for any purpose (whether or not for a No Yes
specified period) for cash, deferred payment or other valuable consideration.
Composite Supply
Works contract services No Yes
Supply by way of or as part of any other service or in any other manner No Yes
whatsoever, of goods being food or any other article for human consumption or
any drink (other than alcoholic liquor for human consumption)
Supply of Goods
Supply of goods by any unincorporated association or body of persons to a Yes No
member thereof for cash, deferred payment or other valuable consideration.
P a g e | 61
Analysis of Section 7(2)(a)

Provision Activities or transactions specified in Schedule III shall be treated neither as a supply of
goods nor a supply of services.
Activities specified under Schedule III can be termed “Negative list” under the
GST regime.
Schedule Activities or transactions which shall be treated neither as a supply of goods nor a
III supply of services
1. Services by an employee to the employer in the course of or in relation to his
employment.
2. Services by any court or Tribunal established under any law for the time being in
force.
Explanation – The term "Court" includes District Court, High Court and Supreme Court.
3.
(a) the functions performed by the Members of Parliament, Members of State
Legislature, Members of Panchayats, Members of Municipalities and Members of
other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or
(c) the duties performed by any person as a Chairperson or a Member or a Director in a
body established by the Central Government or a State Government or local
authority and who is not deemed as an employee before the commencement of this
clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the

deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling.
Analysis of Section 7(2)(b)

Provision Such activities/ transactions undertaken by the Central Government, a State Government
or any local authority in which they are engaged as public authorities, as may be notified
by the Government on the recommendations of the Council shall be treated neither as a
supply of goods nor a supply of services.
Notified Notification No. 14/2017 CT (R) dated 28.06.2017 has notified the “services by
Service way of any activity in relation to a function entrusted to a Panchayat under
article 243G of the Constitution” for the said purpose.

The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such
principal supply; and
(b) a mixed supply comprising two or more supplies shall
P a g e | 62
Basics…
GST is payable on individual goods or services or both at the notified rates. The application of rates poses no problem if
the supply is of individual goods or individual services, which is clearly identifiable and such goods or services are subject
to a particular rate of tax.
However, in certain cases, supplies are not such simple and clearly identifiable supplies. Some of the supplies are a
combination of goods or combination of services or combination of goods and services both and each individual
component of such supplies may attract a different rate of tax.
In such a case, the rate of tax to be levied on such supplies may be a challenge. It is for this reason, that the GST Law
identifies composite supplies and mixed supplies and provides certainty in respect of tax treatment under GST for such
supplies.
In order to determine whether the supplies are ‘composite supplies’ or ‘mixed supplies’, one needs to determine whether
the supplies are naturally bundled or not naturally bundled in ordinary course of business.
Analysis of Section 8(a)

Provision The tax liability on a composite supply shall be determined as ,” a composite supply
comprising two or more supplies, one of which is a principal supply, shall be treated as a
supply of such principal supply”.
Composite Supply
Meaning Composite supply means a supply made by a taxable person to a recipient and:
of ✓ comprises two or more taxable supplies of goods or services or both, or any
Composite combination thereof.
Supply ✓ are naturally bundled and supplied in conjunction with each other, in the
[Section
ordinary course of business
2(30)]
✓ one of which is a principal supply.
This means that in a composite supply, goods or services or both are bundled owing
to natural necessities. The elements in a composite supply are dependent on the
‘principal supply’.
Meaning Principal supply means the supply of goods or services which constitutes the
of predominant element of a composite supply and to which any other supply forming
Principal part of that composite supply is ancillary.
Supply
[Section
2(90)]
How to A composite supply comprising of two or more supplies, one of which is a principal
determine supply, shall be treated as a supply of such principal supply.
the tax
liability
on
composite
supplies?
Example Sridevi Ltd. entered into a contract with Madhuri Ltd. for supply of goods, where goods
are packed and transported with insurance. The supply of goods, packing materials,
transport and insurance is a composite supply and supply of goods is a principal supply.
P a g e | 63
When a consumer buys a television set and he also gets warranty and a maintenance
contract with the TV, this supply is a composite supply. In this example, supply of TV is
the principal supply, warranty and maintenance services are ancillary.
How to Whether the services are bundled in the ordinary course of business, would depend
determine upon the normal or frequent practices followed in the area of business to which
whether the services relate. Such normal and frequent practices adopted in a business can be
services are ascertained from several indicators some of which are listed below:
bundled in
the
The If large number of service receivers of such bundle of services
ordinary perception of
course of reasonably expect such services to be provided as a package, then
the consumer
business? such a package could be treated as naturally bundled in the ordinary
or the service
receiver course of business.
Practice For example, bundle of catering on board and transport by air is a

followed by bundle offered by a majority of airlines.
Majority of
service
providers in
a particular
area of
business
Nature of the If the nature of services is such that one of the services is the main
various service and the other services combined with such service are in the
services in a
nature of incidental or ancillary services which help in better
bundle of
services enjoyment of a main service.
For example, service of stay in a hotel is often combined with a
service or laundering of 3-4 items of clothing free of cost per day.
Such service is an ancillary service to the provision of hotel
accommodation and the resultant package would be treated as
services naturally bundled in the ordinary course of business.
Other The following are not determinative but indicative of bundling of

illustrative services in the ordinary course of business :
indicators
✓ There is a single price or the customer pays the same amount,
no matter how much package they actually receive or use.
✓ The elements are normally advertised as a package.
✓ The different elements are not available separately.
✓ The different elements are integral to one overall supply. If one
or more is removed, the nature of the supply would be
affected.
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Conclusion No straight formula can be laid down to determine whether a service is naturally bundled in the ordinary course of
business. Each case has to be individually examined in the backdrop of several factors some of which are outlined
above.
Analysis of Section 8(b)

Provision The tax liability on a mixed supply shall be determined as,” a mixed supply comprising two
or more supplies shall be treated as a supply of that particular supply which attracts the
highest rate of tax”.
Mixed Supply
Meaning Mixed supply means:
of Mixed ✓ two or more individual supplies of goods or services, or any combination
Supply thereof, made in conjunction with each other by a taxable person
[Section ✓ for a single price where such supply does not constitute a composite supply.
2(74)]
In other words, the combination of goods or services are not bundled due to
natural necessities, and they can be supplied individually in the ordinary course of
business.
Example Diwali gift hamper which consist of different Items like sweets, chocolates, cakes, dry fruits
packed in one pack is Mixed supply as these items can be sold separately and it shall be
treated as a supply of that particular item which attracts the highest rate of tax.
Smart Bazar offers a free bucket with detergent purchased. This is a mixed supply as these
items can be sold separately.
How to A mixed supply comprising of two or more supplies shall be treated as supply of
determine that particular supply that attracts highest rate of tax.
the tax
liability
on mixed
supplies?
How to In order to identify if the particular supply is a mixed supply, the first requisite is
determine to rule out that the supply is a composite supply.
if a A supply can be a mixed supply only if it is not a composite supply. As a corollary
particular it can be said that if the transaction consists of supplies not naturally bundled in
supply is a
the ordinary course of business then it would be a mixed supply.
mixed
Once the amenability of the transaction as a composite supply is ruled out, it
supply?
would be a mixed supply, classified in terms of supply of goods or services
attracting highest rate of tax.
P a g e | 65
Theory Questions
Question 1
What is the taxable event under GST?
Question 2
What is composite supply?
Question 3
Supply of all goods and/or services is taxable under GST. Discuss the validity of the statement.
Question 4
Whether transfer of title and/or possession is necessary for a transaction to constitute supply of goods?
Question 5
Examine whether the following activities would amount to supply under section 7 of the CGST Act:
(a) Damodar Charitable Trust, a trust who gets the eye treatment of needy people done free of cost, donates clothes
and toys to children living in slum area.
(b) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these establishments are registered in
respective States. Finished goods are sent from factory in Delhi to the Mumbai depot without consideration so that the
same can be sold.
(c) Raman is an Electronic Commerce Operator in Chennai. His brother who is settled in London is a well-known lawyer.
Raman has taken legal advice from him free of cost with regard to his family dispute.
(d) Would your answer be different if in the above case, Raman has taken advice in respect of his business unit in
Chennai?
Question 6
State whether the following supplies would be treated as supply of goods or supply of services as per Schedule II of
the CGST Act:
(a) Renting of immovable property
(b) Goods forming part of business assets are transferred or disposed of by/ under directions of person carrying on
the business, whether or not for consideration.
(c) Transfer of right in goods without transfer of title in goods.
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a future date.
Question 7
Determine whether the following supplies amount to composite supplies:
(a) A hotel provides 4 days-3 nights package wherein the facility of breakfast and dinner is provided alongwith the
room accommodation.
(b) A toothpaste company has offered the scheme of free toothbrush alongwith the toothpaste.
Question 8
Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of services? Give reason.
Question 9
What will be the relatable transaction as per Schedule II?
A shopping complex owned by M/s X Ltd and M/s Y Ltd. At a later date M/s X
Ltd. sold his share in shopping complex to M/s Z Ltd. and hence, ownership is not
transferred to M/s Z Ltd., but only share in property is transferred to M/s Z Ltd. It
is a supply of service.
If a residential premise is used for residential purposes as well as for some
business purpose, the said activity of leasing of residential complex would be
covered in the definition of supply and eligible to GST.
Such activities could be:
• coaching by teacher at his residence or
• carrying out professional activities from the residence of an Advocate or
Chartered Accountant or Cost Accountant etc.
Mr. A a trader of steel articles purchases steel bars of 10 meters for Rs. 1,00,000.
He gave these steel bars to Mr. B (job worker) for cutting the bars. Mr. B charged
Rs. 20,000 as his job work charges. Mr. B being a job worker is liable to pay GST.
P a g e | 66
Value of job work charges is Rs. 20,000. It is called as supply of service.
A director using car provided by the company for personal travels. It is supply of
service.
A, a trader, is winding up his business. Any goods
left in stock shall be deemed to be supplied by him.
Sale of office computers or furniture is supply of goods.
M/s Ravan & Co a partnership firm decided to dissolve the partnership firm.
Goods left in stock taken over by partners. Taking over of goods by partners will
be considered as a supply of goods. Since, business is not continued further.
Leasing of vacant land to a poultry farm for Rs. 76,000. It is a supply of service.
A builder has entered into agreement to sale a flat (carpet area 1900 sq ft) to
customer. The additional information is as follows: (a) Price of flat (including
apportioned value of cost of land): Rs. 42,00,000 (includes Prime Location Charges
namely charges for getting sea view Rs. 2,00,000). (b) Charges for providing
space for covered parking: Rs. 1,25,000. The builder received part payment
before construction was completed and balance amount was received after
obtaining completion certificate from the Corporation. It is supply of service.
Supply of GST related software to businesses for smooth processing of returns and
accounts is supply of service.
Ram has given his tempos on hire to Gupta Brothers for transportation of foodstuff
for Rs. 40,00,000. He has also transferred the right to use such tempos to Gupta
Brothers. It is supply of service.
A local club supplies snacks etc. to its members during its monthly meeting for a
nominal payment. It is supply of goods.
Question 10
M/s C Ltd. has 3 branches A, B & Z in different states. A in Telangana has run out of stock and B from Andhra Pradesh
transfers its excess stock. Is it supply of goods? GST will be levied?
Question 11
M/s M Ltd. being a garment manufacturer appoints Mr. Ram as an agent, who stores garments manufactured by M Ltd.
and sends to dealers whenever M Ltd. asks Mr. Ram to do so. Is it a supply?
Question 12
Sparsh Ltd. of Mumbai imports business support services from its head office located in USA. The head office has
rendered such services free of cost to its branch office. Will it qualify as supply?
Question 13
Mr. Rajni of Chennai paid fees for online coaching obtained from a teacher located in USA for coaching of
Accountancy course for his son. Is it supply of service?
Question 14
A dealer of air-conditioners permanently transfers an air conditioner from his stock in trade, for personal use at his
residence. Will the transaction constitute supply?
Question 15
M/s Cool Ltd., is in the business of Hotel. It purchased AC for business purpose, availed the ITC and after 2 years,
transferred it to director without consideration. Will the transaction constitute supply?
Question 16
Reliable group has three companies namely M/s Reena Ltd., M/s Leena Ltd., and M/s Beena Ltd., as group companies
and M/s Reliable Ltd., as a parent company. M/s Reliable Ltd., holds 25% of the shares in each group company. Will
the three companies be related persons?
Question 17
Sanam, a proprietor registered in Delhi, has sought architect services from his brother located in US, with respect to his
newly constructed house in Delhi. Will the transaction constitute supply?
P a g e | 67
Question 18
A Five-star hotel provides four days and three-night package, with breakfast. Is this a composite supply?
Question 19
A travel ticket from Mumbai to Delhi includes service of food being served on board, free insurance, and the use of
airport lounge. Is this a composite supply?
Question 20
A shopkeeper is selling storage water bottles along with refrigerator. Is this a composite supply?
Question 21
Bipasha Ltd. a dealer offers combo packs of shirt, watch, wallet, book and they are bundled as a kit and this kit is
supplied for a single price. Is this a composite supply?
Question 22
A dealer sells a washing machine for Rs 30,000 to earn a profit. Does it qualify as a supply?
Question 23
Mr. Ram (an unregistered person) wants to do MBA abroad. He takes Education consultancy services from a UK based
consultant for Rs 10,000. Does it qualify as a supply?
Question 24
ABC Ltd. a manufacturing company scraps old plant and machinery without consideration due to renovation of
manufacturing facility. The company has taken input tax credit on plant and machinery so scrapped. Does it qualify as
a supply?
Question 25
Big Ltd. provides management technical services without consideration to Small Ltd in which Big Ltd. has controlling
rights. These technical services have been provided for benefit of entire group. Does it qualify as a supply?
Question 26
American Express Pvt. Ltd. makes gifts to an employee worth Rs. 75,000 during the year. Does such gifts qualify as a
supply? Would your answer be different if gifts of Rs. 45,000 have been given to employee?
Question 27
Honda Motors Ltd. engages DD Motors as an agent to sell motorcycle on its behalf. For the purpose, Honda Motors Ltd.
has supplied 500 cars to the showroom of DD Motors located in Punjab. Does it qualify as supply?
Question 28
Raheja Builders (a registered taxable person) receives architectural design supplied by a foreign architect to design a
residential complex to be built in Faridabad for a consideration of Rs. 1 crore. Does it qualify as supply?
Question 29
What is the scope of the term ‘supply’ as defined in the CGST Act, 2017?
Question 30
How to distinguish whether a particular supply involves supply of goods or services or both?
Question 31
Whether supply of goods or services without consideration is liable to tax?
Question 32
Whether transfer of goods to another branch located outside the State is taxable?
Question 33
Whether gifts given by employer to employee will also qualify as supply?
Question 34
Whether supply of goods by principal to his agent or by agent to his principal is taxable in the absence of
consideration?
P a g e | 68
Question 35
Whether import of services will be liable to tax under GST regime?
Question 36
How would the tax liability be determined in case of Composite supply?
Question 37
What is Mixed Supply?
Question 38
How would the tax liability be determined in case of Mixed supply?
Question 39
Modest Ltd. registered in Delhi dealing in supply of electrical items transferred some of its stock to its another unit
located in Haryana. Whether such self-supplies are chargeable under GST?
Question 40
How would the tax liability be determined in case of Mixed supply?
Question 41
What are the various modes of supply u/s 7(1)(a)?
Question 42
Define Sale in personal capacity. Support with example.
Question 43
Define Barter. Support with example.
P a g e | 69
Charge of GST
Intra State Supply Inter State Supply
Where the location of the supplier and the place of Where the location of the supplier and the place of
supply of goods or services are in the same State/ supply of goods or services are in
Union territory, it is treated as intra-State (i) two different States or
supply of goods or services respectively. (ii) two different Union Territories or
(iii) a State and a Union territory,
it is treated as inter-State supply of goods or
services respectively.
Extent & Commencement of CGST Act/ UTGST Act/ IGST Act/ SGST Act
Section 1 of Central Goods and Services Tax Act, 2017 extends to the whole of India including the state of J & K.
the CGST
Act
Section 1 of Union Territory Goods and Services Tax Act, 2017 extends to the Union territories of the Andaman and
the UTGST Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu, Chandigarh and other territory, i.e. the
Act Union Territories without State Legislature.
Section 1 of Integrated Goods and Services Tax Act, 2017 extends to the whole of India including the state of J & K.
the IGST Act
State GST State GST law of the respective State/ Union Territory with State Legislature [Delhi and Puducherry] extends to
Laws whole of that State/ Union Territory.
LEVY & COLLECTION OF GST

CGST Act
Chapter III - Levy and Collection of Tax
Section 9 Levy & Collection
Notification
Notification No. Different rates of the CGST to be levied on the intra-State supplies of services
11/2017
Notification No. List of goods taxable under reverse charge
04/2017
Notification No. Exemption from payment of GST on Reverse Charge
08/2017
Notification No. List of services taxable under reverse charge
13/2017
Notification No. Services supplied through ECO
17/2017
IGST Act
Chapter III - Levy And Collection Of Tax
Section 5 Levy and Collection
Notification
Notification No. List of services taxable under reverse charge
10/2017
Notification No. Services supplied through ECO
14/2017
P a g e | 70
Bare Text of Section 9 of CGST Act

(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-
State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value
determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the
recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.
(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas
and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations
of the Council.
(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or
services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all
the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of
such goods or services or both.
(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a
registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall
apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
(5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-
State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation
to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person
representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also
he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable
territory for the purpose of paying tax and such person shall be liable to pay tax.
Basics…
Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by the authority of law.
The charging section is a must in any taxing statute for levy and collection of tax.
Section 9 is the charging provision of the CGST Act. It provides that all intra-State supplies would be liable to CGST.
Analysis of Section 9(1)

Provision Subject to the provisions of sub-section (2), there shall be levied a tax called the central
goods and services tax on all intra-State supplies of goods or services or both, except on
the supply of alcoholic liquor for human consumption, on the value determined under
section 15 and at such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in such manner as
may be prescribed and shall be paid by the taxable person.
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Key Ingredients
Levy of A tax called the Central Goods and Services Tax (CGST) shall be levied on all
CGST intra-State supplies of goods or services or both.
Supply Supply should involve goods and/ or services; either as wholly goods or wholly
services. Even where a supply involves both, goods and services, the law provides
that such supplies would be classifiable either as wholly goods or wholly services.
Schedule II of the Act provides for this classification.
Where a supply involves multiple (more than one) goods or services, or a
combination of goods and services, the treatment of such supplies would be either
as composite or mixed supply.
Collection The tax shall be collected in such manner as may be prescribed and shall be paid
and by the taxable person.
payment
Value Value for levy shall be transaction value under section 15 of the CGST Act.
Product not Intra-State supply of alcoholic liquor for human consumption is outside the
taxable purview of CGST.
GST Rates Rates for CGST are rates as may be notified by the Government on the
recommendations of the GST Council.
Maximum Maximum rate of CGST can be 20%.

Rate
Rates for Broadly, six rates of CGST have been notified for goods, viz.,
Goods 0.125%, 1.5%, 2.5%, 6%, 9% and 14%. Some items have been kept
at Nil rate.
Equivalent rate of SGST/ UTGST will also be levied.
Rates for Broadly, four rates of CGST have been notified for services, viz.,
Services 2.5%, 6%, 9% and 14%.
Equivalent rate of SGST/ UTGST will also be levied.
A new Scheme of Classification of Services has been devised wherein

the services of various descriptions have been classified under various
sections, headings and groups. Each group consists of various Service
Codes (Tariff). Chapters referred are the Chapters of the First
Schedule to the Customs Tariff Act, 1975.
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Notification No. 11/2017 dated 28.06.2017 : Different rates of the CGST to be levied on the intra-State
supplies of services
Chapter/ Description of Service Rate (%)
Section/
Heading
Section 5 Construction Services
Heading (i) Construction of a complex, building, civil structure or a part thereof, including 9
9954 a complex or building intended for sale to a buyer, wholly or partly, except
(Construction where the entire consideration has been received:
services) (a) after issuance of completion certificate, where required, by the competent
authority or
(b) after its first occupation
whichever is earlier.
(ii) composite supply of works contract as defined in clause 2(119) of CGST 9

Act, 2017.
Heading Services in wholesale trade 9

9961 Explanation-This service does not include sale or purchase of goods but includes:
– Services of commission agents, commodity brokers, and auctioneers and all
other traders who negotiate whole sale commercial transactions between buyers
and sellers, for a fee or commission’.
– Services of electronic whole sale agents and brokers.
– Services of whole sale auctioning houses.
Heading Services in retail trade 9

9962 Explanation- This service does not include sale or purchase of goods.
Heading Postal and courier services 9

9968
Heading Electricity, gas, water and other distribution services 9
9969
Heading Education services 9
9992
Notes Value of supply of service and goods portion in such supply in construction of
complex service involving transfer of property in land/ undivided share of land:
shall be computed as follows :
Particulars Amount (Rs.)

Total amount charged for supply (A)
rd
Less: Value of land/ undivided share of land 1/3 of (A)
[1/3rd of the total amount charged]
= Value of supply of service and goods portion in supply (B)
Value of supply of lottery: shall be computed as follows:

In case of lottery run 100/112 of face value or price notified in the Official
by State Government Gazette by the Organising State whichever is higher
In case of lottery 100/128 of face value or price notified in the Official

authorised by State Gazette by the Organising State whichever is Higher
Government
P a g e | 73

Provision The central tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied with
effect from such date as may be notified by the Government on the recommendations of
the Council.
Effect CGST on supply of few items has not been levied immediately. It shall be levied
with effect from such date as may be notified by the Government on the
Products Petroleum crude

falling High speed diesel
Motor spirit (commonly known as petrol)
Natural gas and

Provision The Government may, on the recommendations of the Council, by notification, specify
categories of supply of goods or services or both, the tax on which shall be paid on
reverse charge basis by the recipient of such goods or services or both and all the
provisions of this Act shall apply to such recipient as if he is the person liable for paying
the tax in relation to the supply of such goods or services or both.
Meaning In the normal course, the tax would be payable by the supplier of goods and/ or
services. However, in specific cases (as may be notified), the onus of payment of
tax is shifted to the recipient of goods and/ or services.
Conditions To impose tax on reverse charge basis, the following conditions would be
mandatory :
(a) Notification to be issued by the Central Government specifying the
categories of supply of goods and/ or services.
(b) Should be notified only on recommendation of the Council.
Applicability All the provisions of the CGST Act shall apply to the recipient in the aforesaid
to Recipient cases as if he is the person liable for paying the tax in relation to the supply of
Notification No. 4/2017 CT (R) dated 28.06.2017 : List of Goods taxable under reverse charge
S.No. Description of supply of Goods Supplier of goods Recipient of Goods
1 Cashew nuts, not shelled or Agriculturist Any registered person
peeled
2 Bidi wrapper leaves (tendu) Agriculturist Any registered person
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3 Tobacco leaves Agriculturist Any registered person
4 Silk yarn Any person who manufactures Any registered person

silk yarn from raw silk or silk
worm cocoons for supply of
silk yarn
4A Raw Cotton Agriculturist Any registered person
5 Supply of lottery State Government, Union Lottery distributor or selling

Territory or any local Agent
authority
6 Used vehicles, seized and Central Government, State Any registered person
Confiscated goods, old and Government, Union territory
used goods, waste and scrap or a local authority
Notification No. 13/2017 CT (R) dated 28.06.2017 : List of Services taxable under reverse charge
S.No. Description of supply of Service Supplier of Service Recipient of Service
1 Supply of services by a Goods Goods Transport Agency (a) any factory registered
Transport Agency (GTA) in (GTA) under or governed by the
respect of transportation of Factories Act, 1948; or
goods by road (b) any society registered
under the Societies
Registration Act, 1860 or
under any other law for the
time being in force
in any part of India; or
(c) any cooperative society
established by or under any
law; or
(d) any person registered
under the CGST Act or the
IGST Act or the SGST Act or
the UTGST Act; or
(e) any body corporate
established, by or under any
law; or
(f) any partnership firm
whether registered or not
under any law including
association of persons; or
(g) any casual taxable
person; located in the
taxable territory.
2 Services supplied by an An individual advocate Any business entity located in

individual advocate including a including a senior advocate the taxable territory.
senior advocate by way of or firm of advocates
representational services before
any court, tribunal or authority,
directly or indirectly, to any
business entity located in the
taxable territory, including
where contract for provision of
P a g e | 75
such service has been entered
through another advocate or a
firm of advocates, or by a firm
of advocates, by way of legal
services, to a business entity.
3 Services supplied by an arbitral An arbitral tribunal Any business entity located in

tribunal to a business entity. the taxable territory
4 Services provided by way of Any person Any body corporate or

sponsorship to any body partnership firm located in the
corporate or partnership firm. taxable territory
5 Services supplied by the Central Government, State Any business entity located in
Central Government, State Government, Union territory the taxable territory
Government, Union territory or or local authority
local authority to a business
entity excluding, -
(1) renting of immovable
property, and
(2) services specified below-
(i) services by the Department of
Posts by way of speed post,
express parcel post, life
insurance, and agency services
provided to a person other
than Central Government, State
Government or Union territory
or local authority;
(ii) services in relation to an
aircraft or a vessel, inside
or outside the precincts of a
port or an airport;
(iii) transport of goods or
passengers.
6 Services supplied by a director A director of a company or a The company or a body

of a company/ body corporate body corporate corporate located in the
to the said company/ body taxable territory
corporate.
7 Services supplied by an An insurance agent Any person carrying on

insurance agent to any person insurance business, located in
carrying on insurance business. the taxable territory
8 Services supplied by a recovery A recovery agent A banking company or a

agent to a banking company or financial institution or a non
a financial institution or a non- banking financial company,
banking financial company. located in the taxable
territory.
9 Supply of services by an Author or music composer, Publisher, music company,
author, music composer, photographer, artist, or the producer or the like, located
photographer, artist or the like like in the taxable territory.
by way of transfer or permitting
the use or enjoyment of a
P a g e | 76
copyright covered under section
13(1)(a) of the Copyright Act,
1957 relating to original
literary, dramatic, musical or
artistic works to a publisher,
music company, producer or
the like.
10 Supply of services by the Members of Overseeing Reserve Bank of India

members of Overseeing Committee constituted by
Committee to Reserve Bank of the Reserve Bank of India
India
Notes The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the
taxable territory shall be treated as the person who receives the service for the purpose of this notification.
Body Corporate has the same meaning as assigned to it in Companies Act, 2013.
As per section 2(11) of the Companies Act, 2013, body corporate or corporation includes a company incorporated outside
India, but does not include—
(i) a co-operative society registered under any law relating to cooperative societies; and
(ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by
notification, specify in this behalf.
The business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be
treated as the person who receives the legal services for the purpose of this notification.

Provision The central tax in respect of the supply of taxable goods or services or both by a supplier,
who is not registered, to a registered person shall be paid by such person on reverse
charge basis as the recipient and all the provisions of this Act shall apply to such
recipient as if he is the person liable for paying the tax in relation to the supply of such
goods or services or both.
Meaning In the normal course, the tax would be payable by the supplier of goods and/ or
services.
However, When the goods/ services are supplied by a supplier, who is un-
registered person to a receiver, who is registered person, the liability to pay tax
on such supplies will be on recipient under reverse charge basis. Thus, a registered
person would be required to pay GST on all supplies received by it from un-
registered persons.
Conditions To impose tax on reverse charge basis, the supply has to be from unregistered
person to a registered person.
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Exemption Exemption has been granted from payment of GST on reverse charge basis in
respect of intra state supplies of goods and/ or services received by a registered
person from any unregistered supplier to the extent of aggregate value of Rs.
5000/- per day from all or any of such suppliers. (Inserted vide Notification
No. 8/2017 dated 28.06.2017).
Example Mr A, a registered supplier, engaged in the profession of architect, buys stationery worth
Rs. 100 for his office from a nearby shop which is not registered under GST. In such
case, Mr. A would not be required to pay GST on such purchase of stationery provided
his total supplies received from all unregistered persons do not exceed Rs. 5,000 on
that day.
It is important to note that GST being an indirect tax, burden of the tax has to be passed on to the recipient.
Under reverse charge also, the burden to pay GST is on the recipient, but the compliance requirements, i.e. to obtain
registration under GST, deposit tax, filing returns with the Government, etc. has been shifted from supplier to recipient.

categories of services the tax on intra-State supplies of which shall be paid by the
electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical
presence in the taxable territory, any person representing such electronic commerce
operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical
presence in the taxable territory and also he does not have a representative in the said
territory, such electronic commerce operator shall appoint a person in the taxable
Key Ingredients
Supply Electronic Commerce Operators (ECO) display products as well as services which
through ECO are actually supplied by some other person to the consumer, on their electronic
portal. The consumers buy such goods/ services through these portals. On placing
the order for a particular product/ service, the actual supplier supplies the
selected product/ service to the consumer. The price/ consideration for the
product/ service is collected by the ECO from the consumer and passed on to
the actual supplier after the deduction of commission by the ECO.
ECO to pay Where any supply of service is effected through e-commerce operator (commonly
the tax known as services provided by aggregator), the law provides that the Central/
State Government may on recommendation of the Council specify (notify) that
the e-commerce operator will be liable to discharge the tax on such supplies.
P a g e | 78
It is important to note that, in such supplies, the e-commerce operator is

neither the actual supplier of service/s nor does he actually receive the services.
The actual supplier of services is a third party who provides such service to the
customer through e-commerce operator. Instead of levying tax on such actual
supplier, the law has imposed levy on e commerce operator.
ECO not Further, where the e-commerce operator does not have a physical presence in
having the taxable territory, the representative (being agent / any other person) of
presence the operator (if any) shall be the person liable to pay tax.
Where such representative also does not have presence in such territory, the
operator should appoint a person specifically for this purpose.
Applicability All the provisions of the CGST Act shall apply to such ECO as if he is the
to ECO supplier liable for paying the tax in relation to the supply of above services.
Summary as If the ECO is located in taxable territory Person liable to pay tax is the ECO
to payment
responsibility If the ECO does not have physical presence Person liable to pay tax is the person
in the taxable territory representing the ECO
If the ECO has neither the physical Person liable to pay tax is the person
presence nor any representative in the appointed by the ECO for the purpose
taxable territory
of paying the tax
Notification No. 17/2017 : Services supplied through ECO

The Central Government, on the recommendations of the Council, hereby notifies that in case of the following categories of services,
the tax on intra-State supplies shall be paid by the electronic commerce operator –
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant
for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is
liable for registration under Section 22(1) of the Central Goods and Services Tax Act.
(iii) services by way of house-keeping, such as plumbing, carpentering etc, except where the person supplying such service
through electronic commerce operator is liable for registration under Section 22(1) of the Central Goods and Services Tax Act.
Meaning of Radio taxi It means a taxi including a radio cab, by whatever name called,
various terms which is in two- way radio communication with a central control
office and is enabled for tracking using Global Positioning System
(GPS) or General Packet Radio Service (GPRS).
Maxicab It means any motor vehicle constructed or adapted to carry more

than 6 passengers, but not more than 12 passengers, excluding the
driver, for hire or reward.
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Motorcab It means any motor vehicle constructed or adapted to carry not
more than 6 passengers excluding the driver for hire or reward.
Motor cycle It means any motor vehicle other than a transport vehicle,
omnibus, road-roller, tractor, motor cycle or invalid carriage.
The above three definitions are as per Motor Vehicles Act, 1988.
Bare Text of Section 5 of IGST Act

(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-
State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value
determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be
notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall
be paid by the taxable person:
Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of
section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are
levied on the said goods under section 12 of the Customs Act, 1962.
(2) The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas
and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations
of the Council.
(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or
services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all
the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of
(4) The integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a
registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall
apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
(5) The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on inter-
State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation
to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person
representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also
does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable

Provision Subject to the provisions of sub-section (2), there shall be levied a tax called the
integrated goods and services tax on all inter-State supplies of goods or services or both,
except on the supply of alcoholic liquor for human consumption, on the value determined
under section 15 of the Central Goods and Services Tax Act and at such rates, not
exceeding forty per cent., as may be notified by the Government on the
recommendations of the Council and collected in such manner as may be prescribed
and shall be paid by the taxable person:
Provided that the integrated tax on goods imported into India shall be levied and
collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on
the value as determined under the said Act at the point when duties of customs are
levied on the said goods under section 12 of the Customs Act, 1962.
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Key Ingredients
Levy of A tax called the Integrated Goods and Services Tax (IGST) shall be levied on all
IGST inter-state supplies of goods or services or both.
Collection The tax shall be collected in such manner as may be prescribed and shall be paid
and by the taxable person.
payment
Value Value for levy shall be transaction value under section 15 of the CGST Act.
Product not Inter-State supply of alcoholic liquor for human consumption is outside the
taxable purview of IGST.
GST Rates IGST is approximately the sum total of CGST and SGST/ UTGST. For certain
specified goods and services, nil rate of IGST has been notified.
Maximum Maximum rate of IGST will be 40%.
Rate
Rates for Broadly, six rates of IGST have been notified for goods, viz., 5%,
Goods 12%, 18%, 28%, 3% and 0.25%.
Rates for Broadly, four rates of IGST have been notified for services, viz., 5%,
Services 12%, 18% and 28%. CGST Rates for services have already been
discussed above. IGST rates for such services can be computed on the
basis of the same.
Goods Levied as For the goods imported into India, the IGST shall be levied and
imported additional collected as per the section 3 of the Custom Tariff Act, 1975 i.e.
into India duty of
the additional duty shall be as per the Custom Tariff Act, 1975 and
customs
the value shall also be determined as per the said Act. In other
words, IGST shall be levied as additional duty of customs in addition
to basic customs duty under the Customs Tariff Act, 1975.
Credit of Credit of IGST levied at the time of importation is allowed.

IGST

Provision The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied with
effect from such date as may be notified by the Government on the recommendations of
the Council.
Effect IGST on supply of few items has not been levied immediately. It shall be levied
with effect from such date as may be notified by the Government on the
P a g e | 81
Products Petroleum crude

falling High speed diesel
Motor spirit (commonly known as petrol)
Natural gas and

categories of supply of goods or services or both, the tax on which shall be paid on
reverse charge basis by the recipient of such goods or services or both and all the
provisions of this Act shall apply to such recipient as if he is the person liable for paying
the tax in relation to the supply of such goods or services or both.
Conditions To impose tax on reverse charge basis, the following conditions would be
mandatory :
(a) Notification to be issued by the Central Government specifying the categories
of supply of goods and/ or services.
(b) Should be notified only on recommendation of the Council.
Notification No. 10/2017 IT (R) dated 28.06.2017 : List of Services taxable under reverse charge
This notification has notified specified categories of supply of services wherein whole of the IGST shall be paid on
reverse charge basis by the recipient of services. All the services which have been notified for reverse charge purposes
under CGST Act have also been notified for reverse charge under IGST Act. Further, following two services are
additionally included for IGST purposes:
S.No. Category of supply of Service Supplier of Service Recipient of Service

1 Any service supplied by any Any person located Any person located in the taxable
person who is located in a non- in a non-taxable territory other than non-taxable online
taxable territory to any person territory recipient.
other than non-taxable online
recipient.
2 Services supplied by a person A person located in Importer, as defined in
located in non- taxable territory a non-taxable Section 2(26) of the Customs Act, 1962,
by way of transportation of territory located in the taxable territory.
goods by a vessel from a place
outside India up to the customs Importer, in relation to any
station of clearance in India. goods at any time between their
importation and the time when they are
cleared for home consumption, includes
any owner, beneficial owner or any
person holding himself out to be the
importer.
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Provision The integrated tax in respect of the supply of taxable goods or services or both by a
supplier, who is not registered, to a registered person shall be paid by such person on
reverse charge basis as the recipient and all the provisions of this Act shall apply to such
recipient as if he is the person liable for paying the tax in relation to the supply of such
goods or services or both.
Meaning
Conditions
Applicability Same as Above
to Recipient
Exemption

categories of services, the tax on inter-State supplies of which shall be paid by the
electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical
presence in the taxable territory, any person representing such electronic commerce
operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical
presence in the taxable territory and also does not have a representative in the said
territory, such electronic commerce operator shall appoint a person in the taxable
Supply
through ECO
ECO to pay
the tax
ECO not
having
Same as Above
presence
Applicability
to ECO
Summary as
to payment
responsibility
Notification No. 14/2017 : Services supplied through ECO
Same as above
P a g e | 83
LEVY & COLLECTION OF GST – COMPOSITION LEVY

CGST Act
Section 10 Composition Levy
CGST Rules
Chapter II – Composition
Rule 3 Intimation for composition levy
Rule 4 Effective date for composition levy
Rule 5 Conditions and restrictions for composition levy
Rule 6 Validity of composition levy
Rule 7 Rate of tax of the composition levy

(1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of
section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt
to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding,––
(a) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer,
(b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies
referred to in clause (b) of paragraph 6 of Schedule II, and
(c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers, subject to such conditions and
restrictions as may be prescribed:
Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not
exceeding one crore rupees, as may be recommended by the Council.
(2) The registered person shall be eligible to opt under sub-section (1), if:—
(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;
(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods;
(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at
source under section 52; and
(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council:
Provided that where more than one registered persons are having the same Permanent Account Number (issued under the
Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such
registered persons opt to pay tax under that sub-section.
(3) The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which his aggregate
turnover during a financial year exceeds the limit specified under sub-section (1).
(4) A taxable person to whom the provisions of sub-section (1) apply shall not collect any tax from the recipient on supplies made
by him nor shall he be entitled to any credit of input tax.
(5) If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) despite not being eligible,
such person shall, in addition to any tax that may be payable by him under any other provisions of this Act, be liable to a penalty
and the provisions of section 73 or section 74 shall, mutatis mutandis, apply for determination of tax and penalty.
Basics…
The Government of India provides for simplified and ease of doing business scheme for payment of taxes and filling of
returns to certain categories of taxable person. As a result such taxable person is not required to maintain elaborate
records and filing detailed returns. Section 10 of the CGST Act, provides for composition levy to such person.
The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers.
Suppliers opting for composition levy need not worry about the classification of their goods or services or both, the rate of
GST applicable on the same, etc. They are not required to raise any tax invoice, but simply need to issue a Bill of Supply
wherein no tax will be charged from the recipient.
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Provision Notwithstanding anything to the contrary contained in this Act but subject to the
provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate
turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay,
in lieu of the tax payable by him, an amount calculated at such rate as may be
prescribed, but not exceeding,––
(a) one per cent. of the turnover in State or turnover in Union territory in case of a
manufacturer,
(b) two and a half per cent. of the turnover in State or turnover in Union territory in
case of persons engaged in making supplies referred to in clause (b) of paragraph
6 of Schedule II, and
(c) half per cent. of the turnover in State or turnover in Union territory in case of other
suppliers,
subject to such conditions and restrictions as may be prescribed
Provided that the Government may, by notification, increase the said limit of fifty lakh
rupees to such higher amount, not exceeding one crore rupees, as may be
recommended by the Council.
Limit of As per Act Section 10 of the CGST Act provides the turnover limit of Rs. 50
Turnover (General) lakh for composition levy.
As per Act Proviso to section 10(1) empowers the Government to increase the
(Proviso) said limit of Rs. 50 lakh upto Rs. 1 crore, on the recommendation
of the Council.
As per In view of said power of the Government to increase the turnover

Notification limit for Composition Levy as granted by proviso to section 10(1),
the turnover limit for Composition Levy for CGST and SGST
purposes for all eligible registered persons has been increased from
Rs. 50 lakh to Rs. 75 lakh vide Notification No. 8/2017 CT dated
27.06.2017. to Rs. 1 Crore vide Notification No. 46/2017 dated
13.10.2017.
Exception The notification has specified the turnover limit Rs. 75 Lakhs in
respect of 9 of the Special Category States namely:
1. Arunachal Pradesh;
2. Assam;
3. Manipur
4. Meghalaya
5. Mizoram;
6. Nagaland;
7. Sikkim;
8. Tripura;
9. Himachal Pradesh.
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Important The turnover threshold for Jammu & Kashmir and Uttarakhand shall
note be Rs. 1 crore.
Aggregate Inclusions ✓ Taxable Supplies

Turnover ✓ Exempt Supplies
✓ Exports
✓ Inter-State Supplies
of persons having the same Permanent Account Number, to be
computed on all India basis.
Exclusions ✓ Value of inward supplies on which tax is payable by a person on

reverse charge basis
✓ CGST
✓ SGST
✓ UTGST
✓ IGST
✓ Compensation cess
Notable ✓ The turnover will be computed PAN wise.

Points ✓ The partner and partnership firm will have different PAN Nos.
Thus the turnover of the partner and partnership firm will not
be aggregated.
✓ The HUF and individual coparcener of the family have different
PAN Nos. Hence, turnover of Karta of HUF in his individual
capacity and turnover of Karta as a Karta of HUF will not be
aggregated.
✓ Supply of goods, after completion of jobwork, by a registered
jobworker shall be treated as the supply of goods by the
principal and the value of such goods shall not be included in the
aggregate turnover of the registered jobworker. It will be
included in the turnover of principal.
Rate of Tax Category of registered persons Rate of tax

(Read with Manufacturers, other than manufacturers of such goods as may be notified 1%
Rule 7) by the Government, i.e. ice cream, pan masala and tobacco.
Suppliers making supplies referred to in clause (b) of paragraph 6 of 2.5%
Schedule II [i.e. supply by way of or as part of any service or in any other
manner whatsoever, of goods, being food or any other article for human
consumption or any drink]
Any other supplier eligible for composition levy under section 10 of CGST 0.5%
Act and Chapter-II [Composition Rules] of Central Goods and Services Tax
(CGST) Rules, 2017
An equivalent rate of SGST is also payable.
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Intimation Intimation Any person who is not registered and applies for registration may
of opting by person give an option to pay tax under composition levy in Part B of the
for applying for
registration form, viz., FORM GST REG-01. The same shall be
composition registration
considered as an intimation to pay tax under Composition Levy.
levy [Rules
Such intimation shall be considered only after the grant of
3 & 4]
registration to the applicant and his option to pay tax under
composition levy shall be effective from the date from which
registration is effective.
Intimation A registered person who opts to pay tax under composition levy
by a scheme shall electronically file an intimation in prescribed form on
registered
the Common Portal [www.gst.gov.in], prior to the commencement
person
of the FY for which said option is exercised.
He shall also furnish the statement in prescribed form in accordance
with the provisions of rule 44(4) of CGST Rules, 2017 within 60
days from the commencement of the relevant FY. Any intimation in
respect of any place of business in a State/ UT shall be deemed to
be an intimation in respect of all other places of business registered
on the same PAN.
The option to pay tax under composition levy shall be effective
from the beginning of the FY.

Provision The registered person shall be eligible to opt under sub-section (1), if:—
(a) he is not engaged in the supply of services other than supplies referred to in
clause (b) of paragraph 6 of Schedule II;
(b) he is not engaged in making any supply of goods which are not leviable to tax
under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods;
(d) he is not engaged in making any supply of goods through an electronic

commerce operator who is required to collect tax at source under section 52;
and
(e) he is not a manufacturer of such goods as may be notified by the Government

on the recommendations of the Council:
Provided that where more than one registered persons are having the same Permanent
Account Number (issued under the Income-tax Act, 1961), the registered person shall not
be eligible to opt for the scheme under sub-section (1) unless all such registered persons
opt to pay tax under that sub-section.
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Restrictions Engaged in Composition scheme is not available for services. Suppliers of

services services are excluded from opting to pay tax under composition
scheme, except composite supply, by way of food/ restaurant
services.
Supply of Certain goods are not liable to GST, e.g. petroleum, alcohol for
goods not human consumption, etc. A person opting for composition scheme
leviable to
shall not be entitled to make any supply of non-GST goods.
GST
Inter-state The taxable person should not affect any inter-State outward
outward supplies. This means that even stock transfers to branches outside
supplies
the State would not be permitted. However, in so far as it
relates to inter-State inward procurements/ receipts, there is no
restriction.
Supply A person opting for composition scheme is not allowed to affect

through ECO any supply of goods through an ecommerce portal who is required
to collect tax at source under section 52.
Restriction The person opting for the scheme should not be a manufacturer
on of certain goods as are notified in this regard as follows.
manufacture
i) Ice cream and other edible ice, whether containing cocoa
of notified
goods ii) Pan masala
iii) All goods, i.e. Tobacco and manufactured tobacco substitutes
However, there is no restriction in case the person is engaged in

trading of such goods.
Requirement Meaning All registered persons having the same Permanent Account
of Same Number (PAN) have to opt for composition scheme. If one such
PAN registered person opts for normal scheme, others become ineligible
for composition scheme.
Example A dealer ‘X’ has two offices in Delhi and is eligible for composition levy.
If ‘X’ opts for the composition scheme, both the offices would pay
taxes under composition scheme and abide by all the conditions as may
be prescribed for the composition scheme.
If a taxable person has the following businesses separately registered:

— Sale of footwear (Registered in Karnataka)
— Sale of mobiles (Registered in Karnataka)
— Franchisee of McDonalds (Registered in Kerala)
In the above scenario, the composition scheme would be applicable for all
the 3 units.
P a g e | 88
Taxable person will not be eligible to opt for composition scheme say for
sale of footwear and sale of mobiles and opt to pay taxes under the
regular scheme for franchisee of McDonalds.
Conditions Not casual or The person opting for the scheme must neither be a casual
and non resident taxable person nor a non-resident taxable person.
Restrictions person
for Purchase The goods held in stock by him have not been purchased from an
Composition from unregistered supplier and where purchased, he pays the tax under
Levy (Rule unregistered
reverse charge (i.e. Section 9(4) of CGST).
5) supplier
Follow He shall pay tax under section 9(3)/9(4) (reverse charge) on
Reverse inward supply of goods or services or both.
Charge
Mechanism
Manufacture He was not engaged in the manufacture of goods as notified u/s
debarred 10(2)(e) of the CGST Act, 2017 during preceding financial year.
Display on He shall mention the words “composition taxable person, not

Bill of supply eligible to collect tax on supplies” at the top of the bill of supply
issued by him.
Display at He shall mention the words “composition taxable person” on every

place of notice or signboard displayed at a prominent place at his principal
business
place of business and at every additional place or places of
business.

Provision The option availed of by a registered person under sub-section (1) shall lapse with effect
from the day on which his aggregate turnover during a financial year exceeds the limit
specified under sub-section (1).
Validity of Satisfaction The option exercised by a registered person to pay amount under
Composition of composition levy shall remain valid so long as he satisfies all the
Levy (Rule conditions conditions mentioned in the said section and these rules.
6)
Lapse of The option to pay tax under composition scheme lapses from the
option day on which his aggregate turnover during the FY exceeds the
specified limit.
Payment of Such person is required to pay normal tax under section 9(1) from
normal tax the day he ceases to satisfy any of the conditions prescribed for
composition levy.
P a g e | 89
Issue of Tax He shall issue tax invoice for every taxable supply made thereafter.
Invoice
Intimation He is required to file an intimation for withdrawal from the scheme
for in prescribed form within 7 days of the occurrence of such event.
Withdrawal
Avail ITC Such person shall be allowed to avail the input tax credit in respect
of the
- stock of inputs and
- inputs contained in semi-finished or finished goods and
- on capital goods
held by him on the date of withdrawal.
Intimation Such person shall furnish a statement, within 30 days of

for Stock withdrawal of the option, containing the details of such stock held
in prescribed form on the common portal.

Provision A taxable person to whom the provisions of sub-section (1) apply shall not collect any tax
from the recipient on supplies made by him nor shall he be entitled to any credit of input
tax.
Restriction Taxable person opting for the composition scheme shall not collect tax from the
on recipient on supplies made by him. It implies that a composition scheme supplier
collecting cannot issue a tax invoice.
Tax
Restriction Taxable person opting for the composition scheme is not entitled to any credit of
on taking input tax i.e. he can’t enter into credit chain.
ITC

Provision If the proper officer has reasons to believe that a taxable person has paid tax under sub-
section (1) despite not being eligible, such person shall, in addition to any tax that may be
payable by him under any other provisions of this Act, be liable to a penalty and the
provisions of section 73 or section 74 shall, mutatis mutandis, apply for determination of tax
and penalty.
Penalty If a taxable person has paid tax under the composition scheme though he was not
eligible for the scheme, the person would be liable to penalty and the provisions of
section 73 or 74 of the CGST Act shall be applicable for determination of tax and
penalty.
P a g e | 90
Rule 6 Issue of Where the proper officer has reasons to believe that the registered
Show person was not eligible to pay tax under section 10 or has contravened
Cause
the provisions of the Act or provisions of this Chapter, he may issue a
Notice
notice to such person to show cause within fifteen days of the receipt
of such notice as to why the option to pay tax under section 10 shall
not be denied.
Issue of Upon receipt of the reply to the show cause notice, the proper officer
Order shall issue an order within 30 days of the receipt of such reply,
- either accepting the reply, or
- denying the option to pay tax under section 10 from the date
of the option or from the date of the event concerning such
contravention, as the case may be.
P a g e | 91
Theory Questions
Question 1
Can any person other than the supplier or recipient be liable to pay tax under GST?
Question 2
A person availing composition scheme in Haryana during a financial year crosses the turnover of Rs. 75 lakh during the
course of the year i.e. he crosses the turnover of Rs. 75 lakh in December? Will he be allowed to pay tax under
composition scheme for the remainder of the year, i.e. till 31st March?
Question 3
A hotel owner provided accommodation in Haryana, through an electronic commerce operator – Cool Trips. The hotel
owner is not liable to get registered as per the provisions of section 22(1) of the CGST Act.
Who is the person liable to pay GST in this case?
Would your answer be different if the Electronic Commerce Operator Cool Trips does not have a physical presence in
India?
Question 4
Determine whether the supplier in the following cases are eligible for composition levy provided their turnover in
preceding year does not exceed Rs. 75 lakh :
(i) Mohan is engaged in providing legal services in Rajasthan and is registered in the same State.
(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in neighbouring States.
Question 5
Mohan Enterprises has two registered business verticals in Delhi. Its aggregate turnover for the preceding year for both
the business verticals was Rs. 70 lakh. It wishes to pay tax under composition levy for one of the vertical in the current
year while under normal levy for other vertical. You are required to advice Mohan Enterpises whether he can do so?
Question 6
Is Input Tax Credit allowed under Reverse Charge?
Question 7
What is the threshold for opting to pay tax under the composition scheme?
Question 8
What are the rates of tax for composition scheme?
Question 9
A person availing composition scheme during a financial year crosses the turnover of Rs.1 Crore during the course of the
year i.e. say he crosses the turnover of Rs.1 Crore in December? Will he be allowed to pay tax under composition
scheme for the remainder of the year i.e. till 31st March?
Question 10
Will a taxable person, having multiple registrations, be eligible to opt for composition scheme only for a few of
registrations?
Question 11
Can composition scheme be availed of by a manufacturer and a service supplier?
Question 12
Who are not eligible to opt for composition scheme?
Question 13
Can the registered person under composition scheme claim input tax credit?
Question 14
Can the customer who buys from a registered person who is under the composition scheme claim composition tax as
input tax credit?
P a g e | 92
Question 15
Can composition tax be collected from customers?
Question 16
How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?
Question 17
What are the penal consequences if a person opts for the composition scheme in violation of the conditions?
Question 18
What are the goods for which GST is applicable at a later date to be recommended by the Council?
Question 19
M/s X & Sons, tax consultant of Zenson Ltd., have advised them that reverse charge mechanism is applicable only to
services. Examine the validity of the advice given by M/s X & Sons.
Question 20
Pepper & Salt Ltd., registered in Madhya Pradesh has the turnover amounting to Rs. 80 lakh in the financial year
2017-18. It wants to avail the benefit of composition scheme in the year 2018-19. You are required to advise Pepper
and Salt Ltd. regarding the availability of composition scheme in the year 2018-19.
Will your answer change, if Pepper & Salt Ltd. is registered in Arunachal Pradesh?
Question 21
What are the taxes that are levied on an intra-State supply?
Question 22
Who is responsible to pay taxes?
Question 23
Whether the tax on intra-State supplies is applicable to every supply?
Question 24
What does the payment of tax under reverse charge mean?
Question 25
Is it lawful to collect tax from recipient of supply on reverse charge basis?
Question 26
What is the difference between reverse charge u/s 9(3) and u/s 9(4)?
Question 27
Does tax liability u/s 9(5) come within reverse charge?
Question 28
What are implications if supplier charges GST on the invoice though reverse charge is applicable?
Question 29
What are implications to supplier if recipient refuses to pay tax on reverse charge?
Question 30
In case supplier has paid GST, is recipient discharged from the liability to pay tax on reverse charge?
Question 31
Is GST payable for both the components – CGST and SGST (or UTGST)?
Question 32
Is GST on reverse charge basis payable on inter-State supply also?
Question 33
In case supplier is under composition and no tax appears on invoice, is reverse charge attracted u/s 9(4)?
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Question 34
Why is supplier (operating under an ecommerce operator liable u/s 9(5)) not liable for compulsory registration u/s 24?
Question 35
Is supplier (operating under an ecommerce operator liable u/s 9(5)) exempt from GST in respect of non-ecommerce
supplies also?
Question 36
Whether an application/ intimation needs to be made by supplier opting for composition scheme?
Question 37
A taxable person having same PAN can opt to pay tax under composition scheme by seeking separate registration for
branches?
Question 38
Can a customer who buys from a taxable person who is under composition scheme claim composition tax as input
credit?
Question 39
Is there any option for registered taxable person to withdraw from the composition scheme composition?
Question 40
When can a supply be said to be inter state supply?
Question 41
Mr. TYN has written a book on Indirect Taxes which is published by M/s Dev Law Publications of New Delhi. Who is
liable to pay GST?
Question 42
M/s Bobby & Co., sells electrical cables, motors and wires. Company also undertake to repair switches, motor sets.
Turnover during preceding financial year from sale of goods is Rs. 59 lakhs, whereas repairing unit is Rs. 1 lakh. Is M/s
Bobby & Co. eligible for composition scheme? Advice.
Question 43
Mr. Q is a paper merchant own 5,000 sq ft., shop at Chennai. Mr. Q offered extra space available in their shop to
supplier to put up their advertisement. His turnover in the previous year from sale of goods Rs. 20 lakhs and advertising
services Rs. 2 lakhs. Is Mr. Q eligible for composition scheme in the current year?
Question 44
Hotel King Pvt., Ltd. provider of restaurant services in New Delhi. They also serve beer, whisky and so on. Turnover in
the preceding previous year is Rs. 67 lakhs. Is Hotel King Pvt. Ltd. eligible for composition scheme in the current year?
Question 45
Mr. A of Chennai is a retailer dealing with cell phones. He supplies goods to the person located in Chennai and
Pondicherry. Aggregate turnover in the preceding financial year is Rs. 45 lakhs. Mr. A wants to opt for composition
scheme in the current financial year. Advise.
Question 46
Peter England is a trader who sells his ready-made clothes online on Amazon India (an Electronic Commerce Operator).
He received an order for Rs. 12, 00,000 in the previous year. Peter England also supplied goods from their out lets.
Aggregate turnover of the company in the previous year was Rs. 21,00,000. Is Peter England eligible for composition
scheme?
Question 47
Hot Breads Pvt. Ltd is the supplier of bakery products registered in the current financial year (2017-18) w.e.f. 1st Oct
2017 and is eligible for Composition Scheme. It wants to pay tax @ 1% being a trader. However, the Deputy
Commissioner of Central Tax contended that the assessee is liable to pay tax @ 5% under the Food and Restaurant
Services category? Advise.
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Question 48
If a person is liable to be registered on 11th Oct 2017 and he has applied for registration on 17th Oct 2017, what is
the effective date of registration for composition levy.
Question 49
A person is liable to be registered on 1st Oct 2017 and he has applied for registration on 17th Nov 2017.
Registration granted on 20th Nov 2017. What is the effective date of registration if he wants to opt composition levy?
Question 50
Mr. Sitaram is running a consulting firm and also a readymade garment show room, registered in same PAN. Turnover
of the showroom is Rs. 60 lakh and receipt of the consultancy firm is Rs. 12 Lakh in the preceding financial year.
You are required to answer the following:
a) Is Mr. Sitaram eligible for Composition Scheme?
b) Whether it is possible for Mr. Sitaram to opt for composition only for Showroom?
c) Rework, if Mr. Sitaram is running a restaurant as well as readymade garment show room, whether he is eligible for
composition?
d) If the turnover of garment showroom is Rs.75 Lakh in the preceding financial year and there is no consulting firm
whether he is eligible for Composition?
Question 51
Mr. Rahim is dealer who is selling taxable goods, exempted goods and non-taxable goods (i.e. Liquor). His turnover in
the preceding financial year is Rs. 35 lakh, Rs. 10 lakh, Rs. 15 lakh goods which are leviable to GST, exempted and
non-taxable respectively. Whether Mr. Rahim is eligible for Composition Scheme?
Question 52
Turnover of Mr. Roy in the preceding financial year is Rs. 49 Lakh. Mr. Roy has opted for Composition Scheme. During
the year on 18th February 2018, turnover of Mr. Roy exceeds Rs. 1 crore. What compliances are required to carry by
Mr. Roy?
Question 53
Mr. X and Mr. Y paid fee to an arbitrator to appoint a panel of three arbitrators for settlement of their personal
dispute as per the Arbitration and Conciliation Act, 1996. Who will pay GST?
Question 54
GT Jewellers Ltd. paid Rs. 50 lakhs for sponsorship of Miss India beauty pageant in Mumbai to a Stylish & Co., a
partnership firm. Is it taxable supply, if yes who is liable to pay GST?
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Practical Questions
Question 1
M/s Chopra Ltd. being a manufacturer of laptops has four factories in Chennai, Salem, Coimbatore and Madurai.
Place P.Y. Turnover Rs. in lakhs (Including Taxes @ 18%)
Chennai 57.91
Mumbai 12
Pune 8
Madurai 10
Nashik 23.60
Is Chopra Ltd. eligible for composition levy in the current year?
Question 2
M/s Zinta Ltd. being a trader of laptops has two units in Chennai and in Mumbai.
Place P.Y. Turnover Rs. in lakhs (Excluding Taxes)
Chennai 52
Mumbai 12
(a) Is M/s Paul Ltd. is eligible for composition levy in the current year?
(b) If so, can M/s Paul Ltd. opt composition scheme for Chennai location and normal scheme for Mumbai?
(c) Need to give separate intimations for opting composition scheme in each State.
Question 3
M/s X Pvt. Ltd., is a manufacturer having two units namely Unit –A in Andhra Pradesh and another Unit – B in Tamil
Nadu. Total turnover of two units in last Financial Year was Rs. 95 lakh (Rs. 10 lakh of Unit – A + Rs. 85 lakh of Unit –
B). Total turnover of two units in the second quarter of this financial year was Rs. 15 lakh (Rs. 5 lakh of Unit – A + Rs.
10 lakh of Unit – B). Applicable rate of CGST 9% and SGST 9%. Find the Net liability of X Pvt. Ltd. Note: M/s X Pvt.
Ltd., is not availing input tax credit.
Question 4
Mr. X being a farmer cultivated cashew nuts not shelled or peeled in the State of Kerala. These goods are sold to M/s
Raj Industries for Rs. 2,50,000 a registered person in the State of Kerala. Applicable rate of GST 5%. M/s Raj
Industries has input tax credit CGST Rs. 5,250 and SGST Rs. 5,250.
(a) Who is liable to pay GST
(b) Net liability of GST
Question 5
Mr. X being an agent of cashew nuts (peeled) in the State of Kerala registered under GST. These goods are sold to
M/s Raj Industries for Rs. 2,50,000 a registered person in the State of Kerala. Applicable rate of GST 5%. Mr. X has
input tax credit CGST Rs. 5,250 and SGST Rs. 7,250. You are required to answer the following:
(a) Who is liable to pay GST.
(b) Net liability of GST.
Question 6
Mr. X being a farmer cultivated Bidi wrapper leaves (tendu) in the State of Telangana. These goods are sold to M/s
Sri Vijaya Industries for Rs. 2,12,500 a registered person in the State of Kerala. Applicable rate of GST 5%.
Question 7
Mr. Raj being a agriculturist cultivated tobacco leaves in the State of West Bengal and also registered under GST.
These goods are sold to M/s RR Industries for Rs. 5,75,000 a registered person in the State of Andhra Pradesh.
Applicable rate of GST 5%. M/s RRIndustries has input tax credit CGST Rs. 3,250 and SGST Rs. 3,250.
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Question 8
The customs authority confiscated the gold from Mr. TYN, at the time of import from Dubai. Subsequently sold these
goods through auction to M/s C Ltd. of Chennai for Rs. 22,25,000. Applicable rate of GST 18%.
(a) Person liable to pay GST.
(b) GST liability.
Question 9
Senior Advocate supplied services of Rs.1,50,000/- to business entity for Legal services. Business entity has ITC of Rs.
7,000. Senior Advocate has registered office in Chennai. Business entity is located in Madurai.
Find the following:
a) Who is liable to pay GST
b) Net GST liability
Note:
(i) all services rendered in the month of Oct 2017.
(ii) Turnover of business entity in the previous year Rs. 43 lakh.
(iii) Applicable rate of GST @18%
Question 10
M/s Shakshi Associates a recovery agent (located in Chennai) empanelled by State Bank of India, Local Head Office,
Nungambakkam, Chennai. The following service supplied M/s Shakshi Assocates in the month of Nov 2017 are as
follows:
(1) Fee of Rs. 2,25,825 for supply of services in relation to recovery of dues from the defaulting Borrowers at the place
of business/ occupation and if such Borrowers is/ are unavailable at the place of business then at his/ her residence.
(2) Supply of services with regard to demand for recovery or taking possession of the security from defaulting
Borrowers, for which separate fee charge from the bank Rs. 55,175/-.
Find the following:
(a) Is it supply of service.
(b) If so, who is liable to pay GST.
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Exemptions
Provisions relating to supply are contained in Section 7 and 8 of the Act but every supply is not taxable. To determine
the liability to pay the tax, it needs to be checked whether such supply of goods and/ or services are exempt from tax.
Section 2(47) of the CGST Act, 2017 defines Exempt Supply as supply of any goods or services or both which attracts nil
rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the IGST Act, and includes
non-taxable supply.

CGST Act
Chapter IIIA - Classification & Exemption
Section 11 Power to grant exemption from tax
IGST Act
Section 6 Power to grant exemption from tax
Introduction
Power to grant exemption from GST has been granted vide section 11 of the CGST Act and vide section 6 of the IGST
Act. State GST laws also contain identical provisions granting power to exempt SGST.
Section 11 of CGST Act and Section 6 of IGST Act contain identical provisions w.r.t. exemptions.
Bare Text of Section 11 of CGST Act/ Section 6 of IGST Act

(1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the
Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or
services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as
may be specified in such notification.
(2) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the
Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from
payment of tax any goods or services or both on which tax is leviable.
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(3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of
any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or
order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order
under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification
or order, as the case may be.
Explanation.––For the purposes of this section, where an exemption in respect of any goods or services or both from the whole or
part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall
not collect the tax, in excess of the effective rate, on such supply of goods or services or both.

Provision Where the Government is satisfied that it is necessary in the public interest so to do, it may,
on the recommendations of the Council, by notification, exempt generally, either
absolutely or subject to such conditions as may be specified therein, goods or services or
both of any specified description from the whole or any part of the tax leviable thereon
with effect from such date as may be specified in such notification.
Insights Section 11(1) deals with general exemptions.
Conditions The Central or the State Governments are empowered to grant exemptions from
for tax, subject to the following conditions :
exemption ✓ Exemption should be in public interest.
✓ It should be by way of issue of notification.
✓ It should be on recommendation from the Council.
✓ It may be granted wither in Absolute or conditional manner.
✓ It can be for for any goods and/ or services.
Absolute Meaning The taxable person must avail all the benefits of notification, which
Exemption are absolute (i.e. without any condition).
Example The Central Government has exempted the tax payable under the CGST/
UTGST/ IGST Acts by any taxable person on supply of “salt” with effect
from 01.07.2017.
General exemption has been granted for supply of Indian National Flag as it
is absolutely exempt. [vide Notification No.2/2017-Central Tax (Rate) Dt. 28-
06-2017]
Conditional Meaning In case of conditional exemption, this is upto the registered person
Exemption to avail or not to avail the benefit.
Example The Central Government has exempted the tax payable under the CGST/
UTGST/ IGST Acts by any taxable person on supply of "Services by a hotel,
inn, guest house, club or campsite, by whatever name called, for residential
or lodging purposes, having declared tariff of a unit of accommodation less
than Rs. 1000/- per day".
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Services provided by a goods transport agency, by way of transport in a

goods carriage for - agricultural produce were exempted from GST [vide
Notification No. 12/2017- Central Tax (Rate) Dt 28-06-2017]. It is called as
general exemption subject to such condition where supply of service is in
the nature of transport of agricultural produce.

Provision Where the Government is satisfied that it is necessary in the public interest so to do, it may,
on the recommendations of the Council, by special order in each case, under
circumstances of an exceptional nature to be stated in such order, exempt from payment
of tax any goods or services or both on which tax is leviable.
Insights Section 11(2) deals with ‘exemptions by special order’.
Conditions The Central or the State Governments are empowered to grant exemptions from
for tax, subject to the following conditions:
exemption ✓ Exemption should be in public interest.
✓ It should be by way of issue of Special Order.
✓ It should be on recommendation from the Council.
✓ There should be circumstances of an exceptional nature.
✓ Such circumstances should be stated in the special order.
✓ It can be for for any goods and/ or services.
Example Exemption can be granted by special order to all assesses registered in one State, from
payment of GST by reason, earthquake etc.
Common Points for Section 11(1) and Section 11(2)

It is important to note that the exemption would be in respect of goods or services or both, and not specifically for any classes of
persons.
Further, it is to be noted that an exemption issued under the CGST Act will ‘automatically’ exempt the same supply from the levy of tax
under the SGST/UTGST Act. This is provided under the SGST/UTGST Act. But the converse is not, that is, exemption under the
SGST/UTGST Act will not exempt levy of tax under the CGST Act.

Provision The Government may, if it considers necessary or expedient so to do for the purpose of
clarifying the scope or applicability of any notification issued under sub-section (1) or
order issued under sub-section (2), insert an explanation in such notification or order, as
the case may be, by notification at any time within one year of issue of the notification
under subsection (1) or order under sub-section (2), and every such explanation shall have
effect as if it had always been the part of the first such notification or order, as the case
may be.
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Explanation––For the purposes of this section, where an exemption in respect of any
goods or services or both from the whole or part of the tax leviable thereon has been
granted absolutely, the registered person supplying such goods or services or both shall
not collect the tax, in excess of the effective rate, on such supply of goods or services or
both.
Trigger Government is empowered to clarify the scope or applicability of any notification

point or special order by inserting an explanation in such notification or order.
Time Limit Such clarification shall only be issued within 1 year of issuing of notification or
special order.
How to Such clarification shall only be issued by notification.

issue
To form Every such explanation shall have effect as if it had always been the part of the
part of first such notification or order, as the case may be i.e. explanation so inserted
original would have retrospective effect from the effective date of the relevant
notification notification or special order.
or order
No need to Where an exemption in respect of goods and/ or services has been granted
pay tax absolutely, the registered person supplying such goods and/ or services shall not
collect tax on such goods and/ or services, in excess of the effective rate.
GOODS EXEMPT FROM TAX

Since GST is a tax for common man, everyday items used by the common man have been included in the list of
exempted items.
Exempted Unbranded atta/ maida/ besan
Goods Unpacked food grains,
Milk,
Eggs,
Curd,
Lassi
Fresh vegetables
Plastic Bangles
Indian National Flag etc.
Goods All goods imported by a unit/ developer in the Special Economic Zone (SEZ) for
imported by authorised operations are exempt from the whole of the integrated tax leviable
unit/ thereon under section 3(7) of the Customs Tariff Act, 1975 read with section 5
developer in of the IGST Act, 2017 [Notification No. 64/2017 Cus dated 05.07.2017].
SEZ
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Services Exempt From Tax

Notification No. 12/2017 CT (R) dated 28.06.2017
1 Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of
charitable activities.
In order to claim exemption under this head, following two conditions must be satisfied:-
(i) The entity is registered with income tax authorities under section 12AA of the Income tax Act,
1961, and
(ii) The entity carries out one or more of the specified charitable activities.
It implies that tax is payable on any service other than by way of charitable activities to any other
person [subject to fulfilment of other conditions of taxability] provided by an entity registered under
section 12AA of the Income tax Act, 1961.
2 Services by way of transfer of a going concern, as a whole or an independent part thereof.
3 Pure services provided TO Government:

Pure services (excluding works contract service or other composite supplies involving supply of any
goods) provided to the Central Government, State Government or Union territory or local authority
or a Governmental authority by way of any activity:
• in relation to any function entrusted to a Panchayat under article 243G of the Constitution or
• in relation to any function entrusted to a Municipality under article 243W of the Constitution
4 Services by Central Government, State Government, Union territory, local authority or governmental
authority by way of any activity in relation to any function entrusted to a municipality under article
243 W of the Constitution are exempt.
5 Services by a Governmental Authority by way of any activity in relation to any function entrusted to
a Panchayat under article 243G of the Constitution.
6 Services BY Government:
Services by the Central Government, State Government, Union territory or local authority excluding
the following services—
a. services by the Department of Posts by way of speed post, express parcel post, life insurance,
and agency services provided to a person other than the Central Government, State
Government, Union territory;
b. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an
airport;
c. transport of goods or passengers; or
d. any service, other than services covered under entries (a) to (c) above, provided to business
entities.
7 Services provided by the Central Government, State Government, Union territory or local authority
to a business entity with an aggregate turnover of up to Rs. 20 lakh (Rs. 10 lakh in case of a
Special Category States) in the preceding FY.
Explanation - For the purposes of this entry, it is hereby clarified that the provisions of this entry
shall not be applicable to following services:-
(i) Clauses (a), (b) and (c) of Entry 6 above.
(ii) services by way of renting of immovable property.
to another Central Government, State Government, Union territory or local authority.
However, nothing contained in this entry shall apply to services referred in clauses (a), (b) and (c) of
Entry 6 above.
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9 Services provided by Central Government, State Government, Union territory or a local authority
where the consideration for such services does not exceed Rs. 5,000.
However, nothing contained in this entry shall apply to services referred in Clause (a), (b) and (c) of
Entry 6 above. Further, in case where continuous supply of service* is provided by the Central
Government, State Government, Union territory or a local authority, the exemption shall apply only
where the consideration charged for such service does not exceed Rs. 5,000 in a FY.
*as defined in section 2(33) of the CGST Act, 2017
10 Services provided by way of pure labour contracts of construction, erection, commissioning,

installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure
or any other original works pertaining to the beneficiary led individual house construction or
enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.
11 Services by way of pure labour contracts of construction, erection, commissioning, or installation of

original works pertaining to a single residential unit otherwise than as a part of a residential
complex.
12 Services by way of renting of residential dwelling for use as residence.
13 Services by a person by way of-

a. conduct of any religious ceremony;
b. renting of precincts of a religious place meant for general public, owned or managed by an
entity registered as a charitable or religious trust under section 12AA of the Income-tax Act,
1961 or a trust or an institution registered under section 10(23C)(v) of the Income-tax Act or a
body or an authority covered under section 10(23BBA) of the said Income-tax Act.
However, nothing contained in entry (b) of this exemption shall apply to-
(i) renting of rooms where charges are Rs. 1,000 or more per day;
(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where
charges are Rs. 10,000 or more per day;
(iii) renting of shops or other spaces for business or commerce where charges are Rs. 10,000 or
more per month.
14 Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or
lodging purposes, having declared tariff of a unit of accommodation below Rs. 1,000 per day or
equivalent.
15 Transport of passengers, with or without accompanied belongings, by –

a. air, embarking from or terminating in an airport located in the state of Arunachal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located
in West Bengal;
b. non-air conditioned contract carriage other than radio taxi, for transportation of passengers,
excluding tourism, conducted tour, charter or hire; or
c. stage carriage other than air- conditioned stage carriage.
16 Services provided to the Central Government, by way of transport of passengers with or without
accompanied belongings, by air, embarking from or terminating at a RCS (Regional Connectivity
Scheme) airport, against consideration in the form of viability gap funding:
However, nothing contained in this entry shall apply on or after the expiry of a period of 1 year
from the date of commencement of operations of the regional connectivity scheme airport as notified
by the Ministry of Civil Aviation.
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17 Service of transportation of passengers, with or without accompanied belongings, by—
(a) railways in a class other than—
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places
located in India; and
(e) metered cabs or auto rickshaws (including e-rickshaws).
18 Services by way of transportation of goods-

(a) by road except the services of—
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
19 Services by way of transportation of goods by an aircraft from a place outside India upto the
customs station of clearance in India.
20 Services by way of transportation by rail or a vessel from one place in India to another of the
following goods –
(a) relief materials meant for victims of natural or man-made disasters, calamities, accidents or
mishap;
(b) defence or military equipments;
(c) newspaper or magazines registered with the Registrar of Newspapers;
(d) railway equipments or materials;
(e) agricultural produce;
(f) milk, salt and food grain including flours, pulses and rice; and
(g) organic manure.
21 Services provided by a goods transport agency, by way of transport in a goods carriage of –

(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a consignment
transported in a single carriage does not exceed Rs.1,500;
(c) goods, where consideration charged for transportation of all such goods for a single consignee
does not exceed Rs. 750;
(d) milk, salt and food grain including flour, pulses and rice;
(e) organic manure;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or
mishap; or
(h) defence or military equipments.
22 Services by way of giving on hire –

(a) to a state transport undertaking, a motor vehicle meant to carry more than 12 passengers; or
(b) to a goods transport agency, a means of transportation of goods.
23 Service by way of access to a road or a bridge on payment of toll charges.
24 Services by way of loading, unloading, packing, storage or warehousing of rice.
25 Transmission or distribution of electricity by an electricity transmission or distribution utility.
26 Services by the Reserve Bank of India.
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27 Services by way of—
(a) extending deposits, loans or advances in so far as the consideration is represented by way of
interest or discount (other than interest involved in credit card services);
(b) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign
exchange or amongst banks and such dealers.
28 Services of life insurance business provided by way of annuity under the National Pension System
regulated by the Pension Fund Regulatory and Development Authority of India under the Pension
Fund Regulatory and Development Authority Act, 2013.
29 Services of life insurance business provided or agreed to be provided by the Army, Naval and Air
Force Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the
Group Insurance Schemes of the Central Government.
30 Services by the Employees’ State Insurance Corporation to persons governed under the Employees’
State Insurance Act, 1948.
31 Services provided by the Employees Provident Fund Organisation to the persons governed under the
Employees Provident Funds and the Miscellaneous Provisions Act, 1952.
32 Services provided by the Insurance Regulatory and Development Authority of India to insurers under
the Insurance Regulatory and Development Authority of India Act, 1999.
33 Services provided by the Securities and Exchange Board of India set up under the Securities and
Exchange Board of India Act, 1992 by way of protecting the interests of investors in securities and
to promote the development of, and to regulate, the securities market.
34 Services by an acquiring bank, to any person in relation to settlement of an amount upto two
thousand rupees in a single transaction transacted through credit card, debit card, charge card or
other payment card service.
Explanation.— For the purposes of this entry, “acquiring bank” means any banking company,
financial institution including non-banking financial company or any other person, who makes the
payment to any person who accepts such card.
35 Services of general insurance business provided under following schemes –

(a) Hut Insurance Scheme;
(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural
Development Programme);
(c) Scheme for Insurance of Tribals;
(d) Janata Personal Accident Policy and Gramin Accident Policy;
(e) Group Personal Accident Policy for Self-Employed Women;
(f) Agricultural Pumpset and Failed Well Insurance;
(g) premia collected on export credit insurance;
(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme,
approved by the Government of India and implemented by the Ministry of Agriculture;
(i) Jan Arogya Bima Policy;
(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);
(k) Pilot Scheme on Seed Crop Insurance;
(l) Central Sector Scheme on Cattle Insurance;
(m) Universal Health Insurance Scheme;
(n) Rashtriya Swasthya Bima Yojana;
(o) Coconut Palm Insurance Scheme;
(p) Pradhan Mantri Suraksha BimaYojna;
(q) Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of
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the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation
and Multiple Disabilities Act, 1999.
36 Services of life insurance business provided under following schemes-

(a) Janashree Bima Yojana;
(b) Aam Aadmi Bima Yojana;
(c) Life micro-insurance product as approved by the Insurance Regulatory and Development
Authority, having maximum amount of cover of fifty thousand rupees;
(d) Varishtha Pension BimaYojana;
(e) Pradhan Mantri Jeevan Jyoti BimaYojana;
(f) Pradhan Mantri Jan DhanYogana;
(g) Pradhan Mantri Vaya Vandan Yojana.
37 Services by way of collection of contribution under the Atal Pension Yojana.
38 Services by way of collection of contribution under any pension scheme of the State Governments.
39 Services by the following persons in respective capacities –

(a) business facilitator or a business correspondent to a banking company with respect to accounts
in its rural area branch;
(b) any person as an intermediary to a business facilitator or a business correspondent with respect
to services mentioned in entry (a); or
(c) business facilitator or a business correspondent to an insurance company in a rural area.
40 Services provided to the Central Government, State Government, Union territory under any
insurance scheme for which total premium is paid by the Central Government, State Government,
Union territory.
41 One time upfront amount (called as premium, salami, cost, price, development charges or by any
other name) leviable in respect of the service, by way of granting long term (30 years, or more)
lease of industrial plots, provided by the State Government Industrial Development Corporations or
Undertakings to industrial units.
by way of allowing a business entity to operate as a telecom service provider or use radio
frequency spectrum during the period prior to the 1st April, 2016, on payment of licence fee or
spectrum user charges, as the case may be.
43 Services of leasing of assets (rolling stock assets including wagons, coaches, locos) by the Indian
Railways Finance Corporation to Indian Railways.
44 Services provided by an incubatee up to a total turnover of Rs. 50 lakh in a financial year subject to
the following conditions, namely:-
(a) the total turnover had not exceeded Rs. 50 lakh during the preceding financial year; and
(b) a period of three years has not elapsed from the date of entering into an agreement as an
incubatee.
45 Services provided by-

(a) an arbitral tribunal to –
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to Rs. 20 lakh (Rs.10 lakh in the case of
Special Category States) in the preceding financial year;
(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate,
by way of legal services to-
(i) an advocate or partnership firm of advocates providing legal services;
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(ii) any person other than a business entity; or
(iii) a business entity with an aggregate turnover up to Rs. 20 lakh (Rs.10 lakh in the case of
Special Category States) in the preceding financial year;
(c) a senior advocate by way of legal services to-
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to Rs. 20 lakh (Rs.10 lakh in the case of
Special Category States) in the preceding financial year.
46 Services by a veterinary clinic in relation to health care of animals or birds.
by way of-
(a) registration required under any law for the time being in force;
(b) testing, calibration, safety check or certification relating to protection or safety of workers,
consumers or public at large, including fire license, required under any law for the time being
in force.
48 Taxable services, provided or to be provided, by a Technology Business Incubator or a Science and

Technology Entrepreneurship Park recognised by the National Science and Technology
Entrepreneurship Development Board of the Department of Science and Technology, Government of
India or bio- incubators recognised by the Biotechnology Industry Research Assistance Council, under
the Department of Biotechnology, Government of India.
49 Services by way of collecting or providing news by an independent journalist, Press Trust of India or
United News of India.
50 Services of public libraries by way of lending of books, publications or any other knowledge-
enhancing content or material.
51 Services provided by the Goods and Services Tax Network to the Central Government or State
Governments or Union territories for implementation of Goods and Services Tax.
52 Services by an organiser to any person in respect of a business exhibition held outside India.
53 Services by way of sponsorship of sporting events organised -

(a) by a national sports federation, or its affiliated federations, where the participating teams or
individuals represent any district, State, zone or Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of
India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics
Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.
54 Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing
of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by
way of :
(a) agricultural operations directly related to production of any agricultural produce including
cultivation, harvesting, threshing, plant protection or testing;
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting,
drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk
packaging and such like operations which do not alter the essential characteristics of
agricultural produce but make it only marketable for the primary market;
(d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its
P a g e | 107
use;
(e) loading, unloading, packing, storage or warehousing of agricultural produce;
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee or Board or services provided by a
commission agent for sale or purchase of agricultural produce.
55 Carrying out an intermediate production process as job work in relation to cultivation of plants and
rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material
or other similar products or agricultural produce.
56 Services by way of slaughtering of animals.
57 Services by way of pre-conditioning, precooling, ripening, waxing, retail packing, labelling of fruits
and vegetables which do not change or alter the essential characteristics of the said fruits or
vegetables.
58 Services provided by the National Centre for Cold Chain Development under the Ministry of
Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination.
59 Services by a foreign diplomatic mission located in India.
60 Services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry

of External Affairs, the Government of India, under bilateral arrangement.
by way of issuance of passport, visa, driving licence, birth certificate or death certificate.
by way of tolerating non-performance of a contract for which consideration in the form of fines or
liquidated damages is payable to the Central Government, State Government, Union territory or
local authority under such contract.
by way of assignment of right to use natural resources to an individual farmer for cultivation of
plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel,
raw material or other similar products.
by way of assignment of right to use any natural resource where such right to use was assigned by
the Central Government, State Government, Union territory or local authority before the 1st April,
2016:
However, the exemption shall apply only to tax payable on one time charge payable, in full
upfront or in installments, for assignment of right to use such natural resource.
65 Services provided by the Central Government, State Government, Union territory by way of
deputing officers after office hours or on holidays for inspection or container stuffing or such other
duties in relation to import export cargo on payment of Merchant Overtime charges.
66 Services provided -
(a) by an educational institution to its students, faculty and staff;
(b) to an educational institution, by way of,-
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the Central Government, State
Government or Union territory;
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(iii) security or cleaning or house- keeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution; upto higher
secondary:
However, nothing contained in entry (b) shall apply to an educational institution other than an
institution providing services by way of preschool education and education up to higher secondary
school or equivalent.
67 Services provided by the Indian Institutes of Management, as per the guidelines of the Central
Government, to their students, by way of the following educational programmes, except Executive
Development Programme: -
(a) 2 year full time Post Graduate Programmes in Management for the Post Graduate Diploma in
Management, to which admissions are made on the basis of Common Admission Test (CAT)
conducted by the Indian Institute of Management;
(b) fellow programme in Management;
(c) 5 year integrated programme in Management.
68 Services provided to a recognised sports body by-

(a) an individual as a player, referee, umpire, coach or team manager for participation in a
sporting event organised by a recognized sports body;
(b) another recognised sports body.
69 Any services provided by, _

(a) the National Skill Development Corporation set up by the Government of India;
(b) a Sector Skill Council approved by the National Skill Development Corporation;
(c) an assessment agency approved by the Sector Skill Council or the National Skill Development
Corporation;
(d) a training partner approved by the National Skill Development Corporation or the Sector Skill
Council, in relation to-
(i) the National Skill Development Programme implemented by the National Skill
Development Corporation; or
(ii) a vocational skill development course under the National Skill Certification and Monetary
Reward Scheme; or
(iii) any other Scheme implemented by the National Skill Development Corporation.
70 Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry
of Skill Development and Entrepreneurship by way of assessments under the Skill Development
Initiative Scheme.
71 Services provided by training providers (Project implementation agencies) under Deen Dayal
Upadhyaya Grameen Kaushalya Yojana (DDUGKY) implemented by the Ministry of Rural
Development, Government of India by way of offering skill or vocational training courses certified
by the National Council for Vocational Training.
72 Services provided to the Central Government, State Government, Union territory administration
under any training programme for which total expenditure is borne by the Central Government,
State Government, Union territory administration.
73 Services provided by the cord blood banks by way of preservation of stem cells or any other
service in relation to such preservation.
74 Services by way of-

(a) health care services by a clinical establishment, an authorised medical practitioner or para-
medics;
(b) services provided by way of transportation of a patient in an ambulance, other than those
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specified in (a) above.
75 Services provided by operators of the common bio-medical waste treatment facility to a clinical
establishment by way of treatment or disposal of bio-medical waste or the processes incidental
thereto.
76 Services by way of public conveniences such as provision of facilities of bathroom, washrooms,

lavatories, urinal or toilets.
77 Service by an unincorporated body or a non- profit entity registered under any law for the time
being in force, to its own members by way of reimbursement of charges or share of contribution –
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of Goods and
Services Tax; or
(c) up to an amount of Rs. 5,000 per month per member for sourcing of goods or services from a
third person for the common use of its members in a housing society or a residential complex.
78 Services by an artist by way of a performance in folk or classical art forms of-

(a) music, or
(b) dance, or
(c) theatre,
if the consideration charged for such performance is not more than Rs. 1,50,000.
However, the exemption shall not apply to service provided by such artist as a brand ambassador.
79 Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo.
80 Services by way of training or coaching in recreational activities relating to-

(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of the Income-tax Act.
81 Services by way of right to admission to-

(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event other than a
recognised sporting event;
(c) recognised sporting event, where the consideration for admission is not more than Rs. 250 per
person as referred to in (a), (b) and (c) above.
Above services have been exempted from both CGST and IGST by virtue of notifications issued under
respective Acts.
Apart from this, list of services exempt from IGST by Notification No. 9/2017 IT (R) dated 28.06.2017
also include following three services.
82 Services received from a provider of service located in a non- taxable territory by –
(a) the Central Government, State Government, Union territory, a local authority, a governmental
authority or an individual in relation to any purpose other than commerce, industry or any other
business or profession;
(b) an entity registered under section 12AA of the Income-tax Act, 1961 for the purposes of
providing charitable activities; or
(c) a person located in a non-taxable territory.
However, the exemption shall not apply to –
(i) online information and database access or retrieval services received by persons specified in
entry (a) or entry (b); or
(ii) services by way of transportation of goods by a vessel from a place outside India up to the
customs station of clearance in India received by persons specified in the entry.
83 Services received by the RBI, from outside India in relation to management of foreign exchange
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reserves.
84 Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly
outside India.
Other Exemptions
85 Intra-State supplies received by a registered person from any unregistered supplier exempt from
CGST
Intra-State supplies of goods or services or both received by a registered person from any
unregistered supplier, are exempt from the whole of the central tax leviable thereon under section
9(4).
However, the said exemption shall not be applicable where the aggregate value of such supplies of
goods or service or both received by a registered person from any or all the suppliers, who is or
are not registered, exceeds Rs. 5,000 in a day [Notification No.8/2017 CT (R) dated 28.06.2017].
86 Intra-State supplies received by a TDS deductor from any unregistered supplier exempt from
CGST
Intra-State supplies of goods or services or both received by a deductor under section 51, from any
unregistered supplier, is exempt from the whole of the central tax leviable thereon under
section 9(4), subject to the condition that the deductor is not liable to be registered otherwise than
under section 24(vi) [Notification No.9/2017 CT (R) dated 28.06.2017].
87 Services imported by unit/developer in SEZ exempt from IGST

All services imported by a unit/developer in the Special Economic Zone (SEZ) for authorised
operations are exempt from the whole of the integrated tax leviable thereon under section 3(7) of
the Customs Tariff Act, 1975 read with section 5 of the IGST Act, 2017 [Notification No. 18/2017 IT
(R) dated 05.07.2017].
Important Definitions
Advertisement means any form of presentation for promotion of, or bringing awareness about, any
event, idea, immovable property, person, service, goods or actionable claim through
newspaper, television, radio or any other means but does not include any presentation
made in person.
Advocate has the same meaning as assigned to it in clause (a) of subsection (1) of section 2 of the
Advocates Act, 1961. Advocate means an advocate entered in any roll under the
provisions of the Advocates Act, 1961 [Section 2(1)(a) of the Advocates Act, 1961].
Agricultural means application of scientific research and knowledge to agricultural practices through
extension farmer education or training.
Agricultural means any produce out of cultivation of plants and rearing of all life forms of animals,
produce except the rearing of horses, for food, fibre, fuel, raw material or other similar products,
on which either no further processing is done or such processing is done as is usually done
by a cultivator or producer which does not alter its essential characteristics but makes it
marketable for primary market.
Agricultural means any committee or board constituted under a State law for the time being in force
Produce for the purpose of regulating the marketing of agricultural produce.
Marketing
Committee or
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Board
Aircraft has the same meaning as assigned to it in clause (1) of section 2 of the Aircraft Act,
1934. Aircraft means any machine which can derive support in the atmosphere from
reactions of the air, other than reactions of the air against the earth's surface and
includes balloons, whether fixed or free, airships, kites, gliders and flying machines
[Section 2(1) of the Aircraft Act, 1934].
Airport has the same meaning as assigned to it in clause (b) of section 2 of the Airports Authority
of India Act, 1994. Airport means a landing and taking off area for aircrafts, usually
with runways and aircraft maintenance and passenger facilities and includes aerodrome
as defined in section 2(2) of the Aircraft Act, 1934 [Section 2(b) of the Airports
Authority of India Act, 1994].
Approved means, -
vocational • a course run by an industrial training institute or an industrial training centre
education affiliated to the National Council for Vocational Training or State Council for
Vocational Training offering courses in designated trades notified under the
course Apprentices Act, 1961 or
• a Modular Employable Skill Course, approved by the National Council of
Vocational Training, run by a person registered with the Directorate General of
Training, Ministry of Skill Development and Entrepreneurship;
Arbitral has the same meaning as assigned to it in clause (d) of section 2 of the Arbitration and
tribunal Conciliation Act, 1996. Arbitral tribunal means a sole arbitrator or a panel of
arbitrators [Section 2(d) of the Arbitration and Conciliation Act, 1996].
Authorised shall have the same meaning assigned to “Authorised person” in clause (c) of section 2 of
dealer of the Foreign Exchange Management Act, 1999. Authorised person means an authorised
dealer, money changer, off-shore banking unit or any other person for the time being
foreign authorised under section 10(1) of FEMA, 1999 to deal in foreign exchange or foreign
exchange securities [Section 2(c) of the Foreign Exchange Management Act, 1999].
Authorised means a medical practitioner registered with any of the councils of the recognised
medical system of medicines established or recognised by law in India and includes a medical
professional having the requisite qualification to practice in any recognised system of
practitioner medicines in India as per any law for the time being in force.
Banking has the same meaning as assigned to it in section 45A(a) of the Reserve Bank of India
company Act, 1934. Banking company means a banking company as defined in section 5 of the
Banking Regulation Act, 1949, and includes the State Bank of India, any subsidiary bank
as defined in the State Bank of India (Subsidiary Banks) Act, 1959, any corresponding
new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970, and any other financial institution notified by the Central
Government in this behalf [Section 45A(a) of the Reserve Bank of India Act, 1934].
Brand means a person engaged for promotion or marketing of a brand of goods, service,
ambassador property or actionable claim, event or endorsement of name, including a trade name,
logo or house mark of any person.
Business means any person carrying out business.

entity
Business means an intermediary appointed under the business facilitator model or the business
facilitator or correspondent model by a banking company or an insurance company under the
guidelines issued by the Reserve Bank of India.
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business
correspondent
Central means the authority constituted under section 3 of the Electricity (Supply) Act, 1948.
Electricity
Authority
Central shall have the same meaning as assigned to it in clause (10) of section 2 of the Electricity
Transmission Act, 2003.
Utility
Charitable means activities relating to -
activities (i) public health by way of,-
(A) care or counseling of
(I) terminally ill persons or persons with severe physical or mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a dependence-forming substance such as narcotics drugs
or alcohol; or
(B) public awareness of preventive health, family planning or prevention of HIV
infection;
(ii) advancement of religion, spirituality or yoga;
(iii) advancement of educational programmes or skill development relating to,-
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife;
Clinical means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever
establishment name called, that offers services or facilities requiring diagnosis or treatment or care for
illness, injury, deformity, abnormality or pregnancy in any recognised system of
medicines in India, or a place established as an independent entity or a part of an
establishment to carry out diagnostic or investigative services of diseases.
Contract has the same meaning as assigned to it in clause (7) of section 2 of the Motor Vehicles
carriage Act, 1988. Contract carriage means a motor vehicle which carries a passenger or
passenger or passengers for hire or reward and is engaged under a contract, whether
expressed or implied, for the use of such vehicle as a whole for the carriage of
passengers mentioned therein and entered into by a person with a holder of a permit in
relation to such vehicle or any person authorised by him in this behalf on a fixed or an
agreed rate or sum-
(a) on a time basis, whether or not with reference to any route or distance; or
(b) from one point to another, and in either case, without stopping to pick up or set
down passengers not included in the contract anywhere during the journey, and
includes-
(i) a maxicab; and
(ii) a motor cab notwithstanding that separate fares are charged for its
passengers [Section 2(7) of Motor Vehicles Act, 1988].
Courier means any person engaged in the door-to-door transportation of time-sensitive

agency documents, goods or articles utilising the services of a person, either directly or
indirectly, to carry or accompany such documents, goods or articles;
Customs shall have the same meaning as assigned to it in clause (13) of section 2 of the Customs
station Act, 1962. Customs station means any customs port, customs airport, international courier
terminal, foreign post office or land customs station [Section 2(13) of the Customs Act,
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1962].
Declared tariff includes charges for all amenities provided in the unit of accommodation (given on rent
for stay) like furniture, air-conditioner, refrigerators or any other amenities, but without
excluding any discount offered on the published charges for such unit.
Distributor or means an individual or a firm or a body corporate or other legal entity under law so
selling agent appointed by the Organising State through an agreement to market and sell lotteries on
behalf of the Organising State.
Educational means an institution providing services by way of,-

institution • pre-school education and education up to higher secondary school or equivalent;
• education as a part of a curriculum for obtaining a qualification recognised by any
law for the time being in force;
• education as a part of an approved vocational education course.
Electricity means the Central Electricity Authority; a State Electricity Board; the Central Transmission
transmission Utility or a State Transmission Utility notified under the Electricity Act, 2003 or a
distribution or transmission licensee under the said Act, or any other entity entrusted with
or distribution such function by the Central Government or, as the case may be, the State Government.
utility
E-rickshaw means a special purpose battery powered vehicle of power not exceeding 4000 watts,
having three wheels for carrying goods or passengers, as the case may be, for hire or
reward, manufactured, constructed or adapted, equipped and maintained in
accordance with such specifications, as may be prescribed in this behalf.
General has the same meaning as assigned to it in clause (g) of section 3 of the General
insurance Insurance Business (Nationalisation) Act, 1972.
business
General public means the body of people at large sufficiently defined by some common quality of
public or impersonal nature;
Goods has the same meaning as assigned to it in clause (14) of section 2 of the Motor Vehicles
carriage Act, 1988. Goods carriage means any motor vehicle constructed or adapted for use
solely for the carriage of goods, or any motor vehicle not so constructed or adapted
when used for the carriage of goods [Section 2(14) of the Motor Vehicles Act, 1988].
Goods means any person who provides service in relation to transport of goods by road and
transport issues consignment note, by whatever name called.
agency
Governmental has the same meaning as assigned to it in the Explanation to clause (16) of section 2 of
authority the Integrated Goods and Services Tax Act, 2017. As per said explanation, the
expression “Governmental Authority” means an authority or a board or any other
body––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with 90% or more participation by way of equity or control, to carry out any function
entrusted to a municipality under article 243W of the Constitution.
Health care means any service by way of diagnosis or treatment or care for illness, injury, deformity,
services abnormality or pregnancy in any recognised system of medicines in India and includes
services by way of transportation of the patient to and from a clinical establishment, but
does not include hair transplant or cosmetic or plastic surgery, except when undertaken
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to restore or to reconstruct anatomy or functions of body affected due to congenital
defects, developmental abnormalities, injury or trauma.
Incubatee means an entrepreneur located within the premises of a Technology Business Incubator
or Science and Technology Entrepreneurship Park recognised by the National Science
and Technology Entrepreneurship Development Board (NSTEDB) of the Department of
Science and Technology, Government of India and who has entered into an agreement
with the Technology Business Incubator or the Science and Technology Entrepreneurship
Park to enable himself to develop and produce hi-tech and innovative products.
Inland means national waterways as defined in clause (h) of section 2 of the Inland Waterways
waterway Authority of India Act, 1985 or other waterway on any inland water, as defined in
clause (b) of section 2 of the Inland Vessels Act, 1917.
Insurance means a company carrying on life insurance business or general insurance business.
company
Interest means interest payable in any manner in respect of any moneys borrowed or debt
incurred (including a deposit, claim or other similar right or obligation) but does not
include any service fee or other charge in respect of the moneys borrowed or debt
incurred or in respect of any credit facility which has not been utilized.
Intermediary has the same meaning as assigned to it in sub-section (13) of section 2 of the Integrated
Goods and Services Tax Act, 2017. Intermediary means a broker, an agent or any
other person, by whatever name called, who arranges or facilitates the supply of goods
or services or both, or securities, between two or more persons, but does not include a
person who supplies such goods or services or both or securities on his own account
[Section 2(13) of the IGST Act, 2017].
Legal service means any service provided in relation to advice, consultancy or assistance in any
branch of law, in any manner and includes representational services before any court,
tribunal or authority.
Life has the same meaning as assigned to it in clause (11) of section 2 of the Insurance Act,
insurance 1938.
business
Life micro- shall have the same meaning as assigned to it in clause (e) of regulation 2 of the
insurance Insurance Regulatory and Development Authority (Micro-insurance) Regulations, 2005;
product
Metered cab means any contract carriage on which an automatic device, of the type and make
approved under the relevant rules by the State Transport Authority, is fitted which
indicates reading of the fare chargeable at any moment and that is charged
accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988
and the rules made thereunder (but does not include radio taxi).
National park has the same meaning as assigned to it in clause (21) of the section 2 of the Wild Life
(Protection) Act, 1972.
Online shall have the same meaning as assigned to it in clause (17) of the section 2 of the
information Integrated Goods and Services Tax Act, 2017.
Online information and database access or retrieval services means services whose
and database delivery is mediated by information technology over the internet or an electronic
access or network and the nature of which renders their supply essentially automated and
retrieval involving minimal human intervention and impossible to ensure in the absence of
P a g e | 115
services information technology and includes electronic services such as,––

(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through
telecommunication networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic
form through a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming [Section 2(17) of the IGST Act].
Original means- all new constructions;

works • all types of additions and alterations to abandoned or damaged structures on land
that are required to make them workable;
• erection, commissioning or installation of plant, machinery or equipment or structures,
whether pre-fabricated or otherwise.
Print media means,—

✓ ‘book’ as defined in sub-section (1) of section 1 of the Press and Registration of
Books Act, 1867, but does not include business directories, yellow pages and trade
catalogues which are primarily meant for commercial purposes;
✓ ‘newspaper’ as defined in sub-section (1) of section 1 of the Press and Registration
of Books Act, 1867.
Port has the same meaning as assigned to it in clause (q) of section 2 of the Major Port Trusts
Act, 1963 or in clause (4) of section 3 of the Indian Ports Act, 1908.
Radio taxi means a taxi including a radio cab, by whatever name called, which is in two-way radio
communication with a central control office and is enabled for tracking using the Global
Positioning System or General Packet Radio Service;
Recognised means any sporting event,-

sporting event (i) organised by a recognised sports body where the participating team or individual
represent any district, State, zone or country;
(ii) organised -
(A) by a national sports federation, or its affiliated federations, where the
participating teams or individuals represent any district, state or zone;
(B) by Association of Indian Universities, Inter-University Sports Board, School Games
Federation of India, All India Sports Council for the Deaf, Paralympic Committee
of India or Special Olympics Bharat;
(C) by Central Civil Services Cultural and Sports Board;
(D) as part of national games, by Indian Olympic Association; or
(E) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;
Recognised means –
sports body i. Indian Olympic Association;
ii. Sports Authority of India;
iii. a national sports federation recognised by the Ministry of Sports and Youth
Affairs of the Central Government, and its affiliate federations;
iv. national sports promotion organisations recognised by the Ministry of Sports and
Youth Affairs of the Central Government;
v. the International Olympic Association or a federation recognised by the
International Olympic Association; or
vi. a federation or a body which regulates a sport at international level and its
affiliated federations or bodies regulating a sport in India.
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Religious means a place which is primarily meant for conduct of prayers or worship pertaining to
place a religion, meditation, or spirituality;
Renting in means allowing, permitting or granting access, entry, occupation, use or any such facility,
relation to wholly or partly, in an immovable property, with or without the transfer of possession or
control of the said immovable property and includes letting, leasing, licensing or other
immovable similar arrangements in respect of immovable property;
property
Reserve Bank means the bank established under section 3 of the Reserve Bank of India Act, 1934;
of India
Residential means any complex comprising of a building or buildings, having more than one single
complex residential unit;
Rural area means the area comprised in a village as defined in land revenue records, excluding the
area under any municipal committee, municipal corporation, town area committee,
cantonment board or notified area committee; or any area that may be notified as an
urban area by the Central Government or a State Government;
Senior has the same meaning as assigned to it in section 16 of the Advocates Act, 1961 which,
advocate inter alia, provides that an advocate may, with his consent, be designated as senior
advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability
standing at the Bar or special knowledge or experience in law he is deserving of such
distinction. Senior advocates shall, in the matter of their practice, be subject to such
restrictions as the Bar Council of India may, in the interest of the legal profession,
prescribe.
Single means a self-contained residential unit which is designed for use, wholly or principally,
residential for residential purposes for one family.
unit
Special shall mean the States as specified in sub-clause (g) of clause (4) of article 279A of the
category Constitution.
States
Specified shall mean,-
organisation • Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or
• ‘Committee’ or ‘State Committee’ as defined in section 2 of the Haj Committee Act,
2002.
Stage shall have the same meaning as assigned to it in clause (40) of section 2 of the Motor
carriage Vehicles Act, 1988. Stage carriage means a motor vehicle constructed or adapted to
carry more than 6 passengers excluding the driver for hire or reward at separate fares
paid by or for individual passengers, either for the whole journey or for stages of the
journey [Section 2(40) of the Motor Vehicles Act, 1988].
State means the Board constituted under section 5 of the Electricity (Supply) Act, 1948.
Electricity
Board
State shall have the same meaning as assigned to it in clause (67) of section 2 of the Electricity
Transmission Act, 2003.
Utility
State has the same meaning as assigned to it in clause (42) of section 2 of the Motor Vehicles
Transport Act, 1988. State transport undertaking means any undertaking providing road transport
service, where such undertaking is carried on by
P a g e | 117
Undertaking i. the Central Government or a State Government;

ii. any Road Transport Corporation established under section 3 of the Road Transport
Corporations Act, 1950.
iii. any municipality or any corporation or company owned or controlled by the Central
Government or one or more State Governments, or by the Central Government and
one or more State Governments.
Explanation-For the purposes of this clause, road transport service means a service of
motor vehicles carrying passengers or goods or both by road for hire or reward [Section
2(42) of the Motor Vehicles Act, 1988].
Tiger reserve has the same meaning as assigned to it in clause (e) of section 38K of the Wild Life
(Protection) Act, 1972.
Tour operator means any person engaged in the business of planning, scheduling, organizing,
arranging tours (which may include arrangements for accommodation, sightseeing or
other similar services) by any mode of transport, and includes any person engaged in
the business of operating tours.
Trade union has the same meaning as assigned to it in clause (h) of section 2 of the Trade Unions Act,
1926.
Vessel has the same meaning as assigned to it in clause (z) of section 2 of the Major Port Trusts
Act, 1963.
Wildlife means a sanctuary as defined in the clause (26) of the section 2 of The Wild Life
sanctuary (Protection) Act, 1972.
Zoo has the same meaning as assigned to it in the clause (39) of the section 2 of the Wild
Life (Protection) Act, 1972.
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Theory Questions
Question 1
An individual acts as a referee in a football match organized by Sports Authority of India. He has also acted as a
referee in another charity football match organized by a local sports club, in lieu of a lump sum payment. Discuss
whether he is required to pay any GST?
Question 2
RXL Pvt. Ltd. manufactures beauty soap with the brand name ‘Forever Young’. RXL Pvt. Ltd. has organized a concert to
promote its brand. Ms. Ahana Kapoor, its brand ambassador, who is a leading film actress, has given a classical dance
performance in the said concert. The proceeds of the concert worth Rs. 1,20,000 will
be donated to a charitable organization.
Whether Ms. Ahana Kapoor will be required to pay any GST?
Question 3
When exemption from whole of tax collected on goods or services or both has been granted absolutely, can a person
pay tax?
Question 4
Examine whether GST is exempted on the following independent supplies of services:
(i) Service provided by a private transport operator to Scholar Boys Higher Secondary School in relation to
transportation of students to and from the school.
(ii) Services provided by way of vehicle parking to general public in a shopping mall.
Question 5
Whether Council has powers to grant exemption from payment of taxes?
Question 6
Does exemption from CGST automatically operate as exemption from SGST?
Question 7
Is it possible for CGST to be exempted but not SGST or vice versa for any supply?
Question 8
What is the effect of omitting to avail exemption?
Question 9
What is the difference between exemption and exclusion from GST?
Question 10
Is supply of exempt goods considered taxable or non-taxable supply?
Question 11
Is Petrol an exempt good or non-taxable good?
Question 12
NGO registered under sec. 12AA of the Income Tax Act, 1961 is working for the rehabilitation of disabled. The
aggregate value of taxable supply is Rs. 20 Lakh. Find the taxability for the given service.
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Practical Questions
Question 1
Determine taxable value of supply under GST law with respect to each of the following independent services provided
by the registered persons :
Particulars Gross amount charged (Rs.)
Fees charged for yoga camp conducted by a charitable trust 50,000
Amount charged by business correspondent for the services provided to the rural 1,00,000
branch of a bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem cells 5,00,000
Amount charged for service provided by commentator to a recognized sports body 5,20,000
Question 2
Discuss whether GST is payable in respect of transportation services provided by Raghav Goods Transport Agency in
each of the following independent cases :
Customer Nature of services provided Amount Charged
A Transportation of milk Rs. 20,000
B Transportation of books on a consignment transported in a single goods carriage Rs. 3,000
C Transportation of chairs for a single consignee in the goods carriage Rs. 600
Question 3
Ananda Trust, an entity registered under section 12AA of the Income-tax Act, 1961, has furnished you the following
details with respect to the activities undertaken by it. You are required to compute its tax liability from the information
given below:
Amount received for the Yoga camps organized for elderly people 4,83,000
Payment made for the services received from a service provider located in US, for the 5,50,000
purposes of providing ‘charitable activities’
Amount received for counseling of mentally disabled persons 10,50,000
Amount received for renting of commercial property owned by the trust 1,50,000
Amount received for activities relating to preservation of forests and wildlife 12,35,000
Note: Applicable CGST 9% and SGST 9% have been charged separately wherever applicable. Ananda Trust is not
eligible for composition levy.
Question 4
A contract awarded by Bombay Municipal Corportion (BMC) for repair of a particular road to M/s B Ltd. of Mumbai
with a total consideration of Rs. 12 lakhs with terms and conditions as stated that:
(a) It is pure service (excluding works contract service or other composite supplies involving supply of any goods) and
(b) the entire work should be completed within 30 days. The said work has been completed as per terms and
conditions. Applicable rate of GST 18%
Find the following:
(a) Is it taxable supply?
(b) Rework if the contract is in the nature of works contract where material is involved in the value of contract. Is it
taxable supply? If so who is liable to pay GST.
Note: previous turnover of M/s B Ltd. was Rs. 22 crores.
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Time of Supply
GST is payable on supply of goods or services. Time of Supply means the date on which the charging event has occurred.
As a result, the rate of CGST/ SGST or IGST or UTGST will be decided in accordance with the time of supply. Also,
the due date of payment of GST will also be determined on the basis of time of supply.

CGST Act
Chapter IV – Time and Value of Supply
Section 12 Time of supply of goods
Section 13 Time of supply of services
Chapter VII – Tax Invoice, Credit And Debit Notes
Section 31 Tax invoice
CGST Rules
Chapter VI – Tax Invoice, Credit And Debit Notes
Rule 46 Tax invoice
Rule 47 Time limit for issuing tax invoice
Time of Supply of Goods Time of Supply of Services

Section 12(1) The liability to pay tax on goods shall Section 13(1) The liability to pay tax on services shall
arise at the time of supply, as determined arise at the time of supply, as
in accordance with the provisions of this determined in accordance with the
section. provisions of this section.
Section 12(2) Time of Supply of Goods under Forward Section 13(2) Time of Supply of Services under
Charge Forward Charge.
Section 12(3) Time of Supply of Goods under Reverse Section 13(3) Time of Supply of Services under
Charge Reverse Charge.
Section 12(4) Time of Supply in case of Supply of Section 13(4) Time of Supply in case of Supply of
Vouchers Vouchers.
Section 12(5) Residuary Clause Section 13(5) Residuary Clause
Section 12(6) The time of supply to the extent it relates Section 13(6) The time of supply to the extent it
to an addition in the value of supply by relates to an addition in the value of
way of interest, late fee or penalty for supply by way of interest, late fee or
delayed payment of any consideration penalty for delayed payment of any
shall be the date on which the supplier consideration shall be the date on which
receives such addition in value. the supplier receives such addition in
value.

(1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this
section.
(2) The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue
the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply:
Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount
indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be
the date of issue of invoice in respect of such excess amount.
Explanation 1.––For the purposes of clauses (a) and (b), “supply” shall be deemed to have been made to the extent it is covered by
the invoice or, as the case may be, the payment.
Explanation 2.––For the purposes of clause (b), “the date on which the supplier receives the payment” shall be the date on which
the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is
earlier.
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(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the
earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank
account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called,
in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of
supply shall be the date of entry in the books of account of the recipient of supply.
(4) In case of supply of vouchers by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-
section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for
delayed payment of any consideration shall be the date on which the supplier receives such addition in value.

(1) A registered person supplying taxable goods shall, before or at the time of,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as
may be prescribed:
Provided that the Government may, on the recommendations of the Council, by notification, specify the categories of goods or
supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed.
(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period,
issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:
Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may
be mentioned therein, specify the categories of services in respect of which––
(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(b) tax invoice may not be issued.
(3) Notwithstanding anything contained in sub-sections (1) and (2)––
(a) a registered person may, within one month from the date of issuance of certificate of registration and in such manner as may
be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of
registration till the date of issuance of certificate of registration to him;
(b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred
rupees subject to such conditions and in such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue,
instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed:
Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than
two hundred rupees subject to such conditions and in such manner as may be prescribed;
(d) a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a
receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a
receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered
person may issue to the person who had made the payment, a refund voucher against such payment;
(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in
respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or
services or both;
(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher
at the time of making payment to the supplier.
(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the
P a g e | 122
invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.
(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––
(a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of
payment;
(b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when
the supplier of service receives the payment;
(c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of
that event.
(6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued
at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.
(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are
removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of
removal, whichever is earlier.
Explanation.––For the purposes of this section, the expression “tax invoice” shall include any revised invoice issued by the
supplier in respect of a supply made earlier.
Section 31 Tax Invoice (Relevant to Time of supply of goods)

Sub-Section Clause and Provision
(a) removal of goods for supply to the recipient, where the supply involves movement of
goods; or
issue a tax invoice showing the description, quantity and value of goods, the tax charged
thereon and such other particulars as may be prescribed:
Provided that the Government may, on the recommendations of the Council, by
notification, specify the categories of goods or supplies in respect of which a tax invoice
shall be issued, within such time and in such manner as may be prescribed.
(4) In case of continuous supply of goods, where successive statements of accounts or

successive payments are involved, the invoice shall be issued before or at the time each
such statement is issued or, as the case may be, each such payment is received.
(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or
taken on approval for sale or return are removed before the supply takes place, the invoice
shall be issued before or at the time of supply or six months from the date of removal,

Provision The liability to pay tax on goods shall arise at the time of supply, as determined in
accordance with the provisions of this section.
Insights The liability to pay tax shall arise as per this section.
It covers only the goods.
Time of supply shall be determined as per this section.
Analysis of Section 12(2) read with Section 31(1), 31(4), 31(7)

Provision The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or the last date on which he is required,
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under sub-section (1) of section 31, to issue the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the supply:
Provided that where the supplier of taxable goods receives an amount up to one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess amount shall, at the option of the said supplier,
be the date of issue of invoice in respect of such excess amount.
Explanation 1.––For the purposes of clauses (a) and (b), “supply” shall be deemed to have
been made to the extent it is covered by the invoice or, as the case may be, the
payment.
Explanation 2.––For the purposes of clause (b), “the date on which the supplier receives
the payment” shall be the date on which the payment is entered in his books of account
or the date on which the payment is credited to his bank account, whichever is earlier.
Trigger This section covers the Forward charge mechanism i.e. supply of goods where
point supplier is liable to pay tax.
Time of Time of supply of goods by a person who is liable to pay GST on the supply, is
Supply earlier of the following two dates:
✓ Date of issue of tax invoice or the last date on which invoice ought to have
been issued in terms of section 31, or
✓ Date of receipt of payment, to the extent the payment covers the goods.
Time for General Cases The invoice needs to be issued either before or at the time of
issue of removal (where supply involves movement of goods) of goods/
invoice delivery of goods/ making goods available to recipient.
Continuous The invoice should be issued before or at the time of issuance of

supply of goods periodical statement/ receipt of periodical payment.
Goods sent or Invoice should be issued before or at the time of supply or 6

taken on months from the date of removal, whichever is earlier.
approval for sale
or return
Date of “Date of receipt of payment” in the above situation refers to the earlier of the
Receipt of following :
payment
✓ Date on which the payment is recorded in the books of account of the entity
(supplier of goods) that receives the payment, or
✓ Date on which the payment is credited to the entity’s bank account.
To the This is relevant when either a part of the consideration is paid in advance or
extent invoice is issued for part payment. In such a case, the time of supply will not
covered by cover the full supply. The supply shall be deemed to have been made to the
the invoice extent it is covered by the invoice or the part advance payment.
Excess Option of If payment received is up to Rs. 1,000 in excess of the value of the
taking
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payment invoice date goods invoiced, the supplier can choose to take the date of invoice
upto Rs. as time of issued with respect to such excess amount as the time of supply of
1000 Supply
goods for such excess value.
Example Company X receives an advance of Rs. 50,000 on 30th April,

against which it despatches goods worth Rs. 49,200 under invoice
dated 5th May.
In this example, Company X has received Rs. 800 in excess, which
cannot be considered as payment for the present invoice. Company X
will adjust this excess amount against the next supply.
The time of supply for Rs. 800 can be taken as the date of the
next invoice if the supplier so chooses, though the payment was
received earlier.

Provision In case of supplies in respect of which tax is paid or liable to be paid on reverse charge
basis, the time of supply shall be the earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or the
date on which the payment is debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any
other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or
clause (b) or clause (c), the time of supply shall be the date of entry in the books of
account of the recipient of supply.
Trigger This section covers the Reverse charge mechanism i.e. supply of goods where
point recipient is liable to pay tax.
Time of Time of supply of goods is earliest of the following dates:

Supply
✓ Date on which the goods are received, or
✓ Date on which payment is recorded in the books of account of the entity

that receives the goods, or the date on which it is debited from the entity’s
bank account, whichever is earlier, or
✓ Date immediately following 30 days from the date of issue of invoice (or
document by some other name in lieu of invoice) by the supplier
Time of If it is not possible to determine the time of supply by using these parameters,
supply not then the time of supply will be the date of entry of goods in the books of
determinable account of the recipient of supply.
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Provision In case of supply of vouchers by a supplier, the time of supply shall be—
Trigger This provision is applicable in case of supply of vouchers by a supplier.

point
Meaning of Vouchers are instruments that can be exchanged as payment for goods or services
Vouchers of the designated value.
Time of The time of supply of vouchers exchangeable for goods is-

Supply
If the supply is identifiable at that Point Date of issue of the voucher
If the supply is not identifiable at that Point Date of redemption of the voucher
Example With each purchase of a large pizza during the Christmas week from Perfect
Pizza, one can buy a voucher for Rs. 20 which will be redeemable till 5 Jan for a
small pizza.
As the supply against which the voucher will be redeemed is known on the date of
the sale, the time of supply is the date of issue of the voucher.
Acmesales Limited sells food coupons to a company, which gives these to its
employees as part of the agreed perquisites. The coupons can be redeemed for
purchase of any item of food /provisions in the outlets that are part of the
program.
As the supply against which the coupon will be redeemed is not known on the
date of the sale of the coupon, the time of supply of the coupon will be the
date on which the employee redeems it against food/ provision items of his choice.

Provision Where it is not possible to determine the time of supply under the provisions of sub-section
(2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such
return is to be filed; or
Trigger This provision is applicable when the situation is confronted which is not covered
point by any of the provisions discussed above.
Time of The time of supply in such case shall be as follows :

supply
Where a periodical Due date for filing of the periodical return i.e. date on which
return is to be filed return is required to be filed.
In other cases Date on which GST is paid.
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Example Investigation reveals clandestine removal of goods by a supplier who is not

registered under GST. The evidence is in the form of noting, often undated, and
some corroborative material. The supplier voluntarily pays tax during the
investigation, to close the case. The time of supply will be the date on which the
tax is paid, as being unregistered, the supplier is not required to file periodical
returns.

Provision The time of supply to the extent it relates to an addition in the value of supply by way of
interest, late fee or penalty for delayed payment of any consideration shall be the date
on which the supplier receives such addition in value.
Basic Commercially, all the contract of supplies stipulate payment of interest/ late fee/
penalty etc. for payment of consideration beyond the agreed time period. Such
amount is includible in value of taxable supply.
Trigger This provision is applicable when the time of supply is to be found out in such
point cases of additional amount being payable.
Time of The time of supply in case of addition in value by way of interest/ late fee/
supply penalty for delayed payment of consideration for goods is the date on which the
supplier receives such addition in value.

(1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this
section.
(2) The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section
31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or
the date of receipt of payment, whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause
(a) or clause (b) do not apply:
Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount
indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be
the date of issue of invoice relating to such excess amount.
Explanation.––For the purposes of clauses (a) and (b)––
(i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment;
(ii) “the date of receipt of payment” shall be the date on which the payment is entered in the books of account of the supplier or
the date on which the payment is credited to his bank account, whichever is earlier.
(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the
earlier of the following dates, namely:––
(a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank
account, whichever is earlier; or
(b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called,
in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be
the date of entry in the books of account of the recipient of supply:
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Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of
supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier.
(4) In case of supply of vouchers by a supplier, the time of supply shall be––
(5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-
section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
(6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for
delayed payment of any consideration shall be the date on which the supplier receives such addition in value.
Bare Text of Section 31 (Relevant to Time of supply of services)

Section 31 Tax Invoice
Sub-Section Clause and Provision
(2) A registered person supplying taxable services shall, before or after the provision of service
but within a prescribed period, issue a tax invoice, showing the description, value, tax
charged thereon and such other particulars as may be prescribed:
notification and subject to such conditions as may be mentioned therein, specify the
categories of services in respect of which––
(a) any other document issued in relation to the supply shall be deemed to be a tax
invoice; or
(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of
services,––
(a) where the due date of payment is ascertainable from the contract, the invoice shall
be issued on or before the due date of payment;
(b) where the due date of payment is not ascertainable from the contract, the invoice
shall be issued before or at the time when the supplier of service receives the
payment;
(c) where the payment is linked to the completion of an event, the invoice shall be
issued on or before the date of completion of that event.
(6) In a case where the supply of services ceases under a contract before the completion of
the supply, the invoice shall be issued at the time when the supply ceases and such invoice
shall be issued to the extent of the supply made before such cessation.

Provision The liability to pay tax on services shall arise at the time of supply, as determined in
accordance with the provisions of this section.
Insights The liability to pay tax shall arise as per this section.
It covers only the services.
Time of supply shall be determined as per this section.
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Analysis of Section 13(2) read with Section 31(2), 31(5), 31(6) read with
Rule 46 and 47
Provision The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period
prescribed under sub-section (2) of section 31 or the date of receipt of payment,
whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period
prescribed under sub-section (2) of section 31 or the date of receipt of payment,
whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books of
account, in a case where the provisions of clause (a) or clause (b) do not apply:
Provided that where the supplier of taxable service receives an amount up to one
thousand rupees in excess of the amount indicated in the tax invoice, the time of supply
to the extent of such excess amount shall, at the option of the said supplier, be the date
of issue of invoice relating to such excess amount.
Explanation.––For the purposes of clauses (a) and (b)––
(i) the supply shall be deemed to have been made to the extent it is covered by the
invoice or, as the case may be, the payment;
(ii) “the date of receipt of payment” shall be the date on which the payment is
entered in the books of account of the supplier or the date on which the payment
is credited to his bank account, whichever is earlier.
Trigger This section covers the Forward charge mechanism i.e. supply of services where
point supplier is liable to pay tax.
Time of Time of supply of services by a person who is liable to pay GST on the supply, is
Supply earlier of the following two dates:
if the invoice is ✓ Date of invoice or

issued in time ✓ Date of receipt of payment (to the extent the payment
as per section 31
covers the services),
if the invoice is ✓ Date of provision of service or

not issued in ✓ Date of receipt of payment (to the extent the payment
time as per
covers the services),
section 31
If above not If these two methods are not applicable, the time of supply will
applicable be the date on which the recipient of service shows receipt of
the service in his books of account.
Time for Supplier of The invoice (referred to in rule 46), shall be issued within a
issue of services not period of 30 days from the date of supply of service.
invoice being an
[Section insurer or a
banking
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31(2), (5), company or a

(6) Read financial
with Rule institution
47] Supplier of Where the supplier of services is an insurer or a banking company
services being or a financial institution, including a non-banking financial
an insurer or a
company, the invoice (or any document in lieu thereof), shall be
banking
company or a issued within a period of 45 days from the date of supply of
financial service.
institution
Supply of In case of insurance companies/ banking companies/ financial
services between institutions including NBFCs/ telecom companies/ notified
distinct persons
supplier of services making taxable supplies between distinct
persons as specified in section 25, invoice may be issued
- before or at the time of recording such supply in the books
of account or
- before the expiry of the quarter during which the supply was
made.
Continuous Where the due date of The invoice shall be issued on or

supply of payment is ascertainable from
before the due date of payment.
services the contract
Where the due date of The invoice shall be issued before
payment is not ascertainable
or at the time when the supplier
from the contract
of service receives the payment.
Where the payment is linked to The invoice shall be issued on or

the completion of an event
before the date of completion of
that event.
Cessation of The invoice (to the extent of the supply made before such
supply of cessation) should be issued at the time when the supply ceases.
services before
completion of
supply
Date of “Date of receipt of payment” in the above situation refers to the earlier of the
Receipt of following :
payment
✓ The date on which the payment is recorded in the books of account of the
entity (supplier of services) that receives the payment, or
✓ The date on which the payment is credited to the entity’s bank account,
To the This is relevant when either a part of the consideration is paid in advance or
extent invoice is issued for part payment. In such a case, the time of supply will not
covered by cover the full supply. The supply shall be deemed to have been made to the
the invoice extent it is covered by the invoice or the part advance payment.
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Excess Option of If payment received is up to Rs. 1,000 in excess of the value of the
payment taking goods invoiced, the supplier can choose to take the date of invoice
upto Rs. invoice date
issued with respect to such excess amount as the time of supply of
1000 as time of
Supply goods for such excess value.
Example A telephone company receives Rs. 5000 against an invoice of Rs.

4800. The excess amount of Rs. 200 can be adjusted against the
next invoice. The company has the option to take the date of the
next invoice as the time of supply of service in relation to the
amount of Rs. 200 received in excess against the earlier invoice.

Provision In case of supplies in respect of which tax is paid or liable to be paid on reverse charge
basis, the time of supply shall be the earlier of the following dates, namely:––
(a) the date of payment as entered in the books of account of the recipient or the
date on which the payment is debited in his bank account, whichever is earlier; or
(b) the date immediately following sixty days from the date of issue of invoice or any
other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or
clause (b), the time of supply shall be the date of entry in the books of account of the
recipient of supply:
Provided further that in case of supply by associated enterprises, where the supplier of
service is located outside India, the time of supply shall be the date of entry in the books
of account of the recipient of supply or the date of payment, whichever is earlier.
Trigger This section covers the Reverse charge mechanism i.e. supply of goods where
point recipient is liable to pay tax.
Time of Time of supply of services is earliest of the following dates:

Supply
✓ Date of payment as entered in the books of account of the recipient or the
date on which the payment is debited in his bank account, whichever is earlier;
or
✓ Date immediately following 60 days from the date of issue of invoice or any
other document, by whatever name called, in lieu thereof by the supplier
Time of If it is not possible to determine the time of supply by using these parameters,
supply not then the time of supply will be the date of entry of services in the books of
deter- account of the recipient of supply.
minable
Import of The provisions of reverse charge are not applicable in case of services received from
services associated enterprises located outside India. In such case, time of supply will be
between ✓ the date of entry of the service in the books of account of the recipient, or
associated ✓ the date of payment for the service.
enterprises
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Provision In case of supply of vouchers by a supplier, the time of supply shall be—
Trigger This provision is applicable in case of supply of vouchers by a supplier.

point
Meaning of Vouchers are instruments that can be exchanged as payment for goods or services
Vouchers of the designated value.
Time of The time of supply of vouchers exchangeable for goods is-

Supply
If the supply is identifiable at that Point Date of issue of the voucher
If the supply is not identifiable at that Point Date of redemption of the voucher
Example Best Hospitality Services enters into agreement with Drive Marketing Ltd by
which Drive Marketing Ltd. markets Best Hospitality Services hotel rooms and
sells coupons/ vouchers redeemable for a discount against stay in the hotel.
As the supply against which the voucher will be redeemed is identifiable, the time
of supply of the voucher will be its date of issue.

Provision Where it is not possible to determine the time of supply under the provisions of sub-section
(2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such
return is to be filed; or
Trigger This provision is applicable when the situation is confronted which is not covered
point by any of the provisions discussed above.
Time of The time of supply in such case shall be as follows :

supply
Where a periodical return Due date for filing of the periodical return i.e. Date on
is to be filed which return is required to be filed.
In other cases Date on which GST is paid.

Provision The time of supply to the extent it relates to an addition in the value of supply by way of
interest, late fee or penalty for delayed payment of any consideration shall be the date
on which the supplier receives such addition in value.
Basic Commercially, all the contract of supplies stipulate payment of interest/ late fee/
penalty etc. for payment of consideration beyond the agreed time period. Such
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amount is includible in value of taxable supply.
Trigger This provision is applicable when the time of supply is to be found out in such
point cases of additional amount being payable.
Time of The time of supply in case of addition in value by way of interest/ late fee/
supply penalty for delayed payment of consideration for goods is the date on which the
supplier receives such addition in value.
Value of Supply
GST is payable on supply of goods or services. Time of Supply means the date on which the charging event has occurred.
Value of supply means the amount on which the computation of GST is to be made.
As GST is levied as a percentage of the value of supply, whether of goods or of services, it becomes important to know
how to arrive at the value on which tax is to be paid.

CGST Act
Chapter IV – Time and Value of Supply
Section 15 Value of Taxable Supply

(1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for
the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the
sole consideration for the supply.
(2) The value of supply shall include–––
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods
and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation
to States) Act, if charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the
supply and not included in the price actually paid or payable for the goods or services or both;
(c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount
charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before
delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
(e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments.
Explanation.––For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier
who receives the subsidy.
(3) The value of the supply shall not include any discount which is given––
(a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked
to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the
recipient of the supply.
(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be
determined in such manner as may be prescribed.
(5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the
Government on the recommendations of the Council shall be determined in such manner as may be prescribed.
Explanation.—For the purposes of this Act,––
(a) persons shall be deemed to be “related persons” if––
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(i) such persons are officers or directors of one another’s businesses;

(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or
shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family;
(b) the term “person” also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole
concessionaire, howsoever described, of the other, shall be deemed to be related.
Basic…
Whereas Section 15(1), (2) and (3) cover the Supplies made for a price in money (monetary consideration), to unrelated
persons; Section 15(4) and (5) cover the Supplies made for non-monetary consideration, or for part monetary
consideration and part other, or involving additional consideration, or to related persons, or for specific classes of supply.

Provision The value of a supply of goods or services or both shall be the transaction value, which is
the price actually paid or payable for the said supply of goods or services or both where
the supplier and the recipient of the supply are not related and the price is the sole
consideration for the supply.
Value of The valuation for the purpose of GST shall be done based on the transaction
Supply value.
Conditions The value of taxable supply of goods and services shall ordinarily be ‘the
transaction value’ which is the price paid or payable,
- when the parties are not related and
- price is the sole consideration.
Price Insights This is the price for the specific supply that is being valued. It
actually includes the amount already paid at the time the supply is being
paid or valued for tax, as well as the amount payable and not yet paid at
payable that time. The word ‘payable’ refers to price that is agreed to be
paid for the goods/ services.
Example Contracted price for 1 MT of cement from X Ltd to Y: Rs. 7000.

Advance payment before despatch: Rs. 700.
Payable after credit period of 30 days: Rs. 6300.
Base taxable value: Rs. 7000
Section 15 further elaborates various inclusions and exclusions from the ambit of transaction value.

Provision The value of supply shall include-
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being
in force other than this Act, the State Goods and Services Tax Act, the Union Territory
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Goods and Services Tax Act and the Goods and Services Tax (Compensation to
States) Act, if charged separately by the Supplier
(b) any amount that the supplier is liable to pay in relation to such supply but which has
been incurred by the recipient of the supply and not included in the price actually
paid or payable for the goods or services or both;
(c) incidental expenses, including commission and packing, charged by the supplier to
the recipient of a supply and any amount charged for anything done by the
supplier in respect of the supply of goods or services or both at the time of, or
before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any
supply; and
(e) subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments.
Explanation.––For the purposes of this sub-section, the amount of subsidy shall be included
in the value of supply of the supplier who receives the subsidy.
Basic The taxable value shall include certain elements in addition to price.
Taxes, Insights GST and GST cess are not part of taxable value, but other taxes/
duties etc. cesses/ fees etc. will form part of the value of taxable supply, if
separately billed.
Example If a supplier of goods pays a municipal tax in relation to the goods

being supplied and bills the same separately, such tax will form part
of the value of taxable supply. In the same situation, if the
supplier pays the municipal tax but does not charge the same
separately, even then such tax will form part of the value of
taxable supply as the supplier would have factored such tax while
computing the cost of the goods.
Payments Insights A supplier may need to incur various expenses in order to make a
made to particular supply of goods/ services. In the normal course, he would
third pay these amounts and they would form part of the value that he
parties by charges from the customer (recipient of supply).
the recipient
However, even if the customer makes direct payment of some of
on behalf of
such liabilities (of the supplier) to the third parties, and the
the
supplier does not include this amount in his bill, it would still form
supplier
part of the value of the taxable supply.
Example Grand Biz contracts with ABC Co. to conduct a dealers’ meet. In
furtherance of this, Grand Biz contracts with vendors to deliver
goods/ services, like water, soft drinks, audio system, projector,
catering, flowers etc. at the venue on the stipulated dates at the
stipulated prices. Grand Biz is liable to make these payments as
contracted. Soft drinks supplier wants payment upon delivery; ABC
Co. agrees to pay the bill raised by soft drinks vendor on Grand Biz
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on receiving the crates of soft drinks. This amount is not billed by

Grand Biz to ABC Co. However, it would be added to the value of
service provided by Grand Biz to ABC Co. for payment of GST.
Incidental Insights The value of supply shall include

expenses - Incidental expenses, such as, commission and packing charged
by the supplier to the recipient of supply
- any amount charged by the supplier for anything done in
respect of supply either at the time or before delivery of
goods or services.
Example Inspection or certification charges

Installation and testing charges
Interest or Insights It is specifically provided that interest or late fee or penalty for
late fee or delay in payment of any consideration for supply will form part of
penalty for the value of supply.
delayed
payment Example A supply priced at Rs. 2,000 is made, with a credit period of 1
month for payment. Thereafter interest of 12% is charged. The
payment is received after the lapse of two months from the date
of supply. The amount of 12% p.a. (i.e. 1% per month) on Rs.
2,000 for one month after the free credit period is Rs. 20. Such
interest will be added to the value and thus, the value of taxable
supply will work out to be Rs. 2,020.
Subsidies Meaning of Subsidy is a sum of money given to keep the price of a service or
subsidy commodity low.
Treatment If given by the State or Central the lower price, after adjusting
Government
the subsidy, is the taxable value.
If given by a person or entity other the price, without adjusting the

than the State or Central Government
subsidy, is the taxable value.
Notable point The subsidy is added to the value of supply of the supplier who
receives the subsidy.
Example The selling price of a notebook is Rs. 50. For notebooks sold to
students in Government schools, a company uses its CSR funds to
pay the seller Rs. 30, so that the students pay only Rs. 20 per
notebook. The taxable value of the notebook will be Rs. 50, as this
is a nongovernment subsidy. If the same subsidy is paid by the
Central Government or State Government, the taxable value of the
notebook would be Rs. 30.
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Provision The value of the supply shall not include any discount which is given
(a) before or at the time of the supply if such discount has been duly recorded in the
invoice issued in respect of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement entered into at or
before the time of such supply and specifically linked to relevant invoices;
and
(ii) input tax credit as is attributable to the discount on the basis of document
issued by the supplier has been reversed by the recipient of the supply.
Treatment Discount given Discount shall be allowed as deduction provided shown in invoice.
of Discount before or at the
time of supply
Discount given General If the discount is given after supply, and not known at
after the Case
the time of supply, it can’t be claimed as deduction.
supply
Exception If the discount is given after supply, it can be claimed
as deduction provided :
- discount was agreed upon before or at the time
of supply
- can be specifically linked to relevant invoices.
- proportionate input tax credit is reversed by
the recipient
Example Deductible Royal Biscuit Co. gives a discount of 30% on the list price to its
discount distributors. Thus, for a carton of Spicebisk, in the invoice the
list price is mentioned as Rs. 200, on which a discount of 30% is
given to arrive at the final price of Rs. 140. The taxable value is
Rs. 140, as the discount is allowed at the time of supply and
shown in the invoice.
The agreement of Raju Electrical Appliances with its dealers is

that sale of rice cookers over 100 pieces in the Diwali month will
entitle them to discount of 5% per cooker sold in the next
month. The next month’s stock has already been despatched when
the sales figures for the Diwali month are worked out. However,
as the agreement was in existence at the time of supply, and the
discount can be worked out for each invoice, the taxable value will
be billed price minus 5%. The dealer must reverse the
proportionate input tax credit on the relevant stock to bring it
in line with the reduced tax.
Non- A company announces turnover discounts after reviewing dealer

Deductible performance during the year. The discounts are based on
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discount performance slabs and are given as cash-back. As these discounts
were not known at the time of supply of the goods, they will
not be deducted from taxable value of those goods.

Provision Where the value of the supply of goods or services or both cannot be determined under
sub-section (1), the same shall be determined in such manner as may be prescribed.
Insights Where sub-section (1) is not applicable, that is, if the transaction is with a
related party, and/or price is not the sole consideration for the supply of goods/
services, then the value will be determined in the manner as prescribed, which
means as stipulated in the rules for valuation.

Provision Notwithstanding anything contained in sub-section (1) or subsection (4), the value of such
supplies as may be notified by the Government on the recommendations of the Council
shall be determined in such manner as may be prescribed.
Insights In respect of certain notified supplies also, the value will be determined in the
manner as stipulated in the rules for valuation.
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Questions
Question 1
A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling the
machine at site. The details of the various events are:
17th September Purchase order with advance of Rs. 50,000 is received for goods worth Rs. 12 lakh and entry
duly made in the seller’s books of account
20th October The machine is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
4th November Balance payment of Rs. 11,50,000 received
Determine the time of supply(ies) in the above scenario.
Question 2
Gas is supplied by a pipeline. Monthly payments are made by the recipient as per contract. Every quarter, invoice is
issued by the supplier supported by a statement of the goods dispatched and payments made, and the recipient has to
pay the differential amount, if any. The details of the various events are:
August 5, September 5, October 6 Payments of Rs. 2 lakh made in each month
October 3 Statement of accounts issued by supplier, with invoice for the quarter July –
September
October 17 Differential payment of Rs. 56,000 received by supplier for the quarter July
– September as per statement of accounts
Determine the time of supply.
Question 3
Determine the time of supply from the given information.
May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days from the date of
issuance of invoice elapse on June 3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment
Question 4
May 4 Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days from the date of
issuance of invoice elapse on June 3)
June 12 Pillar & Co receives the goods, which were held up in transit
July 3 Payment made for the goods
Question 5
6th May Booking of convention hall, sum agreed Rs. 15000, advance of Rs. 3000 received
15th September Function held in convention hall
27th October Invoice issued for Rs. 15000, indicating balance of Rs. 12000 Payable
3rd November Balance payment of Rs. 12000 received
Question 6
Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an apartment complex, for
which the Apartment Owners’ Association showed a payment in cash on 4th April to them against work of this
description. The dates of the work are not clear from the records of ABC & Co. ABC & Co have not
issued invoice or entered the payment in their books of account.
Question 7
Determine the time of supply from the given information. (Assuming that service being supplied is taxable under reverse
charge)
May 4 The supplier of service issues invoice for service provided. There is a dispute about amount payable,
and payment is delayed.
August 21 Payment made to the supplier of service
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Question 8
May 4 A German company issues email informing its associated company ABC Ltd. of the cost of technical services
provided to it.
July 2 ABC Ltd transfers the amount to the account of the German company.
Question 9
Mr. Ram sold goods to Mr. Shyam worth Rs. 5,00,000. The invoice was issued on 15th November. The payment was
received on 30th November. The goods were supplied on 20th November. Find the time of supply of goods. Previous
year turnover of Mr. Ram was Rs. 172 lakhs.
Question 10
Mr. Ram sold goods to Mr. Ravi worth Rs. 5,00,000. The invoice was issued on 15th November. The payment was
received on 31st October. The goods were supplied on 20th November. Find the time of supply of goods. Previous
year turnover of Mr. Ram was Rs. 72 lakhs.
Question 10
The supplier of goods has received an amount of Rs. 1500/- against an invoice of Rs. 1,100/- on 25.07.17 and the
date of invoice of next supply to the said recipient is 14.08.17. Find the Time of Supply of goods.
Question 11
M/s X Ltd., being a manufacturer, sold goods to M/s Y Ltd., wholesaler, and issued invoice for the sale on 01-08-
2017. Find the time of supply of goods in each of the following independent cases:
(i) M/s X Ltd., removes the goods for delivery to M/s Y Ltd., on 16th August 2017.
(ii) M/s. Y Ltd., collects the goods from premises of M/s X Ltd., on 10th August 2017.
(iii) M/s Y Ltd., made full payment on 26th July 2017.
(iv) M/s Y Ltd., credited the payment in bank account of M/s X Ltd., on 28th July 2017 for 3/4th of goods, M/s X Ltd.,
recorded the same as receipts in his books on 3rd August 2017. The goods were dispatched on 5th August 2017 from
the warehouse.
Question 12
M/s AB Oil Corporation entered into a contract with Mr. B to supply of oil throughout the year. M/s AB Oil Corporation
issues monthly statement for oil supplied to Mr. B. Determine time of supply of goods in following independent cases:
(i) Mr. B made payment for the month of July on 31st July 2017 and M/s AB Oil Corporation issued statement for the
month of July on 8th August 2017.
(ii) M/s AB Oil Corporation issued statement for the month of August on 5th September 2017, the payment of which not
received till 30th September 2017.
Question 13
ABC & Co., a CA firm issued invoice for services rendered to Mr. Ram on 5th August 2017. Determine the time of
supply in following independent cases:
(i) The provisions of services were completed on 1st July 2017.
(ii) The provisions of services were completed on 15th July 2017.
(iii) Mr. Ram made the payment on 3rd July 2017, where provisions of services were remaining to be completed.
(iv) Mr. Ram made the payment on 15th August 2017, where provisions of services were remaining to be completed.
Question 14
Mr. A, a registered person received goods (i.e. Bedi leaves) from Mr. B, an unregistered dealer. Mr. B issues invoice on
1st July 2017. Find the time of supply of goods in following independent cases:
(i) Mr. A received goods on 15th July 2017, payment of which is not made yet.
(ii) Mr. A received goods on 3rd August 2017 & made payment for the same on 4th August 2017.
(iii) Mr. A made payment on 8th July and received goods on the same date.
(iv) Mr. A received goods on 10th July 2017 & made payment for the same on 9th July 2017.
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Question 15
C Ltd., a registered firm received services from a Raman & Co., an Advocate firm., an unregistered person. The firm
issued invoice to C Ltd. on 1st July 2017. Determine the time of supply of services in the following independent cases:
(i) C Ltd. made the payments to the firm on 15th August 2017.
(ii) C Ltd. made the payments to the firm on 11th September 2017.
Question 16
X Ltd. & Y Ltd. (London) is associated enterprises. X Ltd., a registered firm received the services of Y Ltd., a
unregistered firm. Determine the time of supply in following cases:
(i) X Ltd. recorded the liability in the books on 15th July 2017 and payment will be made in the next month.
(ii) X Ltd. made advance payment to Y Ltd. on 10th July and recorded liability in the books on 15th Aug 2017.
Question 17
Reliable Industries a readymade garment manufacturer issued the voucher on 10-07-2017 to their prospective
customer for enabling them to buy readymade garments manufactured by them from their shop. Customer purchased
readymade garments on 20th Aug 2017. Find the time of supply of goods.
Question 18
Shopper’s Stop store a large retailer who sells various types of products like readymade garment, jewellery, cosmetics,
fabrics, shoes etc., issued the voucher on 10-07-2017 to their prospective customer for enabling them to buy any
product from their shop. Customer purchased readymade garments on 20th Aug 2017. Find the time of supply of
goods.
Question 19
Mr. X being a supplier receives consideration in the month of September 2017, instead of due date of July 2017, and
for such delay he is eligible to receive an interest amount of Rs. 1000/- and the said amount is received on
15.12.2017. Find the time of supply for the interest portion and due date of payment.
Question 20
Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
S.No. Date of receipt Date of payment by recipient of goods Date of issue of invoice
of goods by supplier of goods
1 July 1 August 20 June 29
2 July 1 June 25 June 29
3 July 1 Part payment made on June 30 and balance amount paid on June 29
July 20
4 July 5 Payment is entered in the books of account on June 28 and June 1
debited in recipient’s bank account on June 30
5 July 1 Payment is entered in the books of account on June 30 and June 29
debited in recipient’s bank account on June 26
6 August 1 August 10 June 29
Question 21
Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
S.No. Date of payment by recipient of services Date of issue of invoice
by supplier of services
1 August 10 June 29
2 August 10 June 1
3 Part payment made on June 30 and balance amount paid on September 1 June 29
4 Payment is entered in the books of account on June 28 and debited in recipient’s June 1
bank account on June 30
5 Payment is entered in the books of account on June 30 and debited in recipient’s June 29
bank account on June 26
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Question 22
Kabira Industries Ltd engaged the services of a transporter for road transport of a consignment on 17th June and
made advance payment for the transport on the same date, i.e., 17th June. However, the consignment could not be sent
immediately on account of a strike in the factory, and instead was sent on 20th July. Invoice was received from the
transporter on 22nd July. What is the time of supply of the transporter’s service?
Note: Transporter’s service is taxed on reverse charge basis.
Question 23
Raju Pvt Ltd. receives the order and advance payment on 5th January for carrying out an architectural design job. It
delivers the designs on 23rd April. By oversight, no invoice is issued at that time, and it is issued much later, after the
expiry of prescribed period for issue of invoice. When is the time of supply of service?
Question 24
Investigation shows that 150 cartons of ceramic capacitors were despatched on 2nd August but no invoice was made
and the cartons were not entered in the accounts. There was no evidence of receipt of payment. What is the time of
supply of the 150 cartons?
Question 25
An order is placed on Ram & Co. on 18th August for supply of a consignment of customised shoes. Ram & Co. gets the
consignment ready and informs the customer and issues the invoice on 2nd December. The customer collects the
consignment from the premises of Ram & Co. on 7th December and hands over the payment on the same date, which is
entered in the accounts on the next day, 8th December. What is the time of supply of the shoes?
Question 26
Sodexo meal coupons are sold to a company on 9th August for being distributed to the employees of the said
company. The coupons are valid for six months and can be used against purchase of food items. The employees use
them in various stores for purchases of various edible items on different dates throughout the six months. What is the
date of supply of the coupons?
Question 27
A firm of lawyers issues invoice for services to ABC Ltd. on 17th Feb. The payment is contested by ABC Ltd. on the
ground that on account of negligence of the firm, the company’s case was dismissed by the Court for non-appearance,
which necessitated further appearance for which the firm is billing the company. The dispute drags on and finally
payment is made on 3rd November.
Identify the time of supply of the legal services.
Note: Legal services are taxable on reverse charge basis.
Question 28
Modern Security Co. provides service of testing of electronic devices. In one case, it tested a batch of devices on 4th
and 5th September but could not raise invoice till 19th November because of some dispute about the condition of the
devices on return. The payment was made in December. What is the method to fix the time of supply of the service?
Question 29
An income-tax and money laundering case against Mr. XYZ, working in a multinational company, reveals a large
volume of undisclosed assets, which he claims as service income. On this basis, the GST authorities investigate the GST
liability. Dates of provision of service, whether in the first half or the second half of the financial year being scrutinised
by income-tax authorities, are not known. Mr. XYZ voluntarily pays GST during the investigation. What is the time of
supply of the services?
Question 30
Admission to True Theater is Rs. 90 per ticket for a Tamil Movie as well as for a Hindi Movie plus entertainment tax Rs.
10% on Tamil Movie and 20% on other languages. In the month of November, True Theater sold 2000 tickets of Tamil
Movie and 1500 tickets of Hindi Movie. Find the value of taxable supply of service.
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Question 31
Mr. Ram sold goods to Mr. Lakshman for Rs. 2,50,000. As per the contract of sale, Mr. Ram is required to deliver the
goods in the premises of Mr. Lakshman. Mr. Ram hires transporter for transportation for delivery of goods. However,
the freight is paid by Mr. Lakshman to transporter. Freight paid Rs. 2,500. Find the transaction value of supply of
goods.
Question 32
Mr. A is a seller of furniture. He supplied the furniture for Rs. 5,75,000 to Mr. B with the condition to remove old
furniture from the premises of Mr.B by charging Rs. 5,000. Find the value of taxable supply of goods in the hands of
Mr. A.
Question 33
M/s Ashok Enterprise sells mineral water bottles, with MRP Rs. 20 per bottle. However, customers availing discount of
Rs. 4 per bottle. In the month of Oct 2017, M/s Ashok Enterprise sold 2,000 bottles. Find the value of taxable supply.
Question 34
Best Cars Ltd. sells a car worth Rs. 5,00,000 to Sundar Automobiles. Best Cars Ltd. incurred packing charges of Rs.
6,000 on the car. Best Cars Ltdprovided a discount of 1% on the car price, as part of Diwali scheme. Best Cars Ltd
agreed to provide a further discount of 0.5% if Sundar Automobiles makes payment by 31st of the month via net
banking. Sundar Automobiles makes the payment by 31st of the month using net banking. Find the value of taxable
supply.
Question 35
Assume in above question that due to a severe cash crunch, Best Cars Ltd requests Sundar Automobiles to make the
payment within 2 days, promising a discount of 2% on doing so. Sundar Automobiles makes the payment within 2 days.
Find the value of taxable supply.
Question 36
Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it to Colourful Pvt. Ltd.
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
CGST and SGST chargeable on the goods 10,440
Packing charges (not included in price above) 1,000
Black and White Pvt. Ltd. received Rs. 2000 as a subsidy from a NGO on sale of such goods. The price of Rs. 50,000
of the goods is after considering such subsidy. Black and White Ltd. offers 2% discount on the list price of the goods
which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Black and White Pvt. Ltd.
Question 37
Samriddhi Advertisers conceptualised and designed the advertising campaign for a new product launched by New
Moon Pvt Ltd. for a consideration of Rs. 5,00,000. Samriddhi Advertisers owed Rs. 20,000 to one of its vendors in
relation to the advertising service provided by it to New Moon Pvt Ltd. Such liability of Samriddhi Advertisers was
discharged by New Moon Pvt Ltd. New Moon Pvt Ltd. delayed the payment of consideration and thus, paid Rs. 15,000
as interest. Determine the value of taxable supply made by Samriddhi Advertisers.
Question 38
AKJ Foods Pvt. Ltd. gets an order for supply of processed food from a customer. The customer wants the consignment
tested for gluten or specified chemical residues. AKJ Foods Pvt. Ltd. does the testing and charges a testing fee for the
same from the customer. AKJ Foods Pvt. Ltd. argues that such testing fess should not form part of the consideration for
the sale as it is a separate activity. Is his argument correct in the light of section 15?
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Question 39
A philanthropic association makes a substantial donation each year to a reputed private management institution to
subsidise the education of low income group students who have gained admission there. The fee for these individuals is
reduced thereby, coming to Rs. 3 lakh a year compared to Rs. 5 lakh a year for other students. What would be the
taxable value of the service of coaching and instruction provided by the institution?
Question 40
Mezda Banners, an advertising firm, gives an interest-free credit period of 30 days for payment by the customer. Its
customer ABC paid for the supply 32 days after the supply of service. Mezda Banners waived the interest payable for
delay of two days. The Department wants to add interest for two days as per contract. Should notional interest be
added to the taxable value?
Question 41
Crunch Bakery Products Ltd sells biscuits and cakes through its dealers, to whom it charges the list price minus standard
discount and pays GST accordingly. When goods remain unsold with the dealers, it offers additional discounts on the
stock as an incentive to push the sales.
Can this additional discount be reduced from the price at which the goods were sold and concomitant tax adjustments
made?
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Input Tax Credit

Input Tax Credit is the backbone of the GST regime. GST is nothing but a value-added tax on goods and services
combined. It is these provisions of Input Tax Credit that make GST a value-added tax i.e., collection of tax at all points
in the supply chain after allowing credit of taxes paid on inputs/input services and capital goods. The invoice method of
value added taxation will be followed in the GST too, viz., the tax paid at the time of receipt of goods or services or both
will be eligible for set-off against the tax payable on supply of goods or
services or both, based on the invoices with a special emphasis on actual payment of tax by the supplier.
The basic concept of Input Tax Credit (ITC) is to avoid the cascading effect of duty. Cascading effect of duty (i.e. duty on
duty) happens where tax is levied at every stage of supply.

CGST Act
Chapter V – Input Tax Credit
Section 16 Eligibility and conditions for taking input tax credit
Section 17 Apportionment of credit and blocked credits
Section 18 Availability of credit in special circumstances
Chapter IX – Returns
Section 41 Claim of input tax credit and provisional acceptance thereof
Section 42 Matching, reversal and reclaim of input tax credit
Chapter X - PAYMENT OF TAX
Section 49 Payment of tax, interest, penalty and other amounts
CGST Rules
Chapter V – Input Tax Credit
Rule 36 Documentary requirements and conditions for claiming input tax credit
Rule 37 Reversal of input tax credit in the case of non-payment of consideration
Rule 38 Claim of credit by a banking company or a financial institution
Rule 40 Manner of claiming credit in special circumstances
Rule 41 Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
Rule 42 Manner of determination of input tax credit in respect of inputs or input services and reversal thereof
Rule 43 Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases
Rule 44 Manner of reversal of credit under special circumstances

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in
section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or
intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit
ledger of such person.
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in
respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying
documents as may be prescribed;
(b) he has received the goods or services or both.
Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods where the
goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting
as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or
otherwise;
(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government,
either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take
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credit upon receipt of the last lot or instalment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which
tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of
one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by
the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards
the value of supply of goods or services or both along with tax payable thereon.
(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and
machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed.
(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or
services or both after the due date of furnishing of the return under section 39 for the month of September following the end of
financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return,

Provision Every registered person shall, subject to such conditions and restrictions as may be
prescribed and in the manner specified in section 49, be entitled to take credit of input
tax charged on any supply of goods or services or both to him which are used or intended
to be used in the course or furtherance of his business and the said amount shall be
credited to the electronic credit ledger of such person.
Insights Registered The person should be registered to claim ITC.
Goods or Since GST is charged on both goods and services, input tax credit
services can be availed on inward supply of both goods and services (except
those which are on the exempted/ negative list).
Business ITC will be available on goods and/ or services which are used in the
purpose course or furtherance of the business.
Thus, tax paid on goods and/ or services which are used or intended
to be used for non-business purposes cannot be availed as credit.
The “intention to use” the goods and/ or services in the course or
furtherance of business would also lead to availing of credit on such
goods and/ or services.
Credit in respect of inputs that may have been wasted during the
course of production of finished products does not cease to be ‘used
or intended to be used’ in the course or furtherance of business. In
fact, the full extent of credit will be available whether the extent
of wastage of inputs in the course of production of finished goods is
within normal wastage norms or even exceeds that to be called
abnormal wastage of inputs.
Credited in ITC will be credited in Electronic Credit Ledger.
Analysis of Section 16(2) read with Rule 36 & 37

Provision Notwithstanding anything contained in this section, no registered person shall be entitled
to the credit of any input tax in respect of any supply of goods or services or both to him
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unless,–
(a) he is in possession of a tax invoice or debit note issued by a supplier registered
under this Act, or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both.
Explanation.—For the purposes of this clause, it shall be deemed that the registered
person has received the goods where the goods are delivered by the supplier to a
recipient or any other person on the direction of such registered person, whether acting
as an agent or otherwise, before or during movement of goods, either by way of transfer
of documents of title to goods or otherwise;
(c) subject to the provisions of section 41, the tax charged in respect of such supply
has been actually paid to the Government, either in cash or through utilisation of
input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots or instalments, the
registered person shall be entitled to take credit upon receipt of the last lot or instalment:
Provided further that where a recipient fails to pay to the supplier of goods or services or
both, other than the supplies on which tax is payable on reverse charge basis, the amount
towards the value of supply along with tax payable thereon within a period of one
hundred and eighty days from the date of issue of invoice by the supplier, an amount
equal to the input tax credit availed by the recipient shall be added to his output tax
liability, along with interest thereon, in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the credit of input tax on
payment made by him of the amount towards the value of supply of goods or services or
both along with tax payable thereon.
Insights This section specifies the conditions to be fulfilled for availing the credit. All the
4 conditions need to be satisfied.
Condition 1 Type of ITC can be availed on the basis of any of the following documents:
- Possession document i) Invoice issued by a supplier of goods and/ or services
of tax ii) Invoice issued by recipient (receiving goods and/ or services from
paying unregistered supplier) along with proof of payment of tax (in case of
document
reverse charge)
iii) A debit note issued by supplier
iv) Bill of entry or similar document prescribed under Customs Act
v) Revised invoice
vi) Document issued by Input Service Distributor
Details on The document on the basis of which ITC is being taken should have
document all the relevant particulars as prescribed in rule 46 of the CGST
Rules, few being :
(a) name, address and Goods and Services Tax Identification Number
of the supplier;
(b) a consecutive serial number not exceeding sixteen characters, in
one or multiple series, containing alphabets or numerals or special
characters- hyphen or dash and slash symbolised as “-” and “/”
respectively, and any combination thereof, unique for a financial year;
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(c) date of its issue;

(d) name, address and Goods and Services Tax Identification Number
or Unique Identity Number, if registered, of the recipient;
Relevant Section Section 16 and the CGST Rules do not specify that a
copy of 16
particular copy of the invoice alone will form the basis of
invoice
taking ITC.
Rule 48 However, rule 48 of the CGST Rules specifies that the

original copy is for the recipient of goods.
The original copy may preferably be kept for record to
support the credit entry.
Condition 2 Actual The person taking the ITC must have received the goods and/ or
- Receipt of Receipt services.
the goods
and/ or Deemed Under this model, the goods are delivered to a third party on the
receipt direction of the registered person who purchases the goods from the
services
(Bill-to-
supplier.
Ship
model) Such transfer can be by way of transfer of documents of title to
goods or otherwise either before or during the movement of goods.
It would be deemed that the registered person has received the
goods in such scenario. So, ITC will be available to the registered
person on whose order the goods are delivered to third person.
Example - A is a trader who places an order on B for a consignment

of soda ash. A receives a buying order from C for the same quantity
of soda ash. A instructs B to deliver the goods to C, and in turn he
raises an invoice on C. Though the goods are not physically received
at the premises of A, the condition of section 16(2)(b) is satisfied,
and A is entitled to ITC on the consignment.
Condition 3 Tax should actually have been paid, by cash or through utilization of ITC, on the
- Tax goods and/or services for which ITC is being taken. However, provisional ITC can be
leviable on taken initially, prior to matching in the common portal, and used for payment of
supply self-assessed tax on outward supply.
actually
paid to
Govt.
Condition The registered person taking the ITC must have filed his return under section 39.
4 - Filing
of return
Receipt of Insights In case the goods covered under an invoice are not received in a
goods in single consignment but are received in lots/ instalments, the ITC can
lots be taken only upon receipt of the last lot/ instalment.
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Example XYZ makes an advance payment in August and orders 10 MT of a
particular chemical which is in short supply. The supplier of the
chemical raises a bill for the entire amount in August and collects
GST from XYZ on the advance paid. The chemical is delivered in lots
over a period of three months and the supply is completed in
November.
Though XYZ paid some tax in advance as early as August, he can
take the ITC only on receipt of last instalment of the chemical in
the month of November.
Payment to General The registered person must pay the supplier, the value of the goods
be made Rule – pay and/ or services along with the tax within 180 days from the date
within with 180
of issue of invoice.
specified days
time Part In case recipient of goods has made part payment, he would be liable
payment for reversal of ITC on proportionate basis.
within 180
days
Revocation If the payment is not made within 180 days, recipient will have to
of general reverse the credit.
rule
Also, he will have to furnish the following details in the GSTR 2 of
the month immediately following such 180 days :
- Details of such supply,
- Details of the amount of value not paid and
- Details of the amount of input tax credit availed of
proportionate to such amount not paid
Addition in Such ITC availed by the registered person would be added to his
output tax output tax liability of the month in which the details are furnished.
Interest Along with the amount of ITC, that got added to output tax
liability, interest @ 18% is also payable from the date of availing
credit till the date when the payment is made to the supplier.
Payment Once the payment is made, the recipient will be entitled to avail
made after the credit again without any time limit.
180 days
As per Rule 37, The time limit u/s 16(4) does not apply to claim
for re-availing of credit that had been reversed earlier.
Example Due to a quality dispute, PZP Ltd withheld payment on a machine

supplied by a vendor till it could be rectified. Over 180 days went
by in this dispute. The credit taken by PZP on the invoice got
added to the output tax liability of PZP and thus, it had to pay
back the credit. Only after the vendor rectified the machine and
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PZP released the payment, could PZP take the credit again.
Condition This condition of payment of value of supply plus tax within 180
of payment days does not apply in the following situations :
not
: Supplies on which tax is payable under reverse charge
applicable
: Deemed supplies without consideration
Payment No input tax credit shall be availed by a registered person in respect of any tax
pursuant to that has been paid in pursuance of any order where any demand has been
an order of confirmed on account of any fraud, wilful misstatement or suppression of facts.
demand

Provision Where the registered person has claimed depreciation on the tax component of the cost
of capital goods and plant and machinery under the provisions of the Income-tax Act,
1961, the input tax credit on the said tax component shall not be allowed.
Trigger This provision becomes applicable only in case of capital goods and plant &
point machinery.
Insights Taxable person shall not claim depreciation on tax component of the cost of
capital goods under the provisions of the Income Tax Act, 1961. If the
depreciation under section 32 of the Income Tax Act, 1961 is claimed on the tax
component by capitalizing with the cost of capital goods, input tax credit shall
not be allowed. Thus, in respect of the tax paid on such items, dual benefit
cannot be claimed under Income-tax Act, 1961 and GST laws simultaneously.
Example M/s Jay Ltd. being a manufacturer purchased machinery worth Rs. 10,00,000 on
which GST Rs. 1,80,000 is paid. The manufacturer has following two options:
Option 1: claim depreciation on the entire value of machinery inclusive of GST (i.e
Rs. 11,80,000) by forgoing ITC on capital goods.
Option 2: claim depreciation on the cost of machine (i.e. Rs. 10,00,000) and
avail the ITC of GST portion (i.e. 1,80,000).

Provision A registered person shall not be entitled to take input tax credit in respect of any invoice
or debit note for supply of goods or services or both after the due date of furnishing of the
return under section 39 for the month of September following the end of financial year
to which such invoice or invoice relating to such debit note pertains or furnishing of the
relevant annual return, whichever is earlier.
General Time limit Time limit for availment of credit by registered taxable person is
Rule prescribed in the following manner :
(a) Filing of return under section 39 for the month of September
following end of financial year to which such invoice pertains, or
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(b) Filing of annual return

Insights The return for the month of September is to be filed by 20th

October and annual return of a financial year is to be filed by 31st
December of the succeeding financial year.
Example Hercules Machinery delivered a machine to XYZ in January 2018

under Invoice no. 49 dated 28th January, 2018 for Rs. 4,15,000
plus GST, and undertook trial runs and calibration of the machine as
per the requirements of XYZ. The amount chargeable for the post
delivery activities was covered in a debit note raised in April 2018
for Rs. 50,000 plus GST. Hercules Machinery did not file its annual
return till October, 2018. Though the debit note was received in
the next financial year, it relates to an invoice received in the
financial year ending March 2018. Therefore, the time limit for
taking ITC available on Rs. 50,000 as well as on Rs. 4,15,000 is
20th October, 2018; earlier of the date of filing the annual return
for 2017-18 or the return for September 2018.
Exception The time limit u/s 16(4) does not apply to claim for re-availing of credit that
had been reversed earlier.
Relevant Provisions of Section 41 & 49

Provisional Every registered person shall be entitled to take the credit of eligible input tax
Credit on basis of self assessment.
Such amount shall be credited on a provisional basis to his electronic credit ledger.
Tax wise The Electronic Credit Ledger maintains the tax credits separately for
details - IGST (on imports and inter-state inward supplies),
- CGST and
- STGST/ UTGST.
Utilisation The credit availed shall be utilised only for payment of self assessed output tax.
of ITC
Cross-utilization of credit is available only between CGST and IGST and SGST/
UTGST and IGST. The main restriction is that the CGST credit cannot be utilized
for payment of SGST/ UTGST and SGST/ UTGST credit cannot be utilized for
payment of CGST.
Scheme of ITC of IGST can be used to pay IGST, CGST and SGST/ UTGST in that order.
utilisation ITC of CGST can be used to pay CGST and IGST in that order.
of ITC ITC of SGST/ UTGST can be used to pay SGST/ UTGST and IGST in that order.
ITC of CGST cannot be utilized towards payment of SGST/ UTGST and vice versa.
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(1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for
other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his
business.
(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-
rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under
the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies
including zero-rated supplies.
(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the
recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph
5 of Schedule II, sale of building.
(4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by
way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub-section
(2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input
services in that month and the rest shall lapse:
Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:
Provided further that the restriction of fifty per cent. shall not apply to the tax paid on supplies made by one registered person to
another registered person having the same Permanent Account Number.
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not
be available in respect of the following, namely:—
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward
supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply
of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where––
(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the
time being in force; or
(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or home travel concession;
(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except
where it is an input service for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or
machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
Explanation.––For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation,
additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
(e) goods or services or both on which tax has been paid under section 10;
(f) goods or services or both received by a non-resident taxable person except on goods imported by him;
(g) goods or services or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.
(6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed.
Explanation.––For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus,
equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods
or services or both and includes such foundation and structural supports but excludes—
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
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(iii) pipelines laid outside the factory premises.
The input tax credit eligibility is based on whether the same is used for taxable supplies or exempt supplies. Where the
goods or service is used for both taxable and exempted supplies, only proportionate credit is allowed to a registered person,
Further, a list of supplies ineligible for input tax credit is also provided.

Provision Where the goods or services or both are used by the registered person partly for the
purpose of any business and partly for other purposes, the amount of credit shall be
restricted to so much of the input tax as is attributable to the purposes of his business.
Trigger This provision applies when the goods and/ or services are used by the registered
point person partly for the purpose of business and partly for other purposes.
Insights In such case, full ITC on inward supplies cannot be taken and only proportionate
ITC is allowed.
ITC attributable only to business purposes can be taken by the registered person.
Example A registered person (partnership firm) purchases 5 laptops but one of the laptop
is being used by the son of one of the partners of the firm. ITC will not be
available on such laptop as it is used for personal purposes.
Insights

Provision Where the goods or services or both are used by the registered person partly for effecting
taxable supplies including zero-rated supplies under this Act or under the Integrated
Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts,
the amount of credit shall be restricted to so much of the input tax as is attributable to the
said taxable supplies including zero-rated supplies.
Trigger This provision applies when the goods and/ or services are used by the registered
point person partly for making taxable supplies including zero-rated supplies and partly
for making exempt supplies.
Insights In such case, full ITC on inward supplies cannot be taken and only proportionate
ITC is allowed.
ITC attributable only to taxable and zero rated supplies can be taken by the
registered person.
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Zero-Rated Zero-rated supply is an expression that covers two kinds of supplies:

Supply (i) exports, and
(ii) supplies to a SEZ or SEZ developer.
Therefore, ITC is available on goods and/ or services used for supplies made in the
course of export or to an SEZ unit or SEZ developer.
Example Out of 10 containers purchased by a registered person engaged in taxable supply of

goods, 5 are used for storing non-taxable goods (exempt supply) such as
petroleum (petroleum is out of GST gamut till the time the GST Council takes a
decision in this regard). ITC on 5 containers used for non-taxable goods cannot be
availed.

Provision The value of exempt supply under sub-section (2) shall be such as may be prescribed, and
shall include supplies on which the recipient is liable to pay tax on reverse charge basis,
transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of
Schedule II, sale of building.
Special The value of exempt supplies shall include
inclusions - supply on which tax is paid under Reverse Charge,
- transaction in securities,
- sale of land and sale of building subject to clause (b) of Paragraph 5 of
Schedule II.
Other Supplies in respect of which the outward supplier is not liable to pay tax but the
notable recipient is made liable to pay the tax, then due to section 17(3), for the
points limited purpose of restricting input tax credit to the supplier (who is not
responsible to pay tax due to RCM provisions) the value of these supplies will be
regarded as ‘exempt supplies’ while arriving at the net available input tax credit.
Analysis of Section 17(4) read with Rule 38

Provision A banking company or a financial institution including a nonbanking financial company,
engaged in supplying services by way of accepting deposits, extending loans or
advances shall have the option to either comply with the provisions of sub-section (2), or
avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on
inputs, capital goods and input services in that month and the rest shall lapse:
P a g e | 154
Provided that the option once exercised shall not be withdrawn during the remaining part
of the financial year:
Provided further that the restriction of fifty per cent. shall not apply to the tax paid on
supplies made by one registered person to another registered person having the same
Permanent Account Number.
Trigger This provision is applicable when the services are being supplied by a banking
point company or a financial institution including a nonbanking financial company by way
of accepting deposits, extending loans or advances.
Options Comply They can take ITC in same manner as per section 17(2) read with
available with 17(2) specific rules.
Avail 50% They can avail 50% of eligible ITC on inputs, capital goods and input
ITC services each month and the remaining ITC shall lapse.
Other Change of The option once exercised cannot be changed during the remaining
notable option not part of the financial year.
points allowed
No The restriction of availing 50% ITC shall not apply to the tax paid
Restriction on supplies procured from another registration within the same
of 50% ITC
entity i.e., 100% credit of such tax can be availed.
Credit not Credit of following cannot be availed
allowed - tax paid on inputs and input services that are used for non-
business purposes and
- items mentioned u/s section 17(5) [blocked credits].
Credited in ITC will be credited in Electronic Credit Ledger.

Provision Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of
section 18, input tax credit shall not be available in respect of the following, namely:—
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or

conveyances;
(ii) for transportation of goods;
(b) the following supply of goods or services or both:—
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except where an inward supply of goods or
services or both of a particular category is used by a registered person for
making an outward taxable supply of the same category of goods or
services or both or as an element of a taxable composite or mixed supply;
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(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where ––
(A) the Government notifies the services which are obligatory for an
employer to provide to its employees under any law for the time
being in force; or
(B) such inward supply of goods or services or both of a particular

category is used by a registered person for making an outward
taxable supply of the same category of goods or services or both or
as part of a taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or home
travel concession;
(c) works contract services when supplied for construction of an immovable property
(other than plant and machinery) except where it is an input service for further
supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account
including when such goods or services or both are used in the course or
furtherance of business
Explanation.––For the purposes of clauses (c) and (d), the expression
“construction” includes re-construction, renovation, additions or alterations or
repairs, to the extent of capitalisation, to the said immovable property
(e) goods or services or both on which tax has been paid under section 10;
(f) goods or services or both received by a non-resident taxable person except on
goods imported by him;
(g) goods or services or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free
samples; and
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.
Basic ITC of tax paid on almost every inputs and input services used for supply of
taxable goods or services or both is allowed under GST except a small list of items
provided in this section.
Clause a Coverage ITC is not allowed on Motor vehicles and other conveyances.
Exception ITC is allowed when these are used for
✓ For transportation of goods
✓ For making the following taxable supplies:
- further supply of such vehicles of conveyances; or
- transportation of passengers; or
- imparting training on driving, flying, navigating such vehicles or
conveyances.
Notable There are many taxable persons who are engaged in purchase and sale
Points of used cars. These dealers purchase used cars from others by paying
GST then the credit of GST paid will be available to such dealers
(i.e. while selling they are liable to pay GST).
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The person boarding in the motor vehicle for preforming the journey
can be considered as passenger under GST. As a result,
transportation of passengers from one place to another in any motor
vehicle can be considered as transportation of passenger.
The motor vehicle and other conveyance can be used for
(a) making outward supply of transportation of goods;
(b) transporting own goods.
Example A car dealer is allowed ITC on cars purchased for resale;

A cab service is allowed ITC on cars purchased for use as cabs;
A driving school is allowed ITC on cars purchased for use in teaching
driving.
Clause b(i) Coverage ITC is not allowed on following supply of goods or services or both :
- Foods and beverages,
- outdoor catering,
- beauty treatment,
- health services,
- cosmetic and plastic surgery
Exception ITC is allowed when an inward supply of these is used for making an
outward taxable supply of the same category or as an element of a
taxable composite or mixed supply.
Example A caterer for a wedding gets the sweet dish course supplied by a
specialist in desserts. He is allowed ITC of the tax paid by him to
the specialist.
Clause b(ii) Coverage ITC is not allowed for the tax paid on membership of a club, health
and fitness centre.
Example Thus, if a person has taken any subscription of the gym, yoga
classes, or membership of any club for any sport or for anything
else, the ITC credit shall not be allowed.
Clause Coverage ITC is not allowed on the following supply of goods/ services/ both
b(iii) - Rent-a-cab,
- life insurance and
- health insurance
Exception ITC of these will be allowed when

✓ The Government has made it obligatory for an employer to
provide any of these services to its employees; or
✓ Inward supply of these services is used for making an outward
taxable supply of the same category or as an element of a
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taxable composite or mixed supply.
Clause Coverage ITC on tax paid on travel benefits extended to employees on

b(iv) vacation such as leave or home travel concession shall not be available
under any circumstances.
Clause c Coverage ITC is not allowed on supply of works contract services for
construction of an immovable property.
Exception ITC for any tax paid on work contract services shall be available in
the following cases:
a. When supplied for construction of plant and machinery i.e.
Immovable property involved is plant and machinery
b. Where it is an input service for further supply of works contract
service.
Clause d Coverage ITC is not allowed of the Inward supplies received by a taxable
person for construction of an immovable property (other than plant
and machinery) on his own account even when such supplies are used
in the course or furtherance of business.
Example A company buys material and hires a contractor to construct an

office building to house the plant supervisory staff. The input tax
paid on such goods and services is not allowed as credit.
Clause c & Meaning of “Construction”, includes reconstruction, renovation, additions or

d construc- alterations or repairs, to the extent of capitalization, to the said
tion
immovable property;
Meaning of “plant and machinery” means apparatus, equipment, and machinery

Plant & fixed to earth by foundation or structural support that are used for
Machinery
making outward supply of goods or services or both and includes such
foundation and structural support but excludes-
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
Distinct Section 17(5)(c), deals with works contract services i.e when such
nature services are received under composite contracts and used for the
purpose of construction of an immovable property (other than plant
and machinery). Section 17(5)(d), deals with situations when goods
or services or both are received under different independent
contracts i.e supply of goods and supply of services under separate
contracts for the construction of an immovable property (other than
plant and machinery).
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Clause e Coverage ITC is not allowed of the Inward supplies on which tax has been paid
under the composition scheme.
Impli- A small supplier who has opted for composition scheme would stand
cations to lose business, because neither supplier nor recipient of supply is
eligible for ITC.
Clause f Coverage ITC shall not be available in respect of goods or services or both
received by a non-resident taxable person.
Exception ITC is allowed on the goods imported by such person. It means IGST
on import of goods allowed as ITC.
Clause g Coverage ITC is not allowed on goods and or services used for personal
consumption.
Example M/s X Ltd. purchased shoes for their employee’s personal

consumption by paying GST thereon. ITC not allowed on such goods.
Clause h Coverage ITC is not allowed in the following cases:

• Goods lost
• Goods stolen
• Goods destroyed
• Goods written off or
• Goods disposed of by way of gift
• Goods disposed of by way of free samples
Notable ITC shall be reversed when the goods have been disposed of by way
points of gift or free sample. In this case, there is no consideration for sale
of goods and GST is not payable on output supply. However, the
input tax credit availed on such goods shall be reversed or pay GST
to the department as the case may be.
Clause i Coverage ITC is not allowed of taxes paid under sections 74, 129 and 130.
Detailed (a) Section 74: Show cause notice issued in case of fraud, to
provisions recover the GST.
(b) Section 129: Tax is paid, when goods are under detention by
the officers for further investigation (c) Section 130: Tax paid,
when the goods or conveyance are being confiscated.
Analysis of Section 17(6) read with Rule 42 and 43

Provision The Government may prescribe the manner in which the credit referred to in sub-sections
(1) and (2) may be attributed.
In many situations, the amount of input tax involved in exempt/ non-business use is not easily discernible, as
common goods and/ or services are used for
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(i) making taxable supplies including zero rated supplies and exempt supplies and
(ii) business and non-business purposes.
Rule 42
Step 1 - Compu- Total input tax involved on inputs & input services in a tax Period T
Compute tation Less: Input tax on inputs & input services that are intended to be used (T1)
common exclusively for non-business purposes
Less: Input tax on inputs & input services that are intended to be used (T2)
credit exclusively for exempt supplies
Less: Input tax on inputs & input services which are ineligible for credit (T3)
[blocked credits]
ITC credited to Electronic Credit Ledger C1
Less: ITC on inputs & input services that are intended to be used (T4)
exclusively for taxable supplies including zero rated supplies
Common ITC available for apportionment C2
Insights ✓ T1, T2, T3 and T4 will be determined and declared by the

registered person at the invoice level in GSTR 2.
✓ Where ITC on inputs and input services used partly for non-
business purposes and exempt supplies can be segregated at
invoice level, the same will be added to T1 and T2 respectively and
the balance credit will be added in T4.
✓ The portion identified as pertaining to taxable supplies in C2 will
be allowed as ITC.
Example Making an assumption that Hawai slippers are exempted, take a case
of Eezee Footwear, manufacturer of two varieties of Hawai slippers
and five varieties of other sandals and shoes. Dyes are used in the
manufacture of all footwear. However, bright pink is used only for
one of the Hawai varieties, and black is used only for the sandals and
shoes. Blue and yellow are used for all the varieties. Brown is used
for non-business purposes.
In inward supplies during the month -
Input tax on brown dye: Rs. 10,000 (This is T1)
Input tax on bright pink dye: Rs. 90,000. (This is T2)
Input tax on black dye: Rs. 40,000. (This is T4)
Input tax on blue dye: Rs. 1,00,000
Input tax on yellow dye: Rs. 15,000

Total input tax: Rs. 2,55,000 (This is T)
Total input tax reduced by (T1 + T2 + T4, i.e., by Rs. 1,40,000) is
Rs. 1,15,000.
Amount of common credit (C2) is Rs. 1,15,000. This has to be
apportioned as given below in Step 2.
Step 2 – Compu- Apportion C2 into credit attributable to exempt supplies D1 as:

Compute tation D1 = (E/F) x C2
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credit Where
attributable E = Aggregate value of exempt supplies during the tax period
to exempt F = Total turnover in the State during the tax period
supplies
(ineligible Insights (i) If the registered person does not have any turnover during the
credit) by said tax period, or the above information is not available, the values
apportionm for the last tax period may be used.
ent of (ii) Exempt supplies include supplies charged to tax under reverse
common charge, transactions in securities, sale of land and sale of building
credit when entire consideration is received after completion certificate
issued by the competent authority.
(iii) Aggregate value of exempt supplies and total turnover excludes
the central excise duty, State excise duty and VAT.
Special Presently,
treatment (i) central excise duty is leviable on manufacture/ production of
tobacco, petroleum crude, diesel, petrol, ATF and natural gas
(ii) State excise duty is leviable on manufacture/production of
alcoholic liquor, opium, Indian hemp and narcotics, and
(iii) VAT is leviable on intra-State sale of petroleum crude, diesel,
petrol, ATF, natural gas and alcoholic liquor. Petroleum crude, diesel,
petrol, ATF, natural gas are presently not taxable under GST and
alcoholic liquor is outside the ambit of GST. Thus, supply of both
these products (petrol/ petroleum products and alcoholic liquor)
being non-taxable under GST, will be exempt supplies u/s 2(47) and
taxes/ duties leviable thereon will be excluded from the value thereof
for the purpose of apportionment of credit.
Example Ezee Footwear, which manufactures two varieties of exempt Hawai

slippers and five varieties of taxable sandals and shoes, has the
following turnover in October and has Rs. 1,15,000 common credit
that has to be apportioned:
Turnover of Hawai 1 plus Hawai 2: Rs. 3 crores (This is ‘E’)
Turnover of all varieties of taxable shoes and sandals: Rs. 2 crore
Total turnover of all footwear during the month: Rs. 5 crores (This
is ‘F’)
No inputs/ input services are used for non-business purposes.
(3,00,00,000 /5,00,00,000) x 1,15,000= Rs. 69,000 is the
input tax that pertains to exempt supply (D1).
Compute credit attributable to non-business purposes D2 as under
D2 = 5% of C2 (common credit)
Step 3 – Compute C3 attributable to business purposes and taxable supplies including zero
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Compute rated supplies as under:

eligible C3 = C2 - (D1 + D2)
credits
Step 4 – Add D1 + D2 to the output tax liability.
Restrict
ineligible
credits
Other Separate Compute C3 separately for ITC of CGST, SGST/ UTGST and IGST.
notable compu-
points tation
Compu- Compute Σ (D1 + D2) for the whole financial year, by taking
tation of D1 exempted turnover and aggregate turnover for the whole financial
and D2
year, before the due date for filing the return for September in the
following financial year.
Adjust- If Σ (D1 + D2) > the amount already added to output tax liability
ment every month, the differential amount has to be added to the
output tax liability of any month till September in the following
financial year and interest @ rate 18% should be paid on such
differential amount from 1st April of succeeding year till the date of
payment.
If the amount added to output tax liability every month > Σ (D1 +
D2), the additional amount paid has to be claimed back as credit in
the return of the month not later than September in the next
financial year.
Rule 43
Step 1 Determine common credit ‘Tc’ on capital goods as under:
(i) Identify input tax on capital goods used/ intended to be used exclusively for
non-business purposes or making exempt supplies and declare the same in GSTR 2.
Such amount will not be credited to Electronic Credit Ledge [ECrL].
(ii) Identify input tax on capital goods used/ intended to be used exclusively for
making taxable supplies including zero rated supplies and declare the same in GSTR
2. Such amount will be credited to ECrL.
(iii) Identify input tax on capital goods not covered under (i) and (ii) above (i.e.,
the capital goods which are used/ intended to be used commonly for making
taxable as well as exempt supplies & business & non business purposes) and denote
the same as ‘A’. Such amount will be credited to ECrL. The useful life of such
capital goods will be taken as 5 years from the date of invoice.
(iv) Change from exclusive use for non-business purpose/ exempt supplies to
common use: Where capital goods which were initially covered under (i) above get
subsequently covered under clause (iii), compute ‘A’ by reducing ITC @ 5% per
quarter or part thereof. Such reduced amount will be credited to ECrL.
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(v) Add together the amounts of ‘A’ credited to ECrL to arrive at common
credit ‘Tc’.
(vi) Change from exclusive use for taxable including zero rated supplies to common
use: Where capital goods which were initially covered under (ii) above get
subsequently covered under clause (iii), compute ‘A’ by reducing ITC @ 5% per
quarter or part thereof and add such value to Tc.
Step 2 Determine common credit during the useful life of capital goods for a tax period as
under and denote the same as ‘Tm’:
Tm = Tc ÷ 60
Step 3 Determine common credit at the beginning of a tax period for all capital goods whose
useful life remains during the tax period as under:
Tr = Tm for such capital goods
Step 4 Apportion common credit attributable to exempt supplies as under:

Te = (E ÷ F) x Tr
Where
E = Aggregate value of exempt supplies made during the tax period
F = Total turnover during the tax period
(i) If the registered person does not have any turnover during the said tax
period, or the above information is not available, the values for the last tax
period may be used.
(ii) Aggregate value of exempt supplies and total turnover excludes the central
excise duty, State excise duty and VAT.
(iii) Exempt supplies include supplies charged to tax under reverse charge,
transactions in securities, sale of land and sale of building when entire
consideration is received after completion certificate issued by the competent
authority.
(iv) Amount of Te has to be computed separately for CGST, SGST/UTGST and
IGST.
Step 5 Restrict ineligible credit

Add Te to the output tax liability along with applicable interest during every tax
period of the useful life of the capital goods concerned.

(1) Subject to such conditions and restrictions as may be prescribed—
(a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to
registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs held in stock
and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he
becomes liable to pay tax under the provisions of this Act;
(b) a person who takes registration under sub-section (3) of section 25 shall be entitled to take credit of input tax in respect of
inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the
date of grant of registration;
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(c) where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of
inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day
immediately preceding the date from which he becomes liable to pay tax under section 9:
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed;
(d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such person shall be
entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day
immediately preceding the date from which such supply becomes taxable:
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed.
(2) A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or
services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.
(3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease
or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to
transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged,
amalgamated, leased or transferred business in such manner as may be prescribed.
(4) Where any registered person who has availed of input tax credit opts to pay tax under section 10 or, where the goods or
services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit in the electronic credit ledger or
electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished
or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed, on the day
immediately preceding the date of exercising of such option or, as the case may be, the date of such exemption:
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.
(5) The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated in such manner
as may be prescribed.
(6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person
shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such
percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery
determined under section 15, whichever is higher:
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax
on the transaction value of such goods determined under section 15.

Provision Subject to such conditions and restrictions as may be prescribed—
(a) a person who has applied for registration under this Act within thirty days from the
date on which he becomes liable to registration and has been granted such
registration shall be entitled to take credit of input tax in respect of inputs held in
stock and inputs contained in semi-finished or finished goods held in stock on the
day immediately preceding the date from which he becomes liable to pay tax
under the provisions of this Act;
(b) a person who takes registration under sub-section (3) of section 25 shall be
entitled to take credit of input tax in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in stock on the day immediately
preceding the date of grant of registration;
(c) where any registered person ceases to pay tax under section 10, he shall be
entitled to take credit of input tax in respect of inputs held in stock, inputs
contained in semi-finished or finished goods held in stock and on capital goods on
the day immediately preceding the date from which he becomes liable to pay
tax under section 9:
Provided that the credit on capital goods shall be reduced by such percentage
points as may be prescribed;
(d) where an exempt supply of goods or services or both by a registered person
becomes a taxable supply, such person shall be entitled to take credit of input tax
in respect of inputs held in stock and inputs contained in semi-finished or finished
goods held in stock relatable to such exempt supply and on capital goods
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exclusively used for such exempt supply on the day immediately preceding the
date from which such supply becomes taxable:
Provided that the credit on capital goods shall be reduced by such percentage
points as may be prescribed.
Eligibility
and time
limit of
availing
ITC
Example Mr. Z becomes liable to pay tax on 1st August and has obtained registration on
15th August. Mr. Z is eligible for ITC on inputs held in stock and as part of
semi-finished goods or finished goods held in stock as on 31st July. Mr. Z cannot
take ITC on capital goods.
Mr. A applies for voluntary registration on 5th June and obtains registration on
22th June. Mr. A is eligible for ITC on inputs held in stock and as part of semi-
finished goods or finished goods held in stock as on 21st June. Mr. A cannot take
ITC on capital goods.
Mr. B, a registered taxable person, was paying tax at composition rate upto 30th
July. However, w.e.f. 31st July, Mr. B becomes liable to pay tax under regular
scheme. Mr. B will be eligible for ITC on inputs held in stock and inputs contained
in semi-finished or finished goods held in stock and on capital goods as on 30th
July. ITC on capital goods will be reduced by 5% per quarter from the date of
the invoice.
Declaration By whom All the above categories of persons
Time limit Within 30 days from the date of his becoming eligible to avail the
input tax credit
Mode Electronic
Where On Common portal
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Details Inputs held in stock or
Inputs contained in semi-finished goods held in stock or
Inputs contained in finished goods held in stock, or
Capital goods
Of which The details shall be mentioned on the same dates as mentioned in

date chart above.
Certifi- If the claim of ITC pertaining to CGST, SGST/UTGST, IGST put

cation together exceeds Rs. 2,00,000, the declaration needs to be
certified by a practicing Chartered Accountant/ Cost Accountant.
Notable Verification ITC claimed shall be verified with the corresponding details furnished
points for of ITC by the Corresponding supplier.
last 2
categories Eligible ITC ITC on capital goods will be reduced by 5% per quarter of a year or
on Capital part of the year from the date of invoice.
Goods

Provision A registered person shall not be entitled to take input tax credit under sub-section (1) in
respect of any supply of goods or services or both to him after the expiry of one year from
the date of issue of tax invoice relating to such supply.
Insights ITC is to be availed within 1 year from the date of the issue of the tax invoice
by the supplier.

Provision Where there is a change in the constitution of a registered person on account of sale,
merger, demerger, amalgamation, lease or transfer of the business with the specific
provisions for transfer of liabilities, the said registered person shall be allowed to transfer the
input tax credit which remains unutilised in his electronic credit ledger to such sold,
merged, demerged, amalgamated, leased or transferred business in such manner as may
be prescribed.
Trigger This provision is applicable when there is a change in the constitution of a
point registered person on account of sale, merger, demerger, amalgamation, lease or
transfer of the business with the specific provisions for transfer of liabilities.
Basic It is possible the ITC of a person may remain unutilized. This section prescribes
that in case of change in constitution, such ITC lying in the electronic credit
ledger of the registered person can be transferred to the new entity.
Procedure Furnish The transferor shall furnish the details of sale, merger, demerger,
details on amalgamation, lease or transfer of business electronically on the
portal
common portal.
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Request Along with the details, a request shall be made for transfer of
unutilized input tax credit lying in his electronic credit ledger to the
transferee.
Demerger In the case of demerger, the input tax credit shall be apportioned in
case the ratio of the value of assets of the new units as specified in the
demerger scheme.
Certifi- The transferor shall submit a certificate from practicing Chartered

cation Accountant/ Cost Accountant certifying that the change in
constitution has been done with a specific provision for transfer of
liabilities.
Acceptance Upon acceptance of such details by the transferee on the common

by portal, the unutilized ITC will be credited to his electronic credit
transferee
ledger.
Accounting The transferee will record the inputs and capital goods so transferred
by in his books of account.
transferee

Provision Where any registered person who has availed of input tax credit opts to pay tax under
section 10 or, where the goods or services or both supplied by him become wholly
exempt, he shall pay an amount, by way of debit in the electronic credit ledger or
electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in
stock and inputs contained in semi-finished or finished goods held in stock and on capital
goods, reduced by such percentage points as may be prescribed, on the day
immediately preceding the date of exercising of such option or, as the case may be, the
date of such exemption:
Provided that after payment of such amount, the balance of input tax credit, if any, lying
in his electronic credit ledger shall lapse.
Trigger This provision is applicable when

point - a registered person who has availed ITC switches to composition levy or
- when his supplies get wholly exempted from tax.
Basic This section requires the reversal of ITC already taken.
Reversal of How to The registered person will have to debit the electronic credit or cash
ITC effect ledger by the reversal amount.
In respect of Inputs held in stock or

Inputs contained in semi-finished goods held in stock or
Inputs contained in finished goods held in stock, or
Capital goods
Day On the day immediately preceding the date of switch over/ date of
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exemption.
Balance Balance of ITC, if any, lying in the electronic credit ledger shall lapse.
credit
Reversal in Invoices ITC on inputs will be reversed proportionately on the basis of
case of available corresponding invoices on which credit had been availed on such
inputs inputs.
Invoices not ITC to be reversed will be based on the prevailing market price of
available such goods on the date of switch over/ exemption. The details
furnished on the basis of prevailing market value will be duly certified
by a practicing Chartered Accountant/ Cost Accountant.
Reversal in Pro-rata ITC involved in the remaining useful life (in months) of the capital
case of basis goods will be reversed on pro-rata basis, taking useful life as 5 years.
capital
goods Example Capital goods have been in use for 4 years, 6 month and 15 days.
Useful remaining life in months = 5 months ignoring part of month
ITC taken on such capital goods = C
ITC attributable to remaining useful life = C x 5/60
Common Tax wise The ITC to be reversed on inputs and capital goods will be calculated
points for calculation separately for ITC of CGST, SGST/ UTGST and IGST.
inputs &
capital Added in The reversal amount will be added to the output tax liability of the
output tax registered person.
goods

Provision The amount of credit under sub-section (1) and the amount payable under sub-section (4)
shall be calculated in such manner as may be prescribed.
Insights These provisions are contained in Rule 40 & 44, which have been discussed above.

Provision In case of supply of capital goods or plant and machinery, on which input tax credit has
been taken, the registered person shall pay an amount equal to the input tax credit taken
on the said capital goods or plant and machinery reduced by such percentage points as
may be prescribed or the tax on the transaction value of such capital goods or plant and
machinery determined under section 15, whichever is higher:
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as
scrap, the taxable person may pay tax on the transaction value of such goods
determined under section 15.
Trigger This provision is applicable when the capital goods or plant and machinery on which
point ITC has been taken are supplied outward by the registered person.
Payment In such case, the registered person will pay an amount, higher of the following :
P a g e | 168
- ITC taken on such goods reduced by 5% per quarter of a year or part

thereof from the date of issue of invoice for such goods (i.e., ITC
pertaining to remaining useful life of the capital goods), or
- tax on transaction value.
Tax wise The ITC pertaining to remaining useful life of capital goods will be calculated
calculation separately for ITC of CGST, SGST/ UTGST and IGST.
Added in Where the amount so determined exceeds the tax payable on the transaction
output tax value of the capital goods, such amount will have to be paid and thus, will be
added to the output tax liability.
Sale of If refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the
specific taxable person may pay tax on the transaction value.
goods as
scrap
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Questions
Question 1
ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following items during the month of
July.
S.No. Items GST paid (Rs.)
(i) Electrical transformers to be used in the manufacturing process 5,20,000
(ii) Trucks used for the transport of raw material 1,00,000
(iii) Raw material 2,00,000
(iv) Confectionery items for consumption of employees working in the factory 25,000
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by
giving necessary explanations for treatment of various items.
Question 2
XYZ Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with XYZ Ltd. for the month of
October, 2018 from the following particulars :
S.No. Inward supplies GST (Rs.) Remarks
(i) Inputs ‘A’ 1,00,000 One invoice on which GST payable was Rs. 10,000, is missing
(ii) Inputs ‘B’ 50,000 Inputs are to be received in two instalments. First instalment has been
received in October, 2018.
(iii) Capital Goods 1,20,000 XYZ Ltd. has capitalised the capital goods at full invoice value inclusive of
GST as it will avail depreciation on the full invoice value.
(iv) Input Services 2,25,000 One invoice dated 20.01.2018 on which GST payable was Rs. 50,000
has been received in October, 2018.
Note:
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) ABC Co. Ltd. is not eligible for any threshold exemption.
(iii) The annual return for the financial year 2017-18 was filed on 15th September, 2018.
Question 3
Mr. X, a supplier of goods, pays GST under regular scheme. Mr. X is not eligible for any threshold exemption. He has
made the following outward taxable supplies in a tax period:
Particulars Rs.
Intra-State supply of goods 8,00,000
Inter-State supply of goods 3,00,000
He has also furnished the following information in respect of purchases made by him
in that tax period:
Particulars Rs.
Intra-State purchase of goods 3,00,000
Inter-State purchase of goods 50,000
Mr. X has following ITCs with him at the beginning of the tax period:
Particulars Rs.
CGST 30,000
SGST 30,000
IGST 70,000
Note:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. X during the tax period. Make suitable assumptions as required.
Question 4
What is input tax?
Question 5
What are the conditions necessary for obtaining ITC?
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Question 6
Can a person take ITC without payment of consideration for the supply along with tax to the supplier?
Question 7
What is the time limit for taking ITC and reasons therefor?
Question 8
What is the ITC entitlement of a newly registered person?
Question 9
What is the tax implication of supply of capital goods by a registered person who had taken ITC on such capital
goods?
Question 10
What happens where the details of inward supplies furnished by the recipient do not match with the outward supply
details furnished by the supplier in his valid return?
Question 11
A flying school imports an aircraft for use in its training activity, and takes ITC of the IGST paid on the import. The
departmental audit raises an objection that aircrafts fall within the definition of “conveyance” in section 2(34) of the
Act and that ITC is not allowed on conveyances. Offer your comments.
Question 12
A taxable person is in the business of information technology. He buys a motor vehicle for use of his Executive Directors.
Can he avail the ITC in respect of GST paid on purchase of such motor vehicle?
Question 13
A technical testing agency tests and certifies each batch of machine tools before dispatch by BMT Ltd. Some of these
tools are dispatched to a unit in a SEZ without payment of GST as these supplies are not taxable. The finance
personnel of BMT Ltd. want to know whether they need to carry out reversal of ITC on the testing agency’s services to
the extent attributable to the SEZ supplies. Give your comments.
Question 14
A garment factory receives a Government order for making uniforms for a commando unit. This supply is exempt from
tax under a special notification. The fabric is separately procured for the supply, but thread and lining material for the
collars are the ones which are used for other taxable products of the factory.
The turnover of the other products of the factory and exempted uniforms in July is Rs. 4 crore and Rs. 1 crore
respectively, the ITC on thread and lining material procured in July is Rs. 5000 and Rs. 15000 respectively.
Calculate the eligible ITC on thread and lining material.
Question 15
Mr. A, a registered person was paying tax under Composition Scheme up to 30th July. However, w.e.f. 31st July, Mr. A
becomes liable to pay tax under regular scheme. Is he eligible for ITC?
Question 16
M/s. X Ltd. supplied taxable goods from the factory after manufacture in the month of Oct 2017 for sale to a
distributor for Rs. 8,00,000. M/s X Ltd has suppressed this transaction. However, he deposited the GST @12% on
these goods on 10-1-2018 against show cause notice issued under Section 74 (when there is fraud) of the CGST Act,
2017 by the Central Tax Officer and passed the order accordingly. Whether distributor namely recipient of these
goods is eligible to take input tax credit.
Question 17
M/s C Ltd Chennai procured goods 10,000 Kgs @ Rs. 100 per Kg. From M/s D Ltd of Delhi. These goods came to M/s
C Ltd of Chennai in the following manner:
Date of dispatch No. Kgs dispatched Date of receipt Normal loss in transit kgs Abnormal loss in transit
Kgs
10th Oct 2,000 15th Nov 2 -
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2nd Nov 5,000 20th Nov 5 -
3rd Dec 3,000 1st Jan 1 20
Invoice shows 10,000 Kgs. and GST @18%. You are required to answer:
(a) M/s C Ltd can avail the proportionate credit on 15th Nov and 20th Nov.
(b) M/s C Ltd is eligible for input tax credit if so when.
(c) How much credit is allowed to M/s C Ltd.
Question 18
M/s A Ltd of Aluva (Kerala) receives the input service from M/s B Ltd of Bengaluru who raises the invoice for supply of
service on 17th Dec 2017 and availed the credit on the same date. Find the time limit within which M/s A Ltd is
required to pay the bill amount inclusive of tax to supplier of service. Also explain consequence if payment is not made
within the stipulated time period as mentioned in 2nd proviso to section 16(2) of the CGST Act, 2017.
Question 19
M/s X Ltd. has establishment in Chennai, and establishment in Hyderabad. Supply of goods (open market value of Rs.
5,00,000) made by M/s X Ltd. Chennai to M/s X Ltd. Hyderabad. M/s X Ltd. Chennai paid IGST of Rs. 60,000.
Accordingly M/s X Ltd. Hyderabad availed the input tax credit of Rs. 60,000. 2nd Proviso to Section 16(2) of CGST
Act, 2017 is applicable in the given case (i.e to revere the credit where payment is not made within 180 days from the
date of invoice). Advise.
Question 20
M/s X Ltd. purchased input for Rs. 2,00,000 vide Tax Invoice No. 12 dated 1st December 2017. M/s X Ltd. has
submitted annual return for the financial year 2017-18 on 15th September 2018 and return for September 2018 has
been filed 19th Oct 2018. Find the time limit within which input tax credit can be availed on input by X Ltd. M/s X Ltd.
wants to take input tax credit on such input on 30th September 2018, advise.
Question 21
M/s X Ltd. delivered a machine to M/s Y Ltd. in January 2018 under Invoice No. 180 dated 21st January for Rs.
5,00,000 plus GST, and undertook trial runs and calibration of the same machine as per the requirements of M/s Y Ltd.
The amount chargeable for the past delivery activities were covered in a debit note raised in May 2018 for Rs.
1,25,000 plus GST. M/s Y Ltd did not file its annual return till October 2018. Find the time limit u/s 16(4) of the CGST
Act, 2017 within which input tax credit can be availed by M/s Y Ltd.
Question 22
M/s. Vipin Ltd. purchased raw material ‘A’ 10,000 kg @ Rs. 80 per Kg. plus GST. The said raw material was used to
manufacture product ‘P’. The other information’s are as under:
(i) Processing loss : 2% on inputs ‘A’.
(ii) Transaction value of ‘P’ : Rs. 100 per kg.
(iii) Other material ‘M’ used in the manufacture of ‘P’ : Rs. 2 lac plus GST.
(iv) GST on capital goods imported during the period and used in the manufacture of ‘P’: - Basic customs duty Rs.
20,000 - IGST under customs under section 3(1) of the Customs Tariff Act, 1975 Rs. 10,000;
(v) Rate of GST on ‘A’, ‘M’ and ‘P’ : 12%.
M/s. Vipin Ltd. is not eligible for composition scheme under Section 10 of CGST Act, 2017
Compute:
(a) Amount of input tax credit available and
(b) Net GST payable by M/s. Vipin Ltd.
Question 23
M/s X Ltd manufacturer of textile products. Company received order from Government to supply goods to defense
(exempted supply). The turnover of the other taxable goods and exempted goods Rs. 4 crore and Rs. 1 crore
respectively. Common inputs on which GST paid Rs. 20,000. Calculate the eligible ITC on common inputs?
Question 24
Y Ltd. manufactures taxable and exempted goods. Y Ltd. also simultaneously provides taxable as well as exempted
output services. Raw material 10,000 units were purchased @ Rs. 100 per unit used commonly during the month of
January 2018 to produce all final products. GST paid on inputs 12%. Input services commonly used for all goods and
services in the month of January 2018. Total ITC on inputs and input services taken into books of account in the relevant
tax period is Rs. 1,74,000.
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Turnover for the month of January 2018 (excluding all taxes) :
Particulars Value of finished goods (Rs.)
Taxable supply of goods 2,00,000
Exempted supply of goods (Rs. 80 per unit) 1,00,000
Taxable supply of services 1,00,000
Exempted supply of services 50,000
You are required to compute the amount of reversal of input tax credit for the month of January 2018.
Note: Each unit of exempted final product needs 2 units of raw materials. Assumed that there is no process loss.
Question 25
X Bank of India has corporate office in Mumbai and branches in Chennai, Delhi and Kolkata. Mumbai office provided
services to Chennai office accordingly IGST paid. Explain the treatment of ITC.
Question 26
OK Bank has availed credit of Rs. 25,00,000 lacs in the month of December 2017. Total credit, out of which Rs.
5,00,000 pertains to non-business purpose and Rs. 7,00,000 pertains to credit availed under 2nd proviso of section
17(4). Find the total input tax credit eligible to OK Bank.
Note: OK Bank opted to avail ITC an amount equal to 50% of eligible credit.
Question 27
M/s A Ltd. a registered person under GST law and purchased 10 cars for Rs. 45 lakh plus 28% GST. M/s A Ltd sold 8
cars for Rs. 55 Lakh plus 28% GST. Find the GST liability in the following two independent cases:
(a) M/s A Ltd is a dealer of motor vehicles
(b) M/s A Ltd is not a dealer of motor vehicles
Question 28
M/s MR Ltd. manufacturer of motor vehicles. Company purchased passenger motor vehicle for Rs. 20 lacs plus GST
28% for transportation of their employees from their residence to factory and from factory to their residence. Is M/s
MR Ltd. eligible to avail the credit on purchase motor vehicle?
Question 29
Ferrari Company for conducting Formulae One car races purchased 20 Racing Cars for Rs. 80 lakhs plus GST 28%. Is
Ferrari company eligible for availing ITC on purchase of Racing Cars?
Question 30
M/s Maruti Driving School Pvt. Ltd. supplied taxable services in the month of October 2017 for Rs. 15 lacs (plus GST
18%) to provide training on driving. Company purchased two vehicles for this purpose namely passenger vehicle for
Rs. 20 lacs plus GST 28% and goods vehicle for Rs. 33 lacs plus GST 28%. Find the net GST liability of M/s Maruti
Driving School Pvt. Ltd.
Question 31
M/s Sky Ltd. (Flying Training Institute) purchased aircraft for Rs. 22 crores plus GST 28%. Whether the flying institue is
eligible for input tax credit on purchase of air craft.
Question 32
Guidelines Academy organizes parents meeting and provides meal during meeting to students and their parents. The
supplier of food charged Rs. 72,500 plus GST 18%, under the category of outdoor catering. Is academy eligible to
take ITC?
Question 33
Annapoorna caterings supply outdoor catering services to its customers by sub-contracting the same. Sub- contractor
supplied food items like ice creams, North Indian Meals, South Indian Meals and so on to Annapoorna caterings. Sub-
contractor raised invoice on Annapoorna caterings for supply of outdoor catering services Rs. 2,00,000 plus GST 18%.
Annopoorna caterings supplied outdoor catering to its customers for Rs. 2,10,000 plus GST 18%. Find the Net GST
liability of Annapoorna caterings.
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Question 34
Sky Ltd. is engaged in supply of transport of passengers by air services. The company avails outdoor catering services
of M/s Anna Caterers in order to provide food and beverages to the passengers. M/s Anna Caterers raises an invoice
on Sky Ltd. charging GST. Sky Ltd. wants to avail the ITC on outdoor catering services supplied by M/s Anna Caterers.
Advise.
Question 35
Wipro Pro Ltd is a BPO which works on night shift basis. As per the Government Notification, it has to provide rent a
cab facilities to its employees who work on night shifts. Whether, Wipro Pro is eligible to avail ITC on rent a cab
services.
Question 36
Infosys Ltd. being a registered person under GST Law paid insurance premium for its employees along with GST
thereon. Can Infosys Ltd. avail the ITC of GST paid on insurance premium?
Question 37
M/s MRFL Ltd.being a manufacturer of taxable goods paid general insurance premium to cover loss of stock of finished
goods. Company wants to avail the GST paid on such premium as input tax credit. Advise.
Question 38
M/s A Ltd. being a manufacturer of laptops registered under GST. Company appointed M/s B Ltd. for construction of
factory building in the factory premises. Conract pirce is Rs. 120 lacs plus GST 18%. M/s B Ltd., supplied cement, steel
and labour while executing the contract. Whether M/s A Ltd is eligible to avail the input tax credit on such works
contract service.
Question 39
M/s P Ltd. appoints M/s Q Ltd. for laying of pipelines inside its factory premises which resulting into movable property.
For which M/s P Ltd. purchased pipelines for Rs. 10,00,000 plus GST 12%. On completion of works contract service
M/s Q Ltd charged for Rs. 2,00,000 plus GST 18%. Find the eligible input tax credit to M/s M/s P Ltd.
Question 40
Ram is the chairman of reputed construction company. He ordered certain input goods or services like cement, steel and
labour to be used for the construction of his house. Cement purchased was also used partly for the company building
(i.e. captive use). Input tax credit allowed on purchase of cement?
Question 41
Determine the amount of input tax credit available with Arihant Manufacturing Ltd. in respect of the following items
procured by them in the month of January 2018:
Items GST paid (Rs.)
Raw materials 72,000
Food and beverages & catering services are used in the guesthouse primarily for the stay of 40,000
newly recruited employees
Inputs used for making structures for support of plant and machinery 1,25,000
Capital goods used as parts and components for use in themanufacture of final product 40,000
Question 42
Mr. A of USA being technician came to India to assemble parts of machinery. He also imported goods worth Rs.
10,00,000 and paid following customs duties:
(i) Basic customs duty is Rs. 1,00,000.
(ii) Education Cess 2% plus 1% Secondary and Higher Education Cess together it is Rs. 3,000.
(iii) Integrated Goods and Services Tax (IGST) of Rs. 1,98,540.
In India Mr. A wants to register as non-resident taxable person and his estimated liability is Rs. 2,50,000. How much
Mr. A is liable to pay as advance tax?
Question 43
M/s X Ltd. sold goods to M/s Y Ltd. for Rs. 2,00,000 plus GST Rs.. 36,000. M/s X Ltd. remitted the GST on or before
the due date. During the audit of M/s X Ltd. books by the Central Tax Department quantified the GST liability Rs.
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72,000 and demanded to pay differential duty of Rs. 36,000 u/s 74 of the CGST Act, 2017. Finally, M/s X Ltd. paid
the differential GST of Rs. 36,000. M/s Y Ltd. wants to avail the input tax credit of differential amount of GST, advise.
Question 44
M/s X Ltd. becomes liable to pay tax on 1st December and has obtained registration on 15th December. The GST paid
goods lying in the premises of M/s X Ltd. as on 30th November are as follows:
Particulars Value in Rs. (Excluding tax) GST (Rs.)
Raw material 2,00,000 36,000
Capital goods 5,00,000 1,40,000
Raw material lying in work in progress 3,00,000 54,000
Raw material lying in Finished Goods 12,00,000 2,16,000
(a) Eligible amount of input tax credit.
(b) Time limit to submit declaration on common portal.
(c) Whether any certification required while availing the credit, if so from whom.
Question 45
Mr. A applies for voluntary registration on 22nd November and obtained registration on 25th November. Mr. A has
stock on the following two dates:
Date Opening balance (units) Purchases (units) Sold (units)
21st November 12,000 20,000 8,000
On 24th November, Mr. A purchased 5,000 units and sold 15,000 units. On 24th November, Mr. A is also purchased
plant and machinery for Rs. 2,00,000 plus GST 28%. Mr. A purchased good at uniform rate through out the year at Rs.
100 per unit plus GST paid 18%. You are required to find the eligible input tax credit to Mr. A.
Question 46
Mr. C a registered taxable person, was paying tax at composition scheme upto 30th July. However, w.e.f. 31st July,
Mr. C becomes liable to pay tax under regular scheme. Other information:
(a) Input as on 30th July for Rs. 3,54,000 (inclusive of GST paid @18%).
(b) Capital goods purchased for Rs. 5,00,000 (invoice date 22nd April 2017, GST 18%).
Find the eligible ITC to Mr. C. Note: Mr. C not availed depreciation on the GST paid on capital goods.
Question 47
M/s A Ltd. sold plant and machinery after being used in the manufacture of taxable goods for Rs. 4,00,000 on 1st
November 2018. GST is payable on transaction value of pant and machinery 18%. M/s A Ltd. was purchased this
machine vide invoice dated 22nd November 2017 for Rs. 5,50,000/- plus GST 18%. M/s A Ltd. availed the credit on
said plant and machinery. Find the amount payable by M/s A Ltd. under section 18(6) of the CGST Act, 2017.
Question 48
The goods manufactured by Royal Ltd. have been exempted from GST with effect from 15th November 2017. Earlier
these goods were liable to tax @18%. Its inputs were liable to GST @12%. Following information is supplied on 15th
November 2017:
(i) The inputs costing Rs. 1,44,720 are lying in stock.
(ii) The inputs costing Rs. 77,184 are in process.
(iii) The finished goods valuing Rs. 4,82,400 are in stock, the input cost is 50% of the value.
(iv) The balance in electronic credit ledger account shows credit balance of Rs. 2,79,104.
(v) Royal Ltd. also purchased capital goods for Rs. 2,00,000 by paying GST 28% (invoice dated 10th July 2017)
The department has asked Royal Ltd. to reverse the credit taken on inputs referred above. However, Royal Ltd.
contends that credit once validly taken is indefeasible and not required to be reversed. Decide. What would be your
answer if the balance in electronic credit ledger receivable account as on 15th November 2017 were Rs. 29,104?
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Registration
Registration is the most fundamental requirement for identification of taxpayers ensuring tax compliance in the
economy. Without registration, a person can neither collect tax from his customers nor claim any input tax credit of tax
paid by him. Registration of any business entity under the GST Law implies obtaining a unique number from the
concerned tax authorities for the purpose of collecting tax on behalf of the government and to avail input tax credit for the
taxes on his inward supplies.

CGST Act
Chapter VI – Registration
Section 22 Persons liable for registration
Section 23 Persons not liable for registration
Section 24 Compulsory registration in certain cases
Section 25 Procedure for registration
Section 26 Deemed registration
Section 27 Special provisions relating to casual taxable person and non-resident taxable person
Section 28 Amendment of registration
Section 29 Cancellation of registration
Section 30 Revocation of cancellation of registration
CGST Rules
Chapter III – Registration
Rule 8 Application for registration
Rule 9 Verification of the application and approval
Rule 10 Issue of registration certificate
Rule 11 Separate registration for multiple business verticals within a State or a Union Territory
Rule 12 Grant of registration to persons required to deduct tax at source or to collect tax at source
Rule 13 Grant of registration to non-resident taxable person
Rule 14 Grant of registration to a person supplying online information and database access or retrieval services from a
place outside India to a non-taxable online recipient
Rule 15 Extension in period of operation by casual taxable person and non-resident taxable person
Rule 16 Suo moto registration
Rule 17 Assignment of Unique Identity Number to certain special entities
Rule 18 Display of registration certificate and Goods and Services Tax Identification Number on the name board
Rule 19 Amendment of registration
Rule 20 Application for cancellation of registration
Rule 21 Registration to be cancelled in certain cases
Rule 22 Cancellation of registration
Rule 23 Revocation of cancellation of registration
Rule 24 Migration of persons registered under the existing law
Rule 25 Physical verification of business premises in certain cases
Rule 26 Method of authentication

(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than
special category States, from where he makes a taxable supply of goods or services or both, if his aggregate
turnover in a financial year exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both from any of the special
category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten
lakh rupees.
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(2) Every person who, on the day immediately preceding the appointed day, is registered or holds a licence
under an existing law, shall be liable to be registered under this Act with effect from the appointed day.
(3) Where a business carried on by a taxable person registered under this Act is transferred, whether on
account of succession or otherwise, to another person as a going concern, the transferee or the successor, as
the case may be, shall be liable to be registered with effect from the date of such transfer or succession.
(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of
a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies
pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with
effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to
such order of the High Court or Tribunal.
Explanation.––For the purposes of this section,––
(i) the expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his
own account or made on behalf of all his principals;
(ii) the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply
of goods by the principal referred to in section 143, and the value of such goods shall not be included in the
aggregate turnover of the registered job worker;
(iii) the expression “special category States” shall mean the States as specified in sub-clause (g) of clause (4)
of article 279A of the Constitution.

Provision Every supplier shall be liable to be registered under this Act in the State or Union territory,
other than special category States, from where he makes a taxable supply of goods or
services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees.
Provided that where such person makes taxable supplies of goods or services or both from
any of the special category States, he shall be liable to be registered if his aggregate
turnover in a financial year exceeds ten lakh rupees.
Trigger General Every supplier of goods or services or both is required to obtain

point - Registration in the State or the Union territory from where he makes
Threshold
the taxable supply if his aggregate turnover exceeds Rs. 20 lakh in a
limit for
FY.
registration
Special Limit The limit of Rs. 20 lakh will be reduced to Rs. 10 lakh if
Category
the person is carrying out business in the Special Category
States
States.
Names of [Special category States are specified in Article 279A(4)(g)
States
of the Constitution] - States of Arunachal Pradesh, Assam,
Jammu and Kashmir, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura, Himachal Pradesh and
Uttarakhand.
Special If a person having place of business in different States across
Provision
India has one branch in any of the Special Category States,
the threshold limit for GST registration will be reduced to
Rs. 10 lakh.
Registrati- A person is required to obtain registration with respect to his each place of
on required business in India from where a taxable supply has taken place. However, a supplier
only for a
is not liable to obtain registration if his aggregate turnover consists exclusively of
place of
P a g e | 177
business goods or services or both which are not taxable under GST.
having
taxable
Supply
Aggregate Total Provision Aggregate turnover shall include total turnover of all
Turnover – Turnover of
branches with same PAN.
Notable all
Points branches Example A dealer ‘X’ has two offices – one in Delhi and another in
Haryana. In order to determine whether ‘X’ is liable for
registration, turnover of both the offices would be taken
into account and only if the same exceeds Rs. 20 lakh, X
is liable for registration.
Inclusion of Provision Aggregate Turnover shall include
all kind of
- Value of exported goods/ services,
supplies
- exempted goods/ services,
- inter-State supplies between distinct persons
having same PAN.
Example Rohan Oils, Punjab, is engaged in supplying machine oil as
well as petrol. Supply of petrol is not leviable to GST,
but supply of machine oil is taxable. In order to
determine whether Rohan Oils is liable for registration,
turnover of both the supplies – non-taxable as well as
taxable - would be taken into account and if the same
exceeds Rs. 20 lakh, Rohan Oils is liable for registration.
Supplies Provision Aggregate turnover shall include all supplies made by the
made on
taxable person, whether on his own account or made on
own
account as behalf of all his principals.
well as Example Mohini Enterprises has appointed M/s Bestfords &
principal
Associates as its agent. All the supplies of goods made by
M/s Bestfords & Associates as agent of Mohini
Enterprises will also be included in the aggregate turnover
of M/s Bestfords & Associates.
‘Aggregate The aggregate turnover is different from turnover in a State. The

turnover’ former is used for determining the threshold limit for registration as
Vs.
well as eligibility for composition scheme. However, the composition
‘Turnover
in a State’ levy would be calculated on the basis of ‘turnover in the State’.
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Provision Every person who, on the day immediately preceding the appointed day, is registered or
holds a license under an existing law, shall be liable to be registered under this Act with
effect from the appointed day.
Relevance All the taxpayers who were registered under various earlier indirect tax laws are
of liable to be registered under GST with effect from the appointed day [when the
Appointed
CGST Act came into force, i.e. 22nd June, 2017].
Day
Procedure Such taxpayers have been issued a Provisional ID and password by their respective
tax Departments to logon on GST Common Portal (https://www.gst.gov.in/) to
fill up the required details and upload the supporting documents. After they
provided the requisite details, an ARN (Application Reference Number) is
communicated to them. Once a taxpayer had the ARN, he would have migrated
to GST on the appointed day with issue of provisional certificate and would have
received a provisional GSTIN. Final registration certificate and GSTIN would be
granted within 6 months of the appointed day.

Provision Where a business carried on by a taxable person registered under this Act is transferred,
whether on account of succession or otherwise, to another person as a going concern,
the transferee or the successor, as the case may be, shall be liable to be registered with
effect from the date of such transfer or succession.
Trigger This provision applies if the business is transferred due to succession or any other
point reason as a going concern from one person to other person.
Time for The transferee or successor is to be registered with effect from the date of such
registration transfer/ succession.

Provision Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer
pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case
may be, demerger of two or more companies pursuant to an order of a High Court,
Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the
date on which the Registrar of Companies issues a certificate of incorporation giving
effect to such order of the High Court or Tribunal.
Trigger This provision applies Where the business is transferred, pursuant to sanction of a
point scheme/ arrangement for amalgamation/ de-merger of two or more companies,
pursuant to an order of a High Court/ Tribunal.
Time for The transferee is to be registered with effect from the date on which the
registration Registrar of Companies issues a certificate of incorporation giving effect to such
order.
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(1) The following persons shall not be liable to registration, namely:––
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to
tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
(2) The Government may, on the recommendations of the Council, by notification, specify the category of
persons who may be exempted from obtaining registration under this Act.

Provision The following persons shall not be liable to registration, namely:––
(a) any person engaged exclusively in the business of supplying goods or services or
both that are not liable to tax or wholly exempt from tax under this Act or under the
Integrated Goods and Services Tax Act
(b) an agriculturist, to the extent of supply of produce out of cultivation of land
Persons not Non taxable Person who is engaged exclusively in supplying goods/ services/ both
be liable to supplies
which are not liable to tax.
registration
Exempted Person who is engaged exclusively in supplying goods/ services/ both
supplies
which are wholly exempt from tax.
Agricultu-- An agriculturist, to the extent of supply of produce out of
rist
cultivation of land.
Notable If a supplier is supplying both exempted and non-exempted goods and/ or services,
points then this provision is not applicable and he is required to take registration under
Section 22.
If an agriculturist undertakes supplies which are not linked to the cultivation of
land, he will fall within the provisions of Section 22 and may have to take
registration in respect of such supplies.

the category of persons who may be exempted from obtaining registration under this Act.
Insights The government can specify the category of persons who will not be required to
tale the registration.
It can be done only on the recommendations of council.
Exercise of Persons who are only engaged in making supplies of taxable goods or services or
power both, the total tax on which is liable to be paid on reverse charge basis by the
recipient of such goods or services or both under section 9(3) have been notified
as the category of persons exempted from obtaining registration under GST law.
[Notification No. 5/2017 CT dated 19.06.2017].
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Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall
be required to be registered under this Act,––
(i) persons making any inter-State taxable supply;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
(iv) person who are required to pay tax under sub-section (5) of section 9;
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this
Act;
(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether
as an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of
section 9, through such electronic commerce operator who is required to collect tax at source under section
52;
(x) every electronic commerce operator;
(xi) every person supplying online information and database access or retrieval services from a place outside
India to a person in India, other than a registered person; and
(xii) such other person or class of persons as may be notified by the Government on the recommendations of
the Council.
Analysis of Section 24
Provision Notwithstanding anything contained in sub-section (1) of section 22, the following
categories of persons shall be required to be registered under this Act,––
(i) persons making any inter-State taxable supply
(ii) casual taxable persons making taxable supply
(iii) persons who are required to pay tax under reverse charge
(iv) person who are required to pay tax under sub-section (5) of section 9
(v) non-resident taxable persons making taxable supply
(vi) persons who are required to deduct tax under section 51, whether or not
separately registered under this Act;
(vii) persons who make taxable supply of goods or services or both on behalf of other
taxable persons whether as an agent or otherwise
(viii) Input Service Distributor, whether or not separately registered under this Act
(ix) persons who supply goods or services or both, other than supplies specified under
sub-section (5) of section 9, through such electronic commerce operator who is
required to collect tax at source under section 52
(x) every electronic commerce operator
(xi) every person supplying online information and data base access or retrieval
services from a place outside India to a person in India, other than a registered
person; and
(xii) such other person or class of persons as may be notified by the Government on
the recommendations of the Council
Insights Provisions of section 24 override the provisions of Section 22(1). Thus, the
category of persons mentioned in this section are mandatorily required to obtain
the registration under GST irrespective of their turnover.
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(1) Every person who is liable to be registered under section 22 or section 24 shall apply for registration in
every such State or Union territory in which he is so liable within thirty days from the date on which he
becomes liable to registration, in such manner and subject to such conditions as may be prescribed:
Provided that a casual taxable person or a non-resident taxable person shall apply for registration at least five
days prior to the commencement of business.
Explanation.—Every person who makes a supply from the territorial waters of India shall obtain registration in
the coastal State or Union territory where the nearest point of the appropriate baseline is located.
(2) A person seeking registration under this Act shall be granted a single registration in a State or Union
territory:
Provided that a person having multiple business verticals in a State or Union territory may be granted a
separate registration for each business vertical, subject to such conditions as may be prescribed.
(3) A person, though not liable to be registered under section 22 or section 24 may get himself registered
voluntarily, and all provisions of this Act, as are applicable to a registered person, shall apply to such person.
(4) A person who has obtained or is required to obtain more than one registration, whether in one State or
Union territory or more than one State or Union territory shall, in respect of each such registration, be treated
as distinct persons for the purposes of this Act.
(5) Where a person who has obtained or is required to obtain registration in a State or Union territory in
respect of an establishment, has an establishment in another State or Union territory, then such
establishments shall be treated as establishments of distinct persons for the purposes of this Act.
(6) Every person shall have a Permanent Account Number issued under the Income tax Act, 1961 in order to
be eligible for grant of registration:
Provided that a person required to deduct tax under section 51 may have, in lieu of a Permanent Account
Number, a Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for
grant of registration.
(7) Notwithstanding anything contained in sub-section (6), a non-resident taxable person may be granted
registration under sub-section (1) on the basis of such other documents as may be prescribed.
(8) Where a person who is liable to be registered under this Act fails to obtain registration, the proper officer
may, without prejudice to any action which may be taken under this Act or under any other law for the time
being in force, proceed to register such person in such manner as may be prescribed.
(9) Notwithstanding anything contained in sub-section (1),––
(a) any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy
of foreign countries; and
(b) any other person or class of persons, as may be notified by the Commissioner, shall be granted a Unique
Identity Number in such manner and for such purposes, including refund of taxes on the notified supplies of
goods or services or both received by them, as may be prescribed.
(10) The registration or the Unique Identity Number shall be granted or rejected after due verification in such
manner and within such period as may be prescribed.
(11) A certificate of registration shall be issued in such form and with effect from such date as may be
prescribed.
(12) A registration or a Unique Identity Number shall be deemed to have been granted after the expiry of the
period prescribed under sub-section (10), if no deficiency has been communicated to the applicant within that
period.

Provision Every person who is liable to be registered under section 22 or section 24 shall apply for
registration in every such State or Union territory in which he is so liable within thirty days
from the date on which he becomes liable to registration, in such manner and subject to
such conditions as may be prescribed.
Provided that a casual taxable person or a non-resident taxable person shall apply for
registration at least five days prior to the commencement of business.
Explanation.—Every person who makes a supply from the territorial waters of India shall
obtain registration in the coastal State or Union territory where the nearest point of the
appropriate baseline is located.
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Person to Following persons have to apply for registration

apply for : Persons falling under section 22 or
registration
: Persons falling under section 24
: Casual taxable person
: Non-resident taxable person
Where to The person has to apply for registration in every such State or Union territory in
apply? which he is so liable.
Time Limit Persons falling under section 22 within 30 days from the date on which he
or 24
becomes liable to registration.
Casual taxable person or non- at least five days prior to the commencement
resident taxable person
of business.
Example Sugam Services Ltd. is engaged in taxable supply of services in Madhya Pradesh.
The turnover of Sugam Services Ltd. exceeded Rs. 20 lakh on 1st November. It is
liable to get registered by 1st December in the State of Madhya Pradesh.

Provision A person seeking registration under this Act shall be granted a single registration in a State
or Union territory.
Provided that a person having multiple business verticals in a State or Union territory may
be granted a separate registration for each business vertical, subject to such conditions as
may be prescribed.
Business Only 1 place Entity needs to take 1 registration.
operating of business
in 1 state More than 1 An entity having different branches in a state will have single
place of
registration. It can declare one place as principal place of business
business
(PPoB) and other branches as additional place of business (APoB).
Business Registration needs to be taken State-wise, i.e. there are no centralized

operating registrations under GST. A business entity having its branches in multiple States
in more
will have to take separate State-wise registration for the branches in different
than 1 state
States.
Different Availability The entity has the following options :

business of Options
- obtain single registration for all such verticals
verticals
- obtain separate registration for all such verticals
within a
Separate registration for each business vertical shall be granted
State/ UT
provided all separately registered business verticals pay tax on
supply of goods/ services/ both made to another registered business
vertical, of such person and issue a tax invoice for such supply.
Separate registration application to be filed for each business vert.
P a g e | 183
Composition If one of the business verticals of a taxable person is paying tax
levy
under normal levy [Section 9], no other business vertical shall be
granted registration to pay tax under composition levy. If one of
the business vertical [separately registered] becomes ineligible to
pay tax under composition levy, all other business verticals would
also become so ineligible.

Provision A person, though not liable to be registered under section 22 or section 24 may get himself
registered voluntarily, and all provisions of this Act, as are applicable to a registered
person, shall apply to such person.
Availabili- If a person is not liable to be registered as per the provisions of Section 22 or
ty of 24, still he has the option of taking registration.
Option
Once such a step is taken, all provisions of the act shall apply to him in an equal
manner as applicable to registered persons.
Advantage In case of supplies received from unregistered supplier by registered recipient,

recipient has to pay the tax under reverse charge. Therefore, business units would
prefer receiving supplies from the registered persons only.
Dis- Once a person obtains voluntary registration, he has to pay tax even though his
advantage aggregate turnover does not exceed Rs. 20 lakh/ Rs. 10 lakh.

Provision A person who has obtained or is required to obtain more than one registration, whether in
one State or Union territory or more than one State or Union territory shall, in respect of
each such registration, be treated as distinct persons for the purposes of this Act.
Example Mohan, a Chartered Accountant, has a registered head office in Delhi. He has also
obtained registration in the State of West Bengal in respect of his newly opened
branch office. Mohan shall be treated as distinct persons in respect of
registrations in West Bengal and Delhi.

Provision Where a person who has obtained or is required to obtain registration in a State or Union
territory in respect of an establishment, has an establishment in another State or Union
territory, then such establishments shall be treated as establishments of distinct persons for
the purposes of this Act.
Example Mohan, a Chartered Accountant, has a registered head office in Delhi. He has also
obtained registration in the State of West Bengal in respect of his newly opened
branch office. Establishments of Mohan shall be treated as Establishments of
distinct persons in respect of registrations in West Bengal and Delhi.
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Provision Every person shall have a Permanent Account Number issued under the Income- tax Act,
1961 in order to be eligible for grant of registration:
Provided that a person required to deduct tax under section 51 may have, in lieu of a
Permanent Account Number, a Tax Deduction and Collection Account Number issued
under the said Act in order to be eligible for grant of registration.
Pan A Permanent Account Number is mandatory to be eligible for grant of
Mandatory registration.

Provision Notwithstanding anything contained in sub-section (6), a non resident taxable person may
be granted registration under subsection (1) on the basis of such other documents as may
be prescribed.
Non Since NRTP will generally not have a PAN of India, he may be granted
availability registration on the basis of other prescribed documents.
of PAN
Other He has to submit a self-attested copy of his valid passport along with the
notable application signed by his authorized signatory who is an Indian Resident having
points
valid PAN. However, in case of a business entity incorporated or established
outside India, the application for registration shall be submitted along with its tax
identification number or unique number on the basis of which the entity is
identified by the Government of that country or its PAN, if available. Application
will be submitted by NRTP in FORM GST REG-09.

Provision Where a person who is liable to be registered under this Act fails to obtain registration, the
proper officer may, without prejudice to any action which may be taken under this Act or
under any other law for the time being in force, proceed to register such person in such
manner as may be prescribed.
Temporary Where, pursuant to any survey, enquiry, inspection, search or any other
Registra- proceedings under the Act, the proper officer finds that a person liable to
tion by
registration under the Act has failed to apply for such registration, such officer
officer
may register the said person on a temporary basis and issue an order in prescribed
form.
Duty of Submit Such person shall either submit an application for registration in
person application
prescribed form within 90 days from the date of grant of
for
registration temporary registration.
File appeal He may also file an appeal against such temporary registration.
However, if the Appellate Authority upholds the liability to
P a g e | 185
registration, application for registration shall be submitted within 30

days from the date of issuance of such order of the Appellate
Tribunal.

Provision Notwithstanding anything contained in sub-section (1),––
(a) any specialised agency of the United Nations Organisation or any
Multilateral Financial Institution and Organisation notified under the United
Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign
countries; and
(b) any other person or class of persons, as may be notified by the Commissioner,
shall be granted a Unique Identity Number in such manner and for such purposes,
including refund of taxes on the notified supplies of goods or services or both received by
them, as may be prescribed.
Effect This provision overrides section 25(1) i.e. the category of persons mentioned here
need not take registration. UIN shall be applicable to the territory of India.
Category of Any specialised agency of the United Nations Organisation any Multilateral
persons Financial Institution Organisation notified under the United Nations (Privileges and
required to Immunities) Act, 1947, Consulate or Embassy of foreign countries any other
obtain UIN
person notified by the Commissioner.
Purpose This UIN is needed for claiming refund of taxes paid on notified supplies of goods
and/or services received by them, and for such other purpose as may be notified.
Procedure Such person shall file an application in a different prescribed form. UIN shall be
assigned and registration certificate shall be issued within 3 working days from the
date of submission of application.

Provision The registration or the Unique Identity Number shall be granted or rejected after due
verification in such manner and within such period as may be prescribed.

Provision A certificate of registration shall be issued in such form and with effect from such date as
may be prescribed.
Form of Where the application for grant of registration has been approved, a certificate of
Certificate registration will be made available on the common portal in Form GST REG – 06.
Sign or Every certificate of registration shall be duly signed or verified through electronic
verify verification code by the proper officer.
Contents The certificate shall show the principal place of business and additional place or
P a g e | 186
places of business.
GSTIN Goods and Services Tax Identification Number (GSTIN) shall be assigned subject to
Number the following characters, namely :
(a) two characters for the State code;
(b) ten characters for the Permanent Account Number or the Tax Deduction and
Collection Account Number;
(c) two characters for the entity code; and
(d) one checksum character.
It is a 15 digit PAN based number issued state wise to taxpayer.
Communi- The applicant shall be communicated the registration number, and the certificate
cation to of registration on the common portal, within 3 days after the grant of
applicant registration.
Effective Where an applicant submits application effective date of registration is

date of for registration
registration within 30 days from the date he becomes the date on which he becomes liable to
liable to registration
registration
after 30 days from the date he becomes date of grant of registration
liable to registration
Example Sugam Services Ltd. is engaged in taxable supply of services in Madhya Pradesh.
The turnover of Sugam Services Ltd. exceeded Rs. 20 lakh on 1st November. It is
liable to get registered by 1st December [30 days] in the State of Madhya
Pradesh. It applies for registration on 28th November and is granted registration
certificate on 5th December. The effective date of registration of Sugam Services
Ltd. is 1st November.
In above example, if Sugam Services Ltd. applies for registration on 3rd December
and is granted registration certificate on 10th December. The effective date of
registration of Sugam Services Ltd. is 10th December.

Provision A registration or a Unique Identity Number shall be deemed to have been granted after
the expiry of the period prescribed under sub-section (10), if no deficiency has been
communicated to the applicant within that period.
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Provisions of Rule 8 and 9

Rule 8 – Application for Registration
(1) Every person, other than a non-resident taxable person, a person required to deduct tax at source under
section 51, a person required to collect tax at source under section 52 and a person supplying online
information and database access or retrieval services from a place outside India to a non-taxable online
recipient referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) who is
liable to be registered under sub-section (1) of section 25 and every person seeking registration under sub-
section (3) of section 25 (hereafter in this Chapter referred to as “the applicant”) shall, before applying for
registration, declare his Permanent Account Number, mobile number, e-mail address, State or Union territory
in Part A of FORM
GST REG-01 on the common portal, either directly or through a Facilitation Centre notified by the
Commissioner:
Provided that a person having a unit(s) in a Special Economic Zone or being a Special Economic Zone
developer shall make a separate application for registration as a business vertical distinct from his other units
located outside the Special Economic Zone:
Provided further that every person being an Input Service Distributor shall make a separate application for
registration as such Input Service Distributor.
(2) (a) The Permanent Account Number shall be validated online by the common portal from the database
maintained by the Central Board of Direct Taxes.
(b) The mobile number declared under sub-rule (1) shall be verified through a onetime password sent to the
said mobile number; and
(c) The e-mail address declared under sub-rule (1) shall be verified through a separate one-time password
sent to the said e-mail address.
(3) On successful verification of the Permanent Account Number, mobile number and email address, a
temporary reference number shall be generated and communicated to
the applicant on the said mobile number and e-mail address.
(4) Using the reference number generated under sub-rule (3), the applicant shall electronically submit an
application in Part B of FORM GST REG-01, duly signed or verified through electronic verification code, along
with the documents specified in the said Form at the common portal, either directly or through a Facilitation
Centre notified by the Commissioner.
(5) On receipt of an application under sub-rule (4), an acknowledgement shall be issued electronically to the
applicant in FORM GST REG-02.
(6) A person applying for registration as a casual taxable person shall be given a temporary reference number
by the common portal for making advance deposit of tax in accordance with the provisions of section 27 and
the acknowledgement under sub-rule
(5) shall be issued electronically only after the said deposit.
Rule 9 - Verification of the application and approval

(1) The application shall be forwarded to the proper officer who shall examine the application and the
accompanying documents and if the same are found to be in order, approve the grant of registration to the
applicant within a period of three working days from the date of submission of the application.
(2) Where the application submitted under rule 8 is found to be deficient, either in terms of any information or
any document required to be furnished under the said rule, or where the proper officer requires any
clarification with regard to any information provided in the application or documents furnished therewith, he
may issue a notice to the applicant electronically in FORM GST REG-03 within a period of three working days
from the date
of submission of the application and the applicant shall furnish such clarification, information or documents
electronically, in FORM GST REG-04, within a period of seven working days from the date of the receipt of
such notice.
Explanation.- For the purposes of this sub-rule, the expression “clarification” includes modification or correction
of particulars declared in the application for registration, other than Permanent Account Number, State, mobile
number and e-mail address declared in
Part A of FORM GST REG-01.
(3) Where the proper officer is satisfied with the clarification, information or documents furnished by the
applicant, he may approve the grant of registration to the applicant within a period of seven working days from
the dateof the receipt of such clarification or information or documents.
(4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule
(2) or where the proper officer is not satisfied with the clarification, information or documents furnished, he
P a g e | 188
shall, for reasons to be recorded in writing, reject such application and inform the applicant electronically in
FORM GST REG-05.
(5) If the proper officer fails to take any action, -
(a) within a period of three working days from the date of submission of the application; or
(b) within a period of seven working days from the date of the receipt of the clarification, information or
documents furnished by the applicant under sub-rule (2),the application for grant of registration shall be
deemed to have been approved.
Procedure for Registration (ICAI Module)
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Other Relevant Provisions as per Rules

Rule 18 - Display of registration certificate and Goods and Services Tax Identification
Number on the name board
(1) Every registered person shall display his certificate of registration in a prominent location at his principal
place of business and at every additional place or places of business.
(2) Every registered person shall display his Goods and Services Tax Identification Number on the name
board exhibited at the entry of his principal place of business and at every additional place or places of
business.
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Rule 25 - Physical verification of business premises in certain cases

Where the proper officer is satisfied that the physical verification of the place of business of a registered
person is required after the grant of registration, he may get such verification done and the verification report
along with the other documents, including photographs, shall be uploaded in FORM GST REG-30 on the
common portal within a period of fifteen working days following the date of such verification.

(1) The grant of registration or the Unique Identity Number under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act shall be deemed to be a grant of registration or the Unique
Identity Number under this Act subject to the condition that the application for registration or the Unique
Identity Number has not been rejected under this Act within the time specified in sub-section (10) of section
25.
(2) Notwithstanding anything contained in sub-section (10) of section 25, any rejection of application for
registration or the Unique Identity Number under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act shall be deemed to be a rejection of application for registration under this Act.
These are the linking provisions between the Central Goods and Services Tax and State/Union Territory Goods and
Services Tax Act. By enabling these provisions, the burden of taking registrations under various Acts has been removed.
Thus, if a supplier takes a registration under one act it shall be deemed that the registration has also been obtained under
the other Act and vice-versa. Even otherwise the registration must be taken on the
common portal and is based on the PAN hence the registration will remain common across various Acts.

Provision The grant of registration or the Unique Identity Number under the State Goods and
Services Tax Act or the Union Territory Goods and Services Tax Act shall be deemed to be
a grant of registration or the Unique Identity Number under this Act subject to the
condition that the application for registration or the Unique Identity Number has not been
rejected under this Act within the time specified in sub-section (10) of section 25.
Single Registration under GST is not tax specific, which means that there is single
Registrati- registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.
on for all
taxes
Deemed If the registration/ UIN has been granted under any SGST Act/ UTGST Act then
Registrati- it shall be deemed to be registration/ UIN granted under CGST Act.
on under The only condition being that the application for registration has not been
GST
rejected under CGST Act.

Provision Notwithstanding anything contained in sub-section (10) of section 25, any rejection of
application for registration or the Unique Identity Number under the State Goods and
Services Tax Act or the Union Territory Goods and Services Tax Act shall be deemed to be
a rejection of application for registration under this Act.
Effect This provision overrides Section 25(10).
Deemed If application for registration/ UIN has been rejected under any SGST Act/ UTGST
Rejection Act then it shall be deemed to be rejection of application under CGST Act.
P a g e | 191

(1) The certificate of registration issued to a casual taxable person or a non-resident taxable person shall be
valid for the period specified in the application for registration or ninety days from the effective date of
registration, whichever is earlier and such person shall make taxable supplies only after the issuance of the
certificate of registration:
Provided that the proper officer may, on sufficient cause being shown by the said taxable person, extend the
said period of ninety days by a further period not exceeding ninety days.
(2) A casual taxable person or a non-resident taxable person shall, at the time of submission of application for
registration under sub-section (1) of section 25, make an advance deposit of tax in an amount equivalent to
the estimated tax liability of such person for the period for which the registration is sought:
Provided that where any extension of time is sought under sub-section (1), such taxable person shall deposit
an additional amount of tax equivalent to the estimated tax liability of such person for the period for which the
extension is sought.
(3) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person
and shall be utilised in the manner provided under section 49.
Meaning of certain terms used in Section 27

Casual It means a person who occasionally undertakes transactions involving supply of
Taxable goods or services or both in the course or furtherance of business, whether as
Person
principal, agent or in any other capacity, in a State/UT where he has no fixed
[Section
place of business.
2(20)]
Non- It means any person who occasionally undertakes transactions involving supply of
Resident goods or services or both, whether as principal or agent or in any other capacity,
Taxable
but who has no fixed place of business or residence in India.
Person
[Section
2(77)]
Insights A CTP does not have a fixed place of business in the State/UT where he
undertakes supply though he might be registered with regard to his fixed place of
business in some other State/UT, while a NRTP does not have fixed place of
business/residence in India at all.
A CTP has to undertake transactions in the course or furtherance of business
whereas the business test is absent in the definition of NRTP.

Provision The certificate of registration issued to a casual taxable person or a non-resident taxable
person shall be valid for the period specified in the application for registration or ninety
days from the effective date of registration, whichever is earlier and such person shall
make taxable supplies only after the issuance of the certificate of registration.
Provided that the proper officer may, on sufficient cause being shown by the said taxable
person, extend the said period of ninety days by a further period not exceeding ninety
days.
Period of Period specified in the registration application, or
validity of 90 days from the effective date of registration.
registration
P a g e | 192
certificate Whichever is earlier.

granted to
CTP/NRTP
Extension The proper officer may extend the said period of ninety days by a further period
of period not exceeding ninety days, on sufficient cause being shown by the said taxable
person.
For this, he will have to make an application before the end of the validity of
registration granted to him.
Taxable Such person can make taxable supplies only after the issuance of the certificate of
supplies registration and not before that.
Applicabili- Rule 9 and rule 10 of the CGST Rules 2017 shall also apply to an application
ty of submitted under this rule.
general
rules

Provision A casual taxable person or a non-resident taxable person shall, at the time of submission
of application for registration under sub-section (1) of section 25, make an advance
deposit of tax in an amount equivalent to the estimated tax liability of such person for the
period for which the registration is sought.
Provided that where any extension of time is sought under sub-section (1), such taxable
person shall deposit an additional amount of tax equivalent to the estimated tax liability of
such person for the period for which the extension is sought.
Basic Since the nature of the activity carried out by a casual taxable person and non-
resident person are temporary as compared to a regular taxable person, additional
safeguards have been placed to ensure that the registration is granted for a
limited period and the tax liability is recovered in advance.
Advance At the time of submitting the registration application, CTP/NRTP are required to
Deposit make an advance deposit of tax in an amount equivalent to the estimated tax
liability of such person for the period for which the registration is sought.
Procedure Such person will get a TRN for making an advance deposit of tax which shall be
credited to his electronic cash ledger. An acknowledgement of receipt of application
for registration is issued only after said deposit.
Provision Where extension of time is sought, such registered taxable person will deposit an
in case of additional amount of tax equivalent to the estimated tax liability of such person
extension
for the period for which the extension is sought.

Provision The amount deposited under sub-section (2) shall be credited to the electronic cash
ledger of such person and shall be utilised in the manner provided under section 49.
P a g e | 193

(1) Every registered person and a person to whom a Unique Identity Number has been assigned shall inform
the proper officer of any changes in the information furnished at the time of registration or subsequent thereto,
in such form and manner and within such period as may be prescribed.
(2) The proper officer may, on the basis of information furnished under sub-section (1) or as ascertained by
him, approve or reject amendments in the registration particulars in such manner and within such period as
may be prescribed:
Provided that approval of the proper officer shall not be required in respect of amendment of such particulars
as may be prescribed:
Provided further that the proper officer shall not reject the application for amendment in the registration
particulars without giving the person an opportunity of being heard.
(3) Any rejection or approval of amendments under the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a rejection or approval
under this Act.

Provision Every registered person and a person to whom a Unique Identity Number has been
assigned shall inform the proper officer of any changes in the information furnished at the
time of registration or subsequent thereto, in such form and manner and within such
period as may be prescribed.
Triger point The provision becomes applicable when there is any change in any of the
particulars furnished in the application for registration in or for Unique Identity
Number, either at the time of obtaining registration or Unique Identity Number
or as amended from time to time.
Procedure to Time period Register person shall within 15 days of such change
be followed How to apply Submit an application
Sign duly signed or verified through electronic verification code
Mode Electronically
Attachments along with the documents relating to such change
Where At Common Portal
Self or either directly or through a Facilitation Centre notified by the
through others
Commissioner

Provision The proper officer may, on the basis of information furnished under sub-section (1) or as
ascertained by him, approve or reject amendments in the registration particulars in such
manner and within such period as may be prescribed:
Provided that approval of the proper officer shall not be required in respect of
amendment of such particulars as may be prescribed:
Provided further that the proper officer shall not reject the application for amendment in
the registration particulars without giving the person an opportunity of being heard.
Power with Core fields of The proper officer has the power to approve or reject the
proper information
amendments applied.
officer
Non-core The approval of proper officer is not required.
P a g e | 194
fields of
information
Core fields Change 1. legal name of business;
of relates to
2. address of the principal place of business or any additional
informati-
place(s) of business; or
on
3. addition, deletion or retirement of partners or directors,
Karta, Managing Committee, Board of Trustees, Chief
Executive Officer or equivalent, responsible for the day to day
affairs of the business which does not warrant cancellation of
registration
Time period The proper officer shall, after due verification, approve the
of approval
amendment within a period of fifteen working days from the date
of the receipt of the application.
Issuing order The proper officer shall issue an order electronically.
Effective date Amendment shall take effect from the date of the occurrence of
of
the event warranting such amendment.
amendment
Applicability The change relating to first and third point shall be applicable for
of change
all registrations of the registered person obtained under the
provisions of this Chapter on the same Permanent Account Number
in any State or Union territory.
Non-core Where change relates to non-core fields of information, registration certificate

fields of shall stand amended upon submission of the application for amendment on the
informati-
Common Portal.
on
Change in Fresh Where a change in the constitution of any business results in
constituti- Registration
change of PAN of a registered person, the said person shall apply
on
for fresh registration.
Reason GSTIN is PAN based. Any change in PAN would warrant a new
registration.
Change in Mobile no./ e-mail address of authorised signatory can be amended only after
mobile no. online verification through GST Portal.
or email id
Non Reason of The proper officer is of the opinion that the amendment sought is
satisfaction non-
- either not warranted or
of Proper satisfaction
- the documents furnished therewith are incomplete or incorrect
officer
Issue of He may serve a notice within 15 working days from the date of the
notice
receipt of the application.
P a g e | 195
Content of The notice will require the registered person to show cause, within 7
notice
working days of the service of the notice, as to why the application
submitted for amendment shall not be rejected.
Person to The registered person shall furnish a reply to the notice within 7
reply
working days from the date of the service of the said notice.
Rejection of The proper officer shall reject the amendment application and pass
application
an order :
- Where the reply to the notice is found to be not satisfactory
or
- where no reply is furnished in response to the notice issued
within 7 working days
Officer not If the proper officer fails to take any action,-
taking
(a) within 15 working days from the date of submission of the
action
application, or
(b) within 7 working days from the date of the receipt of the reply
to the notice to show cause,
the certificate of registration shall stand amended to the extent
applied for and the amended certificate shall be made available to
the registered person on the common portal.

Provision Any rejection or approval of amendments under the State Goods and Services Tax Act or
the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to
be a rejection or approval under this Act.

(1) The proper officer may, either on his own motion or on an application filed by the registered person or by
his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period
as may be prescribed, having regard to the circumstances where,––
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor,
amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable
to be registered under section 22 or section 24.
(2) The proper officer may cancel the registration of a person from such date, including any retrospective date,
as he may deem fit, where,––
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be
prescribed; or
(b) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a
continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced
business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
P a g e | 196
Provided that the proper officer shall not cancel the registration without giving the person an opportunity of
being heard.
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and
other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for any
period prior to the date of cancellation whether or not such tax and other dues are determined before or after
the date of cancellation.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.
(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the
electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in
stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and
machinery on the day immediately preceding the date of such cancellation or the output tax payable on such
goods, whichever is higher, calculated in such manner as may be prescribed:
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to
the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points
as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under
section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.

Provision The proper officer may, either on his own motion or on an application filed by the
registered person or by his legal heirs, in case of death of such person, cancel the
registration, in such manner and within such period as may be prescribed, having regard
to the circumstances where,
(a) the business has been discontinued, transferred fully for any reason including death
of the proprietor, amalgamated with other legal entity, demerged or otherwise
disposed of
(b) there is any change in the constitution of the business
(c) the taxable person, other than the person registered under sub-section (3) of
section 25, is no longer liable to be registered under section 22 or section 24
Trigger This provision covers the circumstances where the registration can be cancelled by
Point proper officer
- on his own or
- on application filed by registered person
- on application filed by legal heirs (in case of death of registered person)
Circumst- Business has been discontinued.

ances Business has been transferred to some other party. (That other party needs to
register under GST.)
Business has been amalgamated with other legal entity.
Business has been demerged.
Business has been disposed off in any other manner.
There is any change in the constitution of the business (like Partnership firm now
converted into Private Limited company).
The person doesn’t require registration either due to turnover limits or loss of
compulsory reason by which it was registered. (However, the person who took
voluntary registration cant apply for cancellation)
P a g e | 197
Other A voluntarily registered person cannot seek cancellation before the expiry of a
notable period of 1 year from the effective date of registration. A person to whom a UIN
points
has been granted under rule 17 cannot apply for cancellation of registration.

Provision The proper officer may cancel the registration of a person from such date, including any
retrospective date, as he may deem fit, where,––
(a) a registered person has contravened such provisions of the Act or the rules made
thereunder as may be prescribed
(b) a person paying tax under section 10 has not furnished returns for three consecutive
tax periods
(c) any registered person, other than a person specified in clause (b), has not furnished
returns for a continuous period of six months
(d) any person who has taken voluntary registration under sub-section (3) of section 25
has not commenced business within six months from the date of registration
(e) registration has been obtained by means of fraud, wilful misstatement or
suppression of facts
Provided that the proper officer shall not cancel the registration without giving the person
an opportunity of being heard.
Trigger This provision covers the circumstances where the registration can be cancelled by
Point proper officer on his own.
Circumst- The registered person has contravened the following provisions :

ances - he does not conduct any business from the declared place of business; or
- he issues invoice or bill without supply of goods or services in violation of the
provisions of this Act, or the rules made thereunder; or
- he violates the provisions of section 171 of the Act or the rules made
thereunder
- The person paying tax under composition levy has not furnished returns for 3
consecutive tax periods.
- The registered person (other than paying tax under composition levy) has not
furnished returns for a continuous period of 6 months.
- The person who took voluntary registration has not commenced business
within 6 months from the date of registration.
- Registration has been obtained by means of fraud, wilful misstatement or
suppression of facts:
Natural The proper officer shall not cancel the registration without giving the person an
justice opportunity of being heard.
P a g e | 198

Provision The cancellation of registration under this section shall not affect the liability of the person
to pay tax and other dues under this Act or to discharge any obligation under this Act or
the rules made thereunder for any period prior to the date of cancellation whether or not
such tax and other dues are determined before or after the date of cancellation.
Insights Even if the registration is cancelled, the person shall still be liable to pay the tax
and other dues for the period prior to date of cancellation. Such dues need not
necessarily be determined before the cancellation.

Provision The cancellation of registration under the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a
cancellation of registration under this Act.

Provision Every registered person whose registration is cancelled shall pay an amount, by way of
debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of
input tax in respect of inputs held in stock and inputs contained in semi-finished or finished
goods held in stock or capital goods or plant and machinery on the day immediately
preceding the date of such cancellation or the output tax payable on such goods,
whichever is higher, calculated in such manner as may be prescribed.
Provided that in case of capital goods or plant and machinery, the taxable person shall
pay an amount equal to the input tax credit taken on the said capital goods or plant and
machinery, reduced by such percentage points as may be prescribed or the tax on the
transaction value of such capital goods or plant and machinery under section 15,
whichever is higher.
Debiting A registered person whose registration is cancelled will have to debit the electronic
electronic credit or cash ledger.
cash or
credit
ledger
Amount to General The amount to be debited shall be
be debited provision
(i) input tax credit (ITC) in respect of :
- stock of inputs and inputs contained in semi-finished/ finished
goods’ stock or
- capital goods or plant and machinery on the day immediately
preceding the date of cancellation, or
(ii) the output tax payable on such goods ;
Provision In case of capital goods or plant and machinery, the taxable
in case of
person shall pay an amount equal to
capital
goods - the input tax credit taken on the said capital goods or plant
and machinery, reduced by the percentage points or
P a g e | 199
- the tax on the transaction value of such capital goods or

plant and machinery under section 15,
Provisions Inputs The input tax credit shall be calculated proportionately on the basis
of Rule 44 of the corresponding invoices on which credit had been availed by the
registered taxable person on such inputs.
If tax invoices are not available, the ITC to be reversed will be based
on the prevailing market price (MP) of such goods on the date of
cancellation. Such details shall be duly certified by a practicing
chartered accountant or cost accountant.
Capital The input tax credit involved in the remaining useful life in months
Goods or
shall be computed on pro-rata basis, taking the useful life as five
Plant &
Machinery years.
Example
Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months= 5 months ignoring a part of
the month Input tax credit taken on such capital goods= C
Input tax credit attributable to remaining useful life= C multiplied
by 5/60.
The amount shall be determined separately for input tax credit of central tax,
State tax, Union territory tax and integrated tax.

Provision The amount payable under sub-section (5) shall be calculated in such manner as may be
prescribed.
Provisions of Rule 20 & 22

Registered Time period A registered person seeking cancellation of registration shall submit
person the application for cancellation of registration in prescribed form
submitting
within 30 days of occurrence of the event warranting cancellation.
application
regarding Mode He shall submit the application electronically.
cancellati- Where to
He shall submit the application at common portal.
on apply
Furnishing He is required to furnish in the application the details of
details in
- inputs held in stock or
application
- inputs contained in semi-finished/ finished goods held in
stock and
P a g e | 200
- capital goods held in stock

on the date from which cancellation of registration is sought,
- liability thereon,
- details of the payment, if any, made against such liability
and
may furnish relevant documents thereof.
Self or The registered person can apply
through
- either directly or
others
- through a Facilitation Centre notified by the Commissioner
Order of Where a person who has submitted an application for cancellation

cancellation
of his registration is no longer liable to be registered or his
registration is liable to be cancelled, the proper officer shall issue
an order within 30 days from the date of submission of
application.
Proper Issue of Where the proper officer has reasons to believe that the
officer notice
registration of a person is liable to be cancelled, he shall issue a
cancelling notice to such person.
the
registration Contents of The notice will require the registered person to show cause, within
suo-moto notice
7 working days from the date of the service of such notice, as to
why his registration shall not be cancelled.
Person to The registered person shall furnish a reply to the notice within 7
reply
working days from the date of the service of the said notice.
Satisfaction If the officer is satisfied with the reply, he shall drop the
of officer
proceedings and pass the order.
Non- If the officer is not satisfied with the reply and the registration is
Satisfaction
liable to be cancelled, he shall issue the order within 30 days from
of officer
the date of the reply to the show cause notice.
Effective The cancellation of registration shall be effective from a date to be determined by

date of the proper officer. He will direct the taxable person to pay arrears of any tax,
cancellati-
interest or penalty including the amount liable to be paid under section 29(5).
on

(1) Subject to such conditions as may be prescribed, any registered person, whose registration is cancelled by
the proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration
in the prescribed manner within thirty days from the date of service of the cancellation order.
(2) The proper officer may, in such manner and within such period as may be prescribed, by order, either
P a g e | 201
revoke cancellation of the registration or reject the application:
Provided that the application for revocation of cancellation of registration shall not be rejected unless the
applicant has been given an opportunity of being heard.
(3) The revocation of cancellation of registration under the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a revocation of cancellation
of registration under this Act.

Provision Subject to such conditions as may be prescribed, any registered person, whose
registration is cancelled by the proper officer on his own motion, may apply to such officer
for revocation of
cancellation of the registration in the prescribed manner within thirty days from the date
of service of the cancellation order.
Trigger This provision is applicable only when the registration is cancelled by the proper
point officer on his own motion.
Application Time limit The registered person may apply for revocation of cancellation within
for 30 days from the date of service of the cancellation order.
revocation
Mode He shall submit the application electronically.
Where to He shall submit the application at common portal.
apply
Self or The person can apply
through
- either directly or
others
- through a Facilitation Centre notified by the Commissioner
Registrati- If registration was cancelled for failure of registered person to
on
furnish returns, then before applying for revocation, the person has
cancelled
due to non- to make good the defaults by filing all pending returns, making
furnishing payment of all dues in terms of such returns along with interest,
of returns penalty, late fee, etc. for which the registration was cancelled by
the officer.

Provision The proper officer may, in such manner and within such period as may be prescribed, by
order, either revoke cancellation of the registration or reject the application.
Provided that the application for revocation of cancellation of registration shall not be
rejected unless the applicant has been given an opportunity of being heard.
Satisfacti- Reasons to If the proper officer is satisfied that there are sufficient grounds for
on of officer be recorded revocation of cancellation of registration, he shall record the reasons
in writing.
Passing He shall revoke the cancellation of registration by an order
order
Time limit The order shall be passed within 30 days from the date of the
P a g e | 202
receipt of the application.

Communic The officer shall communicate the order to the applicant.
ation
Non- Reasons to If the proper officer is not satisfied that there are sufficient
Satisfacti- be recorded
grounds for revocation of cancellation of registration, he shall record
on of officer
the reasons in writing.
Passing He shall reject the application for revocation of cancellation of
order
registration by order.
Communic The officer shall communicate the order to the applicant.
ation
Steps to be Issue of Before passing the rejection order, the officer shall
taken notice
issue a notice to such person.
before
rejection Contents of The notice will require the registered person to show
notice
cause, within 7 working days from the date of the
service of such notice, as to why the application
submitted for revocation should not be rejected.
Person to The registered person shall furnish a reply to the notice
reply
within 7 working days from the date of the service of
the said notice.
Decision by On receipt of the information or clarification, the
officer
officer shall proceed to dispose the application i.e.
either accept or reject within 30 days from the date
of the receipt of such information or clarification from
the applicant.

Provision The revocation of cancellation of registration under the State Goods and Services Tax Act
or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed
to be a revocation of cancellation of registration under this Act.
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Questions
Question 1
Determine the effective date of registration in following cases:
(a) The aggregate turnover of Dhampur Industries of Delhi has exceeded Rs. 20 lakh on 1st September. It submits the
application for registration on 20th September. Registration certificate is granted to it on 25th September.
(b) Mehta Teleservices is an internet service provider in Lucknow. Its aggregate turnover exceeds Rs. 20 lakh on 25th
October. It submits the application for registration on 27th November. Registration certificate is granted to it on 5th
December.
Question 2
State the time-period within which registration needs to be obtained in each of the following independent cases:
(a) Casual taxable person
(b) Person making inter-State taxable supply
Question 3
In order to be eligible for grant of registration, a person must have a Permanent Account Number issued under the
Income- tax Act, 1961. State one exception to it.
Question 4
State which of the following suppliers are liable to be registered:
(a) Agent supplying goods on behalf of some other taxable person and its aggregate turnover does not exceed Rs. 20
lakh during the financial year.
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land.
Question 5
What are the advantage of taking registration in GST?
Question 6
Can a person without GST registration collect GST and claim ITC?
Question 7
If a person is operating in different States, with the same PAN number, can he operate with a single registration?
Question 8
Can a person having multiple business verticals in a State obtain separate registrations for each business vertical?
Question 9
Is there a provision for a person to get himself voluntarily registered though he may not be liable to pay GST?
Question 10
Can the Department, through the proper officer, suo-moto proceed to register of a person?
Question 11
Whether the registration granted to any person is permanent?
Question 12
Is it necessary for the UN bodies to get registration under GST?
Question 13
What is the responsibility of the taxable person making supplies to UN bodies?
Question 14
What is the validity period of the registration certificate issued to a casual taxable person and non- resident taxable
person?
Question 15
What happens when the registration is obtained by means of willful misstatement, fraud or suppression of facts?
P a g e | 204
Question 16
Is there an option to take centralized registration for services under GST Law?
Question 17
What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Question 18
At the time of registration, will the assessee have to declare all his places of business?
Question 19
What will be the time limit for the decision on the on-line registration application?
Question 20
What will be the time of response by the applicant if any query is raised in the online application?
Question 21
Does cancellation of registration impose any tax obligations on the person whose registration is so cancelled?
Question 22
Mr. J has been involved in supplying taxable material in J&K, since, 1st July 2017. His turnover in the month of Nov
2017 exceeded the limit of Rs. 20 lacs. Mr. J is required to register under GST law?
Question 23
Mr. C of Calicut is trading on his own goods and also acting as an agent of Mr. B of Bengaluru. Mr. C turnover in the
financial year 2017-18 is Rs. 12 lacs in his own account and Rs. 9 lacs on behalf of principal. Whether Mr. C is liable
to register compulsorily under GST law.
Question 24
Mr. Rajan is a farmer with an annual turnover in relation to agriculture of Rs. 18,00,000 lakh. Since this income is
agriculture-related, the turnover is exempt from GST. However, Mr. Rajan also supplies plastic bags worth of Rs.
2,50,000 (taxable goods) along with his crop and charges separately for this. Mr. Rajan is required to register under
GST? Advise.
Question 25
Mr. X a dealer dealing with Intra State supply of goods and services has place of business in India furnished the
following information in the financial year 2017-18: 1. Sale of taxable goods by Head Office located in Chennai for
Rs. 1,00,000 2. Supply of taxable services by Branch office at Bengaluru for Rs. 50,000 3. Supply of goods exempted
from GST Rs. 10,000 4. Export of goods and services for Rs. 2,00,000 5. Sale of goods acting as agent on behalf of
principal for Rs. 15,00,000.
Find aggregate turnover.
Question 26
Mr. Gold runs a retail shop for handmade jewellery and is registered in Chennai. Mr. Gold is planning to sell the
jewellery at an exhibition in Mumbai, to be held from 1st January 2018 to 10th January 2018. Advise time with
regard to registration and payment of GST.
Question 27
M/s X Ltd is an advertising company located in Chennai and is registered as a normal taxable person there. Now, they
have secured an assignment to manage digital marketing for the Koti Deepothsavam Festival, which will take place in
Hyderabad, Telangana. This will require M/s X Ltd. to displace some resources in Hyderabad until the festival is over.
Advise M/s X Ltd. to obtain for separate registration in the State of Telangana.
P a g e | 205
Introduction of Invoice
An invoice is a commercial instrument issued by a supplier of goods/ services to a recipient. It identifies both the parties
involved, and lists, describes the items sold/ services supplied, quantifies the items sold, shows the date of shipment and
mode of transport, prices and discounts, if any, and the delivery and payment terms (in case of supply of goods).
Importance of Invoice
✓ Tax invoice acts as a document evidencing the payment of the value of the goods or services or both as also the tax
portion in the same.
✓ Under GST, a tax invoice is an essential document for the recipient to avail Input Tax Credit (ITC).
✓ GST is chargeable at the time of supply. Invoice is an important indicator of the time of supply.
✓ It supports the invoice matching mechanism that has been introduced under GST. For the purpose of claiming the
input tax credit, the invoice matching needs to be done. The inwards supplies of the person claiming the credit
(recipient) should match with the outward supplies of the supplier(s).

CGST Act
Chapter VII – TAX INVOICE, CREDIT AND DEBIT NOTES
Section 31 Tax invoice
Section 32 Prohibition of unauthorised collection of tax
Section 33 Amount of tax to be indicated in tax invoice and other documents
Section 34 Credit and debit notes
CGST Rules
Chapter VI – TAX INVOICE, CREDIT AND DEBIT NOTES
Rule 46 Tax invoice
Rule 46A Invoice-cum-bill of supply
Rule 47 Time limit for issuing tax invoice
Rule 48 Manner of issuing invoice
Rule 49 Bill of supply
Rule 50 Receipt voucher
Rule 51 Refund voucher
Rule 52 Payment voucher
Rule 53 Revised tax invoice and credit or debit notes
Rule 54 Tax invoice in special cases
Rule 55 Transportation of goods without issue of invoice

(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as
may be prescribed:
Provided that the Government may, on the recommendations of the Council, by notification, specify the categories of goods or
supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed.
(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period,
issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:
Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may
be mentioned therein, specify the categories of services in respect of which––
(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(3) Notwithstanding anything contained in sub-sections (1) and (2)––
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(a) a registered person may, within one month from the date of issuance of certificate of registration and in such manner as may
be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of
registration till the date of issuance of certificate of registration to him;
(b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred
rupees subject to such conditions and in such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue,
instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed:
Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than
two hundred rupees subject to such conditions and in such manner as may be prescribed;
(d) a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a
receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a
receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered
person may issue to the person who had made the payment, a refund voucher against such payment;
(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in
respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or
services or both;
(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher
at the time of making payment to the supplier.
(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the
invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.
(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply of services,––
(a) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the due date of
payment;
(b) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the time when
the supplier of service receives the payment;
(c) where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of completion of
that event.
(6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued
at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.
(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are
removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of
removal, whichever is earlier.
Explanation.––For the purposes of this section, the expression “tax invoice” shall include any revised invoice issued by the
supplier in respect of a supply made earlier.
Analysis of Section 31 read with Rules 46 to 55

Provision (1) A registered person supplying taxable goods shall, before or at the time of,—
(a) removal of goods for supply to the recipient, where the supply involves
movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other
case,
issue a tax invoice showing the description, quantity and value of goods, the tax
charged thereon and such other particulars as may be prescribed:
notification, specify the categories of goods or supplies in respect of which a tax
invoice shall be issued, within such time and in such manner as may be prescribed.
(2) A registered person supplying taxable services shall, before or after the provision of
service but within a prescribed period, issue a tax invoice, showing the description,
value, tax charged thereon and such other particulars as may be prescribed:
notification and subject to such conditions as may be mentioned therein, specify
P a g e | 207
the categories of services in respect of which––
(a) any other document issued in relation to the supply shall be deemed to be a
tax invoice; or
(3) Notwithstanding anything contained in sub-sections (1) and (2)–
(a) a registered person may, within one month from the date of issuance of
certificate of registration and in such manner as may be prescribed, issue a
revised invoice against the invoice already issued during the period beginning
with the effective date of registration till the date of issuance of certificate of
registration to him;
(b) a registered person may not issue a tax invoice if the value of the goods or
services or both supplied is less than two hundred rupees subject to such
conditions and in such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or paying
tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill
of supply containing such particulars and in such manner as may be
prescribed:
Provided that the registered person may not issue a bill of supply if the value of
the goods or services or both supplied is less than two hundred rupees subject
to such conditions and in such manner as may be prescribed;
(d) a registered person shall, on receipt of advance payment with respect to any
supply of goods or services or both, issue a receipt voucher or any other
document, containing such particulars as may be prescribed, evidencing
receipt of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods
or services or both the registered person issues a receipt voucher, but
subsequently no supply is made and no tax invoice is issued in pursuance
thereof, the said registered person may issue to the person who had made the
payment, a refund voucher against such payment;
(f) a registered person who is liable to pay tax under sub-section (3) or sub-
section (4) of section 9 shall issue an invoice in respect of goods or services or
both received by him from the supplier who is not registered on the date of
receipt of goods or services or both;
(g) a registered person who is liable to pay tax under sub-section (3) or sub-
section (4) of section 9 shall issue a payment voucher at the time of making
payment to the supplier.
(4) In case of continuous supply of goods, where successive statements of accounts or
successive payments are involved, the invoice shall be issued before or at the time
each such statement is issued or, as the case may be, each such payment is
received.
(5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply
of services,––
(a) where the due date of payment is ascertainable from the contract, the
invoice shall be issued on or before the due date of payment;
(b) where the due date of payment is not ascertainable from the contract, the
invoice shall be issued before or at the time when the supplier of service
receives the payment;
(c) where the payment is linked to the completion of an event, the invoice shall
be issued on or before the date of completion of that event.
(6) In a case where the supply of services ceases under a contract before the
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completion of the supply, the invoice shall be issued at the time when the supply
ceases and such invoice shall be issued to the extent of the supply made before
such cessation.
(7) Notwithstanding anything contained in sub-section (1), where the goods being sent
or taken on approval for sale or return are removed before the supply takes place,
the invoice shall be issued before or at the time of supply or six months from the date
of removal, whichever is earlier.
Explanation.––For the purposes of this section, the expression “tax invoice” shall include
any revised invoice issued by the supplier in respect of a supply made earlier.
Basic There is no format prescribed for the Tax Invoice. Only certain fields have been
prescribed as mandatory fields. Further, invoices may be issued manually or
electronically. Issuance of electronic invoices is not mandatory.
Time Limit for Issue of Invoice (read with Rule 47)

Analysis Please Refer Module 3 Chapter 5 “Time of Supply”
Example Modi Manufacturers, Delhi supplies goods to Kejri Electronics, Haryana. The goods
were removed from its factory in Delhi on 23rd September. Modi Manufacturers
needs to issue a tax invoice on or before 23rd September.
Babu Bhai Security Services Ltd. provides security services to Bappi Lahiri
Jewellers for their Jewellery Exhibition to be organized on 5th October. Babu
Bhai Security Services Ltd. needs to issue a tax invoice within 30 days of supply
of security services, i.e. on or before 4th November.
Jhanvi Cinemas entered into an annual maintenance contract with Peer Services
Ltd. for one year [April-March] for the Air conditioners fitted in their theaters.
As per the contract, payment for said services had to be made on 7th April.
However, Jhanvi Services made the payment on 15th April. Since services provided
by Peer Services Ltd. to Jhanvi Cinemas is a continuous supply of services and due
date of payment is ascertainable from the contract, Peer Services Ltd. had to
issue a tax invoice on or before such due date, viz. 7th April.
Contents of Tax Invoice (read with Rule 46)

There is no format prescribed for an invoice, but rules make it mandatory for an invoice to have the following
fields (only applicable fields are to be filled).
(a) Name, address and GSTIN of the supplier
(b) A consecutive serial number not exceeding 16 characters, in one or multiple series,
containing alphabets/ numerals/ special characters hyphen or dash and slash, and any
combination thereof, unique for a FY
(c) Date of its issue
(d) If recipient is Name, address and GSTIN or UIN of recipient
registered
If recipient is Rs. 50000 or Name and address of the recipient and the address
unregistered and more
of delivery, along with the name of State and its
value of supply is
code
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Less than Rs. Unregistered recipient may still request the aforesaid
50000
details to be recorded in the tax invoice
(e) HSN code for goods or services
(f) Description of goods or services
(g) Quantity in case of goods and unit or Unique Quantity Code thereof
(h) Total value of supply of goods or services or both
(i) Taxable value of supply of goods or services or both taking into account discount or
abatement, if any
(j) Rate of tax (CGST, SGST, IGST, UTGST or cess)
(k) Amount of tax charged in respect of taxable goods or services (CGST, SGST, IGST,
UTGST or cess)
(l) Place of supply along with the name of State, in case of a supply in the course of inter-
State trade or commerce
(m) Address of delivery where the same is different from the place of supply
(n) Whether the tax is payable on reverse charge basis, and
(o) Signature or digital signature of the supplier or his authorized representative
Requirement of HSN (read with Rule 46)

Meaning HSN stands for Harmonized System of Nomenclature which was developed by the
World Customs Organization (WCO) with the vision of classifying goods all over
the World in a systematic manner. It came into effect in 1988. The HSN Codes
uses various Sections, Chapter, Headings and Sub-headings to classify the goods
and services accordingly. It facilitates common understanding of products across the
countries.
This type of classification is used for taxation purposes in identifying the rate of
tax applicable to a product in a country. The HSN structure contains 21 sections,
with 99 Chapters, about 1,244 headings, and 5,224 sub-headings. The
commodity’s manufacturing and technological complexity define the section or
chapter to which it belongs.
No. of Annual Turnover (AT) in the Number of Digits of

digits to be preceding FY HSN Code
used AT ≤Rs. 1.5 crores Nil
Rs. 5 crores ≥AT >Rs. 1.5 crores 2
AT >Rs. 5 crores 4
Manner of issuing the invoice (read with Rule 48)

In case of The invoice shall be prepared in triplicate, in the case of supply of goods, in the
taxable following manner, namely,- by marking on face of the invoice
supply of (a) ORIGINAL FOR RECIPIENT;
Goods (b) DUPLICATE FOR TRANSPORTER; and
(c) TRIPLICATE FOR SUPPLIER.
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In case of The invoice shall be prepared in duplicate, in the case of the supply of services, in
taxable the following manner, namely,-
supply of (a) ORIGINAL FOR RECIPIENT; and
services (b) DUPLICATE FOR SUPPLIER.
The serial number of invoices issued during a tax period shall be furnished electronically [through the Common Portal –
www.gst.gov.in], in FORM GSTR-1 [Details of outward Supplies of goods or services].
Relaxation Cases A registered person may not issue a Tax Invoice if:
in certain involved (i) Value of the goods/ services/ both supplied < Rs.200,
cases (ii) the recipient is unregistered; and
(iii) the recipient does not require such invoice.
Consolidated Instead such registered person shall issue a Consolidated Tax Invoice
Tax Invoice for such supplies at the close of each day in respect of all such
supplies.
Thus, small taxpayers, like small retailers, doing a large number of

small transactions for upto a value of Rs. 200 per transaction to
unregistered customers need not issue invoice for every such
transaction. They can issue one consolidated invoice at the end of
each day for all transactions done during the day.
Compulsory Supplier should issue an invoice when the customer demands.

issue
Special Supplier of Service being Remarks
Cases Insurer/ Banking As the number of transactions are numerous in these sectors, it
Company/ Financial is not mandatory to mention the following :
institution, including NBFC, ✓ Serial number
Supplier of passenger ✓ Address of the recipient of taxable service
Transportation service
However, the other information as prescribed for a Tax Invoice
under rule 46 is mandatory.
Goods Transport Agency Along with the other information as prescribed for a tax
(GTA) supplying services invoice, under rule 46, the following information is mandatory :
in relation to ✓ Gross weight of the consignment
transportation of goods ✓ Name of the consignor and the consignee
by road in a goods ✓ Registration number of goods carriage in which the goods
carriage are transported
✓ Details of goods transported
✓ Details of place of origin and destination
✓ GSTIN of the person liable for paying tax whether as
consignor, consignee or GTA
Revised Tax Invoice [Read with Rule 53]

When to be Every registered person who has been granted registration with effect from a date
issued? earlier than the date of issuance of certificate of registration to him, may issue
Revised Tax Invoices. Such invoices shall be issued against the invoices already
issued during said period.
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Time limit Revised Tax Invoices shall be issued within 1 month from the date of issuance of
certificate of registration.
Necessity This provision is necessary, as a person who becomes liable for registration has to
apply for registration within 30 days of becoming liable for registration.
When such an application is made within the time period and registration is
granted, the effective date of registration is the date on which the person
became liable for registration.
Thus, there would be a time lag between the date of grant of certificate of
registration and the effective date of registration. For supplies made by such
person during this intervening period, the law enables the issuance of a revised
invoice, so that ITC can be availed by the recipient on such supplies.
Sarabhai Private Ltd. commenced business of supply of goods on 1st April in Delhi.
It’s turnover exceeded Rs. 20,00,000 on 3rd September. Thus, it became liable
to registration on 3rd September. It applied for registration on 29th September
and granted registration certificate on 5th October. Since it applied for
registration within 30 days of becoming liable to registration, it was granted
registration with effect from 3rd September. Sarabhai Private Ltd. may issue
Revised Tax Invoices in respect of taxable supplies effected between 3rd
September and 5th October.
Consolida- General A registered person may issue a Consolidated Revised Tax Invoice in
ted Revised Rule respect of all taxable supplies made to an unregistered recipient (but
Tax not for supplies made to registered recipient) during such period.
Invoices
Exception However, in case of inter-State supplies, a consolidated Revised Tax

Invoice cannot be issued in respect of all unregistered recipients if
the value of a supply exceeds Rs. 2,50,000.
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Particulars (a) The word “Revised Invoice”, wherever applicable, indicated prominently
(b) Name, address and GSTIN of the supplier
(c) Nature of the document
(d) A consecutive serial number not exceeding 16 characters, in one or multiple
series, containing alphabets or numerals or special characters -hyphen or dash
and slash and any combination thereof, unique for a FY
(e) Date of issue of the document
(f) Name, address and GSTIN or UIN, if registered, of the recipient
(g) Name and address of the recipient and the address of delivery, along with
the name of State and its code, if such recipient is un-registered
(h) Serial number and date of the corresponding tax invoice or, as the case may
be, bill of supply
(i) Value of taxable supply of goods or services, rate of tax and the amount of
the tax credited/ debited to the recipient
(j) Signature/ digital signature of the supplier/ his authorized representative.
Bill of Supply [read with rule 49]

Meaning A bill of supply is similar to a GST invoice except that Bill of Supply issued by
such persons does not contain the details pertaining to rate of tax and amount of
tax. Further, value to be mentioned in the Bill of Supply is not also taxable
value.
Necessity A bill of supply is issued in cases where tax cannot be charged :

✓ Registered person is selling exempted goods/ services,
✓ Registered person has opted for composition scheme
Relevance A registered person opting for the composition levy does not collect tax from the
recipient on outward supplies made by him. Similarly, in case of a registered
person supplying exempted goods and/or services, no tax implications are
there. Recipients should not expect Tax Invoice from such suppliers as they cannot
issue tax invoice.
Example Patel & Sons is a manufacturer of goods who has opted for composition levy
under section 10. It will issue a Bill of Supply to the buyers of goods and not the
tax invoice as it does not collect any tax from the buyers, but amount at the
rate specified under section 10.
Any other Any tax invoice or any other similar document issued under any other Act
document for the time being in force in respect of any non-taxable supply shall be treated
to be treated as bill of supply for the purposes of the Act.
Bill of
Supply
Particulars (a) Name, address and GSTIN of the supplier
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(b) A consecutive serial number not exceeding 16 characters, in one or more
multiple series, containing alphabets or numerals or special characters -
hyphen or dash and slash and any combination thereof, unique for a FY
(d) Name, address and GSTIN or UIN, if registered, of the recipient
(e) HSN Code for goods or services
(f) Description of goods or services or both
(g) Value of supply of goods or services or both taking into account discount/
abatement, if any; and
(h) Signature/ digital signature of supplier/ his authorized representative.
Receipt Voucher (read with rule 50)

When to A registered person shall, on receipt of advance payment with respect to any
issue supply of goods or services or both, issue a Receipt Voucher evidencing receipt of
such payment.
Uncertain- rate of tax is not determinable Tax shall be paid at the rate of 18%
ties at the nature of supply is not Supply shall be treated as inter-State supply
determinable
time of
receipt of
advance
(b) A consecutive serial number not exceeding 16 characters, in one or multiple
series, containing alphabets or numerals or special characters -hyphen or
dash and slash and any combination thereof, unique for a FY
(e) Description of goods or services
(f) Amount of advance taken
(g) Rate of tax (CGST, SGST, IGST, UTGST or cess)
(h) Amount of tax charged in respect of taxable goods or services (central tax,
State tax, integrated tax, Union territory tax or cess)
(i) Place of supply along with the name of State and its code, in case of a
supply in the course of inter-State trade or commerce
(j) Whether the tax is payable on reverse charge basis; and
(k) Signature/ digital signature of supplier/ his authorized representative
Refund Voucher (read with rule 51)

When to Where, on receipt of advance payment with respect to any supply of goods or
issue services or both the registered person issues a Receipt Voucher, but subsequently
no supply is made and no tax invoice is issued in pursuance thereof, the said
registered person may issue a Refund Voucher against such payment to the person
who had made the payment.
P a g e | 214

(b) A consecutive serial number not exceeding sixteen characters, in one or
(e) Number and date of Receipt Voucher issued
(f) Description of goods/ services in respect of which refund is made
(g) Amount of refund made
(h) Rate of Tax (CGST, SGST, IGST, UTGST or cess)
(i) Amount of tax paid in respect of such goods or services (central tax, State
tax, integrated tax, Union territory tax or cess)
(j) Whether the tax is payable on reverse charge basis; and
(k) Signature/ digital signature of supplier/ his authorized representative
Invoice and Payment Vouchers to be issued by recipient of supply liable to pay tax under reverse
charge [Rule 46 and rule 52]
Issue of Where a registered person is liable to pay tax under reverse charge, such
payment registered person shall issue a payment voucher at the time of making payment to
voucher the supplier (whether the supplier is registered or not).
Issue of Where supplier is registered Invoice shall be issued by supplier

Invoice Where supplier is not registered Invoice shall be issued by recipient
Particulars (a) Name, address and GSTIN of the supplier, if registered
(b) A consecutive serial number not exceeding sixteen characters, in one or
(d) Name, address and GSTIN of the recipient
(e) Description of goods or services
(f) Amount paid
(g) Rate of tax (CGST, SGST, IGST, UTGST or cess);
(h) Amount of tax paid in respect of taxable goods or services (CGST, SGST,
IGST, UTGST or cess);
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(i) Place of supply along with the name of State and its code, in case
of a supply in the course of inter-State trade or commerce; and
(j) Signature/ digital signature of supplier/ his authorized representative
Delivery Challan (Rule 55)

When to Rule 55 specifies the cases where at the time of removal of goods, goods may be
issue removed on delivery challan and invoice may be issued after delivery. Such cases
are :
✓ Supply of liquid gas where the quantity at the time of removal from the place
of business of the supplier is not known
✓ Transportation of goods for job work
✓ Transportation of goods for reasons other than by way of supply, or
✓ Such other supplies as may be notified by the Board
Manner of Delivery challan shall be serially numbered.

issue It shall not exceed 16 characters.
It can be issued in one or multiple series.
It is to be issued at the time of removal of goods for transportation.
Where goods are being transported on a delivery challan in lieu of invoice, the
same shall be declared in E-Way Bill.
No. of The delivery challan shall be prepared in TRIPLICATE in the following manner :
copies ✓ Original copy shall be for consignee.
✓ Duplicate copy shall be for transporter.
✓ Triplicate copy shall be for consignor.
Tax Invoice Where the goods being transported are for the purpose of supply to the
after recipient but the tax invoice could not be issued at the time of removal of
delivery goods for the purpose of supply, the supplier shall issue a tax invoice after
delivery of goods.
Particulars (a) Date and number of the delivery challan

(b) Name, address and GSTIN of the consigner, if registered
(c) Name, address and GSTIN or UIN of the consignee, if Registered
(d) HSN code and description of Goods
(e) Quantity (provisional, where the exact quantity being supplied is not
known)
(f) Taxable value
(g) Tax rate and tax amount – central tax, state tax, integrated tax, union
territory tax or cess, where the transportation is for supply to the
consignee
(h) Place of supply, in case of inter-state movement
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(i) Signature
Goods Where the goods are being transported in a semi knocked down or completely
transported knocked down condition,
in SKD/ ✓ the supplier shall issue the complete invoice before dispatch of the first
CKD consignment;
condition
✓ the supplier shall issue a delivery challan for each of the subsequent
consignments, giving reference of the invoice;
✓ Copies of the corresponding delivery challan shall accompany each consignment
along with a duly certified copy of the invoice; and
✓ the original copy of the invoice shall be sent along with the last consignment.

(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by
way of tax under this Act.
(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made thereunder.

Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made for a
consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to
assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is
made.

(1) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that
tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned
by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied
such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of
such credit note in the return for the month during which such credit note has been issued but not later than September following
the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is
earlier, and the tax liability shall be adjusted in such manner as may be prescribed:
Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such
supply has been passed on to any other person.
(3) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that
tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has
supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed.
(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the details of
such debit note in the return for the month during which such debit note has been issued and the tax liability shall be adjusted in
such manner as may be prescribed.
Explanation.––For the purposes of this Act, the expression “debit note” shall include a supplementary invoice.
Analysis of Section 34(1) and 34(2)

Provision 34(1) Where a tax invoice has been issued for supply of any goods or services or both
and the taxable value or tax charged in that tax invoice is found to exceed the
taxable value or tax payable in respect of such supply, or where the goods
supplied are returned by the recipient, or where goods or services or both
supplied are found to be deficient, the registered person, who has supplied such
P a g e | 217
goods or services or both, may issue to the recipient a credit note containing
such particulars as may be prescribed.
34(2) Any registered person who issues a credit note in relation to a supply of goods or
services or both shall declare the details of such credit note in the return for the
month during which such credit note has been issued but not later than
September following the end of the financial year in which such supply was
made, or the date of furnishing of the relevant annual return, whichever is earlier,
and the tax liability shall be adjusted in such manner as may be prescribed:
Provided that no reduction in output tax liability of the supplier shall be
permitted, if the incidence of tax and interest on such supply has been passed
on to any other person.
Basic Section 34(1) and 34(2) cover the provisions of Credit Note.
When to Supplier may issue the Credit note to the recipient in the following situations :
issue Credit ✓ Taxable value declared in the invoice is more than the actual value of supply
Note ✓ Tax charged in the invoice is more than the actual tax payable in respect of
supply
✓ the goods supplied have been returned by the recipient
✓ the goods or services or both supplied are found to be deficient
Particulars Particulars of Credit Note are same as of revised tax invoice.
Disclosure Declaration Any registered person who issues a credit note in relation to a
in Returns supply of goods or services or both shall declare the details of such
credit note in the return for the month during which such credit
note has been issued.
Last Date Last date to furnish the details of such credit note is earlier of :
of (i) 30th September following the end of the financial year in which
furnishing
such supply was made,
or
(ii) the date of furnishing of the relevant annual return.
Adjust- General A supplier can adjust tax liability only when the details of credit
ment in Rule note have been provided in the return.
liability
Exception However, no reduction in output tax liability of the supplier shall be
permitted, if the incidence of tax and interest on such supply has
been passed on to any other person.
Analysis of Section 34(3) and 34(4)

Provision 34(3) Where a tax invoice has been issued for supply of any goods or services or both
and the taxable value or tax charged in that tax invoice is found to be less than
the taxable value or tax payable in respect of such supply, the registered person,
who has supplied such goods or services or both, shall issue to the recipient a
debit note containing such particulars as may be prescribed.
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34(4) Any registered person who issues a debit note in relation to a supply of goods or
services or both shall declare the details of such debit note in the return for the
month during which such debit note has been issued and the tax liability shall be
adjusted in such manner as may be prescribed.
Explanation.––For the purposes of this Act, the expression “debit note” shall include a
supplementary invoice.
Basic Section 34(3) and 34(4) cover the provisions of Debit Note.
When to Supplier has to issue the Debit note to the recipient in the following situations :
issue Debit ✓ Taxable value declared in the invoice is less than the actual value of supply
Note ✓ Tax charged in the invoice is less than the actual tax payable in respect of
supply
Particulars Particulars of Credit Note are same as of revised tax invoice.
Disclosure Any registered person who issues a debit note in relation to a supply of goods or
in Returns services or both shall declare the details of such debit note in the return for the
month during which such debit note has been issued.
Adjust- The tax liability shall be adjusted in such manner as may be prescribed.
ment in
liability
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Questions
Question 1
Sultan Industries Ltd., Delhi, entered into a contract with Prakash Entrepreneurs, Delhi, for supply of spare parts of a
machine on 7th September. The spare parts were to be delivered on 30th September. Sultan Industries Ltd. removed
the finished spare parts from its factory on 29th September. Determine the date by which invoice must be issued by
Sultan Industries Ltd. under GST law.
Question 2
MBM Caretakers, a registered person, provides the services of repair and maintenance of electrical appliances. On
April 1, it has entered into an annual maintenance contract with P for its Air Conditioner and Washing Machine. As
per the terms of contract, maintenance services will be provided on the first day of each quarter of the relevant
financial year and payment for the same will also be due on the date on which service is rendered. During the year, it
provided the services on April 1, July 1, October 1, and January 1 in accordance with the terms of contract. When
should MBM Caretakers issue the invoice for the services rendered?
Question 3
The aggregate turnover of Sangri Services Ltd. exceeded Rs.20 lakh on 12th August. He applied for registration on 3rd
September and was granted the registration certificate on 6th September. You are required to advice Sangri Services
Ltd. as to what is the effective date of registration in its case. It has also sought your advice regarding period for
issuance of Revised Tax Invoices.
Question 4
Shyam Fabrics has opted for composition levy scheme in the current financial year. It has approached you for advice
whether it is mandatory for it to issue a tax invoice. You are required to advice him regarding same.
Question 5
Discuss the provisions relating to issuance of refund voucher under CGST Act and rules thereunder.
Question 6
Is a registered person liable to pay tax under reverse charge under section 9(3)/9(4) of the CGST Act required to
issue an invoice? Discuss the relevant provisions under CGST Act and rules thereunder.
Question 7
Discuss the provisions relating to issuance of credit and debit notes under CGST Act and rules thereunder.
Question 8
What is the time period within which invoice has to be issued for supply of services?
Question 9
What is the time period within which invoice has to be issued in a case involving continuous supply of goods?
Question 10
What is the time period within which invoice has to be issued in a case involving continuous supply of services?
Question 11
What is the time period within which invoice has to be issued where the goods being sent or taken on approval for
sale?
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Concept of E-Ledgers
The introduction of E-ledgers is a unique feature under the GST regime. Electronic Ledgers or E-Ledgers are statements
of cash and input tax credit in respect of each registered taxpayer. In addition, each taxpayer shall also have an electronic
tax liability register. Once a taxpayer is registered on common portal (GSTN), two e-ledgers (Cash & Input Tax Credit
ledger) and an electronic tax liability register will be automatically opened and displayed on his dash board at all times.
Key Features of Payment process

✓ Electronically generated challan from GSTN common portal in all modes of payment and no use of
manually prepared challan;
✓ Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of payment of tax.
✓ Convenience of making payment online;
✓ Logical tax collection data in electronic format;
✓ Faster remittance of tax revenue to the Government Account;
✓ Paperless transactions;
✓ Speedy Accounting and reporting;
✓ Electronic reconciliation of all receipts;
✓ Simplified procedure for banks;
✓ Warehousing of Digital Challan.
✓ Greater transparency.
✓ Online payments made after 8 pm will be credited to the taxpayer’s account on the same day.
✓ Instant online receipts for payments made online.
✓ Single Challan form to be created online, replacing the three or four copy Challan.

CGST Act
Chapter X – Payment of Tax
Section 49 Payment of tax, interest, penalty and other amounts
Section 50 Interest on delayed payment of tax
Section 51 Tax deducted at source
Section 52 Tax Collected at Source
Section 53 Transfer of input tax credit
CGST Rules
Chapter IX : Payment of Tax
Rule 85 Electronic Liability Register
Rule 86 Electronic Credit Ledger
Rule 87 Electronic Cash Ledger
Rule 88 Identification number for each transaction
Bare Tax of Section 49

(1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit
or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such
conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in
(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in
accordance with section 41, to be maintained in such manner as may be prescribed.
(3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or
any other amount payable under the provisions of this Act or the rules made thereunder in such manner and subject to such
conditions and within such time as may be prescribed.
(4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act
or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may
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be prescribed.
(5) The amount of input tax credit available in the electronic credit ledger of the registered person on account of––
(a) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be utilised
towards the payment of central tax and State tax, or as the case may be, Union territory tax, in that order;
(b) the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may be utilised
towards the payment of integrated tax;
(c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards
payment of integrated tax;
(d) the Union territory tax shall first be utilised towards payment of Union territory tax and the amount remaining, if any, may
be utilised towards payment of integrated tax;
(e) the central tax shall not be utilised towards payment of State tax or Union territory tax; and
(f) the State tax or Union territory tax shall not be utilised towards payment of central tax.
(6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other
amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of section 54.
(7) All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register in such
manner as may be prescribed.
(8) Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the following
order, namely:––
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand determined under section 73 or
section 74.
(9) Every person who has paid the tax on goods or services or both under this Act shall, unless the contrary is proved by him, be
deemed to have passed on the full incidence of such tax to the recipient of such goods or services or both.
Explanation.––For the purposes of this section,—
(a) the date of credit to the account of the Government in the authorised bank shall be deemed to be the date of deposit in the
electronic cash ledger;
(b) the expression,—
(i) “tax dues” means the tax payable under this Act and does not include interest, fee and penalty; and
(ii) “other dues” means interest, penalty, fee or any other amount payable under this Act or the rules made thereunder.
Electronic Cash Ledger (Read with Rule 87)
Meaning The Electronic Cash Ledger contains a summary of all the deposits/ payments
made by a taxpayer.
Mainten- Electronic Cash Ledger is maintained on the GST Portal. The Electronic Cash
ance Ledger has to be maintained in prescribed form on the common portal by a
person liable to pay tax.
Mode of Online Internet Banking There is no restriction on the amount of tax

Deposit Credit or Debit deposited through these modes.
Cards
Offline NEFT/ RTGS There is no restriction on amount.
*NEFT stands for National Electronic Fund

Transfer.
**RTGS stands for Real Time Gross Settlement.
Over the Counter There is limit of Rs. 10,000 per challan, per
Payments i.e. Cash,
tax period.
Cheque, Drafts
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However, this limit shall not apply in the

following cases :
✓ Deposit made by Government Departments
✓ Deposit made by proper officer or any other
officer authorized where such officer recovers
outstanding dues including attachment
proceedings or sale of moveable/ immoveable
properties
✓ Deposit made by proper officer or any other
officer authorized where such officer collects
the amount by way of cash/ cheque/ demand
draft during any investigation/ enforcement
activity/ any ad hoc deposit
✓ Deposit made by Persons notified by
Commissioner
Manner of Use for The amount reflected in the electronic cash ledger may be used for
utilization making any payment towards tax, interest, penalty, fee, or any
of amount other amount under the relevant tax head in the prescribed
reflected in manner.
Electronic
Cash Ledger Major Heads The ledger is displayed major head-wise i.e., IGST, CGST, SGST/
UTGST, and CESS.
Minor Each major head is divided into five minor heads:

Heads ✓ Tax,
✓ Interest,
✓ Penalty,
✓ Fee, and
✓ Others.
In the ledger, information is kept minor head-wise for each major head.
Inter Minor The amount available in the Electronic Cash Ledger can be utilised
Head for payment of any liability for the respective major and minor
Adjustment
heads. For example, liability for the tax under SGST/ UTGST can
be settled only from the available amount of cash under SGST/
UTGST Major head.
Example : An amount of Rs. 1,000 is available under minor head

‘tax’ of major head ‘SGST/ UTGST’ and the taxpayer has a liability
of Rs. 200 for minor head ‘interest’ under the same major head
‘SGST/ UTGST’. Since, there is no amount available under minor
head ‘interest’ under major head “SGST/ UTGST”, therefore,
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interest payment cannot be made from the amount available under

‘tax’ of the same major head.
Inter Major Amount available under one major head (SGST/ UTGST, CGST,
Head IGST or CESS) cannot be utilised for discharging the liability under
Adjustment
any other major head.
For example, amount available in SGST/ UTGST cannot be utilised
for discharging liabilities under CGST, IGST, or CESS and vice versa.
Example : A taxpayer made a cash deposit of Rs. 1,000 to IGST –

Tax, through net banking. The tax payer can utilise this cash
deposit of Rs. 1,000 in the cash ledger to make payment ONLY of
the IGST – Tax liability, by debiting the Cash Ledger.
Procedure of Online Manual or physical Challans are not allowed under the GST regime.
Payment Challan It is mandatory to generate Challans online on the GST Portal.
Single There is single Challan prescribed for all taxes, fees, penalty,
Challan interest, and other payments to be made under the GST regime.
Validity E-challan generated remains valid for 15 days.
CPIN Every Challan carried a unique CPIN. CPIN stands for Common
portal Identification Number. It is created for every Challan
successfully generated by the taxpayer. It is a 14-digit unique
number to identify the challan.
Commission The commission for making payment through e-challan has to be

borne by the person making the payment.
Payment by Any unregistered person has to make payment on the basis of

Unregistered temporary identification number generated through common portal.
Person
CIN On successful credit of amount in the concerned (Central/ State)
Government Account maintained in the authorized bank, a Challan
Identification Number (CIN) will be generated by the collecting
bank which will be indicated in the challan.
CIN or Challan Identification Number is generated by the banks,
once payment in lieu of a generated Challan is successful. It is a 17-
digit number that is 14-digit CPIN plus 3-digit Bank Code.
CIN is generated by the authorized banks/ Reserve Bank of India
(RBI) when payment is actually received by such authorized banks
or RBI and credited in the relevant government account held with
them. It is an indication that the payment has been realized and
credited to the appropriate government account. CIN is
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communicated by the authorized bank to taxpayer as well as to

GSTN.
Deemed Date Date of credit into the treasury of the State Government/Central
of Deposit Government is deemed to be the date of deposit and not the
actual date of debit to the amount of the taxable person.
Credit in On receipt of the CIN from the collecting bank, the said amount is
Electronic credited into the electronic cash ledger of the person on whose
Cash Ledger
behalf the deposit is made and the common portal will generate a
receipt to this effect.
Non- If CIN is not generated even after making payment and submission
generation of mandate form or when after generation, it has not reflected in
of CIN
the common portal, the person making the deposit or the person
on whose behalf the deposit has been made, can make a
representation in prescribed form through the common portal or e-
gateway through which the payment has been made.
Discrepancy In case any discrepancy is noticed in electronic cash ledger, the

in Electronic registered person shall communicate the same to the officer
Cash Ledger
exercising jurisdiction in the matter, through the common portal in
prescribed form.
Terms for BRN BRN or Bank Reference Number is the transaction number given by
Reference the bank for a payment against a Challan.
E-FPB E-FPB stands for Electronic Focal Point Branch. These are branches
of authorized banks which are authorized to collect payment of
GST. Each authorized bank will nominate only one branch as its E-
FPB for pan India transaction.
The E-FPB will have to open accounts under each major head for all
governments. Any amount received by such E-FPB towards GST will
be credited to the appropriate account held by such E-FPB. For
NEFT/ RTGS Transactions, RBI will act as E-FPB.
Electronic Credit Ledger (Read with Rule 86)

Meaning It’s a statement reflecting the details of self-assessed input tax credit (ITC) by
a registered person. It is also called Electronic Input Tax Credit Ledger.
Mainten- Electronic Credit Ledger is maintained on the GST Portal. It has to be

ance maintained in prescribed form on the common portal by a person liable to pay
tax.
Deposit The self-assessed input tax credit (ITC) by a registered person shall be credited
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to its Electronic Credit Ledger.
Manner of Use for The amount reflected in the electronic credit ledger may be used
utilization for making payment of TAX ONLY and not other amounts such as
of amount interest, penalty, fees etc.
reflected in
Electronic Not for Where a person is liable to discharge tax liability under RCM,
Cash Ledger Reverse balance lying in this ledger can’t be used.
Charge
Use of IGST The ITC available under this head will be utilized in
Variants of following manner :
GST
✓ IGST
✓ CGST
✓ SGST/ UTGST
CGST The ITC available under this head will be utilized in

following manner :
✓ CGST
✓ IGST
SGST/ The ITC available under this head will be utilized in

UTGST
following manner :
✓ SGST/ UTGST
✓ IGST
Limitation CGST credit cannot be utilized for payment of SGST/

UTGST.
Similarly, SGST/ UTGST credit cannot be utilized for
payment of CGST.
Return filed Invalid As per Section 2(117), a valid return means a return furnished
but tax not return under section 39(1) on which self-assessed tax has been paid in
paid full. Thus, a return is not considered as a valid return if a person
files the return but doesn’t make payment of tax.
ITC only It is only the valid return that would be used for allowing input
through tax credit (ITC) to the recipient. In other words, unless the
Valid
supplier has paid the entire self-assessed tax and filed his return
Return
and the recipient has filed his return, the ITC of the recipient
would not be confirmed.
Electronic Credit Ledger (Read with Rule 85)

Meaning It’s a statement which reflects the total tax liability of a taxpayer (after
netting) for the particular month.
Order of First Self -assessed tax and other dues for the previous tax periods.
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discharge of Second Self -assessed tax and other dues for the current period.
tax and
Third The liability if any, arising out of demand notice and adjudication
other dues
proceedings.
“Other dues” referred above mean interest, penalty, fee or any other amount payable under the Act or
the rules made thereunder.
Presumption When a taxable person has paid the GST under the corresponding Act, the
about Tax taxable person is deemed to have passed on the incidence of such payment of tax
Incidence to the recipient of such goods and/ or services. Thus, if tax has been paid under
the CGST Act, then the taxable person is deemed to have passed on the
incidence of such payment of CGST to the recipient. This is subject to the
contrary being proved.

(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to
pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part
thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the
Government on the recommendations of the Council.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day
on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or
excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on
such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the
Government on the recommendations of the Council.
When ✓ Delay in payment of tax, in full or in part within the prescribed period
interest is ✓ Undue or excess claim of input tax credit under section 42(10)
payable? ✓ Undue or excess reduction in output tax liability under section 43(10)
Section 42(10) of CGST Act deals with contravention of provisions for matching
of claims for input tax credit by a recipient.
Section 43(10) of CGST Act deals with contravention of provisions for matching
of claims for reduction in output tax liability by a supplier.
Rate of Notified by The rate of interest shall be notified by the Government on the
interest Govt. basis of recommendation of the Council.
Maximum Such rate to be notified shall not exceed-

Rate (a) 18% in case of belated payment of tax i.e. on failure to pay
tax (or part of tax) to the Government’s account.
(b) 24% on undue or excess claim of ITC or on such undue or
excess reduction in output tax liability.
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Time period The period of interest will be from the date following the due date of payment
for to the actual date of payment of tax.
calculation
of interest
Other The payment of interest in case of belated payment of tax should be made
Notable voluntarily i.e. even without a demand. The interest payable under this section
Points shall be debited to the Electronic Liability Register. The liability for interest can
be settled by adjustment with balance in Electronic Cash Ledger but not with
balance in electronic credit ledger.
Bare Text of Section 19 of IGST Act – Tax wrongfully collected and paid to
Central Government or State Government
(1) A registered person who has paid integrated tax on a supply considered by him to be an inter-State supply, but which is
subsequently held to be an intra-State supply, shall be granted refund of the amount of integrated tax so paid in such manner and
subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a transaction
considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall not be required to
pay any interest on the amount of integrated tax payable.
Basic Payment of tax is based on ‘nature of supply’.
If there is mistake in payment of tax due to erroneous determination of ‘nature
of supply’, it is not permissible to adjust incorrect taxes paid against the correct
taxes, because of the above appropriation of payments. Remedy lies in refund.
Procedure Taxable person who has paid tax in error is entitled to refund by first restoring
the discharge of the correct tax due so that the incorrect tax paid reflects on
the common portal as ‘paid in excess’.
Situations IGST wrongly paid IGST wrongly paid will be refunded subject to conditions
prescribed.
CGST and SGST/ CGST and SGST/ UTGST wrongly paid will be refunded
UTGST wrongly paid subject to conditions prescribed.
Payment of incorrect tax doesn’t attract interest.
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Questions
Question 1
How many types of electronic ledger are there?
Question 2
What are the main features of GST payment process?
Question 3
Explain the following terms in brief: (a) E-FPB (b) CPIN (c) CIN
Question 4
Can one use input tax credit for payment of interest, penalty, and payment under reverse charge?
Question 5
Are principles of unjust enrichment applicable for payment made under GST?
Question 6
State the name of output tax under GST, where any of the input tax credit under GST can be availed?
Question 7
X Ltd. filed the return for GST under section 39(1) for the month of November on 20th December showing self-assessed
tax of Rs. 2,50,000 which was not paid. Explain what are the implications for ABC limited as per relevant provisions?
Question 8
Mr. Cake has output Tax Liability of Rs. 1,00,000/- towards CGST & SGST/UGST and Rs. 20,000 towards IGST and
also interest payable of Rs. 1800/-. Explain the manner of discharge tax liability by Mr. Cake if Input tax credit
available of CGST & SGST is Rs. 25,000/- each & IGST is Rs. 25,000/-
Question 9
In previous question, wxplain the manner of discharge tax liability by Mr. Cake if Input tax credit is not available.
Question 10
Rajnikant Ltd. is operating in two states AP and TN. The tax liability for the month of August 2017 is as follows :
S. No. Tax Liability Andhra Pradesh (Rs.) Tamil Nadu (Rs.)
1 Output CGST Payable 25,000 10,000
2 Output SGST Payable 10,000 5,000
3 Output IGST Payable 3,000 2,500
4 Input CGST 8,000 13,000
5 Input SGST 15,000 1,500
6 Input IGST 12,000 16,000
Calculate the tax payable for the month of August 2017.
Question 11
Tittu Ltd. has following tax liabilities under the provisions of Act :
Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2017 1,00,000
Interest & Penalty on delayed payment and filing of returns belonging to August 2017 20,000
Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2017 1,20,000
Interest & Penalty on delayed payment and filing of returns belonging to September 2017 20,000
Demand raised as per section 73 or section 74 under CGST Act, 2017 belonging to July 2017 8,00,000
Demand raised as per the old provisions of Indirect Taxes 1,00,000
Tittu Ltd. has Rs. 5,00,000 in Electronic cash ledger. Suggest Tittu Ltd in discharging the tax liability.
Question 12
Sonu Ltd. supplied goods worth Rs. 10,00,000 to Sweety Ltd. in the month of September, 2017 plus GST 12%. Sonu
Ltd. paid the GST on 5th December 2018. The amount of input tax credit is 70,000 is available in the books.
Calculation of interest payment if any under section 50 of the CGST Act, 2017.
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Meaning of Return
“Return” ordinarily means statement of information (facts) furnished by the taxpayer, to tax administrators, at regular
intervals. All the returns under GST laws are to be filed electronically.
Basic Features of Return Filing

✓ Electronic filing of returns.
✓ Uploading of invoice level information.
✓ Auto-population of information relating to ITC from returns of supplier to that of recipient.
✓ Invoice-level information matching.
✓ Auto-reversal of ITC in case of mismatch.
Importance of Return Filing

In any tax law, “filing of returns” constitutes the most important compliance procedure which enables the Government/
tax administrator to estimate the tax collection for a particular period and determine the correctness and completeness of
the tax compliance of the taxpayers.
The correct and timely filing of returns is of utmost importance because of two reasons :
✓ Firstly, under GST laws, a taxpayer is required to estimate his tax liability on “self-assessment” basis and
deposit the tax amount along with/ before the filing of such return. The return, therefore, constitutes a
kind of working sheet/ supporting document for the tax authorities that can be relied upon as the basis
on which the tax has been computed by the taxpayer.
✓ Secondly, under the GST regime, filing of returns not only determines the tax liability of the person filing
the same, but it also has a huge bearing on determination of tax liability of other persons with whom the
former has entered into taxable activities.
Purpose Served by Return Filing

✓ Mode for transfer of information to tax administration;
✓ Compliance verification program of tax administration;
✓ Finalization of the tax liabilities of the taxpayer within stipulated period of limitation;
✓ Providing necessary inputs for taking policy decision;
✓ Management of audit and anti-evasion programs of tax administration

CGST Act
Chapter IX – Returns
Section 37 Furnishing details of outward supplies
Section 38 Furnishing details of inward supplies
Section 39 Furnishing of Returns
Section 40 First return
Section 41 Claim of input tax credit and provisional acceptance thereof
Section 42 Matching, reversal and reclaim of input tax credit
Section 43 Matching, reversal and reclaim of reduction in output tax liability
Section 44 Annual return
Section 45 Final return
Section 46 Notice to return defaulters
Section 47 Levy of late fee
Section 48 Goods and services tax practitioners
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(1) Every registered person, other than an Input Service Distributor, a non-resident taxable person and a person paying tax under
the provisions of section 10 or section 51 or section 52, shall furnish, electronically, in such form and manner as may be
prescribed, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of
the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within such
time and in such manner as may be prescribed:
Provided that the registered person shall not be allowed to furnish the details of outward supplies during the period from the
eleventh day to the fifteenth day of the month succeeding the tax period:
Provided further that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for
furnishing such details for such class of taxable persons as may be specified therein:
Provided also that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory tax
shall be deemed to be notified by the Commissioner.
(2) Every registered person who has been communicated the details under sub-section (3) of section 38 or the details pertaining
to inward supplies of Input Service Distributor under sub-section (4) of section 38, shall either accept or reject the details so
communicated, on or before the seventeenth day, but not before the fifteenth day, of the month succeeding the tax period and the
details furnished by him under sub-section (1) shall stand amended accordingly.
(3) Any registered person, who has furnished the details under sub-section (1) for any tax period and which have remained
unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission
in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account
of such error or omission, in the return to be furnished for such tax period:
Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after
furnishing of the return under section 39 for the month of September following the end of the financial year to which such details
pertain, or furnishing of the relevant annual return, whichever is earlier.
Explanation.––For the purposes of this Chapter, the expression “details of outward supplies” shall include details of invoices,
debit notes, credit notes and revised invoices issued in relation to outward supplies made during any tax period.
Basic This section deals with furnishing details of outward supplies.
Persons General The details of outward supplies of both goods and services are
required to required to be furnished by every registered person including casual
furnish registered person.
details of
outward Exception However, following persons are not required to furnish this return :
supplies ✓ input service distributor (ISD)
✓ non-resident taxable person
✓ composition taxpayer
✓ person deducting tax at source
✓ E-commerce operator (ECO)
✓ a supplier of OIDAR services
Return Form Return is to be filed in Form GSTR-1.

Filing
Mode Return is to be filed electronically.
Through Return can be furnished through the common portal, either directly
or from a notified Facilitation Centre.
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Due Date General GSTR-1 for a particular month is filed on or before
the 10th day of the immediately succeeding month.
In other words, GSTR-1 of a month can be
filed any time between 1st and 10th day of the
succeeding month.
Special A taxpayer cannot file GSTR-1 before the end of

Situation
the current tax period.
However, following are the exceptions to this rule :
✓ Casual taxpayers, after the closure of their
business
✓ Cancellation of GSTIN of a normal taxpayer
A taxpayer who has applied for cancellation of registration will be allowed

to file GSTR-1 after confirming receipt of the application.
Limitation GSTR-1 cannot be filed during the period from 11th
day to 15th day of month succeeding the tax
period.
GSTR-1 can be filed on or after 16th of a month, if
due date of 10th of the month is missed.
Extension The due date of filing GSTR-1 may be extended by

the Commissioner/ Commissioner of State GST/
Commissioner of UTGST for a class of taxable
persons by way of a notification.
Details of B2B Meaning B2B means business to business transaction. In such

Outward type of transactions, the recipient is also a
supplies registered supplier and hence, takes ITC.
w.r.t.
uploading Intra-State Invoice-wise details of all supplies are to be
Supplies
of invoices uploaded.
Inter-State
Supplies
B2C Meaning B2C means business to consumer transaction. In
such type of transactions, the recipient is consumer
or unregistered and hence, will not take or cannot
take ITC.
Intra-State Consolidated details of all supplies are to be

Supplies
uploaded.
Inter-State Invoices > Rs. Invoice-wise details of all supplies are

Supplies 2,50,000
to be uploaded.
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Invoices ≤ Rs. Consolidated details of all supplies are

2,50,000
to be uploaded.
Time of Any time Invoices can be uploaded at any time during the tax
uploading period and not just at the time of filing.
Example For the month of October, the taxpayer can upload

invoices from 1st October to 10th November. In case
of late filing of GSTR-1, invoices can be uploaded
after 15th November.
Details to be Scanned copies of invoices are not required to be uploaded. Only

uploaded certain prescribed fields of information from invoices need to be
uploaded e.g., invoice no., date, value, taxable value, rate of tax,
amount of tax etc. In case there is no consideration, but the
activity is a supply by virtue of Schedule 1 of CGST Act, the
taxable value will have to be worked out as prescribed and
uploaded. Description of each item in the invoice will not be
uploaded. Only HSN code in respect of supply of goods and
accounting code in respect of supply of services will have to be fed.
Contents of Basic ✓ GSTIN

GSTR-1 Details ✓ Legal name and Trade name
✓ Aggregate turnover in previous year
✓ Tax period
✓ HSN-wise summary of outward supplies
✓ Details of documents issued
✓ Advances received/ advances adjusted
Details of ✓ B2B
Outward ✓ B2C
Supplies
✓ Zero rated and Deemed exports
✓ Debit/ Credit notes issued
✓ Nil rated/ Exempted/ Non-GST
✓ Amendments for prior period
Amendment Insights The supplier can make amendments in the particulars furnished in
in details of GSTR-1 filed by him for the prior periods if he agrees to the
outward mismatch report communicated to him by the system every month,
supply after the processing of the return.
furnished
The details of original debit notes/ credit notes / refund vouchers
in prior
issued by the tax-payer in the current tax period as also the
periods
revision in the debit notes/ credit notes/ refund vouchers issued in
the earlier tax periods are required to be shown in the GSTR-1.
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If the supplier discovers any error or omission, he shall rectify the

same in the tax period during which such error or omission is
noticed, and pay the tax and interest, in case there is short
payment, in the return to be furnished for such tax period.
Example GSTR-1 for the month of August, 2017 was filed on 10th
September, 2017 and the consolidated return u/s 39 pertaining to
the month of August, 2017 was filed on 20th September, 2017.
The said return is processed in the month of October, 2017 and
errors discovered during matching are communicated to the supplier
in the mismatch report in the month of October, 2017. The
supplier has to rectify the said errors in GSTR-1 for the month of
October, 2017 (due date of submission of which is 10th November,
2017). If there is any tax liability because of the said amendment/
rectification, it will be automatically calculated in his return u/s 39
for the month of October, 2017.
Time limit If supplier could not make correction at the time of filing of
for GSTR-1 for the month in which mistake was noticed, then he can
rectification
make such amendments in the subsequent periods.
However, the maximum time limit within which such amendments
are permissible is earlier of the following dates:
✓ Date of filing of monthly return u/s 39 for the month of
September following the end of the financial year to which such
details pertain or
✓ Date of filing of the relevant annual return
Example An entity has furnished the annual return for the year 2017-18 on
August 15, 2018. An error is discovered in respect of a transaction
pertaining to November, 2017. The entity has filed the returns for
the month of September, 2018 on October 20, 2018. In this
case, the rectification of the error pertaining to the transaction in
November, 2017 cannot be rectified beyond August 15, 2018.
Other ✓ GSTR 1 needs to be filed even if there is no business activity (Nil Return) in
notable the tax period.
points ✓ Filing of GSTR-1 for current month is possible only when GSTR-1 for the
previous month has been filed.
✓ All values like invoice value, taxable value and tax amounts in GSTR-1 are to
be declared up to 2 decimal digits. The rounding off of the self-declared tax
liability to the nearest rupee will be done in GSTR 3.
✓ Taxpayer opting for voluntary cancellation of GSTIN will have to file GSTR-1
for active period.
P a g e | 234

(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax
under the provisions of section 10 or section 51 or section 52, shall verify, validate, modify or delete, if required, the details
relating to outward supplies and credit or debit notes communicated under sub-section (1) of section 37 to prepare the details of
his inward supplies and credit or debit notes and may include therein, the details of inward supplies and credit or debit notes
received by him in respect of such supplies that have not been declared by the supplier under sub-section (1) of section 37.
under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, the details of inward supplies of taxable
goods or services or both, including inward supplies of goods or services or both on which the tax is payable on reverse charge
basis under this Act and inward supplies of goods or services or both taxable under the Integrated Goods and Services Tax Act or
on which integrated goods and services tax is payable under section 3 of the Customs Tariff Act, 1975, and credit or debit notes
received in respect of such supplies during a tax period after the tenth day but on or before the fifteenth day of the month
succeeding the tax period in such form and manner as may be prescribed:
Provided that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing
such details for such class of taxable persons as may be specified therein:
Provided further that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory
tax shall be deemed to be notified by the Commissioner.
(3) The details of supplies modified, deleted or included by the recipient and furnished under sub-section (2) shall be
communicated to the supplier concerned in such manner and within such time as may be prescribed.
(4) The details of supplies modified, deleted or included by the recipient in the return furnished under sub-section (2) or sub-
section (4) of section 39 shall be communicated to the supplier concerned in such manner and within such time as may be
prescribed.
(5) Any registered person, who has furnished the details under sub-section (2) for any tax period and which have remained
unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission
in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and
interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such
tax period:
Provided that no rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after
furnishing of the return under section 39 for the month of September following the end of the financial year to which such details
pertain, or furnishing of the relevant annual return, whichever is earlier.
Basic This section deals with furnishing details of inward supplies.
Persons General The details of inward supplies of both goods and services are
details of
outward Exception However, following persons are not required to furnish this
supplies return:
✓ input service distributor (ISD)

Filing
P a g e | 235
Through Return can be furnished through the common portal, either
directly or from a notified Facilitation Centre.
Due Date General GSTR-2 for a particular month is filed after the 10th
day but on or before the 15th day of the
immediately succeeding month.
Example The details of inward supplies pertaining to the

month of October will be required to be furnished
between 11th November and 15th November.
Extension The due date of filing GSTR-2 may be extended by

the Commissioner/ Commissioner of State GST/
Commissioner of UTGST for a class of taxable persons
by way of a notification.
Details of ✓ Invoice wise details of all inter-State and intra-State supplies received from
Inward registered persons or unregistered persons including inward supplies taxable
supplies w.r.t. under reverse charge;
uploading of ✓ Import of goods and services made; and
invoices
✓ Debit and credit notes, if any, received by the registered person from
suppliers in respect of above supplies
Contents of Basic ✓ GSTIN

GSTR-2 Details ✓ Year
✓ Tax Period
✓ Legal name and Trade name
✓ HSN summary of inward supplies
✓ ISD Credit/ TDS Credit/ TCS Credit
✓ Advances paid/ advances adjusted
✓ ITC reversal/ reclaim
✓ Addition/ reduction in output tax due to mismatch
Details of ✓ B2B supplies under forward charge

Outward ✓ Supplies under reverse charge
Supplies
✓ Import of inputs and capital goods
✓ Debit/ Credit notes
✓ Supplies from composition taxable person and Nil rated/
exempted/ Non-GST supplies
✓ Amendments for prior period
Manner of Auto ✓ Inward supplies received from registered persons including

filling Populated inward supplies taxable under reverse charge.
details of details
✓ Amendments to details of inward supplies received in earlier
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GSTR 2 tax periods.

✓ Details of credit/ debit notes.
✓ Amendment to details of credit/ debit notes of earlier tax
periods.
Non-Auto ✓ Outward supplies which are not entered by the supplier in his
Populated GSTR-1.
details
✓ Details relating to claim of ITC, which the recipient has to
decide on the basis of his self-assessment.
✓ Goods/ services imported from out of India which attract
IGST. These details are to be entered by the importer
manually.
Amendment Insights In case any error or omission is discovered in GSTR-2 during

in details of matching, rectification of the same will be effected in the GSTR-
inward 2 of the month in which such error/ omission is discovered.
supply These amendments are to be made by the recipient only if he
furnished in
agrees to the mismatch report communicated to him by the
prior periods
system every month, after the processing of the return. Tax and
interest, if any, arising out of such rectification will be paid by
the person responsible for filing the return of inward supplies.
Time limit The maximum time limit within which such amendments are
for permissible is earlier of the following dates:
rectification
✓ Date of filing of monthly return u/s 39 for the month of
September following the end of the financial year to which
such details pertain or
✓ Date of filing of the relevant annual return
Communi- Insights The details of outward supplies for a month furnished by the
cation of supplier are communicated and made available electronically (auto
details of populated) to the respective recipient(s) in Part A of Form
GSTR-1 to GSTR- 2A/ Form GSTR-4A (in case of registered person opting
the recipient
for composition levy) through the common portal after the 10th
of supply
day of the succeeding month (due date of filing of GSTR-1).
Example Details of outward supply of a supplier pertaining to the month

of October shall be available to the recipients after 10th
November. Thus, all the entries which are appearing in GSTR-1 of
the said supplier against GSTIN of a particular recipient, will be
made available to him in an auto-populated manner in Part A of
GSTR-2A.
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GSTR 2 The special feature of GSTR-2 is that the details of supplies
Special received by a recipient can be auto populated on the basis of the
Feature
details furnished by the counterparty supplier in his GSTR-1.
Verification Insights The recipient then verifies, validates, modifies or if required,

of details by deletes the details relating to
recipient in ✓ outward supplies,
GSTR-2A ✓ debit and credit notes
communicated to him in GSTR 2A.
He then prepares details of his
✓ inward supplies,
✓ credit notes,
✓ debit notes
(including therein even those details which have not been declared
by the supplier in his GSTR-1) in GSTR-2.
Invoices The recipient can himself feed the invoices not uploaded by his
missed by supplier. The credit on such invoices will also be given provisionally
supplier
but will be subject to matching.
On matching, if the invoice is not uploaded by the supplier, both

of them will be intimated. If the mismatch is rectified, provisional
credit will be confirmed. But if the mismatch continues, the
amount will be added to the output tax liability of the recipient
in the returns for the month subsequent to the month in which
such discrepancy was communicated.
Acceptance/ Insights The details of supplies modified, deleted or included by recipient

rejection of in his GSTR-2 are auto populated in Form GSTR-1A of the
modifications supplier concerned through common portal.
made by
recipient by Time given The supplier may accept the modifications made by the recipient
supplier in to supplier between the 15th day and 17th day of the month succeeding the
GSTR-1A relevant month.
Amendment If supplier accepts the modifications, details furnished by him in

in GSTR 1 GSTR-1 earlier get amended accordingly.
A recipient paying tax under composition scheme modifies, deletes
or includes a supply in his GSTR-4 and such changes are auto
populated in GSTR-1A of the supplier concerned.
Master A supplier is required to file GSTR-1 of a month (say November) by 10th of

Example next month i.e., by 10th December. The details of GSTR-1 are then made
available to recipient in GSTR-2A. The recipient can then accept, reject or
P a g e | 238
modify or add details of such inward supplies which are not reflected in GSTR-
2A and file return of inward supplies for the month of November in GSTR-2 by
15th December. Thereafter, details of inward supplies added, corrected, or
deleted by the recipient are made available to supplier in GSTR-1A. If such
additional/ modified/deleted information is accepted by the supplier between 15th
December and 17th December, then GSTR-1 filed by him for the month of
November gets amended accordingly, and GSTR-3 for the month of November is
generated based on amended information. All entries added by the recipient
which are not accepted by the supplier in GSTR-1A remain in mismatched
category and are reflected in mismatch report.

under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form
and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax
credit availed, tax payable, tax paid and such other particulars as may be prescribed, on or before the twentieth day of the month
succeeding such calendar month or part thereof.
(2) A registered person paying tax under the provisions of section 10 shall, for each quarter or part thereof, furnish, in such form
and manner as may be prescribed, a return, electronically, of turnover in the State or Union territory, inward supplies of goods
or services or both, tax payable and tax paid within eighteen days after the end of such quarter.
(3) Every registered person required to deduct tax at source under the provisions of section 51 shall furnish, in such form and
manner as may be prescribed, a return, electronically, for the month in which such deductions have been made within ten days
after the end of such month.
(4) Every taxable person registered as an Input Service Distributor shall, for every calendar month or part thereof, furnish, in
such form and manner as may be prescribed, a return, electronically, within thirteen days after the end of such month.
(5) Every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in such form and
manner as may be prescribed, a return, electronically, within twenty days after the end of a calendar month or within seven days
after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier.
(6) The Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing the returns
under this section for such class of registered persons as may be specified therein:
Provided that any extension of time limit notified by the Commissioner of State tax or Union territory tax shall be deemed to be
notified by the Commissioner.
(7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section (3) or
sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to
furnish such return.
(8) Every registered person who is required to furnish a return under sub-section (1) or sub-section (2) shall furnish a return for
every tax period whether or not any supplies of goods or services or both have been made during such tax period.
(9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub-section (1) or sub-
section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other
than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or
incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars
are noticed, subject to payment of interest under this Act:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of
return for the month of September or second quarter following the end of the financial year, or the actual date of furnishing of
relevant annual return, whichever is earlier.
(10) A registered person shall not be allowed to furnish a return for a tax period if the return for any of the previous tax periods
has not been furnished by him.
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Persons General The details of inward supplies of both goods and services are
Exception However, following persons are not required to furnish this return:
✓ input service distributor (ISD)

Filing

Due Date General GSTR-3 for a particular month is filed by 20th day
of the immediately succeeding month.
Extension The due date may be extended by the Commissioner/

Commissioner of State GST/ Commissioner of UTGST
for a class of taxable persons by way of a
notification.
Payment of General The last date (due dates) of filing such return is also the due
Tax date for payment of tax i.e. 20th of succeeding month is due
date for payment of tax for previous month.
Example In respect of taxpayers filing GSTR-3, due date of payment of tax

for the month of October is 20th November.
Notable GSTR-3 filed without payment of self-assessed tax disclosed

point therein, is not be regarded as a valid return in terms of section
2(117).
Contents of Basic GSTR-3 is generated only when GSTR-1 and GSTR-2 for the same
GSTR-3 tax period is filed. It shall be auto populated on the basis of
information furnished through returns in GSTR-1, GSTR-2 and
based on other tax liabilities of preceding tax periods.
Major ✓ Details of taxpayer

Details ✓ Tax Period
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✓ Information auto populated from GSTR 1 and GSTR 2

- Aggregate value of all B2B outward supplies
- Aggregate value of all B2B outward supplies
- Aggregate value of all zero-rated outward supplies
- Aggregate value of all inward supplies
- Aggregate value of all imports etc.
✓ Information about adjustment for earlier periods
✓ Details of all liabilities (tax, interest, penalty, late fees etc.)
Rectification Need for In GST since the returns are built from details of individual
of Errors/ revision transactions, there is no requirement for having a revised return.
omissions in Any need to revise a return may arise due to the need to change
GSTR 3 a set of invoices or debit/ credit notes. Instead of revising the
return already submitted, the system allows changing the details
of those transactions (invoices or debit/ credit notes) that are
required to be amended.
Time of Omission or incorrect particulars discovered in the returns filed u/s

revision 39 can be rectified in the return to be filed for the month/
quarter during which such omission or incorrect particulars are
noticed.
Payment of Any tax payable as a result of such error or omission will be

tax required to be paid along with interest.
Rectification Rectification of error or omission discovered on account of scrutiny,

not allowed audit, inspection or enforcement activities by tax authorities is not
permitted. Hence, assessee may not be able to pass on the ITC to
the receiver in respect of tax payments made by him in pursuance
of account of any of the aforementioned situations.
Time limit The maximum time limit within which the rectification of errors/
for omissions is permissible is earlier of the following dates:
rectification
✓ Due date of filing of return for the month of September/
quarter ending September following the end of the financial
year [i.e., 20th October of next financial year] or
✓ Actual date of filing of the relevant annual return
GSTR-3B When the due dates for furnishing GSTR-1 and GSTR-2 get extended, return in
Form GSTR-3B is to be filed. GSTR-3B is a simple return containing summary of
outward and inward supplies liable to reverse charge, eligible ITC, payment of tax
etc. Thus, GSTR-3B does not require invoice-wise data of outward supplies.
GSTR-3B can be submitted electronically through the common portal, either
directly or through a notified Facilitation Centre.
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Steps involved in Furnishing of Returns

Step 1: Filing of GSTR-1
The taxpayer will upload the final GSTR-1 either directly through data entry at the common portal or by uploading
the file containing the details through an offline utility/ tool or through third party applications or software by 10th
day of the month succeeding the month during which the supplies have been made.
Invoices should be uploaded periodically (may be daily, weekly etc.) to minimize last minute load on the system.
Modification in invoices would be allowed from 15th day to the 17th day of the month only on the basis of the
details uploaded by the counterparty purchaser in GSTR-2.
Step 2: Auto-population of GSTR-2A
GST common portal will auto-populate GSTR-2A of taxpayer based on the invoice details reported by the counter-
party taxpayers (suppliers) on a near real-time basis. While every taxpayer will be able to see the invoices
uploaded by their suppliers, they will be able to finalise their GSTR-2 only after the last date of filing GSTR-1. After
filing of GSTR-1, the taxpayers will be able to view/ download their GSTR-2A for further steps.
Step 3: Finalisation and filing of GSTR-2
The invoices auto-populated in GSTR-2A will be accepted/ rejected/ modified by the purchasing
taxpayers in GSTR-2. Purchasing taxpayer will also be able to add additional purchase invoice details in his
GSTR-2 which have not been uploaded by counterparty taxpayer (supplier) as described above, provided he is in
possession of valid invoice issued by counter-party taxpayer and he has actually received such supplies.
The taxpayers can then file their GSTR-2 either online or through offline utility or through third party
applications or software between 10th and 15th day of the month succeeding the month during which the supplies
have been received.
GSTR-2A is a read only document; no changes can be effected therein.
Step 4: Reconciliation of outward and inward supplies
Recipients will have the option to reconcile their inward supplies with their suppliers for any missing supply invoices
during the period of 7 days from filing of GSTR-1. The recipients can prompt the suppliers to accept the inward
supplies as uploaded by them. The suppliers can accept/ reject the modifications made by the recipients between
15th day and the 17th day. Where a recipient has added an invoice and the corresponding supplier accepts the
addition, it will amend his GSTR-1 accordingly.
Step 5: Finalisation of GSTR-3
Finalisation of GSTR-1 and GSTR-2 would enable taxpayers in finalizing their GSTR-3. GSTR-3 would show the
amount that will be credited/ debited to the ITC ledger of the taxpayer. The taxpayer will fill in the details of ITC
that he intends to utilise for payment of taxes. Any balance amount will have to be paid by the taxpayer as cash.
The return would also show the late fee and interest payable, if any.
Step 6: Payment of taxes and submission of GSTR-3
Any payment made through challan gets credited to the electronic cash ledger and does not automatically get offset
against any tax liability. Payment of taxes has to be done by debiting the electronic cash ledger and the taxpayer
can opt to debit the electronic cash ledger while submitting the return.
Filing of returns by composition supplier [Section 39(2) read with rule 62 of

CGST Rules]
Persons Every registered person paying tax under section 10 i.e., composition supplier will
required to file the return.
furnish
Filing

Due Date GSTR-4 should be furnished by 18th of the month succeeding the
relevant quarter.
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Contents of Basic & Other ✓ GSTIN

GSTR-4 Details ✓ Legal name and Trade name
✓ TDS credit received
✓ Tax payable and paid
✓ Interest, Late fees payable and paid
✓ Refund claimed from Electronic cash ledger
✓ Debit entries in electronic cash ledger for tax/ interest
payment
Details ✓ Invoice-wise details of all inward supplies (i.e., intra and inter-
regarding State supplies and from registered and unregistered persons)
Inward and
including reverse charge supplies
Outward
Supplies ✓ Tax on outward supplies
✓ Consolidated statement of advances paid/ adjusted on receipt of
supply
✓ Amendments pertaining to inward and outward supplies for
earlier tax period
Details of FCM The inward supplies of a composition supplier received from

Inward Supplies registered persons filing GSTR-1 will be auto populated in FORM
Supplies GSTR-4A.
The composition supplier can view the auto-populated details of
inward supplies in GSTR-4A and, where required, after adding,
correcting or deleting the details, furnish GSTR-4.
RCM Composition taxpayer is required to pay tax under reverse charge

Supplies mechanism at normal rates.
The tax payable by a composition taxpayer under reverse charge
mechanism can either comprise of CGST and SGST (in case of
intra-state inward supply) or it can consist of IGST in case of
(inter-state inward supply).
From Registered Such supplies get auto-populated in GSTR-4.

person
From Unregistered As the supplies received from un-registered
person
persons do not get auto-populated, such details
are required to be furnished manually.
Details of Consolidated Composition taxpayers are neither entitled for any ITC nor
Outward details entitled to pass on any credit of composition levy to its
Supplies customers (registered/ unregistered). Therefore, composition
taxpayers are required to provide consolidated details of outward
supplies in GSTR-4 and not invoice-wise details of outward
supplies.
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Nature of The person making inter-state supply can’t opt for composition
outward scheme.
supplies
So, the composition amount payable on ‘outward supply’ will
comprise of CGST and SGST and can never consist of IGST
amount.
No matching In GSTR-2 there is no need for a registered person to report

of outward inward supplies received from composition supplier, whether
composition
invoice-wise or supplier-wise. There is, thus, no mechanism for
supplies
matching, outward supplies made by the composition taxpayer.
Amendments Correction entries regarding outward supplies furnished in past

in outward period are required to be reported without reference to any
supplies
invoice. However, it would be necessary to mention the relevant
past quarter in which the error had occurred and sought to be
rectified.
Tax Since a composition supplier is not eligible to take ITC, he will discharge his
Liability liability only by debiting electronic cash ledger.
Entry into Relevant If a registered person opts for composition scheme from the
Composition returns beginning of a financial year, he will, where required, furnish
Scheme GSTRs-1, 2 and 3 relating to the period prior to opting for
composition levy.
Time Limit He shall furnish such returns till the

✓ due date of furnishing the return for the month of September
of the succeeding financial year, or
✓ furnishing of annual return of the preceding financial year,
Non eligible The composition supplier will not be eligible to avail of ITC on
for ITC receipt of invoices or debit notes from the supplier for the period
prior to his opting for the composition scheme.
Exit from Relevant A registered person opting to withdraw from the composition
Composition returns scheme at his own motion or where option is withdrawn at the
Scheme instance of the proper officer will, where required, furnish GSTR-4
relating to the period prior to his exiting from composition levy.
Time Limit He shall furnish such returns till the

✓ due date of furnishing the return for the quarter ending
September of the succeeding financial year, or
✓ furnishing of annual return of the preceding financial year,
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Filing of Returns by Non-Resident Taxable Persons [Section 39(5) read with

rule 63 of CGST Rules]
Persons Every NRTP will file the return.
required to
furnish
Filing
Due Date The details in GSTR-5 should be furnished

✓ within 20 days after the end of the calendar month or
✓ within 7 days after the last day of validity period of the
registration,
Contents of A registered NRTP is not required to file separately the Statement of Outward
GSTR-5 Supplies, Statement of Inward Supplies and Return for a normal tax payer. He
shall incorporate the details of outward supplies and inward supplies in GSTR-5.
Payment of NRTP shall pay the tax, interest, penalty, fees or any other amount payable
interest etc. under the CGST Act or the provisions of the Returns Chapter under CGST Rules,
2017 till the last date of filing return.
Exemption A NRTP is not required to file annual return.
Details of inward supplies of persons having UIN [Rule 82]

Where UIN was issued for claiming refund of taxes paid on the inward supplies of a person, such
person shall furnish the details of those inward supplies of taxable goods and/ or services on
which refund of taxes has been claimed in Form GSTR-11, along with application for such refund
claim.

Every registered person who has made outward supplies in the period between the date on which he became liable to registration
till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of
registration.

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take the credit of
eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit
ledger.
(2) The credit referred to in sub-section (1) shall be utilised only for payment of self-assessed output tax as per the return
referred to in the said sub-section.
P a g e | 245

(1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for
a tax period shall, in such manner and within such time as may be prescribed, be matched––
(a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in this section
referred to as the “supplier”) in his valid return for the same tax period or any preceding tax period;
(b) with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported
by him; and
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the details of
corresponding outward supply or with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975
in respect of goods imported by him shall be finally accepted and such acceptance shall be communicated, in such manner as may
be prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier
for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be
communicated to both such persons in such manner as may be prescribed.
(4) The duplication of claims of input tax credit shall be communicated to the recipient in such manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the
supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the
recipient, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is
communicated.
(6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall be added to the
output tax liability of the recipient in his return for the month in which the duplication is communicated.
(7) The recipient shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5), if the supplier
declares the details of the invoice or debit note in his valid return within the time specified in sub-section (9) of section 39.
(8) A recipient in whose output tax liability any amount has been added under sub-section (5) or sub-section (6), shall be liable to
pay interest at the rate specified under sub-section (1) of section 50 on the amount so added from the date of availing of credit till
the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be
refunded to the recipient by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may
be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the supplier.
(10) The amount reduced from the output tax liability in contravention of the provisions of sub-section (7) shall be added to the
output tax liability of the recipient in his return for the month in which such contravention takes place and such recipient shall be
liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50.
Matching of ITC is one of the core features of GST. Matching process is carried out by GSTN. In the first place, the ITC
claimed by a taxpayer is allowed to the taxpayer on provisional basis and he is allowed to utilise it for payment of tax
declared in his return. Therefore, even before the ITC claim of the taxpayer is matched and finally allowed, it can be
availed for payment of taxes in the return.
Time of General Matching will be done after the due date for furnishing the
matching return in Form GSTR-3 [i.e. after 20th of the month following
the month to which return relates].
Exception However, where the time limit for furnishing Form GSTR-1 and
Form GSTR-2 has been extended, the date of matching of ITC
claim shall also be extended accordingly.
Further, the Commissioner may, on the recommendations of the
Council, by order, extend the date of matching of ITC to such
date as may be specified therein.
P a g e | 246
Details to be Under ITC matching, details of inward supplies including imports, furnished by
matched the recipient is matched with :
✓ Corresponding details of outward supply furnished by the supplier in his valid
return for the same tax period or any preceding tax period.
✓ IGST paid under section 3 of the Customs Tariff Act, 1975 (CTA) in
respect of goods imported by him.
✓ for duplication of claims of input tax credit.
ITC claim When the The claim of ITC be considered as matched provided :
matched, claim of ITC ✓ Invoices and debit notes in FORM GSTR-2 were accepted by
accepted and be considered
the recipient on the basis of FORM GSTR-2A without
communicated as matched
amendment
✓ Where the amount of input tax credit claimed ≤ Output tax
paid on such tax invoice/ debit note by the corresponding
supplier.
Final The claim of input tax credit relating to inward supply that
acceptance of match with the details of corresponding outward supply shall be
ITC claim
finally accepted.
and
communi- Such acceptance in respect of any tax period be made available
cation to electronically to the recipient making such claim in FORM GST
recipient MIS-1 through the GST common portal.
Discrepancy Discrepancy Discrepancy in ITC claim implies mismatch of ITC claim in respect
in ITC claim in ITC claim of any tax period. ITC claim is considered as mismatched in the
following two cases :
✓ Where ITC claimed by a recipient in respect of an inward
supply > Tax declared by the supplier for the same supply in
his valid returns or
✓ Where the outward supply is not declared by the supplier in
his valid returns.
Communi- Any discrepancy in ITC claim shall be communicated to recipient

cation of and supplier electronically through the common portal on/ before
discrepancy
the last date of the month in which the matching has been
to supplier
and recipient carried out. Recipient shall be communicated in Form GST MIS 1
and Supplier shall be communicated in Form GST MIS 2.
Suitable Rectification Supplier may make suitable rectifications in the

rectification by Supplier
Statement of Outward Supplies to be furnished
of
for the month in which the discrepancy is made
discrepancy
available.
Rectification by supplier means adding or correcting
P a g e | 247
the details of an outward supply in his valid return

so as to match the details of corresponding inward
supply declared by the recipient.
Rectification Recipient may make suitable rectifications in the

by Recipient
Statement of Inward Supplies to be furnished for
the month in which the discrepancy is made
available.
Rectification by recipient means deleting or
correcting the details of an inward supply so as to
match the details of corresponding outward supply
declared by the supplier.
ITC Matched Where the discrepancy in ITC claim has been rectified by the
supplier or recipient and resultantly ITC claim matches, ITC claim
shall be finally accepted. Recipient shall be communicated
electronically in Form GST MIS-1 through GST common portal.
Non- Where the discrepancy in ITC claim is not rectified, an amount

rectification to the extent of discrepancy shall be added to the output tax
of
liability of the recipient.
discrepancy
Duplication of Claim of ITC The recipient might have wrongly claimed ITC more than once on
ITC claims on the same the same invoice. The duplication of ITC claims in the details of
invoice more
inward supplies shall be communicated to the recipient in FORM
than once
GST MIS-1 electronically through the common portal.
Addition of The amount claimed as ITC that is found to be in excess on

excess ITC account of duplication of claims shall be added to the output
claimed
tax liability of the recipient in his return for the month in
which the duplication is communicated.
Interest Basic In both the cases, where the amount has been added to the
payable on output tax liability of the recipient, he shall be liable to pay
amount added interest on the amount so added.
to the output
tax liability of Rate of 18%
the Interest
Time period Interest shall be computed from the date of availing of credit
Recipient
till the corresponding additions are made.
Subsequent Reduction of After the amount has been added to the output tax liability of
reduction in output tax the recipient, the supplier may declare the details of the
the output tax liability
invoice/ debit note in his valid return within the specified time.
liability In that case, the recipient shall be eligible to reduce, from his
P a g e | 248
output tax liability, the amount to the extent of discrepancy.
Refund of Where any reduction in output tax liability is accepted, the

interest interest paid by recipient shall be refunded. Such amount shall
be refunded to the recipient by crediting the amount in the
corresponding head of his Electronic Cash Ledger.
Maximum However, the amount of interest to be credited in any case

refund shall not exceed the amount of interest paid by the supplier.
Use of such The amount so credited shall be available for payment of any
amount future liability towards interest or the taxable person may claim
refund of such amount.
Reduction of Basic Where any reduction in output tax liability is in contravention

output tax of the provisions, such amount shall again be added to the
liability in output tax liability of the recipient in his return for the month
contravention in which such contravention takes place.
of provisions
Rate of 24%
Interest

(1) The details of every credit note relating to outward supply furnished by a registered person (hereafter in this section referred
to as the “supplier”) for a tax period shall, in such manner and within such time as may be prescribed, be matched––
(a) with the corresponding reduction in the claim for input tax credit by the corresponding registered person (hereafter in this
section referred to as the “recipient”) in his valid return for the same tax period or any subsequent tax period; and
(b) for duplication of claims for reduction in output tax liability.
(2) The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for
input tax credit by the recipient shall be finally accepted and communicated, in such manner as may be prescribed, to the
supplier.
(3) Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for
input tax credit or the corresponding credit note is not declared by the recipient in his valid returns, the discrepancy shall be
communicated to both such persons in such manner as may be prescribed.
(4) The duplication of claims for reduction in output tax liability shall be communicated to the supplier in such manner as may be
prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the
recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the
supplier, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is
communicated.
(6) The amount in respect of any reduction in output tax liability that is found to be on account of duplication of claims shall be
added to the output tax liability of the supplier in his return for the month in which such duplication is communicated.
(7) The supplier shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if the recipient
declares the details of the credit note in his valid return within the time specified in sub-section (9) of section 39.
(8) A supplier in whose output tax liability any amount has been added under sub-section (5) or sub-section (6), shall be liable to
pay interest at the rate specified under sub-section (1) of section 50 in respect of the amount so added from the date of such claim
for reduction in the output tax liability till the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be
refunded to the supplier by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may
be prescribed:
P a g e | 249
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the recipient.
(10) The amount reduced from output tax liability in contravention of the provisions of sub-section (7) shall be added to the
output tax liability of the supplier in his return for the month in which such contravention takes place and such supplier shall be
liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50.
Time of General Matching will be done after the due date for furnishing the
matching return in Form GSTR-3 [i.e. after 20th of the month following
the month to which return relates].
Exception However, where the time limit for furnishing Form GSTR-1 and
Form GSTR-2 has been extended, the date of matching of claim
of reduction in the output tax liability shall also be extended
accordingly.
Further, the Commissioner may, on the recommendations of the
Council, by order, extend the date of matching to such date as
may be specified therein.
Details to be Under matching of details relating to claim of reduction in output tax liability,
matched details of every credit note relating to outward supply furnished by the
supplier for a tax period is matched with :
✓ Corresponding reduction in ITC claim by the corresponding recipient in his
valid return for the same tax period or any subsequent tax period.
✓ for duplication of claims for reduction in output tax liability.
Reduction in When the The claim for reduction in output tax liability of the supplier
output tax claim of shall be considered as matched provided:
liability claim Reduction in
✓ Credit notes in Form GSTR-1 were accepted by the
matched, output tax
liability corresponding recipient in Form GSTR-2 without amendment
accepted and
considered as ✓ Where the amount of output tax liability after taking into
communicated
matched account the reduction claimed ≥ ITC claim after taking into
account the reduction admitted and discharged on such credit
note by the corresponding recipient in his valid return.
Final Claim for reduction in output tax liability by the supplier that
acceptance of matches with the corresponding reduction in ITC claim by the
ITC claim
recipient shall be finally accepted. Such acceptance for any tax
and
communi- period be made available electronically, to the supplier making
cation to such claim, in FORM GST MIS-1 through common portal.
recipient
Discrepancy Discrepancy Discrepancy in claim for reduction in output tax liability implies
in reduction in reduction mismatch of claim for reduction in output tax liability in respect
in output tax in claim for
of any tax period.
liability output tax
liability Claim for reduction in output tax liability is considered as
P a g e | 250
mismatched in the following two cases:

✓ Where reduction in output tax liability in respect of outward
supplies > Corresponding reduction in ITC claim by recipient in
his valid return or
✓ Where the corresponding credit note is not declared by the
recipient in his valid returns.
Communi- Any discrepancy in claim for reduction in output tax liability

cation of shall be communicated to recipient and supplier electronically
discrepancy
through the common portal on/ before the last date of the
to supplier
and recipient month in which the matching has been carried out.
Recipient shall be communicated in Form GST MIS 2 and
Supplier shall be communicated in Form GST MIS 1.
Suitable Rectification Supplier may make suitable rectifications in the

rectification by Supplier
Statement of Outward Supplies to be furnished for
of
discrepancy
available.
Rectification by supplier means deleting or
correcting the details of an outward supply in his
valid return so as to match the details of
corresponding inward supply declared by the
recipient.
Rectification Recipient may make suitable rectifications in the

by Recipient
Statement of Inward Supplies to be furnished for
available.
Rectification by recipient means adding or
correcting the details of an inward supply so as to
match the details of corresponding outward supply
declared by the supplier.
Communi- Where the discrepancy in claim for reduction in output liability

cation of has been rectified by the supplier or recipient and resultantly
claim for
claim for reduction in output liability matches, claim for
reduction in
output reduction in output liability shall be finally accepted. Supplier
liability shall be communicated electronically in Form GST MIS-1 through
matched GST common portal.
Non- Where the discrepancy is not so rectified as mentioned in the

rectification preceding paras, an amount to the extent of discrepancy shall be
of
added to the output tax liability of the supplier.
discrepancy
P a g e | 251
Duplication of Claim of The duplication of claims for reduction in output tax liability in
claims for reduction in the details of outward supplies shall be communicated to the
reduction in output tax
supplier in Form GST MIS-1 electronically through the common
output tax liability
more than portal.
liability
once
Addition of The amount in respect of any reduction in output tax liability
excess that is found to be on account of duplication of claims shall be
reduction in
added to the output tax liability of the supplier in his return
output tax
liability for the month in which such duplication is communicated.
claimed
Interest Basic In both the cases, where the amount has been added to the
payable on output tax liability of the supplier, he shall be liable to pay
amount added interest on the amount so added.
to the output
tax liability of Rate of 18%
the Interest
Time period Interest shall be computed from the date of availing such claim
Supplier
for reduction in the output tax liability till the corresponding
additions are made.
Subsequent Reduction of After the amount has been added to the output tax liability of
reduction in output tax the supplier, the recipient may declare the details of the credit
the output tax liability
note in his valid return within the specified time. In that case,
liability the supplier shall be eligible to reduce, from his output tax
liability, the amount to the extent of discrepancy.
Refund of Where any reduction in output tax liability is accepted, the

interest interest paid by supplier shall be refunded. Such amount shall be
refunded to the supplier by crediting the amount in the
corresponding head of his Electronic Cash Ledger.
Maximum However, the amount of interest to be credited in any case

refund shall not exceed the amount of interest paid by the recipient.
Use of such The amount so credited shall be available for payment of any
amount future liability towards interest or the taxable person may claim
refund of such amount.
Reduction of Basic Where any reduction in output tax liability is in contravention

output tax of the provisions, such amount shall again be added to the
liability in output tax liability of the supplier in his return for the month
contravention in which such contravention takes place.
of provisions Rate of 24%
Interest
P a g e | 252

(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual
taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such
form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year.
(2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of
section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts
and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the
audited annual financial statement, and such other particulars as may be prescribed.
Persons General All taxpayers filing return in GSTR-1 to GSTR-3, are required to
required to file an annual return.
file annual
return Exception However, following persons are not required to file annual return:
✓ Casual Taxable Persons.
✓ Non- resident taxable person
✓ Input Service Distributors and
✓ Persons authorized to deduct/ collect tax at source
Return Due Date This return needs to be filed by 31st December of the next
Filing Financial Year.
Mode Electronically
Form Normal Annual Return is to be filed electronically in Form

Suppliers
GSTR-9 through the common portal.
Composition Annual Return is to be filed electronically in Form

suppliers
GSTR-9A through the common portal.
Reconcilia- Meaning Reconciliation Statement will reconcile the value of supplies

tion declared in the return furnished for the financial year with the
statement audited annual financial statement and such other particulars, as
may be prescribed.
Persons Person required to get his accounts audited u/s 35(5).

required to Every registered person must get his accounts audited by a
file
Chartered Accountant or a Cost Accountant if his aggregate
turnover during a FY exceeds Rs.2 crores.
Requirement Such registered person is required to furnish electronically through

the common portal along with Annual Return a copy of
✓ Audited annual accounts
✓ A Reconciliation Statement, duly certified, in prescribed form
P a g e | 253

Every registered person who is required to furnish a return under sub-section (1) of section 39 and whose registration has been
cancelled shall furnish a final return within three months of the date of cancellation or date of order of cancellation, whichever is
later, in such form and manner as may be prescribed.
Person Every registered person who is required to furnish return u/s 39(1) and whose
required to registration has been surrendered or cancelled shall file a Final Return.
furnish
Final Return
Return Form GSTR-10
filing
Mode Electronically
Through Common Portal
Time Limit Final Return has to be filed within 3 months of the:

(i) date of cancellation, or
(ii) date of order of cancellation
whichever is later.

Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring
him to furnish such return within fifteen days in such form and manner as may be prescribed.

(1) Any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38
or returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred rupees for every day
during which such failure continues subject to a maximum amount of five thousand rupees.
(2) Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee
of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a
quarter per cent. of his turnover in the State or Union territory.

(1) The manner of approval of goods and services tax practitioners, their eligibility conditions, duties and obligations, manner of
removal and other conditions relevant for their functioning shall be such as may be prescribed.
(2) A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies
under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 in
(3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any particulars furnished in the
return or other details filed by the goods and services tax practitioners shall continue to rest with the registered person on whose
behalf such return and details are furnished.
Analysis of Section 48 read with Rule 83 and 84

Section 48 provides for the authorisation of an eligible person to act as approved Goods and Services Tax
Practitioner (GSTP). A registered person may authorise an approved GSTP to furnish information, on his behalf, to the
Government.
P a g e | 254
GSTN will provide separate user ID and Password to GSTP to enable him to work on behalf of his clients without
asking for their user ID and passwords. They can do all the work on behalf of taxpayers as allowed under GST Law. A
taxpayer may choose a different GSTP by simply unselecting the previous one and then choosing a new GSTP on the
GST portal.
A GSTP enrolled in any State or Union Territory shall be treated as enrolled in the other States/ Union territories.
Eligibility Satisfaction ✓ He must be a citizen of India;

criteria for of all ✓ He must be a person of sound mind;
GSTP conditions
✓ He is not adjudicated as insolvent;
✓ He has not been convicted by a competent court;
and satisfies any of the following conditions.
Satisfaction ✓ He is a retired officer of the Commercial Tax Department of

of any one any State Government or of the Central Board of Excise and
condition
Customs, Department of Revenue, Government of India, who,
during his service under the Government, had worked in a post
not lower than the rank of a Group-B gazetted officer for a
period of not less than two years; or
✓ He has enrolled as a sales tax practitioner or tax return
preparer under the existing law for a period of not less than
five years;
✓ He has passed any of the prescribed qualifications.
Prescribed ✓ A graduate or postgraduate degree or its equivalent

qualifica- examination having a degree in Commerce, Law, Banking
tions
including Higher Auditing, or Business Administration or
Business Management from any Indian University established by
any law for the time being in force; or
✓ A degree examination of any Foreign University recognised by
any Indian University as equivalent to the degree examination
mentioned in sub-clause (i); or
✓ Any other examination notified by the Government, on the
recommendation of the Council, for this purpose; or
✓ has passed any of the following examinations, namely:-
- final examination of the Institute of Chartered Accountants
of India; or
- final examination of the Institute of Cost Accountants of
India; or
- final examination of the Institute of Company Secretaries
of India.
Procedure for ✓ An application in prescribed form may be made electronically through the
Enrolment common portal for enrolment as GSTP.
as GSTP ✓ The application shall be scrutinised and GST practitioner certificate shall be
P a g e | 255
granted in the prescribed form.

✓ In case, the application is rejected, proper reasons shall have to be given.
✓ The enrolment once done remains valid till it is cancelled.
✓ No person enrolled as a GSTP shall be eligible to remain enrolled unless he
passes such Examination conducted at such periods and by such authority as
may be notified by the Commissioner on the recommendations of the Council.
✓ Any person who has been enrolled as GSTP by virtue of him being enrolled as
a Sales Tax Practitioner or Tax Return Preparer under the earlier Indirect
Tax law shall remain enrolled only for a period of 1 year from the appointed
date unless he passes the said examination within the said period of 1 year.
Activities A goods and services tax practitioner can undertake any or all of the following
undertaken activities on behalf of a registered person, if so authorised by him to-
by GSTP ✓ furnish the details of outward and inward supplies;
✓ furnish monthly, quarterly, annual or final return;
✓ make deposit for credit into the electronic cash ledger;
✓ file a claim for refund; and
✓ file an application for amendment or cancellation of registration (Confirmation
from the registered person shall be sought)
✓ appear as authorised representative before any officer of Department,
Appellate Authority or Appellate Tribunal, on behalf of such registered person
Furnishing Duties of When a registered person opts to furnish his return through
returns registered GSTP, such registered person shall:
through person
✓ before confirming submission of any statement prepared by
GSTP GSTP, ensure that the facts mentioned in the return are true
and correct.
✓ gives his consent in prescribed form to any GSTP to prepare
and furnish his return
However, failure to respond to request for confirmation shall be

treated as deemed confirmation.
Responsibi- The responsibility for correctness of any particulars furnished in

lity rests the return or other details filed by the GST practitioners shall
with
continue to rest with the registered person on whose behalf such
registered
person return and details are furnished.
Other notable ✓ Any registered person may give consent and authorise a GST practitioner in
points the prescribed form by listing the authorised activities in which he intends to
authorise the GST practitioner.
✓ The registered person authorising a GSTP shall have to authorise in the
prescribed form and the GST practitioner will have to accept the
P a g e | 256
authorisation in Part B of the same form.

✓ The GST practitioner shall be allowed to undertake only such tasks as
indicated in the prescribed form. The registered person may, at any time,
withdraw such authorisation in the prescribed form.
✓ Any statement furnished by the GST practitioner shall be made available to
the registered person on the GST Common Portal. For every statement
furnished by the GST practitioner, a confirmation shall be sought from the
registered person over email or SMS.
✓ The GST practitioner shall prepare all statements with due diligence and affix
his digital signature on the statements prepared by him or electronically
verify using his credentials.
✓ If the GST practitioner is found guilty of misconduct, his enrolment will be
liable to be cancelled. A show cause notice would be issued to him in the
prescribed form.
P a g e | 257
Questions
Question 1
What are the key features of return mechanism in GST?
Question 2
What kind of inward supplies are required to be furnished in GSTR-2?
Question 3
Can a recipient feed information in his GSTR-2 which has been missed by the supplier?
Question 4
Mr. X, a composition tax payer, did not render any taxable supply during the quarter July-September. Is he required
to file any goods and service tax return?
Question 5
If a return has been filed, how can it be revised if some changes are required to be made?
Question 6
Mr. A, a regular taxpayer, files his GSTR-1, GSTR-2 and GSTR-3 for the month of August, 2017 by the respective due
dates. Mr. A receives a communication from the GST common portal on 28th September, 2017 that ITC of Rs. 15,000
claimed by him is in excess of the tax declared by Mr. B (supplier concerned) in his valid
tax return. Mr. B has filed his Annual Return for financial year 2017-18 on 10th November, 2018.
Answer the following questions:
(i) When is Mr. B required to rectify the discrepancy? Is there any maximum time limit beyond which the discrepancy
cannot be rectified?
(ii) What will happen if Mr. B does not rectify the discrepancy?
Question 7
Mr. Y, a registered person, has filed its GSTR-3 for the month of September on 19th November. Determine the amount
of late fee payable, if any, by Mr. Y.

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Tribute to my Beloved Elder Brother

Awarded by Chief Being Awarded with

A brief about Rahul Garg

Love for the subject GST

1. Multi Colour Theory notes.

With Best Wishes

ALL INDIA RANKHOLDER in CA, CS, CMA

A Special thanks is due to my biggest strength,

my wife SHIKHA GARG;

who has always been my side in all the challenges.

This publication could not have been possible without her.

DISTINGUISHING FEATURES OF THE BOOK

• Strictly as per CA Intermediate (IPCC) syllabus

• Analysis of each section supported by Bare Act provision

• Word by Word Logical Analysis of all sections

• 100% Theory in Multi-color for better retention

• Comprehensive coverage of the syllabus

• All topics of module covered

• Simple & lucid language

• Important points highlighted for Last Minute Revision

• Unique presentation to create interest

• Tabular and diagrammatic Presentation for easy understanding

• All topics categorized under suitable headings and sub headings

Topic Page No.

Why Tax is Collected?

Any Categories of Tax!!!

Features of Direct Taxes

Features of Indirect Taxes

Direct Tax Vs. Indirect Tax……… A Ready Reference…

Some Basic Terms!

Taxes Subsumed Under GST

Additional Duties of Excise (Textiles and Textile Products)

Need for GST in India/ Deficiencies in earlier system

Part XI : Relations Between The Union and The States

Relevance w.r.t. Taxes

Division of Powers relating to Tax

List No. List I List II List III

Amended Article 248 : Residuary powers of legislation

New Article 279A : Goods and Services Tax Council

Amended Article 286

Article 366 : Definitions

Detailed Description of Lists

(d) natural gas;

Petroleum crude No Yes Yes

One Nation, one tax

States and U.T.s…. An Analysis!

Scheme of Input Tax Credit

Structure of The Central Goods and Services Tax Act, 2017

Central Goods and Services Tax Rules

Structure of The Integrated Goods and Services Tax Act, 2017

11 Power to grant exemption from tax

97 Application for Advance Ruling

144 Presumption as to documents in certain cases

a place outside India to a non-taxable online recipient

Chapter VIII: Returns

141 Procedure in respect of seized goods

CHAPTER VIII: APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS

Important Definitions as per CGST Act

(Compensation to States) Act.

(g) a Regional Council constituted under article 371A of the Constitution.

transmission or reception of signs, signals, writing, images and sounds or

Important Definitions as per IGST Act

Section 20 of IGST Act [Application of provisions of Central Goods and