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What Is Tax?
Indirect Taxes: If the taxpayer is just a conduit and at every stage the
tax incidence is passed on till it finally reaches the consumer, who
really bears the brunt of it, such tax is indirect tax.
In Simple Terms,
The person paying the tax to the Government directly bears the
incidence of the tax.
The person paying the tax to the Government collects the same
from the ultimate consumer.
Thus, incidence of the tax is shifted to the other person.
It has now been more than a decade since the idea of national
Goods and Services Tax (GST) was mooted by Kelkar Task Force in
2004.
Concept Of GST
Before we proceed with the finer nuances of Indian GST, let us first
understand the basic concept of GST.
Since, only the value added at each stage is taxed under GST, there
is no tax on tax or cascading of taxes under GST system. GST does
not differentiate between goods and services and thus, the two are
taxed at a single rate.
Dual GST:
India has adopted a dual GST which is imposed concurrently by the
Centre and States, i.e. Centre and States simultaneously tax goods
and services. Centre has the power to tax intra-State sales & States
are empowered to tax services. GST extends to whole of India
including the State of Jammu and Kashmir.
Legislative Framework
There is single legislation – CGST Act, 2017 - for levying CGST. Similarly,
Union Territories without State legislatures are governed by U T GST
Act, 2017 for levying UTGST. States and Union territories with their own
legislatures [Delhi and Puducherry] have their own GST legislation for
levying SGST.
Registration
Every supplier of goods and or services is required to obtain
registration in the State/UT from where he makes the taxable supply if
his aggregate turnover exceeds 20 lakh during a Financial Year.
Composition Scheme
In GST regime, tax (i.e. CGST and SGST UT GST for intra-State supplies
and IGST for inter-State supplies) is payable by every taxable person
and in this regard provisions have been prescribed in the law.
Exemptions
Apart from providing relief to small-scale business, the law also
contains provisions for granting exemption from payment of tax on
essential goods and or services.
GSPs/ASPs
BENEFITS OF GST
GST is a win-win situation for the entire country. It brings benefits to all
the stakeholders of industry, Government and the consumer. It will
lower the cost of goods and services, give a boost to the economy
and make the products and services globally competitive.
CONSTITUTIONAL PROVISIONS
The GST laws resolve these issues by laying down one comprehensive taxable
event i.e. “Supply” - Supply of goods or services or both.
In the GST regime, the entire value of supply of goods and or services is taxed in
an integrated manner, unlike the earlier indirect taxes, which were charged
independently either on the manufacture or sale of goods, or on the provisions
of services.
Section – 7
The meaning and scope of supply taxable under GST can be understood in
terms of following parameters, which can be adopted to characterize a
transaction as supply:
there are also cases where a transaction is kept out of scope of supply despite
the existence of the above parameters, i.e. a list of activities shall be treated as
neither supply of goods nor supply of services. In other words, they are outside
the scope of GST.
Includes
excludes
Negative list of services [Section 7(2) + Schedule III]
MODES OF SUPPLY
Earlier, VAT was levied by the State on the sale of goods which was defined
under most State VAT laws as transfer of property in goods for consideration.
Under the CGST Act, although sale has been treated as a form of supply
leviable to GST, the definition of ‘sale’ has not been provided.
While barter may deal with a transaction which only includes an exchange of
goods/services, exchange may cover a situation where the goods are partly
paid for in goods and partly in money. When there is a barter of goods or
services, same activity constitutes supply as well as consideration.
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.
CONSIDERATION
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 means money. It covers anything which might be
possibly done, given or made in exchange for something else. Further, a
consideration need not always flow from the recipient of the supply. It can also
be made by a third person
Any transaction involving supply of goods and/or services without consideration
is not a supply unless it is deemed to be a supply under law [as deemed in
TAXABLE SUPPLY
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
Transfer
Land and Building
Treatment or Process
Transfer of Business Assets
Renting of immovable property
Construction of complex, building, civil structure, etc.
Works contract services.
•Naturally bundled
•Not naturally bundled
The very basis for the charge of tax in any taxing statute is the taxable event i.e.
the point on which the levy of tax gets attracted. As discussed earlier, the
taxable event under GST is SUPPLY. CGST and SGST/UT GST are levied on all intra-
State supplies of goods and/or services while IGST is levied on all inter-State
supplies of goods and/or services.
Where the location of the supplier and the place of supply of goods or services
are in the same State/Union territory, it is treated as intra-State supply of goods
or services respectively.
Where the location of the supplier and the place of supply of goods or services
are in
(1) two different States or (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.
Central Goods and Services Tax Act, 2017 extends to the whole of India
State GST law of the respective State/Union Territory with State Legislature [Delhi
and Puducherry] extends to whole of that State/Union Territory.
Union Territory Goods and Services Tax Act, 2017 extends to the Union territories
of the Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli,
Daman and Diu, Chandigarh and other territory, i.e. the Union Territories without
State Legislature [Section 1 of the UT GST Act].
A tax called the Central Goods and Services Tax (CGST) shall be levied on all
intra-State supplies of goods or services or both.
The tax shall be collected in such manner as may be prescribed and shall be
paid by the taxable person. However, intra-State supply of alcoholic liquor for
human consumption is outside the purview of CGST.
Value for levy: Transaction value under section 15 of the CGST Act.
Rates of CGST: Rates for CGST are rates as may be notified by the Government
on the recommendations of the GST Council [Rates notified are 0%, 0.125%,
1.5%, 2.5%, 6%, 9% and 14%]. Maximum rate of CGST will be 20%.
CGST on supply of the following items has not been levied immediately. It shall
be levied with effect from such date as may be notified by the Government on
the recommendations of the Council:
Petroleum crude
High speed diesel
Motor spirit (commonly known as petrol)
Natural gas and
Aviation turbine fuel
Reverse charge –
1. Inventory model
Inventory maintained by online retailer. Example: Big Basket
2. Marketplace model
Product directly shipped by seller to customer Example: E bay
3. Fulfilment center
Fast moving goods held on consignment, some products also sold at
marketplace by sellers
Example: Amazon,Flipkart.
4. Aggregator
Selling services under its own brand. Service provider continues to be owner of
the services provided
Example: Uber, Ola, Oyo Rooms
ECO Operation
Display products as well as services which 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.
The Government may notiFinancial Year specific categories of services the tax
on intra-State supplies of which shall be paid by the electronic commerce
operator (ECO) if such services are supplied through it. Such services shall be
notified on the recommendations of the GST Council
It is important to note here that the above provision shall apply only in case of
supply of services.
1. If the ECO is located in taxable territory - Person liable to pay tax is the ECO
2. If the ECO does not have physical presence in the taxable territory Person
liable to pay tax is the person representing the ECO.
3. If the ECO has neither the physical presence nor any representative in the
taxable territory - Person liable to pay tax is the person appointed by the ECO for
the purpose of paying the tax
GST Rates prescribed for various goods: Broadly, six rates of CGST have been
notified for goods, viz., 0.125%, 1.5%, 2.5%, 6%, 9% and 14%. Some items have
been kept at Nil rate. Equivalent rate of SGST/UT GST will also be levied.
GST Rates prescribed for various services: Broadly, four rates of CGST have been
notified for services, viz., 2.5%, 6%, 9% and 14%. Equivalent rate of SGST/UT GST
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.
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
Section 10 of the CGST Act provides the turnover limit of Rupees 50 lakh for
composition levy. However, proviso to section 10(1) empowers the Government
to increase the said limit of Rupees 50 lakh upto Rupees 1 crore, on the
recommendation of the Council.
Includes
Value of all outward supplies
--Taxable supplies
--Exempt supplies
--Exports
--Inter-State supplies
of persons having the same PAN be computed on all India basis.
Excludes
--CGST
--SGST
--UT GST
--IGST
--Cess
--Value of inward supplies on which tax is payable under reverse charge.
the goods held in stock by him have not been purchased from an unregistered
supplier and where purchased, he pays the tax under reverse charge under
section 9(4).
he shall pay tax under section 9(3) 9(4) (reverse charge) on inward supply of
goods or services or both.
he shall mention the words “composition taxable person, not eligible to collect
tax on supplies” at the top of the bill of supply issued by him; and he shall
mention the words “composition taxable person” on every notice or signboard
displayed at a prominent place at his principal place of business and at every
additional place or places of business.
Supplier of goods which are not taxable under the CGST Act/SGST Act/UT GST
Act
Integrated Goods and Services Tax Act, 2017 extends to the whole of India.
IGST is levied on the inter-State supply of goods or services or both.
tax called the Integrated Goods and Services Tax (IGST) shall be levied on all
inter-State supplies of goods or services or both. The tax shall be collected in
such manner as may be prescribed and shall be paid by the taxable person.
Value for levy: Transaction value under section 15 of the CGST Act
Rates of IGST: IGST is approximately the sum total of CGST and SGST/UT GST.
Maximum rate of IGST will be 40%.
Broadly, six rates of IGST have been notified for goods, viz., 5%, 12%, 18%, 28%, 3%
and 0.25%.
Broadly, four rates of IGST have been notified for services, viz., 5%, 12%, 18% and
28%. CGST Rates for services have already been discussed in earlier paras. IGST
rates for such services can be computed on the basis of the same.
Exempt supply has been defined as supply of any goods or services or both
which attracts nil rate of tax or which may be wholly exempt from tax and
includes non-taxable supply.
(ii) No need to pay tax on goods and/or services on which absolute exemption
granted
Items such as unbranded Atta Maida Besan, unpacked food grains, milk, eggs,
curd, lassi and fresh vegetables are among the items exempted from GST.
The default provision for time of supply of goods is the earliest of the following
dates:
• Date of issue of invoice by the supplier;
• If invoice is not issued the last date on which supplier is required to issue the
invoice;
• The date on which supplier receives the payment with respect to supply.
The default rule for time of supply of services is the earliest of following dates:
• Date of issue of invoice by the supplier;
• The date on which supplier receives the payment with respect to the supply. It
has also been provided that, if invoice is not issued within a period of thirty days
from the date of supply of service, the time of supply shall be the date of
provision of service.
GOODS
1.Date of issue of invoice by the supplier or the last date on which he is required,
to issue the invoice
2. Date on which the supplier receives the payment ((entering the payment in
books of account or crediting of payment in bank account, whichever is earlier)
with respect to the supply)
If it cannot be done by any of the above rules the time of supply will be:
a) When a periodical return has to be filed, the date on which such return is to
be filed;
b) In any other case the date of payment of tax.
Valuation is common for all three acts (CGST, SGST and IGST) and common for
both goods and services.
Taxable value is transaction value i.e. price paid or payable for the supply
provided the supplier and the recipient are not related to each other and price
is the sole consideration.
Transaction value
When a transaction of supply of goods/services is made between two persons
who are not related to each other and price is the sole consideration for the
supply,
4. Incidental expenses like commission and packing incurred by the supplier are
also to be added (if not forming part of price) to the price to arrive at the
transaction value
6. Interest or late fee or penalty for delayed payment of any consideration for
any supply
(b) Taxes other than GST, if charged separately by the supplier [Section 15(2)(a)]
GST and GST cess are not part of taxable value, but other taxes cesses fees etc.
will form part of the value of taxable supply, if separately billed. For instance, if a
supplier of goods pays mandi 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 mandi 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.
(c) Payments made to third parties by the recipient on behalf of the supplier in
relation to the supply [Section 15(2)(b)]
A supplier may need to incur various expenses in order to make a particular
supply of goods / services. In the normal course, he would pay these amounts
and they would form part of the value that he charges from the customer
(recipient of supply). However, even if the customer makes direct payment of
some of such liabilities (of the supplier) to the third parties, and the supplier does
not include this amount in his bill, it would still form part of the value of the
taxable supply.
Commission:
This may be paid to an agent and recovered from the buyer of the goods /
services; this is part of the value of the supply.
Packing, if charged by the supplier to the recipient, is similarly part of the value
of the supply. Inspection or certification charges are another element that may
be added to the value, if billed to the recipient of supply.
Installation and testing charges at the recipient’s site will also be added, being
an amount charged for something done by the supplier in respect of the supply
at the time of making the supply
Interest, late fee and penalty for delayed payment [Section 15(2)(d)] The value
for a taxable supply will include not only the base price but also the charges for
delay in payment.
A supply priced at Rupees 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% per annum.
(i.e. 1% per month) on Rupees 2,000 for one month after the free credit period is
Rupees20. Such interest will be added to the value and thus, the value of
taxable supply will work out to be Rupees 2,020.
Subsidies
The selling price of a notebook is Rupees 40. For notebooks sold to students in
Government schools, a company uses its CSR funds to pay the seller Rupees 20,
so that the students pay only Rupees 20 per notebook. The taxable value of the
notebook will be Rupees40, 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 Rupees 20.
Discounts that are allowed before or at the time of supply and shown in the
invoice;
Discounts that are allowed after supply in terms of an agreement that existed at
the time of supply and are worked out invoice-wise and the proportionate input
tax credit is reversed by the recipient.
Related Person
Specific supplies
(a) Option a – difference between buying-selling rate and the reference rate
Published by RBI. Where reference rate is not available, 1% of gross Indian Rupee
value of the transaction. And where the conversion is not into Indian Rupees,
then 1% of the lesser of the Indian Rupee equivalent of each currency
Exchanged
(b) Option b – 1% of gross amount upto Rupees1 lac, 1/2% after Rupees1 lac
upto Rupees10 lacs
And 1/10% after Rupees 10 lacs. This option (b) once exercised cannot be
withdrawn during the financial year
2. Supply of services by travel agent of booking of tickets for air-travel, the value
of supply will be 5% of basic domestic fare or 10% of basic international fare.
3. Supply of services in relation to life insurance, the value of supply will be gross
premium reduced by investment allocation, in the case of single premium policy
will be 10% of premium and in all other cases will be 5% of first year’s premium
and 12.5% for other year’s premium.
Composition
The composition levy is an alternative method of levy of tax designed for small
taxpayers whose turnover is up to Rupees 1.5 Crore (Rupees 75 lakhs in case of
few States). The objective of composition scheme is to bring simplicity and to
reduce the compliance cost for the small taxpayers
Moreover, it is optional and the eligible person opting to pay tax under this
scheme can pay tax at a prescribed percentage of his turnover every quarter,
instead of paying tax at normal rate.
Composition scheme is a scheme for payment of GST available to small
taxpayers whose aggregate turnover in the preceding financial year did not
cross Rupees 1.5 Crore. In Case of specified states Rupees 75 Lakhs
Following persons are not allowed to opt for the composition scheme:
A person opting for composition levy will have to pay tax on quarterly basis
before 18th of the month succeeding the quarter during which the supplies
were made.
Supplier of services cannot opt for composition exception being restaurant
services.
Aggregate turnover will be computed on the basis of turnover on an all India
basis and will include value of all taxable supplies, exempt supplies and exports
made by all persons with same PAN, but would exclude inward supplies under
reverse charge as well as central, State/Union Territory and Integrated taxes and
cess.
A taxable person opting to pay tax under the composition scheme is out of the
credit chain. He cannot take credit on his input supplies. When he switch over
from composition scheme to normal scheme, eligible credit on the date of
transition would be allowed
As the composition dealer cannot collect tax paid by him on outward supplies
from his customers, the registered person making purchases from a taxable
person paying tax under the composition scheme cannot avail credit.
If a taxable person has paid tax under the composition scheme though he was
not eligible for the scheme then the person would be liable to penalty and the
provisions of section 73 or 74 shall be applicable for determination of tax and
penalty
Supplies to SEZ from domestic tariff area will be treated as inter-State supply. A
person paying tax under composition scheme cannot make inter-State outward
supply of goods. Thus, for making supplies to an SEZ unit, a person needs to take
registration as a regular taxpayer. The supplies to SEZ will be zero rated and the
supplier will be entitled to make supplies without payment of tax or if he pays
tax, he will be entitled to refund of tax so paid.
(1) Uniform rate of tax @ 1% under composition scheme for manufacturers and
traders (for traders, tax is liable only on supply of taxable goods while for the
purpose of determining the eligibility, turnover of exempted goods would also
be considered). No change for composition scheme for restaurant.
(A taxpayer whose turnover is below Rupees 1.5 crore can opt in for
Composition Scheme. In case of North-Eastern states and Himachal Pradesh,
the limit is now Rupees 75 lakh.)
"Input tax" in terms of section 2(62) 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
Relevant Sections
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
Section 19: Taking input tax credit in respect of inputs and capital goods sent for
job work
Section 20: Manner of distribution of credit by Input Service Distributor
Section 21: Manner of recovery of credit distributed in excess.
Input tax credit can be taken on the basis of any of the following documents:
(1) Invoice issued under section 31
(ii) Debit note issued under section 34
(iii) Bill of entry
(iv) Invoice prepared in respect of reverse charge basis under section 9(3) and
9(4)
(v) Document issued by ISD under rule 7(1) for distribution of credit referred
under rule 4(1)(g)
(iv) The supplier has uploaded the relevant invoice on the GSTN;
(v) The supplier has paid the said amount of tax (as charged in the invoice) to
appropriate Government in cash or by way of utilization of input tax credit, as
admissible;
He – claimant of input tax credit – has furnished return under section 39 in FORM-
GSTR 2
ITC cannot be availed after the due date of filing the return for September
month of the next Financial year or on furnishing the Annual Return whichever is
earlier.
GOODS
1) Meant for personal
consumption
2) Motor Vehicles
3) Goods lost, stolen,
destroyed, written off
4) Goods disposed off by way
of gift or free samples
5) Goods received for construction of immovable property on
own account (other than plant and machinery)
SERVICES
Proportionate credit:
ITC based ON usage in
business
Non-taxable supplies
Exempt Supplies
Nil-rated supplies
ITC NOT AVAILABLE
If recipient of goods or service or both has not paid the supplier within 180 days
from date of invoice, the amount equal to input tax credit availed along with
the interest will be added to output liability of the recipient. Such non-payment
of the value of invoice must be admitted in the return filed in FORM-GSTR 2 (Rule
2) for the month immediately following the period of 180 days from the date of
issue of invoice. The recipient shall be entitled to avail the credit again once he
makes payment to the supplier. However the interest paid will not be refunded
The condition for payment to the supplier within 180 days for availment of credit
does not apply to supplies on which tax is payable under reverse charge
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 shall not be allowed on the said
tax component.
Total ITC on Input and Input services (MINUS) Input Tax which credit is
unavailable.
b. Common Credit
Input Tax Credited to Electronic Credit Ledger (MINUS) Input tax Taxable supply.
Credit for a Tax Period = input tax credited to electronic ledger divided by 60 (5
years into 12 Months)
The above amount shall be calculated for all such common capital goods for
every tax period namely a month
5. The amount of credit to be added to output tax liability attributable to
exempt supplies out of input tax for common use of capital good shall be
Every supplier shall be liable to be registered under the Act in the State from
which he makes a taxable supply of Goods or Services or both.
This threshold limit will be 10 Lakhs if a taxable person conducts his business in
any of the special category states as specified in sub-clause (g) of clause (4) of
Article 279A of the Constitution
Turnover will be counted for a PAN computed on all-India basis. Thresh hold
exemption is not state-wise.
A person having multiple business verticals [as defined in Section 2(18)] in one
State may obtain separate registrations for each of the business vertical, subject
to prescribed conditions.
Aggregate turnover includes
-Taxable supplies
--Exempt supplies
--Exports
--Inter-State supplies of persons having the same PAN be computed on all India
basis
— Persons who supply goods and/or services, other than supplies specified
under subsection (5) of section 9, through such electronic commerce operator
who is required to collect tax at source under section 52,
— Every electronic commerce operator;
— 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
taxable person; and such other person or class of persons as may be notified by
the Central Government or a State Government on the recommendations of
the Council.
APPLICATION PROCEDURE.
1. Logon to the GST Portal
2. Fill up Form Part-A of Form GST REG-01 (PAN, Mobile and Email)
3. PAN validated online by Common portal from CBDT database.
Mobile no and email verified through OTP sent through it.
4. Temporary Reference Number (TRN) is generated and communicated to the
applicant on the
validated mobile number and email address.
5. Access and fill in the form Part B along with specified documents using the
received number
6. On receipt of such application, an acknowledgement in the prescribed form
shall be issued to the applicant electronically.
7. Application forwarded to GST Officer and he starts verifying the application.
AFTER THREE WORKING DAYS
If Not, Officer asks for more details in FORM GST REG-03 - Within 7 working days,
Produce the documents along with FORM GST REG- 04
The time limit for application is within 30 days (for persons other than casual
taxable person or a non-resident taxable person) and casual taxable person or
a non-resident taxable person shall have to obtain the registration at least 5
days prior to the commencement.
Single registration will be granted from one state or union territory and in case of
persons having business across different states, then multiple registrations are
granted. Even in a single state, multiple registrations are possible wherever a
person has multiple business verticals.
Special Economic Zone unit or Special Economic Zone developer shall make a
separate application for registration as a business vertical distinct from its other
units located outside the Special Economic Zone.
Every person who is liable to take a registration or wants to obtain voluntary
Registration shall have a Permanent Account Number (PAN).
Every person required to deduct tax under section 51 may have, in lieu of a
Permanent Account Number, a Tax Deduction and Collection Account Number
(TAN)
A non-resident taxable person can obtain registration on the basis of any other
document as may be prescribed.
Deemed registration
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.
Certificate of Registration
Nature of registration
a. The registration in GST is PAN based and State specific.
b. One registration per State/UT.
(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.)
Amendment of Registration
Except for the changes in some core information in the registration application,
a taxable person shall be able to make amendments without requiring any
specific approval from the tax authority.In case the change is for legal name of
the business, or the State of place of business or additional place of business, the
taxable person will apply for amendment within 15 days of the event
necessitating the change.
The Proper Officer, then, will approve the amendment within the next 15 days.
For other changes like the name of day-to-day functionaries, e-mail IDs, mobile
numbers etc. no approval of the Proper Officer is required, and the amendment
can be affected by the taxable person on his own on the common portal.
Significance of invoices has enhanced manifolds under GST regime. The reason
behind the same is 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). Thus,
a registered person cannot avail Input Tax Credit unless he is in possession of a
tax invoice or a debit note.
Under the GST regime, an “invoice” or “tax invoice” means the tax invoice
referred to in section 31 of the CGST Act, 2017. This section mandates the
issuance of an invoice or a bill of supply for every supply of goods or services. It
is not necessary that only a person supplying goods or services needs to issue an
invoice. The GST law mandates that any registered person buying goods or
services from an unregistered person also needs to issue a payment voucher as
well as a tax invoice. The type of invoice to be issued depends upon the
category of registered person making the supply.
The provisions relating to tax invoices, debit and credit notes are contained in
Chapter VI - Tax Invoice, Credit and Debit Notes [Sections 31 to 34] of the CGST
Act. State GST laws also prescribe identical provisions in relation to Tax Invoice,
Credit and Debit Notes.
TAX INVOICE ISSUED BY A SUPPLIER OF TAXABLE GOODS/TAXABLE SERVICES
1. Supplier of taxable goods is required to issue a tax invoice:
a. Before or at the time of removal of the goods where the supply involves
movement of goods;
b. Before or at the time of delivery of the goods to the recipient where the
supply does not involve movement of goods.
2. Supplier of services is required to issue a tax invoice:
a. Before provision of the services or
b. After provision of the services but within a specified time.
Supply of Goods
1. Invoice in Triplicate
2. Original copy for recipient Duplicate copy for transporter; and Triplicate copy
for supplier
Supply of Services
1. Invoice in Duplicate
2. Original copy for recipient; and Duplicate copy for supplier
Particulars of the Debit and Credit Notes are also same as revised tax invoices
b. Tax payer who has opted for composition scheme makes a supply, then issue
a bill of supply
A registered person is not required to issue a tax invoice in accordance with the
provisions of clause (b) of sub-section (3) of section 31 i.e. in respect of supply of
goods or services or both where the value therein does not exceed a sum of
Rupees.200 subject to the following conditions, namely: -
(a) The recipient is not a registered person; and
(b) The recipient does not require such invoice,
However, in respect of such supplies the supplier shall issue a consolidated tax
invoice for such supplies at the close of each day in respect of all such supplies.
Exports
Cessation of services
On cessation of a contract for supply of services, the invoice is required to be
issued to the extent supply is complete prior to cessation
Receipt Voucher
When advance is accepted receipt voucher is being issued by the supplier.
Where at the time of receipt of advance, rate of tax is not determinable then
tax shall be paid at 18%
Where at the time of receipt of advance, nature of supply is not determinable
the same shall be treated as interstate supply.
Refund Voucher
When advance is refunded, then issue refund voucher.
Payment Voucher
Payment voucher is to be issued by recipient of supply liable to pay under
reverse charge. Moreover, A registered person who is liable to pay tax under
reverse charge [under section 9(3)/9(4) of the CGST Act] 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.
It is important to note here that intra-State supplies of goods and/or services
received by a registered person from an unregistered supplier are exempt from
tax provided the aggregate value of such supplies received from any/all
unregistered suppliers is upto 5,000 in a day.
Further, where the aggregate value of such supplies covered under section 9(4)
exceeds 5,000 in a day from any/all the unregistered suppliers, the registered
person may issue a consolidated invoice at the end of the month. This provision
also applies to a Bill of Supply
Delivery Challan
Rule 55 specifies the cases where at the time of removal of goods, goods may
be removed on delivery challan and invoice may be issued after delivery.
Where the goods are being transported in a semi knocked down or completely
knocked down condition,
(a) the supplier shall issue the complete invoice before dispatch of the first
consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent
consignments, giving reference of the invoice;
(c) Copies of the corresponding delivery challan shall accompany each
consignment along with a duly certified copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment
Credit Note
Registered Supplier of goods or services or both may issue credit note in the
following situations:
1. Taxable value in invoice Greater than Taxable value in respect of such supply
2. Tax charged in invoice Greater than Tax payable in respect of such supply
3. where the goods supplied are returned by the recipient
4. where goods or services or both supplied are found to be deficient
Debit Note
Registered Supplier of goods or services or both shall issue a debit note in the
following situations
1. Taxable value in invoice Less Than Taxable value in respect of such supply
2. Tax charged in invoice Less Than Tax payable in respect of such supply
Debit note shall include a supplementary invoice
(1) September following the end of the financial year in which such supply was
made, or
(ii) the date of furnishing of the relevant annual return, whichever is earlier.
Debit Note
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.
No credit note shall be issued if the incidence of tax and interest on such supply
has been passed by him to any other person.
E way Bill
E-way bill is an electronic way bill for movement of goods which can be
generated on the GSTN (common portal). A ‘movement’ of goods of more than
50,000 in value cannot be made by a registered person without an e-way bill.
E-way bill will also be allowed to be generated or cancelled through SMS.
When an e-way bill is generated a unique e-way bill number (EBN) is allocated
and is available to the supplier, recipient, and the transporter.
A taxpayer or his representative can generate a challan from common portal and fill
the details of the amount to be deposited and purpose thereof. The said challan will be
valid for 15 days. The desired amount can be deposited only through banks. On
successful payment, a challan identification number (CIN) will be generated by the
bank and same will be indicated in the challan
Chapter – 10 of the CGST Act -2017 deals with payment process of tax.
Section 49 envisages to payment of Goods and Services tax, interest, penalty, fee and
other amounts.
Section 50 specifies imposition of interest on delayed payment of tax.
Section 51 pertains to tax deduction at source.
Section 52 pertains to tax collection at source
1. Electronic tax liability register- For every tax payer an electronic tax liability register
will be maintained on the common portal (gst.gov.in) and it will be debited or credited.
2. Electronic cash ledger- For every tax payer an electronic cash ledger will be
maintained on the common portal (gst.gov.in) for crediting the amount deposited and
debiting the payment towards tax, interest, penalty, fee or any other amount. The date
of credit to the bank account of appropriate government will be deemed to be date
of deposit in the electronic cash ledger.
3. Electronic credit ledger- For every tax payer an electronic credit ledger will be
maintained on the common portal (gst.gov.in) for crediting every claim of input tax
credits and available credit can be used for discharge of tax liability only
Major Features
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 C PIN 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
communicated by the authorized bank to taxpayer as well as to GSTN.
BRN or Bank Reference Number is the transaction number given by the bank for a
payment against a Challan
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.
Order in which a taxpayer has to discharge his tax and other dues.
1. Self-assessed tax and other dues related to returns of previous tax periods.
2. Self-assessed tax and other dues related to return current tax period.
3. Any other amount payable under the GST Act & Rules there under.
What happens if the taxable person files the return but does not make payment of tax?
In such cases, the return is not considered as a valid return. Unless the supplier has paid
the entire self-assessed tax and filed his return and the recipient has filed his return, the
ITC of the recipient would not be confirmed
Rate of Interest
1. 18% in the case of tax dues as per sub-section (1)
CA EXAM SERIES – YOUR SUCCESS BEGINS HERE 3
GST – CHAPTER 9 – FAST TRACK NOTES
The term “tax” here means the tax payable under the Act or Rules made thereunder.
The payment of interest in case of belated payment of tax should be made voluntarily
i.e. even without a demand. The interest payable under this section 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.
Chapter IX of the CGST Act [Sections 37 to 48] prescribes the provisions relating
to filing of returns as under:
All the returns under GST laws are to be filed electronically. Taxpayers can file
the statements and returns by various modes.
CONTENTS OF GSTR- 1
Basic & Other Details
•GSTIN
•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 Outward Supplies
1. B2B
2. B2C
3. Zero rated and Deemed exports
4. Debit/Credit notes issued
5. Nil rated Exempted Non GST
6. Amendments for prior period
GSTR – 2
CONTENTS OF GSTR- 2
•ITC reversal/reclaim
• Addition/reduction in output tax due to mismatch
Details of Inward Supplies
GSTR – 4
Quarterly Return
GSTR – 5
Date Of Filing - 20th of the month succeeding the tax period or within 7 days
after expiry of registration, whichever is earlier
GSTR – 9
Annual Return
Filed By Registered Person other than an ISD, TDS/TCS Taxpayer, Casual Taxable
Person and Nonresident Taxpayer
GSTR – 10
Final Return
Date Of Filing - Within three months of the date of cancellation or date of order
of cancellation, whichever is later.
GSTR - 1
•This Statement signifies the tax liability of the supplier for the supplies effected
during the previous month.
•It needs to be filed by the 10th of every month in relation to supplies effected
during the previous month.
•For example, a statement of all the outward supplies made during the month
of July, needs to be filed by 10th August.
•This Statement signifies accrual of ITC (Input Tax Credit) from the inputs
received during the previous month.
•It is auto-populated from the GSTR-1 filed by the corresponding suppliers of the
Taxpayer except for a few fields like imports, and purchases from unregistered
suppliers.
•It needs to be filed by the 15th of every month in relation to supplies received
during the previous month.
•For example, a statement of all the inward supplies received during the month
of July needs to be filed by 15th August.
GSTR-3- Return
Annual Return
This return needs to be filed by 31st December of the next Financial Year.
In this return, the taxpayer needs to furnish details of expenditure and income for
the entire Financial Year.
GSTR-1
•Signifies Tax Liability
• File via GSTN/Easy upload tools provided by GSTN GSPs
• Periodical uploading allowed
• Filed by 10th
GSTR-2
•Signifies ITC availability
•Auto-populated from GSTR-1 filed by a Tax Payer’s Suppliers
•Changes allowed between 10th and 15th
• Filed by 15th
GSTR-3
STR-3
•Auto-populated from GSTR-1 and GSTR-2
•Filed by 20th
•Payment can be made any time before or on 20th.
Revision of Returns
The mechanism of filing revised returns for any correction of errors/omissions has
been done away with.
The rectification of errors/omissions is allowed in the subsequent returns.
However, no rectification is allowed after furnishing the return 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.
Any registered person who fails to furnish Form GSTR- 1, GSTR-2, GSTR-3 or Final
Return within the due dates shall be liable to pay a late fee of ` 100 per day,
subject to a maximum of `5,000
The process of ITC Matching begins after the due date for filing of the return
(20th of every month). This is carried out by GSTN.
The details of every inward supply furnished by “recipient” in form GSTR-2 shall
be matched with corresponding details of outward supply furnished by
corresponding “supplier” in his valid return.
A return may be considered to be a valid return only when the appropriate GST
has been paid in full by the taxable person, as shown in such return for a given
tax period.
In case the details match, then ITC claimed by recipient in his valid returns shall
be considered as finally accepted and such acceptance shall be
communicated to recipient.
Failure to file valid return by the supplier may lead to denial of ITC in the hands
of the recipient.
In case the ITC claimed by the recipient is in excess of the tax declared by the
supplier or where the details of outward supply are not declared by the supplier
in his valid returns, the discrepancy shall be communicated to both the supplier
and the recipient.
The recipient will be asked to rectify the discrepancy of excess claim of ITC and
in case the supplier has not rectified the discrepancy communicated in his valid
returns for the month in which the discrepancy is communicated then such
excess ITC as claimed by the recipient shall be added to output tax liability of
recipient in the succeeding month.
The recipient shall be liable to pay interest on the excess ITC or duplicate ITC
added back to output tax liability of recipient from the date of availing of ITC till
the corresponding additions are made in their returns.
Re-claim of ITC refers to taking back the ITC reversed in the Electronic Credit
Ledger of the recipient by way of reducing the output tax liability.
Such re-claim can be made by recipient only if supplier declares details of the
Invoice and/or Debit Notes in his valid return within prescribed timeframe.