INDIRECT TAXES

(P2CMC33)
UNIT – I
Tax: History – Direct Taxes and Indirect Taxes – Canons of Taxation – Essentials of an effective
Tax system – Tax Administration – Constitutional Amendments 2016 – Limitations of VAT-
Justification for goods and services Tax (GST) – Evolution of GST.

UNIT – II
GST Act – Highlight of GST – Structure of GST Model in India – IGST, CGST, SGST –
Taxes and Duties, Subsumed under GST – Taxes and Duties outside GST – Products not
Covered – Exemptions – Benefits – Elimination of Tax on Tax – Registration – Dealern – GSTN
– Surrender – Cancellation. GST Council – Functions – Administration of GST – Authorities –
Rights.

UNIT – III
Computation of GST – Supply of Goods – Conditions of Taxability – Place of supply of
goods and Services – Categories of GST Rates – Levy of GST – Time and Value of Supply –
Input Tax Credit - Matching of Input Tax Credit – Availability of Credit in Special
Circumstances – Cross Utilization – Filing Returns – Forms GSTR – Payment of GST –
Refunds.

UNIT – IV
Customs Act 1962: Scope of Customs Law – Taxable Event – Imports and
Exports procedure – Types of Customs Duties – Valuation of goods – Clearance of Imported
goods – Warehousing.

UNIT – V
Customs Rules – Powers of Authorities – Appeals: Exemptions – Baggage Rules
Drawback of Customs Duties – Powers of Customs officers – Appeals – Penalties and offence –
SEZ and EOU.
 UNIT – I
TAX
HISTORY
The word “tax” was derived from the Latin word “taxore”. The meaning of “taxo” is to
estimate, appreciate or value. Tax is the amount paid by persons staying with a territorial limit of
a Sovereign State and is levied on individual, goods, property, business, services, etc. Tax
constituties Government revenue.

Definition of Tax
According to De Marw, “A tax is a price which each citizen pays to the State to cover his
share of the cost of the general public service which he will consume.”

Characteristic Features of a Tax

Following are the characteristic features of a tax:
(i) It is levied the State by virtue of its sovereign powers conferred under the
Constitution.
(ii) It is used for public purposes.
(iii) It is a compulsory contribution levied by public authorities or State.
(iv) It is not a payment for a specific service rendered by the State for the payer.

Taxation Objective
Tax revenue is the main source of income and its receipt is going up year after year.
The key as well as subsidiary objectives are outlined below:
Key Objectives
(i) Revenue generation,
(ii) Maintenance of Welfare State,
(iii) Prevention of concentration of wealth in few hands and
(iv) Re-distribution of wealth for the common benefit of society.
Subsidiary Objectives
(i) Enhance savings and thereby investment,
(ii) Bringing about rapid economic development and
(iii) Provision of employment opportunities

DIRECT TAXES
According to Dalton, a direct tax is really a tax which is paid by a person on whom it is
legally imposed and the burden of which cannot be shifted to any other person.
Advantages of Direct Taxes
 Justifiable: Direct taxes are based on the taxable capacity and their burden is justifiably
distributed.
 Progressive: Direct taxes are progressive as higher rates of taxes on higher income groups
and lower rates on lower income groups are imposed. Poor people are exempted under
direct taxes.
 Certain: Government can estimate the proceeds from taxes and can balance its income
and expenditure. Assessee is also certain about amount of tax.
 Elastic: Direct taxes are elastic in the sense that high proceeds to government become
possible by increasing the rate of these taxes.
  Productive: Direct taxes are productive as in short run these do not affect productive
capacity.
Disadvantage of Direct Taxes
 Arbitrary: The rates of taxes are arbitrarily fixed by the governments.
 Evasion: Direct taxes encourage the tax-payers to conceal their income and it leads to
blackmoney.
 Reduce Saving: The higher rate of direct taxes reduces the saving capacity of the people
as a significant part of the income is taken away in form of taxes and it affects the rate of
capital formation adversely.
 Limited tax base: Direct taxes do not reach all. These cover only a part of the society-
salaried class. Business class avoid and evade direct taxes by manipulating accounts.

INDIRECT TAXES
Indirect taxes are those taxes which have their primary burden or impact on a single person. But
that person succeeds in shifting his burden to others. Indirect taxes of the Union Government
comprise: (i) Customs Duty, (ii) Excise Duty, (iii) CST and (iv) Service Tax.
Special Features of Indirect Taxes
1. Shifting of tax burden: For example, central excise duty which is paid by the
manufacturer is recovered by including such duties and taxes in the cost of the
commodity.
2. Indirect taxation is commodity taxation as the central excise levy is made in respect of
commodities manufactured in any part of India.
3. While imposing direct taxes, the ability of the tax-payer (assessee) is directly determined,
whereas in respect of indirect taxes, the ability of tax-payer is indirectly determined.
4. The tax-payer does not perceive a direct pinch while paying indirect taxes.
5. Indirect taxes are easier to collect and greater amount of generation of revenue is assured
as tax evasion is comparatively less in the case of organised sector.
6. Tax imposed on commodities directly affects the prices of commodities.
Indirect taxes includes Central Excise Duty, Customs Duty, Central Sale Tax, Service
Tax, State VAT, Octori, Interest Tax, Expenditure Tax, Foreign Travel Tax, etc.
Merits of Indirect Taxes
 Convenient: Indirect taxes are more convenient to pay.
 Disguised: The effect of indirect taxes does not provoke resentment, because they cause
less annoyance to the public as these taxes are not felt directly.
 Not Easily Evadable: Indirect taxes are difficult to evade as they are usually merged with
prices.
 Broad-based: Indirect taxation usually being commodity taxes has a broader scope.
 Social Value: Indirect taxes have a high social value.
 Forced Savings: Indirect taxes are an effective means of mopping up consumer’s surplus.
 Complementary: Additional revenue can be easily obtained by introducing an indirect
tax.
 Progressive: Indirect taxes on luxuries and semi-luxuries are progressive in effect, as they
fall on the rich people’s consumption outlays.
Demerits of Indirect Taxes
 Inequitability: Indirect taxes are unjust and inequitable as they are regressive in effect.
  Less productive: Indirect taxes do not conform to the canons of economy and
productivity.
 Inflationary Potentiality: Indirect taxes prove to be inflationary when excessively relied
upon.
 Disincentive Effect on Saving: Indirect taxes discourage savings when the people have to
spend more with a rise in the prices of commodities.
 No Educative Value: Indirect taxes being invisible and as they are collected through
middlemen like traders, hence, they do not promote any civic sense.

DIFFERENCE BETWEEN DIRECT TAXES AND INDIRECT TAXES

Following are some of the main points of distinction between and indirect tax:
Direct Taxes Indirect Taxes
 These do not have any impact on cost Increase in rates of indirect taxes leads to
and prices of goods. increase in cost and prices of goods.

 Income tax, wealth tax, expenditure tax
and corporation tax are instances of
direct taxes.
 These taxes conform of the Principle of
equity.
Central excise duty, customs duty, VAT,
service tax are instances of indirect taxes
These do not discriminate between rich and
poor. The levy is against the principles of
equity.

 Income tax is tax levied on income and The burden of indirect taxes fall on the rich
wealth tax is tax levied on and poor alike. These are takes on
property/assets of an assessee. Thus, consumption.
they do not affect those with low
income /wealth from that level.

 These have an element of certainty. The There is clear shifting of burden in respect of
tax-payer knows the amount of tax indirect taxes. For instance, the MRP of a
payable. product includes central excise duty and VAT.
The burden falls on consumsers.

 These is no shifting of burden. The There is clear shifting of burden in respect of

impact and incidence of direct taxes fall indirect taxes. For instance, the MRP of a
on the same person. product includes central excise duty and VAT.
The burden falls on consumers.
 Imposition of direct taxes does not
Imposition of indirect taxes creates imbalance
create imbalance in the use of
in the use of productive resources.
productive resources.
CANONS OF TAXATION
Cannons or principles of taxation refer to the administrative aspects of a tax. They relate
to the rate, amount, method of levy and collection of tax. A good tax system must have a proper
combination of a kinds of taxes having different canons. Adam Smith enunciated the four canons
which must be incorporated in any system of taxation.
They are:
 Canon of equality
 Canon of certainty
 Canon of economy
 Canon of convenience
Canon of equality
The canon of equality/equity implies that the burden of taxation must be distributed
equally or equitably in relation to the ability of the tax-payers.
Canon of certainty
The tax system must be specific and certain. In the words of Adam Smith, “the tax which
each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the
manner of payment, the amount to be paid ought to be clear and plain to the contributor and to
every other person,”
Canon of Economy
This principle implies that the cost of tax collection must be the minimum. The tax must
be such as to bring the maximum part of the collected revenue into the government treasury.
Canon of Convenience:
This principle implies that tax must be collected in a convenient manner from the tax payers.
Other canons of taxation
Besides the aforesaid canons of taxation, economists like Bastable have added some more
canons of taxation which are enumerated below:
Canon of Productivity: Taxes must be levied in order to accumulate enough money for the
government to secure enough facilities for the people. According to Charles F.Bastable, this
canon must be based on productivity.
Canon of Elasticity: This canon implies that taxation should have built-in flexibility. The tax
system must be designed in such a way that it must bring more revenue when the income of
people also increases.
Canon of Simplicity:
This implies that tax systems, tax rates and provisions must be made simple to understand
by the common public.
Canon of Diversity:
According to this principle there must be a multiple tax system of diverse nature rather
than having a single tax system. By introducing large number of taxes, it will be difficult for the
people to evade/avoid them.
Canon of Expediency: This canon implies that levy of taxes must be based on certain well
founded principles so that they are justified from the government viewpoint.
Limitation of VAT
Multiplicity of Duties/Taxes
There are multiplicity of taxes on goods and services, Excise duty on manufacture,
customs duty on imports and exports, service tax on services are levied by the Central
Government. On the other hand, VAT, Entry Tax, Purchase Tax, Octroi and duty on liquor are
levied by the State governments.
Lack of Uniformity of Provisions In State Vat Statutes
Present structure of VAT across states lacks uniformity. This leads to increased
complexities for corporate having operations in multiple States.
Sale of Goods Vs Provision of Services
Another source of complexity under the State VAT is determining whether a particular
transaction constitutes a sale of goods or supply of services.
Ex: Software products and intangibles
The distinction becomes important as the sales of goods are governed by the State Vat and the
sale of services are governed by Centre Government.
Inability of State to Levy Tax on Services
The States are precluded from taxing services. Thus arrangement has posed difficulties in
taxation of goods supplied as part of a composit works contract involving a supply of both goods
and services.
Distortion of Tax Base with Multitude of Exemptions
The starting base the CENVAT is narrow and is being further eroded by variety of area-
specific and conditional and unconditional exemptions.
Cascading Effect of Taxes
Tax Cascading occurs under both Central and State taxes. The most significant
contributing factor to Tax Cascading is the partial overage of Central and State taxes on account
of various exemptions, for instance, Oil and gas production, mining, agriculture, wholesale and
retail trade, real estate construction and range of services remain outside the ambit of both the
CENVAT and the Service tax levied by the Centre.
Another major contributing factor to tax cascading is the Central Sales Tax (CST) on
Inter-State sales, collected by the origin state and for which no credit is allowed by any level of
government. This gets embedded in the total cost of the product.
Unimaginative Indigenous Production Due to CENVAT
The CENVAT is levied on goods manufactured or produced in India. This gives rise to
definitional issues as to what constitutes manufacturing and valuation issues for determining the
value evolved which the tax is to be levied. While these concepts have evolved through judicial
rulings, it is recognized that limiting the tax to the point of manufacturing is a severe impediment
to an efficient and neutral application of tax. Manufacturing itself forms a narrow base.
Multi-point taxation system extending to the retail level.
Increase the cost of production and puts Indian suppliers at a competitive disadvantage in the
international markets. It creates a bias in favor of imports, which do not bear the hidden burden
of taxes on production inputs.
Complexities in Tax Administration
In spite of the improvement made in the tax design and administration over the past few
year, the systems at both Central and State levels remain complex. Their administration leaves a
lot to be desired. Further, the process for resolution of disputes is slow and expensive. At the
same time, the systems suffer from substantial compliance gaps, except in the highly organized
sectors of the economy.

JUSTIFICATION FOR GST

The need for GST in Indian Taxation System will add value at each stage and will set off
the rates both at state and at central level. Introduction GST, will increase the efficiency of
taxation, improves the economic growth and it will bring whole nation to one national market.
Following are some of the points that can explain the need for GST:-
Tax Sturcture will be Simple
At present, there are huge number of taxes that has to pay by consumers, with GST it will
single tax to pay, which is much easier to understand.
Tax revenue will increase:
Simple tax structure will bring more tax payers and in return it will be revenue for
government.
Competitive pricing:
GST will eliminate all other taxes of indirect taxes and this will effectively mean that tax
amount paid by end users (consumers) will reduce. Thus results in more consumption of goods,
which will be benefited to companies.
Boost to exports:
If Indian market will be competitive in pricing, then more and more foreign players will
try to enter the market, which results in more numbers of exports and benefits to Indian Market.
Saving more Money
For common people, GST offers many benefits. After GST implementation, the price of
FMCG products, small cars, cinema tickets, electrical wires, etc. are cutting prices of their
products.
No multiple taxes
The biggest benefit of GST is an elimination of multiple indirect taxes.
No need for records
The taxpayers would not be required to maintain records of the Central Government and
the State Governments.
Ease of business
The main advantage of GST is, it is helping the entrepreneurs in doing business activities.
Revenue increase
GST replaced all 17 indirect taxes with a single tax. The increase in product demand will
lead to increase in tax revenue for state and central government.
Easy Tax Filing and Documentation
For a business, GST will be a soon. Return filing, tax payment and refund process will
easy and hassle free.
Increase in GDP
GST will increase gross domestic product.
More employment
As GST will reduce the cost of product it is expected that demand for the product will
increase and to meet the demand, supply has to go up. The requirement of more supply will be
addressed by only increasing employment.
Evolution of GST
The journey of the GST started in a modest way back in 1986-1987, when the then
finance minister VP Singh introduced. Modified Valued Added Tax (MODVAT) in 1986 in
Parliament.
Since then, various government at the Centre under the leadership of different finance
ministers worked towards the final shape of the present GST, which has came into face from 1 st
July 2017

The following is a timeline of events that led to the launch of the ‘one nation one tax’ GST
February 1986: Finance Minister Vishwanath Pratap Singh proposes a major overhaul of the
excise taxation structure in the budget for 1986-87
2000: Prime Minister Atal Bihari Vajpyee introdudces the concept, set up a committed headed
by the then West Bengal Finance Minister Asim Dasgupta to design a GST model.
2003: The Vajpayee government forms a task force under Vijay Kelkar to recommend tax
reforms.
2004: Vijay Kelkar, then advisor to the Finance Ministry, recommends GST to replace the
existing tax regime.
February 28, 2006: GST appears in the Budget speech for the first time; Finance Minister
P Chidambaram sets an ambitious April 1, 2010 as deadline for GST implementation. He says
the Empowered Committee of finance ministers will prepare a road map for GST.
2008: Empowered Committee of State Finance Ministers constituted.
April 30, 2008: The Empowered Committee submits a report titled ‘A model and Roadmap
Goods and Services Tax (GST) in India’ to the government
November 10, 2009: Empowered Committee submits a discussion paper in the public domain on
GST welcoming debate.
2009: Finance Minister Pranab Mukherjee announces basic structure of GST as designed by
Dasgupta committee; retains 2010 deadline.
February 2010: Finance Ministry starts mission-mode computerization of commercial taxes in
states, to lay the foundation for GST rollout.
Pranab Mukherjee defers GST to April 1, 2011.
March 22, 2011: UPA-II tables 115th Constitution Amendment Bill in the Lok Sabha for
bringing GST.
March 29, 2011: GST Bill referred to Parliamentary Standing Committee of Finance led
Yashwant Sinha.
November 2012: Finance Minister P Chidambaram holds meetings with state finance ministers;
decides to resolve all issues by December 31, 2012 for GST rollout.
February 2013: Declaring UPA government’s resolve to introducing GST, Chidambaram in his
Budget speech makes provision for Rs. 9,000 crore to compensate states for losses incurred
because of GST.
August 2013: Parliamentary standing committee submits report to Parliament suggesting
improvements on GST. GST Bill gets ready for introduction in Parliament.
2014; GST Bill cleared by Standing Committee lapses as Lok Sabha dissolves.
December 18, 2014: Cabinet approves 122nd Constitution Amendment Bill to GST.
December: 19, 2014: Finance Minister Arun Jaitley introduces the Constitution (122nd)
Amendment Bill in the Lok Sabha.
February 2015: Jaitley sets April 1, 2016 as deadline for GST rollout.
May 6, 2015: Lok Sabha passes GST Constitutional Amendment Bill.
May 12, 2015: The Amendment Bill presented in the Rajya Sabha.
May 14, 2015: The GST Bill forwarded to jointh committee of Rajya Sabha and Lok Sabha.
August 2015: Government fails to win the support of Opposition to pass the bill in the Rajya
Subha where it lacks sufficient number.
July 2016: Centre opposes capping GST rate6 at 18%; gets states around.
August 3, 2016: Rajya Sabha passes the Constitution Amendment Bill by two-thirds majority.
September 2, 2016: 16 states ratify GST Bill; President Pranab Mukherjee gives assent to the
Bill.
September 12: Union Cabinet clears formation of GST Council.
September 22-23: Council meets for first time.
November 3: GST Council agrees on four slab tax structure of 5, 12,18 and 28% along with an
additional cess on luxury and sin goods.
January 16, 2017: Arun Jaitley announces July 1 as GST7 rollout deadline. Centre, states agree
on contentious issue of dual control and taxing rights on goods at high sea.
February 18: GST Council finalized draft compensation bill providing to make good any
revenue loss to states in first five years of GST8 rollout.
March 4: GST Council approves CGST and Integrated-GST bills.
March 20: Cabinet approved CGST, IGST and UT GST AND Compensation bills.
March 27: Arun Jaitley tables CGST, IGST, UP GST and Compensation bills in Parliament.
Lok Sabha pass all the four key GST Bills – Central GST (CGST), Integrated GST (IGST), State
GST (SGST) and Union Territory GST (UTGST).
May 18: GST Council fits over 1,200 goods in one of the four tax slabs of 5, 12, 18 and 28%.
Over 80% of goods of mass consumption either exempted or taxed under 5% slab.
GST Council fixes cess on luxury and sin goods to create kitty for compensating states.
May 19: GST Council decides on 5, 12,18 and 28% as service tax slabs.
June 21: All states except Jammu and Kashmir pass SGST law.
June 30 Midnight: GST set to roll out.

UNIT – II
GST ACT
GST
GST is an Indian Tax which has replaced many Indirect Taxes in India. The Goods and
Services Tax was passed in the Parliament on 29 th March 2017. The Act came into effect on 1 st
July 2017. Goods & Services Tax Law in India is a comprehensive, multi-stage destination-
based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of
goods and services. This law has replaced many on the supply of goods and services. This law
has replaced many indirect tax laws that previously existed in India.

Advantages of GST
A) Make in India:
 Will help to create a unified common national market for India, giving a boost to
foreign 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 for
eliminating rate arbitrage between neighboring States and the 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 is turn means
production thereby helping in the growth of the industries. This will create India
as “manufacturing hub”
B) Ease of Doing Business:
 Simpler tax regium with fewer exemptions
 Reduction in multiplicity of taxes leading to simplification and uniformity
 Reduction in compliance costs-No multiple record keeping for a variet of taxes
 Simplified and authomated procedures for various processes such as registration,
returns, refunds, tax payment, etc
 All interaction to be through the common GSTN portal-so-less public interface
between the taxpayer and the tax administration
 Will improve environment of compliance as all returns to be filed online, input
credits to be verified online, encouraging more paper trail of transactions
 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
C) Benefit to Consumers.
 Final price of goods is expected to be lower due to seamless flow of input tax
credit between the manufacturer, retailer and supplier of services;
 It is expected that a relatively large segment of small retailers will be either
exempted from tax or will suffer very low tax rates under a compounding scheme-
purchases from such entities will cost less for the consumers;
 Average tax burden on companies is likely is likely to come down which is
expected to reduce prices and lower prices mean more consumption.

MODEL OF GST SYSTEM

There are two types of GST structure in the world. These are:
i. Single GST
ii. Dual GST
Single GST
Many countries in the world have a single unified GST system i.e. a single tax applicable
throughout the country. However, in federal countries like Brazil and Canada, a dual GST
system is prevalent whereby GST is levied by both the federal and state or provincial
governments. In India, dual GST is proposed whereby a Central Goods and Services Tax
(CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of every
transaction of supply of goods and services.

Dual GST (Goods and Services Tax) in India

A “Dual GST” model has been adopted in view of the federal structure of our country.
Centre and States will simultaneously levy GST on every supply of goods or services or both
which, takes place within a State or Union Territory. Thus, thus shall be two components of
GST:
Central GST (CGST)
Levied & collected under the authority of CGST Act, 2017 passed by the Parliament.
CGST or Central GST
CGST refers to Central Goods and Service Tax. It is levied on the intrastate movement of
goods and services. The revenue collected under CGST is for the central government. However,
Input tax credit on CGST is given partly to the centre and party to the states as it will be utilized
against the payment of both CGST and IGST.
Highlights of CGST
1. CGST is applicable on both, goods and services.
2. CGST is levied by the Central Government through a separate statute on all transactions
of goods and services made for a consideration.
3. Proceeds would be shared between the Central and State Government.
State GST (SGST)
Levied & collected under the authority of SGST Act, 2017 passed by respective State
SGST or State GST
SGST refers to State goods and Service tax. The revenue collected under SGST is collected State
Government. The State Government levies it on the intrastate movement of goods and services.
Highlights of SGST
1. SGST is levied by the State Government through a statute on all transactions of supply of
goods and services.
2. SGST world be paid to the account of the respective State Government.
Note: Any tax liability obtained under SGST can be set off against SGST or IGST input tax
credit only.
IGST or Integrated GST
IGST refers to Integrated goods and service tax. It is levied on the interstate movement of
goods and services. Integrated GST will be collected by the centre. IGST will also be applicable
on the import of goods.
Under GST,IGST is a tax levied on all Inter-State supplies of goods and/or services and
will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or
services in both cases of import India and export from India.
TAXES ARE SUBSUMED IN GOODS AND SERVICES TAX
1. Taxes earlier levied and collected by the Centre
 Central Excise duty
 Duties of Excise (Medicinal and Troll Preparations)
 Additional Duties of Excise (Goods of Special Importance)
 Additional Duties of Excise (Textiles and Textile Products)
 Additional Duties of Customs (commonly known as CVD)
 Special Additional Duty of Customs (SAD)
 Service Tax
 Central Surcharge and Cesses so far as they relate to supply of goods and
services.
2. State taxes that are subsumed under the GST are:
 State VAT
 Central Sales Tax
 Luxury Tax
 Entry Tax (all forms)
 Entertainment and Amusement Tax (except when levied by the local bodies)
 Taxes on advertisements
 Purchase Tax
 Taxes on lotteries, betting and gambling
 State Surcharges and Cesses so far as they relate to supply of goods and services.
List of items kept outside the purview of GST
The new goods and Services Tax (GST) replaced most of the previous taxes in India.
Now GST will be levied at all stages right from manufacture up to final consumption with credit
of taxes paid at previous stages available as setoff. Only value addition will be taxed ad burden
of tax is to be born by the final consumer.
However, at present, following items are kept outside the purview of GST in India:
1. Alcohol for human consumption:
Alcohol for human consumption has been kept outside the purview of GST India
at present. However, the taxes imposed to alcohol for human consumption will continue
as per the structure before GST implementation.
2. Petroleum products:
Petroleum products such as petroleum crude, motor spirit (petrol), high speed
diesel, natural gas and aviation turbine fuel etc. are also kept outside the purview of GST
in India. However, the taxes for these products will be charged as per the structure before
introduction of GST.
As for petroleum products, although the GST constitutional amendment provides
for levying GST on these products, it allows the timeframe for their inclusion to be
decided by the GST Council. Therefore, in the initial years of GST, petroleum products
will remain out of the scope of GST.
The existing taxation system under VAT and the Central Excise Act will continue
for the commodities listed above.
PRODUCT NOT COVERED
Exempted Goods under GST
Sr.No Classification Description of Goods
1 0101 Live asses, mules and hinnies
2 0102 Live bovine animals
3 0103 Live swine
4 0104 Live sheep and goats
5 0105 Live poultry, that is to say, of the species Gallus domesticus, ducks,
geese, turkeys and guinea fowls.
6 0106 Other live animal such as Mammals, Birds, Insects
7 0201 Meat of bovine animals, fresh and chilled.
8 0202 Meat of bovine animal frozen
9 0203 Meat of swine, fresh, chilled of frozen
10 0204 Meat of sheep or goats, fresh, chilled or frozen
11 0205 Meat of horses, asses, mules or hinnies, fresh, chilled or frozen
12 0206 Edible offal of bovine animals, swine, sheep goats, horses, asses,
mules or hinnies, fresh, chilled or frozen
13 0207 Meat and edible offal, of the poultry of heading 0105, fresh, chilled or
frozen
14 0208 Other meat and edible meat offal, fresh, chilled or frozen
15 0209 Pig fat, free of lean meat and poultry fat, not rendered or otherwise
extracted, fresh, chilled or frozen
16 0209 Pig fat, free of lean meat and poultry fat, not rendered or otherwise
extracted, salted, in brine, dried or smoked
17 0210 Meat and edible meat offal, salted, in brine, dried or smoked; edible
flours and meals of meat or meat offal
18 3 Fish seeds, prawn/shrimp seeds whether or not proceed, cured or in
frozen state
19 301 Live fish
20 302 Fish, fresh or chilled, excluding fish fillets and other fish meat of
heading 0304
21 304 Fish fillets and other fish meat
22 0306 Crustaceans, whether in shell or not, live, fresh or chilled; crustaceans,
in shell, cooked by steaming or by boiling in water live, fresh or
chilled.
23 0307 Mollusks, whether in shell or not, live, fresh, chilled; aquatic
invertebrates other than crustaceans and mollusks, live, fresh or
chilled.
24 0308 Aquatic invertebrates other than crustaceans and molluscs, live, fresh
or chilled.
25 0401 Fresh milk and pasteurized milk, including separated milk, milk and
cream, not concentrated nor containing added sugar or other
sweetening matter, excluding Ultra High Temperature (UHT) milk
26 0403 Curd; Lassi; Butter milk
27 0406 Chena or paneer, other than put up in unit containers and bearing a
 registered brand name
28 0407 Birds’ eggs, in shell, fresh, preserved or cooked
29 0409 Natural honey, other than put up in unit container and bearing a
registered brand name;
30 0501 Human hair, unworked, whether or not washed or scoured; waste of
human hair
31 0506 All goods i.e Bones and horn-cores, unworked, defatted, simply
prepared, treated with acid or gelatinised; powder and waste of these
products
32 0507 90 All goods i.e. hoof meal; horn meal; hooves, claws, nails and beaks;
antlers; etc.
33 0511 Semen including frozon semen
34 6 Live trees and other plants; bulbs roots and the like; cut flowers and
ornamental foliage
35 0701 Potatoes, fresh or chilled.
36 0702 Tomatoes, fresh or chilled.
37 0703 Onions, shallots, garlic, leeks and other alliaceous vegetables, fresh or
chilled.
38 0704 Cabbages, cauliflowers, kohirabi, kale and similar edible brassicas,
fresh or chilled.
39 0705 Lettuce and chicory, fresh or chilled
40 0706 Carrots, turnips, salad beetroot, salsify, celeriac, radishes and similar
edible roots, fresh or chilled.
41 0707 Cucumbers and gherkins, fresh or chilled,
42 0708 Leguminous vegetables, shelled or unshelled, fresh or chilled.
43 0709 Other vegetables, fresh or chilled.
44 0712 Dried vegetables, while, cut, sliced, broken or in powder, but not
further prepared.
45 0713 Dried leguminous vegetables, shelled, whether or not skinned or split.
46 0714 Manioc, arrowroot, salep, Jerusalem artichokes, sweet potatoes and
similar roots and tubers with high starch or inulin content, fresh or
chilled; sago pith.
47 0801 Coconuts, fresh or dried whether or not shelled or peeled
48 0801 Brazil nuts, fresh whether or not shelled or peeled
49 0802 Other nuts, fresh such as Almonds, Hazelnuts or filberts, walnuts
Chestnuts, Pistachios, Macadamia nuts, Kola nuts, Areca nuts, fresh,
whether or not shelled or peeled
50 0803 Bananas, including plantains, fresh or dried
51 0804 Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens,
fresh.
52 0805 Citrus fruit, such as Oranges, Mandarins, clementines, wilkings and
similar citrus hybrids, Grapefruit, including pomelos, Lemons and
limes, fresh
53 0806 Grapes, fresh
54 0807 Melons, fresh
55 0808 Apples, pears and quinces, fresh
56 0809 Apricots, cherries, peaches, plums and sloes, fresh.
57 0810 Other fruit such as strawberries, raspberries, blackberries, mulberries
and loganberries, black, white or red currants and gooseberries,
cranberries, bilberries and other fruits of the genus vaccinium, Kiwi
fruit, Durians, Persimmons, Pomegranates, Tamarined, Sapota,
Custard apple, Bore, Lichi, fresh.
58 0814 Peel of citrus fruit or melons, fresh.
59 9 All goods of seed quality
60 0901 Coffee beans, not roasted
61 0902 Unprocessed green leaves of tea
62 0909 Seeds of anise, badian, fennel, coriander, cumin or caraway; juniper
berries
63 0910 11 10 Fresh ginger, other than in processed form
64 0910 30 10 Fresh turmeric, other than in processed form
65 1001 Wheat and meslin
66 1002 Rye
67 1003 Barley
68 1004 Oats
69 1005 Maize
70 1006 Rice
71 1007 Grain sorghum
72 1008 Buckwheat, millet and canary seed; other cereals such as Jawar, Bajra,
Ragi.
73 1101 Wheat or meslin flour
74 1102 Cereal flours other than of meslin
75 1103 Cereal groats, meal and pellets
76 1104 Cereal grains hulled
77 1105 Flour, of potatoes
78 1106 Flour, of the dried leguminous vegetables of heading 0713, of sago or
of roots or tubers of heading 0714 or of the products of Chapter 8 i.e.
of tamarind, of singoda, mango flour etc.
79 12 All goods of seed quality
80 1201 Soya beans, whether or not broken, of seed quality.
81 1202 Ground-nuts, not roasted or otherwise cooked, whether or not shelled
or broken, of seed quality.
82 1204 Linseed, whether or not broken, of seed quality.
83 1205 Rape or colza seeds, whether or not broken, of seed quality.
84 1206 Sunflower seeds, whether or nor broken, of seed quality.
85 1207 Other oil seeds and oleaginous fruits whether or not broken of seed
quality.
86 1209 Seeds, fruit and spores, of a kind used for sowing.
87 1210 Hop cones, fresh
88 1211 Plants and parts of plants, of a kind used primarily in perfumery, in
pharmacy or for insecticidal, fungicidal or similar purpose, fresh or
 chilled.
89 1212 Locust beans, seaweeds and other algae, sugar beet and sugar cane,
fresh or chilled.
90 1213 Cereal straw and husks, unprepared, whether or not chopped, ground,
pressed or in the form of pellets.
91 1214 Swedes, man golds, fodder roots, hay lucems, clover, sainfoin, forage
kale, lupines, vetches and similar forage products, whether or not in
the form of pellets.
92 1301 Lac and Shellac 93. 1404 90 40 Betel leaves
93 1404 90 40 Betel leaves
94 1701 or 1702 Jaggery of all types including Cane Jaggery and Palmyra Jaggery
95 1904 Puffed rice, commonly known as Muri, flattened or beaten rice,
commonly known as Chira, parched rice, commonly known as khoi,
parched paddy or rice coated with sugar, or gur, commonly known as
Murki
96 1905 Pappad, by whatever name it is known, except when served for
consumption
97 1905 Bread, except when served for consumption and pizza bread
98 2107 Prasadam supplied by religious places like temples, mosques,
churches, gurudwaras, dargahs, etc
99 2201 Water other then aerated, mineral, purified, distilled, medicinal, ionic
battery, de-mineralized and water sold in sealed Container
100 2201 Non-alcoholic Toddy, Neera including data and palm neera.
101 2202 90 90 Tender coconut water other than put up in unit container and bearing a
registered brand name
102 2302, 2304, Aquatic feed including shrimp feed and prawn feed, poultry feed &
2305, 2306, cattle feed, including grass, hay & straw, supplement & husk of
2308, 2309 pulses, concentrates additives, wheat bran & de-oiled cake
103 2501 Salt, all types
104 2716 00 00 Electrical energy
105 2835 Di calcium phosphate (OCP) animal feed grade conforming to IS
specification No.5470:2002
106 3002 Human Blood and its components
107 3006 All types of contraceptives
108 3101 All goods and organic manure
109 3304 Kajal, Kumkum, Bindi, Sindur, Alta
110 3825 Municipal waste, sewage sludge, clinical waste
111 3926 Plastic bangles
112 4014 Condoms and contraceptives
113 4401 Firewood or fuel wood
114 4402 Wood charcoal
115 4802/4907 Judicial, Non-judicial stamp papers, Court fee stamps when sold by
the Government
116 4817/4907 Treasuries or Vendors authorized by the Government
117 48/4907 Postal items, like envelope, Post card etc., sold by Government
118 4907 Rupee notes when sold to the Reserve Bank of India
119 4901 Cheques, lose or in book form
120 4902 Printed books, including Braille books
121 4903 Newspapers, journals and periodicals, whether or not illustrated or
containing advertisement material
122 4905 Childer’s picture, drawing or coloring books
123 5001 Maps and hydro graphic or similar charts of all kinds, including
atleases, wall maps, topographic plans and globes, printed
124 5002 Silkworm laying, cocoon
125 5003 Raw silk
126 5101 Silk waste
127 5102 Wool, not carded or combed
128 5103 Fine or coarse animal hair, not carded or combed
129 52 Waste of wool or of fine or coarse animal hair
130 52 Gandhi Topi
131 5303 Khadi yarn
132 5303 Jute fibers, raw or processed but not spun
133 63 Coconut, coir fiber
134 6703 Indian National Flag
135 6912 0040 Human hair, dressed, thinned, bleached or otherwise worked
136 7018 Earthen pot and clay lamps
137 8201 Glass bangles
138 8445 Agricultural implements manually operated or animal driven i.e. Hand
tools, such as spades, shovels, mattocks, picks, hoes, forks and rakes;
axes, bill hooks and similar hewing tools; secateurs and pruners of any
kind; scythes, sickles, hay knives, hedge shears, timber wedges and
other tools of a kind used in agriculture, horticulture or forestry.
139 8446 Amber charkha
140 8802 6000 Hand loom
141 8803 Spacecraft and suborbital and spacecraft launch vehicles
142 9021 Parts of goods of heading 8801
143 92 Hearing aids
144 9603 Indigenous handmade musical instruments
145 9609 Muddhas made of sarkanda and phool bahari jhadoo
146 9610 00 00 Slate pencils and chalk sticks
147 9803 Slates
148 Any Chapter Passenger baggage
Puja samagri namely:
 Rudraksha, rudraksha mala, tulsi kanthi mala, panchgavya
 Sacred thread
 Wooden khadau;
 Panchamrit;
 Vibhuti sold by religious institutions
 Unbranded honey;
 Wick for diya
  Roll;
 Kalava;
 Chandan tika.
149 Supply of lottery by any person other than State Government, Union
Territory or Local authority subject to the condition that the supply of
such lottery has suffered appropriate central tax, State tax, Union
territory tax or integrated tax, as the case may be, when supplied by
State Government, Union Territory or local authority, as the case may
be, to the lottery distributor or selling agent reappointed by the State
Government, Union Territory or local authority, as the case maybe.

EXEMPTIONS
Generally, tax is levied on all goods and services according to the guidelines set by the
Government. But in some cases, the Government deviates from the guidelines due to difficulties
in levying the tax in various economic sectors.
There are various forms of exemptions, including threshold limits and geographical
exemptions. Specific items may also be excluded from GST for reasons relating to the product or
its usage.
The exemption limit for business in the North Eastern states will be Rs.10 lakhs and the
exemption limit for business in other Indian states will be Rs.20 lakhs
The exemptions are classified in to two categories, namely:
 Merit based exemption/concessional exemptions
 Technical exemptions
Merit based exemption/concessional exemptions:
Merit-based or Concessional Exemption is the exemption provided to essential products
like certain food items and other basic amenities to maintain the stability of the GST rate.
The main intension of such exemptions is that the common man should not suffer from heavy
taxes. Therefore, GST Council has given exemptions on various products such as wheat, rice,
milk, eggs, fruits and vegetable etc.
Technical exemptions
Certain supplier are exempted owing to the pragmatic difficulties in collecting taxes on
them. The 3 types of technical exemptions are:
 Suppliers related to immovable proberty
 Financial services
 Intermediary pooling services, like insurance and gambling

REGISTRATION
Any supplier of goods and service Provider of services who make a taxable supply with
an aggregate turnover of RS.20 lakhs in a financial year is required to obtain GST registration. In
special category states, the aggregate turnover criteria is set at Rs.10 lakhs. In simple words
Every business whose taxable supply of goods or services under GST (Goods and Service Tax)
and whose turnover exceeds the threshold limit of Rs. 20 lakh/10 Lakh as applicable will be
required to register as a normal taxable person
NEED AND ADVANTAGES OF REGISTRATION
Registration will confer the following advantages to a taxpayer:
 He is legally recognized as supplier of goods or services.
  He is legally authorized to collect taxes from his customers and pass on the credit of the
taxes paid on the goods or services supplied to the purchasers/recipients.
 He can claim Input Tax Credit if taxes paid and can utilize the same for payment of taxes
due on supply of goods or services.
 Seamless flow of Input Tax Credit from suppliers to recipients at the national level.

GST REGISTRATION ROCESS FOR NEW APPLICANT

GST registration can be done online through the GST Portal. On submission of a GST
registration application
Step by Step Guide for GST Registration
Step 1- Taxpayer need to visit on GST Registration Portal By Using Following link
https://www.gst.in/
Step 2 - Now Please Click on “Click the Services > Registration > New Registration option.
Step 3 - The Application form is divided into two parts as Parts as Part A and Part B.
Step 4 – In part A- The New Registration page is displayed. Select the New Registration option.
Step 5 – In the OPTION drop down list, select the Taxpayer as the type of taxpayer to be
registered, also select the state for which registration is required and district.
Step 6 – Enter your Business Legal Name as per PAN Database
Step 7 – Enter your Email Address and valid Indian mobile number of the Primary Authorized
Signatory.
Step 8 – In the Type the characters you see in the image below field, enter the captcha text and
Click on “Proceed Button”
Step 9 – The OTP Verification page is displayed. In the Mobile OTP field, enter the OTP you
received on your mobile number. OTP is valid only for 10 minutes. In the Email OTP field, enter
the OTP you received on your email address. OTP is valid only for 10 minutes and click the
PROCEED button.
Step 10 – The system generated Temporary Reference Number (TRN) is displayed on your
screen…
Part B of GST Registration
Step 11 - Now login again by using “Temporary Reference Number” and Captcha Code
Step 12 – The My Saved Application page is displayed. Under the Action column, click the Edit
icon (icon in blue square with white pen).
Step 13- The Registration Application form with various tabs is displayed.
Step 14 – On the top of the page, there are ten tabs as Business Details, Promoter/Partners,
Authorized Signatory, Authorized Representative, Principal Place of Business, Additional Places
of Business, Goods and Services, Bank Accounts, State Specific Information and Verification.
Click each tab to enter the details.
Step 15 – Fill The Details of Principal place of business
Step 16 – Enter Commodity Details and Save & Continue
Note: In case you do not know the HSN Code: In the Search HSN Chapter by Name or Code
field, type the matching character and from the displayed HSN Chapter list, scroll and select the
appropriate HSN code.
Step 17 – Fill the Details of Bank account and upload document
Step 18 – Verification tab: This tab page displays the details of the verification for authentication
of the details submitted in the form.
Note: After filling the enrolement application, you need to digitally sign the application using
Digital Signature Certificate (DSC)/E- Signature or EVC. Digitally signing using DSC is
mandatory in case of LLP and Companies
Click the SUBMIT button to save the updated information and documents.
Step 19 – Click Proceed (Note: Make sure your DSC dongle is inserted in your laptop/desktop)
Step 20 – Click Sign from the pop-up window
Step 21 – Note: To view the details of your DSC click the View Certificate button.
Step 22 – On successful submission it will show message on screen.
Registration Process for Existing Members
Migration of Existing Tax Payers (Section 142)
1. All the persons registered under the present Tax structure (VAT, Central Excise, Service
Tax) shall be migrated automatically to GST on Provisional basis, which is valid for a
period of 6 months or extended period as State/Central Govt. may prescribed.
2. Every person to whom provisional Registration as stated above has been granted needs to
furnish information as may be called for by proper officer and upon furnishing of same,
final registration shall be granted by State/Central Govt. officer as the case may be.
3. Provisional Certificate issued to Existing Tax payer shall be cancel if the person fails to
furnish the information as called for.
4. If the taxable person under the present tax system submits application that he is not liable
to be registered under GST Act, then the certificate of registration issued on provisional
basis shall be deemed to have not been upon cancellation of provisional registration
under GST.

GOODS AND SERVICES TAX NETWORK (GSTN)

Robust information technology network is vital for administration of GST to ensure proper
compliance and avoid misuse of input tax credit. Goods and Service Tax Network (GSTN) has
been incorporated as a section 25 company (non-profit company) on 23-3-2-13, owned by
government and private players jointly.
The Company has been set up primarily to provide IT infrastructure and services to the Central
and State Government, tax payers and other stakeholders for implementation of the goods and
Services Tax (GST).
GSTN has been entrusted with the responsibility of building Indirect Taxation platform for GST
to help the taxable persons prepare, file, rectify returns and make payments of indirect tax
liabilities. GST will be a one stop solution for all indirect tax requirement, due to which business
will be able to manage tax easily. It will become not easier for the taxable persons and
government to track the status of returns and payments with the help of GSTN

SURRENDER OF GST REGISTRATION

The days a major issue which is arising in GST registration is that how to surrender our
GST Registration? and where to surrender for GST Registration Certificate.
If you have applied GST by mistake and got registration certificate form GST and you
worried that what should be the further process.
If you have wrongly registered for GST and want to surrender your GST Registration,
one cancel GST Registration only if the annual turnover of his business is less the Rs.20 lakhs.

CANCELLATION OF REGISTRATION
 The GST law provides for two scenarios where cancellation of registration can take
place; the one when the taxable person no more requires it (voluntary cancellation) and another
when the proper Officer considers the registration liable for cancellation in view of certain
specified defaults (Suo-motu cancellation) like when the registrant is not doing business from the
registered place of business of if he issues tax invoice without making the supply of goods or
services.
The taxable person desirous of cancellation of registration will apply on the common
portal within 30 days of the event warranting cancellation.
In case of voluntary registration (taken despite not being liable for), no cancellation is
allowed until expiry of one year from the effective date of registration. If satisfied, the Proper
Officer has to cancel the registration within 30 days from the date of application or the date of
reply to notice.

UNIT – III
COMPUTATION OF GST
SUPPLY
Meaning of supply as Per Section 7 of the CGST law
 All forms of supply of goods or services or both such as sale, transfer, barter, exchange,
license, rental, lease or disposal made or agreed to be made for a consideration by a
person in the course or furtherance of business;
 Import of services for a consideration whether or not in the course of furtherance of
business;
 The activities specified in Schedule I, made or agreed to be made without a
consideration; and
 The activities to be treated as supply of goods or supply of services as referred to in
Schedule II.

Supply of Goods or Services or Both

Goods as well as services have been defined in the GST Law. The securities are excluded
from the definition of goods as well as that of services. Money is also excluded from the
definition of goods as well as services, however, 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 are included in
services.
Schedule II to the CGST Act, 2017 lists a few activities which are to be treated as supply
of goods or supply of services. For instance, any transfer of title in goods would be a supply of
goods, whereas any transfer of right in goods without transfer of title would be considered as
services.
Activities to be treated as supply of goods or supply of services
1. Transfer
 Any transfer of the title in goods is a supply goods;
 Any transfer of right in goods or of undivided share in goods without the transfer of
title thereof, is of services;
 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
 Any lease, tenancy, easement, license to occupy land is a supply of services;
 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
 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;
 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;
 Where any person cases 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 taxable person,
unless-
o The business is transferred as a going concern to another person; or
o The business is carried on by a personal representative who is deemed to be a
taxable person.

CONDITIONS FOR TAXABILITY OF SUPPLY OF GOODS AND SERVICES UNDER

GST
The following conditions to be fulfilled for imposing tax on supply of goods and services under
GST in India:
 Supply should be of goods or services.
 Supply should be taxable.
 Supply should be made by a taxable person.
 Supply should be made within a taxable territory.
 Supply should be made in exchange for each or reward (consideration).
 Supply should be made in the course of business or in the interest of growing a business.

1. Supply of goods or services

When a transaction takes place, if there is a transfer of title of goods, then it is
considered as supply of goods. For example, when you buy a pen from a retailer, the
ownership of the pen is transferred from the retailer to you, the customer.
When there is a transfer of right in goods without transfer of title, it is considered
as supply of service. For example, if you are availing transportation services, then the
right of using the service is transferred to you, while ownership still stays with the
transportation company.
2. Supply should be taxable
 Supply of goods or service can either be taxable or tax-exempt. Taxable suppliers
are goods and services that attract GST. Tax-exempt supplies includes supply of goods or
services that belong to a specific category mentioned in the GST Act.
3. Supply should be made by a taxable person
A taxable person is defined as a person who is registered under the GST, or is a
liable to register, or a person who has voluntarily registered.
Supply between two non-taxable people will not be considered as supply under GST.
If a person supplies goods or services in different states or has multiple business
verticals, then they are required to register separately for each or vertical. Each of these
registered entities will be considered as a taxable person.

4. Supply should be made within a taxable territory

Taxable territory means any place in India except the State of Jammu and Kashmir.
5. Supply should be made in exchange for consideration
Consideration can be defined as a barter of goods or services, or payment made
for a supply in money, or in kind. A prepayment or deposit toward a supply is also as
accepted as a consideration by the government.
According to CGST Act, the following activities that will be treated as supply even if it is
made without consideration.
 When a business permanently transfers or disposes its assets for which input tax
credits have been availed.
 Supply made between two related or separate persons for business purposes.
 Supply of goods by an agent on behalf of the supplier or supply received by an
agent on behalf of a customer.
 When a taxable person imports services from a related person, or form his or her
own business outside of India for business purposes.
6. Supply should be made in the course of business or in the interest of growing a
business
 GST is applicable only on business transaction. Hence, for a transaction to be a
considered as supply under GST, it has to be made for business purposes.
 If supplier made for personal purposes, it will not be considered as a supply under
GST.
Components of supply under GST
A supply under GST has three attributes that are used to calculate the tax owned for that
transaction: place, value and time.
Place of Supply – This component determines whether a transaction is an intra-state supply, an
inter-state supply, or an external trade, which determines the type of GST that will be associate
with it.
Value of Supply – This component decides the taxable value of supply made and thus the
amount of tax that needs to be paid for it.
Time of Supply – This component determines when the associated taxes and GST returns are
due.
PLACE OF SUPPLY OF GOODS
GST is a destination based tax, i.e., the goods/services will be taxed at the place where
they are consumed and not at the origin. So, the state where they are consumed will have the
right to collect GST.
This, in turn, makes the concept of place of supply crucial under
GST as all the provisions of GST revolve around it.
Place of supply of goods under GST defines whether the transaction will be counted as intra-
state or inter-state and accordingly levy of SGST, CGST & IGST will be determined.
It is very important to understand the term ‘place of supply’ for determining the right tax to be
charged on the invoice.
Here is an example:

Location of Service Place of Supply Nature of Supply GST Applicable

Receiver
Maharashtra Maharashtra Intra-state CGST+SGST
Maharashtra Kerala Inter-state IGST

Place of Supply When There is Movement of Goods

SUPPLY PLACE OF SUPPLY
Involves movement of goods, whether by the Location of the goods when the movement of
supplier or the recipient or by any other person goods when the movement of goods terminates
for delivery to the recipient
Goods are delivered by the seller to a recipient It is assumed that the third person has received
on the direction of a third person, (whether the goods and the place of supply of such
agent or not) before or during movement of goods will be the principal place of business of
goods, by way of documents of title to the third person
goods or some other way.

Example – 1 Intra-state sales

Mr.Raj of Mumbai, Maharashtra sells 10 TV sets to Mr.Vijay of Nagpur, Maharashtra
The place of supply is Nagar in Maharashtra. Since it is the same state CGST & SGST will be
charged.
Example - 2 Inter-State sales
Mr.Raj of Mumbai, Maharashtra sells 30 TV sets to Mr.Vinod of Bangalore, Karnataka
The place of supply is Bangalore in Karnataka. Since it is a different state IGST will be charged.
Example – 3 Deliver to a 3rd party as per instructions
Anand in Lunknow buys goods from Mr. Raj in Mumbai (Maharashtra). The buyer requests the
seller to send the goods to Nagpur (Maharashtra)
In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST will be
charged.
Place of supply: Lucknow (UP)
GST: IGST

Example 4 – Receiver takes the goods ex-factory

Mr.Raj of Mumbai, Maharashtra gets on order of 100 TV sets from Sales Heaven Ltd. of
Chennai, Tamil Nadu. Sales Heaven mentions that it will arrange its own transportation and take
TV sets from Mr.Raj ex-factory.

TIME OF SUPPLY
Time of supply means the point in time when goods/services are considered supplied’. When the
seller known the ‘time’, it help him identify due date for payment of taxes.
CGST/SGST or IGST must be paid at the time of supply. Goods and services have a separate
basis to identify their time of supply. Let’s understand them in detail.
A) Time of Supply of Goods
Time of supply of goods is earliest of:
1. Date of issue of invoice
2. Last date on which invoice should have bee issued
3. Date of receipt of advance/payment.
For example:
Mr. X sold goods to Mr. Y worth Rs. 1,00,000. The invoice was issued in 15 th January. The
payment was received on 31st January. The goods were supplied on 20th January.

INPUT CREDIT TAX

As per Section 2 (63) of the Central Goods and Services Tax (CGST) Act, 2017, the term “input
tax credit” means the credit of input tax.
Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output. When
any supply of services or good are supplied to a taxable person, the GST charged is known as
Input Tax.
The time limit to avail Input Tax Credit under GST
ITC can be availed by a registered taxable person in a specific manner and within a specified
time frame. The table below shows the different situations wherein the inputs can be claimed for
semi-finished goods or stock or finished goods.

Situation ITC claims day for semi furnished

goods/stock/finished good (held on
immediate preceding day)
If a person has applied for registration or is Day from when he is liable to pay taxes
liable to register or is granted registration.
When a person take voluntary registration Registration day
When a taxable registered person stops paying Day from when he is liable to pay tax normally
taxes in composition levy scheme. u/s 7

Input tax credit for the above-mentioned situations can be claimed only if it does not exceed one
year from the tax invoice date of issue related to supply.

For any other cases, IT must be claimed:

 Before you file a valid return for the September month u/s 27 days after the end of
financial year to which the invoice is related, or
 Before you file the annual return, as u/s 30 day7s, the due date to file to annual return is
December 31 after the end of the the financial year.
Manner of talking credit Section 16
 Registered person shall be entitled to take credit of input tax charged on supply of
gods/services which are used or intended to be used in the course or furtherance of his
business.
 In case of services, if payment is not made to supplier within 180 days from the date of
issue of invoice by supplier, amount equal to credit so availed to be paid as output tax
with interest (other than reverse charger supplier)
 Reverse charge – credit can be availed on payment of value of supply with tax.
Section 16 – other provisions
 No credit to the extent of depreciation (under IT Act) claimed on tax amount
 Time limit for taking credit (upper limit) earliest of the following:
o Date of filing of return for the month of September in next Financial year
o Date of filing of Annual return for the relevant current FY – 31st December.
Conditions for Eligibility of Input Tax Credit
 Tax Invoice/Debit Note/Document should be in possession of the Assessee
 He should received the goods or services
 Tax should be paid by the supplier to the Government
 Return has been field
 Payment has to be made within 180 days from Invoice
Negative List: Input Tax Credit not available
Input tax credit will not be available in respect of the following:
A) Motor Vehicles
However credit in respect of motor vehicles would be available in the following cases:
 When supplied in usual course of business-for example, a Trader in motor vehicles
purchases motor vehicles and supplies them in usual course of his business. He shall be
eligible to claim credit of GST paid on purchases of vehicles.
Motor vehicles used for providing the following taxable services:
 Transportation of passengers,
 Transportation of goods, or
 Imparting training on motor driving skills
 If motor vehicles used for:
o Courier agency (transporting documents)
o Outdoor catering
o Pandal and shamiana
o Tour operator (may be said that they transport passengers-but revenue may
say that they transport tourists)
B) Goods and services provided in relation to:
 Food and beverages
 Outdoor catering
 Beauty treatment
 Health services
 Cosmetic and plastic surgery
 Membership of a club
 Health and fitness centre
 Life insurance
 Health insurance
 Travel benefits extended to employees on vacation such as leave or home travel
concession
C) Works Contracts
- Goods and services
- Acquired by the principal
- In the execution of works contract
- When such contract results in construction of immovable property, other than plant and
machinery
D) Goods purchased for use in the construction
- Goods acquired by the principal
- which are used in the construction of immovable property, other than plant and
machinery and
-which are not transferred by him to any other person
E) Goods and services on which tax has been paid under the composition levy under
section8.
F) Goods and services used for private or personal consumption to the extent they are so
Consumed.
Types of documents for availing ITC
 An invoice issued by the supplier of goods or services or both
 A debit note issued by a supplier as per section 34
 A bill of entry
 An invoice issued in accordance with the provisions of S.31
  A document issued by an Input Service Distributor
 A document issued by an Input Service Distributor, as prescribed in clause (g) of-rule (1)
of rule 4.

RETURN IN GST
All registered business have to file monthly or quarterly and annual GST Returns based
on the type of registration.
Meaning of return
“Return” is a statement of specified particulars, relating to business activity undertaken
by the taxable person during a prescribed period. It is an important tool for the Revenue
Department to collect the financial data and other related information of assessee. This will
enable the Department to have a concrete database which will in turn help them for enforcing the
compliance part, as required by the law of land.
Thus, return process has become a powerful tool to implement the ‘data and revenue’
collection system so also it has been emphasized as one of the pertinent process under the GST
Regime. The submission and processing of return is an important link between the taxpayer and
tax administration. Thus, understanding of the whole return process under GST Regime become
need of the day.
Under GST a registered dealer has to file GST returns that includes:
 Purchases
 Sales
 Output GST (On sales)
 Input tax credit (GST paid on purchases)
Under GST, a regular taxpayer needs to furnish monthly returns and one annual return. There are
separate returns for a taxpayer registered under the composition scheme, nonresident taxpayer,
taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax
(TDS/TCS) and a person granted Unique Identification Number. It is important to note that a
taxpayer is NOT required to file all types of returns. In fact, taxpayers are required to file returns
depending on the activities they undertake.
Process:
As it is mandatory, every registered person is required to the returns for the prescribed tax period
within the stipulated due dated as provided in the law. The GSTN upon enrollment will provide a
User ID and password which shall be used by him for filing tax return on the Common Portal.
Filing Process
A normal taxpayer has to file following returns:
1. GSTR -1 (Statement of Outward Supplies):
a) This return signifies the tax liability of the supplier for the supplies effected during
the previous month.
b) It needs to be filed by the 10 th 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 2017 needs to be filed by 10th August, 2017.
2. GSTR – 2 (Statement of Inward Supplies):
a) This return signifies accrual of ITC (Input Tax Credit) from the inputs received
during the previous month.
 b) It is auto-populated from the GSTR – 1s filed by the corresponding suppliers of the
Taxpayer except for a few fields like imports and purchases from unregistered
suppliers.
c) It needs to be filed by the 15 th 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 2017 needs to be filed by 15th August, 2017.
3. GSTR – 3: This is a consolidated return. It needs to be filed by the 20 th of every month. It
consolidates the following details
 Outward Supplies (Auto-Populated from GSTR-1)
 Inward Supplies (Auto-populated from GST-2)
 ITC availed
 Tax Paid (Using both Cash and ITC)
4. GST – 3B: It is monthly self-declaration that has to be field a registered dealer from July
2017 till March 2018. It contains details of outward and inward supplies. We do not need
to provide invoice level information in this form. Only total values for each field have to
be provided.

TYPES OF GST RETURNS

Under GST, there are different forms for filing of returns by tax payers. All these forms are
required to be e-filed. The details of each form are listed below along with details of applicability
and periodicity.
(a) GSTR-1
GSTR-1 require the taxpayer to furnish details of outward supplies or sales
This form is to provide the details of the outward supplies of goods and services to the
department. It has to be filed by the 10th of every following month. This forms the base of
the further submission of forms in the month.
Type of Return: Details of Outward Supplies
Type of Assessee: Regular/Casual
Due Date: 10th of Next Month
(b) GSTR – 2
GSTR – 2 requires furnishing details of inward supplies or purchases.
This form provides the details of the inward supplies of goods and services as approved
and ratified by the recipient of the goods or services. This has to be filed by 15 th of the
following month.
Type of Return: Details of Inward Supplies
Type of Assessee: Regular/Casual
Frequency: Monthly
Due Date: 15th of Next Month
(c) GSTR – 3
GSTR – 3 requires furnishing monthly return. This is the auto-populated form which
contains all the details filed under GSTR 1 & GSTR 2. This would allow the department
to calculate the tax payable after taking into consideration of Input Tax Credit
availability.
Type of Return: Consolidated Return of Inward & Outward Supplies
Types of Assessee: Regular/Casual
Frequency: Monthly
 Due Date: 20th of Next Month
(d) GSTR – 4:
GSTR – 4 Returns to be filed by Composition Tax Payers.
This form contains the details furnished in the auto-populated form of outward details. It
has to be filed by the 18th of the following month after each quarter.
Type of Return: Return of Inward & Outward Supplies
Type of Assessee: Compounding
Frequency: Quarterly
Due Date: 18th of Month Next to Quarter
(e) GSTR – 5:
GSTR – 5 Returns to be filed by Foreign Non-Resident Taxpayer.
This form has to be filed by the Foreign non-Resident Taxpayer providing the details of
outward supplies, imports, tax paid, input tax availed, if any, and if there is any remaining
stock. This is a monthly submission form which needs to be filed by 20 th of the following
month.
Type of Assessee: Non-Resident
Frequency: One Time
Due Date: 7 days from Expiry of Registration
(f) GSTR – 6:
GSTR – 6 Return to be filed by an Input Service Distributor.
Once the details mentioned in GSTR 6A are accepted and ratified GSTR 6 is generated
and filed by the filed by the Input Service Provider on 13th of the month.
Type of Return: Return of Input Services Received & their Distribution
Type of Assessee: Input Service Distributor (ISD)
Frequency: Monthly
Due Date: 13th of Next Month

(g) GSTR – 7:
GSTR – 7 Return to be filed by a Tax Deductor.
It is the form for submission of details of Tax deductions made in the month. It needs to
be filed on 10th of the following month.
Type of Return: Return of TDS
Type of Assessee: TDS Deductor
Frequency: Monthly
Due Date: 10th of Next Month
(h) GSTR – 8
GSTR – 8 Statement for Tax Collection at Source.
This return contains all the supplies made by the e-commerce seller. It also contains
details of the Tax deducted at source. This form need to e-filed at 10 th of the following
month.
Type of Return: Return of Outward Supplies & TCS
Type of Assessee: E-Commerce Operator
Frequency: Monthly
Due Date: 10th of Next Month
(i) GSTR – 9/9A:
GSTR – 9 Annual Return
 This is an annual return which needs filing by every taxpayer by 31 st of the following
financial year. It contains the details of all 12 GSTR 3 filed through the financial year.
GSTR – 9 A is the annual return to be filed the taxpayers who have opted for
composition of tax. It also has to be filed by 31 st December of the coming financial year
and comprises of details filed under the quarterly returns.

PAYMENT PROCEDURE:
 Challan to be generated in FORM GST PMT – 06 for the tax, interest, etc. to be
deposited (Valid for 15 days).
 Mandate form (Applicable in case of NEFT and RTGS):
 Where the payment is made by way of NEFT or RTGS mode, the mandate form shall be
generated along with the challan on the Common Portal and the same shall be submitted
to the bank from where the payment is to be made (The said mandate form will be valid
for 15 days from the date of generation of challan).
 On successful payment, a Challan Identification Number (CIN) will be generated and the
same shall be indicated in the challan. On receipt of CIN from the authorized Bank, the
said amount shall be credited to the electronic cash ledger.

REFUND PROCESS UNDER GST

The cash flow and working capital requirement of manufacturers and exports could be
adversely affected if a refund is delayed. As a result, one of the intentions of the implementation
of GST is to ensure that the refund process is smoother so that manufacturers and exporters do
not face issues due to delays. By ensuring that the refund process is facilitated quickly, tax
administration becomes more effective.
The GST regime has provisions relating to refunds and it aims at streamlining and
standardising the procedures pertaining to refunds under GST. Therefore, a standardized form
has been created to make claims for refunds. The procedure for making claims can be completed
online in a timely manner.
Every claim of refund has to be filled in Form GST RFD-1. However, claim of refund of
balance in electronic cash ledger can be claimed through furnishing of monthly or quarterly
returns in Form GSTR-3, GSTR-4 or GSTR – 7, as the case may be, of the relevant period.
Refund Process Under GST
In order to process a refund claim, the following procedure must be adhered to:
 Visit the GSTN portal and fill in the application form meat for claiming refund.
 You will receive an email or SMS which contains an acknowledgement number after the
filing of application is done electronically.
 The cash and return ledger will be adjusted and the “carry-forward input tax credit” will
be reduced automatically.
 The application for refund along with the documents you have submitted will be
scrutinised by the authorities with a 30 day period after you have filed the refund
application.
 “Unjust enrichment” is a concept that will be thoroughly scrutinized by the authorities.
In case the application does not qualify, the refund will be transferred to a Consumer
Welfare Fund (CWF).
 In case the refund claimed by the individual in excess of the predetermined amount of
refund, a pre-audit process will be conducted before the refund is sanctioned.
 The credit of the refund will be done electronically to the applicant’s account through
NEFT, RTGS or ECS
 Individual are allowed to make their applications for refund at the end of each quarter.
 In case the amount of refund is below Rs.1000, no refund will be provided to the
individual.