GOODS AND SERVICE TAX- CIA 1

Submitted By:

Divya Lasod-1823306

Diya Sajeev-1823307

Vaidehi Sivakumar-1823322

Samiksha Saraogi-1823326

Rhythm Khetan-1823366

Submitted To:

Dr. Thomas Joseph

School of Business and Management

CHRIST (Deemed to be University)

Bannerghatta Road Campus

February 2021
TABLE OF CONTENTS

S. NO. PARTICULARS PAGE NUMBER

1. INTRODUCTION 2

2. GST RATES 2-5

3. AGGREGATE TURNOVER 6-7

4. INPUT TAX CREDIT 8-10

5. ILLUSTRATION (NUMERICAL QUESTION) 11-13

6. REFERENCES 14

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INTRODUCTION

GST is known as the Goods and Services Tax. It is a backhanded assessment which has supplanted
numerous aberrant expenses in India, for example, the extract obligation, VAT, administration
charge, and so on The Goods and Service Tax Act was passed in the Parliament on 29th March
2017 and happened on first July 2017.

In other words,Goods and Service Tax (GST) is imposed on the stock of products and enterprises.
Merchandise and Ventures Tax Law in India is a thorough, multi-stage, objective put together
expense that is required with respect to each esteem expansion. GST is a solitary homegrown
aberrant duty law for the whole country.

1. (A) TYPES OF GST

There are three kinds of GST-

CGST-Central Goods and Services Tax is appropriate on the merchandise and enterprises which
are viewed as standard and expense rates can be revised intermittently. All the income gathered is
allotted to the focal government. According to the Central Goods and Services Tax Act 2016, it is
the unified piece of GST that incorporates a large portion of the focal tariffs to be specific Central
Sales Tax, Central Excise Duty, Service Tax, Additional Custom Duty among different other
brought together levies.

SGST-State Goods and Services Tax includes different assessments and tolls under the state
authority which are important for one uniform tax collection structure. It principally incorporates
a blend of different assessments to be specific Entertainment Tax, Levies on Lottery, State Sales
Tax and Luxury Tax among different sorts. The income gathered here has a place with the state
government. The standard structure is planned by the focal government.

IGST-Integrated Goods and Services Tax is charged on the stock of merchandise and ventures as
moved starting with one state then onto the next. According to the Article 269A of the Indian
Constitution, the between state exchange and business exercises which include development of
products demand the IGST. The income gathered is shipped off to the Government of India.

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Non Taxed items under GST (0% tax rate)

Items under this bracket include fruits and vegetables, cereals, meat and fish, potatoes and other
edible tubers and roots, tender coconut, tea leaves, jaggery, coffee beans, ginger, turmeric, milk,
curd. Further certain items such as contraceptives and vaccines are also free from tax.

Reasoning

Items falling under this category are essential to all people living in the country and hence, free
from being taxed, thus manufacturers can offer the cheapest price possible to end consumers. Most
people depend on these items for their daily needs and the lower the income population especially
relies on such commodities offered at cheap prices to run their households and fulfill their daily
needs. Further items such as contraceptives are required and used by all and cannot be made
available to the public at high rates as many sections of the country may not be able to afford them.
Taxing items in this bracket would disrupt lives of the general public. Thus, items in this category
are considered essential.

GST slab of 5%
This slab covers necessities such as sugar, oil, seasonings, spices, coffee, coal, pesticides, tea,
herbal medicines, incense sticks, kites, chopped dry mango, cashew nuts or cashew nuts in the
shell, sweets, handcrafted carpets, lifeboats, wind-based atta chakki, ice and snow, fish filets,
insulin, non-branded namkeen, life-saving drugs and so on.
The services offered under such a slab involve railways, airlines, take-away meals, AC and non-
AC restaurants, hotel stays with a ticket price of or less 7,500, and special flights for pilgrims.

Reasoning
This bracket has a similar reasoning to 0% taxed items as a lot of the commodities mentioned in
this bracket are almost as important to essentials. Hence, the tax rate for such items are kept low.
Products such as oil, sugar and spices are essential to almost every household rich and poor alike.
Thus, to make these products accessible to all the tax rates are kept low and respectively the prices
of these goods are relatively low. Further, taxes on certain key medications such as insulin are also

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kept low so that they can be accessed by all. With nearly 73 million cases of diabetes in the country
it becomes important to keep key medicines such as insulin rates low.

GST slab of 12%

Under this slab are covered goods such as mobile phones, sewing machines, bari made of pulses,
plastic beads, corrective spectacles, diagnostic kits, umbrellas, accessories boxes, and processed
foods, including frozen meat, butter, artificial sweeteners, ghee, cheese, etc.
The services offered under such a slab involve business class air tickets and film tickets below
100.

Reasoning

This tax bracket usually has anything which is not a sure short living necessity but is majorly
responsible for the smooth functioning of a person’s day to day life, these are parts of middle class
family’s day to day functioning and hence can be charged more than the basic survival necessities,
since most of the goods belong to brands providing the product with proper packaging these and
also belonging to a lot of MNC’s these goods have a good enough reason to be in this tax bracket

GST slab of 18%

Under this slab are goods such as hair oil, kajal pencil sticks, safety glass, noodles, Aluminium
foil, pastries, frozen yogurt, bottled water, set up a box for TV, hair shampoo, oil talc, water heating
system, baby carriages, washing machine, washing powder, perfume spray, leather garments,
cookers, oil powder, utensils, binoculars, synthetic flowers, wristwatches, briefcase, trimmer,
furnishings, stationery, mattress screens, television set, lithium-ion batteries, etc.
The services offered within this slab will now include:
Restaurants inside of hotels where the prices are above 7,500.
Real hotel costs underneath 7,500.
Movie tickets above 100.

Reasoning

The 18% tax bracket includes the majority of the items covered under the GST bill infect it covers
about 43% of all the goods that are being legally sold in the market, the sole purpose behind

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introducing GST was to unify the tax charged on most used commodities and the 18% tax bracket
includes all of those products, with products such as speakers, monitors, printers, electrical
transformer, optical fiber, tissues, sanitary napkins, notebooks, steel etc. Products being a modern
family/day necessity is processed under one final tax and not various other taxes, this tax slab
include many other items that are not a necessity, hence the tax rate

GST slab of 28%

Over 200 products are characterized within this slab, including automobiles, smoking, long-lasting
consumer goods, high-end motorbikes, pan masala, measuring device, cement. Under such a slab,
service providers involve racing, gambling betting; real hotel bill needs to stay above 7,500.
A special amount of 0.25percent is imposed on semi-polished as well as cut stone.

Reasoning

This is the highest tax bracket for GST it only includes mere luxury items which are in no way a
necessity to the common man, in fact some of the items like cigarette and other tobacco based
products are harmful for one’s health and even put others at risk(passive smoking) hence these
items are heavily taxed by the government and should be.it also includes items like soft drink,
chocolates and other junk items which are easily available and heavily flooded in the market but
are unhealthy and not a necessity for common man hence they belong to this tax bracket

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1. (B) AGGREGATE TURNOVER

As per section 2(6) of CGST Act, 2017 'aggregate turnover' stands for the aggregate
value of every taxable supplies (apart from the value of inward supplies on which tax is
levid on an individual on reverse charge basis), exempt supplies, exports of services or
goods or both of them and inter-State supplies of individuals having the same fixed
Account Number, to be calculated on all India basis but it does not include central tax,
State tax, integrated tax, Union territory tax and cess.

INCLUSION IN AGGREGATE TURNOVER

● Taxable Supply which includes supply to distinct person having the same
PAN (Table 3.1(a) of GSTR-3B)
● Zero-Rated-Supply (Table 3.1(b) of GSTR-3B)
● Nil-Rated Supply plus the exempted supply (Table 3.1(c) of GSTR-3B)
● Non-GST Supply (Table 3.1(e) of GSTR-3B)
● Taxes apart from GST
● Amount of outward-supplies of commodities on which the person receiving
is required to pay the tax under reverse-charge mechanism
● Goods sold to the job doers on principal-to-principal basis
● Goods received from the job doers on principal to principal basis
● For any agent, the commodity supplies made by him/her on behalf of all
his/her principals has to be included during calculating aggregate turnover.

EXCLUSION IN AGGREGATE TURNOVER

● Values of the inward supplies of commodities on which the person receiving

is required to pay the tax According to the reverse charge mechanism (Table
3.1(d) of GSTR-3B). Anyway, the value of that kind of supplies will continue
to stay a part of the ‘aggregate turnover’ of the person supplying such
services.

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● Value of union territory tax, central tax, state tax and integrated tax including
the compensation cess
● Goods supplied for the use of job work or received back after the job work
according to section 143 of CGST Act, 2017
● For a job doer, the listed supplies will not be included in their aggregate
turnover:
● Commodities returned to the principal
● Commodities sent to some other job doer according to the instruction of
the principal
● Commodities supplied directly from the place of the job doer by the
principal.

● Transactions in which there are neither any supply of goods nor services that
is Schedule III of CGST-Act, 2017 as amended by CGST (Amendment) Act,
2018.

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1. (C) INPUT TAX CREDIT (ITC)

Input tax credit is the tax payment made by the business on purchase of goods or services. Input
tax credit is such tax which is paid at the purchase when reduced from liability payable on outward
supplies. In other words, input tax credit is the tax lowered from output tax payable on account of
sales. Businesses can lower their tax liability by claiming credit to the extent of GST paid on
purchases.

Input tax credit is obtainable for capital goods under GST. However ITC can be claimed only for
business reasons. ITC will not be obtainable for goods or services exclusively used for Capital
Goods used exclusively for producing exempted goods, Capital Goods used exclusively for non-
business (i.e., personal) purposes and supplies for which ITC is specifically not available. ITC will
not be allowed if depreciation has been claimed on the tax component of capital goods.

Example for Input tax credit:

- Tax payable on the final product (output) is Rs 450

- Tax paid on purchased (input) is Rs 300

Then one can claim the input credit of Rs 300 and one need to deposit Rs 150 in taxes.

ITC can be claimed by the person registered under GST only if he satisfies all the conditions below:

● The dealer should be in possession of the tax invoice

● The said goods/services should have been received
● Returns should have been filed.
● The tax charged should have been paid to the government by the supplier.
● When goods are collected in installments ITC can be claimed only when the final lot is
received.
● No ITC will be authorized if depreciation has been claimed on tax element of a capital
good.

Documents Required for Claiming Input tax credit

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The following documents are needed for claiming Input tax credit:

● Invoice that is issued by the supplier of goods or services.

● The debit note that is issued by the supplier to the recipient (if any)
● The bill of entry
● An invoice issued under certain conditions like the bill of supply issued instead of tax
invoice if the total is less than Rs 200 or in situations where the reverse charge is applicable
as per the GST law.
● A credit note or invoice that is issued by the Input Service Distributor (ISD) as per the
invoice rules under GST.
● A bill of supply that is issued by the supplier of goods and services or both.

Input tax credit will be reversed in the following cases below:

● Non-payment of invoices in 180 days: Those invoices that are not paid within 180 days of
issue, the ITC will be reversed.
● Credit note issued to ISD by seller: If a credit note was issued by the seller to the HO then
the ITC consequently reduced will be then reversed. This is applicable to ISD sellers.
● Inputs partially for business purpose and partially for exempted supplies or for personal
use: This is for those businesses which use inputs for both business and non-business (i.e.,
personal) purpose. ITC used in the section of input goods or services used for the personal
purpose should be reversed proportionately.
● Capital goods partially for business and partially for exempted supplies or for personal use:
This is similar to the above case, except that it affects capital goods.
● ITC reversed is less than required: This is calculated after the yearly return is furnished. If
the total ITC on inputs of exempted/non-business purpose is further than the ITC actually
reversed during the year then the variation amount will be added to output liability. Interest
will be applicable on this.

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Utilization of Input tax credit

Input tax credit utilization under GST is the process of claiming the credit of GST paid on inwards
supply of goods and services by a registered business under GST and utilizing that to set off GST
liability on outward supply of goods and services.

The lately introduced rule 88A in the CGST rule allows utilization of input tax credit of integrated
tax concerning the payment of Central tax and State tax, or as the instance may be, Union Territory
tax, in any order respect to the situation that the entire input tax credit on account of the integrated
tax is completely over first before the input tax credit on account of Central tax or State or Union
Territory tax can be utilized.

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2. ILLUSTRATION

ABC Super Store, headquartered in Bangalore, deals in different varieties of goods, ranging from
homemade sweets and chocolates to spices, tea, coffee, processed food, toothpaste and other
various FMCG items. The company to keep its costs low purchases items from whole sale dealers
in other states. The following are the inward transactions of the company for the month of
December 2020-

● Purchased goods from Indore Rs 120,000 @ 12% GST

● Purchased goods from XYZ Ltd in Mumbai for Rs 360,000 @ 18% GST
● Purchased goods from Patna Rs 80,000 @ 28% GST
● Purchased raw material from Chennai Rs 150,000 @ 5% GST
● Purchased goods from Ahmedabad for Rs 210,000 @ 5% GST
● Purchased raw material from Ludhiana Rs 160,000 @ 18% GST
The following were the outward supplies of the company to its customers during the same month:

● Supplies to dealers in Karnataka Rs 140,000 @ 5% GST

● Supplied goods to Hyderabad Rs 180,000 @ 12% GST
● Supplied goods worth 400,000 to MNO Ltd. in Goa @ 18% GST
● Supplied goods to Lucknow worth Rs 390,000 @ 12% GST
● Supplies to Delhi Rs 120,000 @ 28% GST
● Supplies to dealers in Pune Rs 250,000 @ 5% GST

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Particulars Value IGST CGST SGST
Inward Supply
Goods purchased from ₹ 1,20,000.00 ₹ 14,400.00 ₹ - ₹ -
Indore @ 12% GST
Goods purchased from XYZ ₹ 3,60,000.00 ₹ 64,800.00 ₹ - ₹ -
Ltd. In Mumbai @ 18% GST
Goods purchased from Patna ₹ 80,000.00 ₹ 22,400.00 ₹ - ₹ -
@ 28% GST
Goods purchased from ₹ 1,50,000.00 ₹ 7,500.00 ₹ - ₹ -
Chennai @ 5% GST
Purchased goods from ₹ 2,10,000.00 ₹ 10,500.00 ₹ - ₹ -
Ahmedabad @ 5% GST
Purchased goods from ₹ 1,60,000.00 ₹ 28,800.00 ₹ - ₹ -
Ludhiana @ 18% GST
Total Inward Supply ₹ 10,80,000.00 ₹ 1,48,400.00 ₹ - ₹ -
Outward Supply
Goods supplied to dealers in ₹ 1,40,000.00 ₹ 3,500.00 ₹ 3,500.00
Karnataka @ 5% GST
Goods supplied to ₹ 1,80,000.00 ₹ 21,600.00 ₹ - ₹ -
Hyderabad @ 12% GST
Goods supplied to MNO Ltd ₹ 4,00,000.00 ₹ 72,000.00 ₹ - ₹ -
in Goa @ 18% GST
Goods supplied to Lucknow ₹ 3,90,000.00 ₹ 46,800.00 ₹ - ₹ -
@ 12% GST
Supplied goods to Delhi @ ₹ 1,20,000.00 ₹ 33,600.00 ₹ - ₹ -
28% GST
Goods sold to dealers in ₹ 2,50,000.00 ₹ 12,500.00 ₹ - ₹ -
Pune @ 5% GST
Total Outward Supply ₹ 14,80,000.00 ₹ 1,86,500.00 ₹ 3,500.00 ₹ 3,500.00

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Utilization of ITC
Input Tax Credit ₹ 1,48,400.00 ₹ - ₹ -
Output Tax Credit ₹ 1,86,500.00 ₹ 3,500.00 ₹ 3,500.00
Input tax credit on IGST ₹ 1,48,400.00
Less: Output Tax Liability ₹ 1,48,400.00 ₹ 1,48,400.00 ₹ - ₹ -
₹ - ₹ 38,100.00 ₹ 3,500.00 ₹ 3,500.00

Net Tax Liability ₹ 38,100.00 ₹ 3,500.00 ₹ 3,500.00

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REFERENCES

Input Tax Credit (ITC) Under GST With ExamplesInput Tax Credit (ITC) Under GST

With Examples. (n.d.). GSTHero. Retrieved February 3, 2021, from

https://gsthero.com/input-tax-credit-itc-under-gst-with-

examples/#:~:text=Input%20tax%20credit%20(ITC)%20is,payable%20on%20acc

ount%20of%20sales

Input Tax Credit (ITC). (n.d.). Gstzen. Retrieved February 3, 2021, from

https://www.gstzen.in/a/what-is-input-tax-credit-

itc.html#:~:text=Input%20Tax%20Credit%20or%20ITC,of%20GST%20paid%20

on%20purchases

GST Input Tax Credit Utilization: New & Old Rules for ITC Utilization. (n.d.).

Quickbooks. Retrieved February 3, 2021, from

https://quickbooks.intuit.com/in/resources/gst-center/gst-input-tax-credit-

utilization/#What_is_ITC_Utilization

Optimising Credits in the Amended Rules for Input Tax Credit Utilisation. (n.d.).

Cleartax. Retrieved February 3, 2021, from https://cleartax.in/s/gst-input-tax-

credit-

utilisation#:~:text=The%20newly%20inserted%20rule%2088A,integrated%20tax

%20is%20completely%20exhausted

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