MODULE III

VALUATION OF GST
The section 9 of CGST Act, 2017 gives the basis of charge.
As per this section, GST shall be levied on the basis of
taxable supply of goods, services determined under section
15. The section 15 contains the provisions of value of
taxable supply. The provisions are:
Section 15(1) Transaction value is the value of supply
Section 15(2) Inclusions in the value of supply
Section 15(3) discount not to be included
Section 15(4) When section 15(1) is not applicable (Rule
27 to Rule 31)
Section 15(5) about notified services/ goods (Rule 32)
As per section 15(1) of CGST Act, 2017, the value of
supply of goods or services or both shall be the transaction
value, which is the price actually paid or payable for the
said supply of goods or services or both where the supplier
and the recipient of the supply are not related and the price
is the sole consideration for the supply.

Value of supply = Transaction Value + Certain elements

Inclusions in Transaction Value sec15(2)
1) Any taxes, duties, Cess , fees and charges except GST
2) Any payments made to third parties by the recipients on behalf of
the supplier in relation to the supply
3) The incidental expenses such as commission and packing, charged
by supplier or any thing else done by the supplier in relation to
supply at the time of or before the delivery of goods or supply of
services.
4) Interest, late fee and penalty for delayed payment of any
consideration for any supply and
5) Any subsidy directly linked to the price excluding subsidies
provided by the government (central/state)
Exclusion of discount from transaction value
1)If discount is duly recorded in the invoice either before/ at the
time supply, discount is not included in the value of supply
2) If the discount is provided after the supply is effected then
discount may still be excluded from the value of supply, if
following conditions are fulfilled.
a)Such discount is given under an agreement entered into at (or
before) at the time of such supply and can be worked out invoice-
wise and
b)Input tax credit ( as is attributable to the discount on the basis of
document issued by the supplier) has been reversed by the
recipient of the supply
Treatment of municipal and other taxes:
The list price of the goods is Rs.40,000(exclusive of
taxes). The tax levied by Municipal authority is
Rs.2,000. The CGST and SGST chargeable on the
goods is @18%. Now, since the value includes any
taxes, duties other than GST. The value of supply shall
be Rs.42,000 and GST payable will be 18% of 42,000
i.e., 7560
Chitra Advertisers conceptualized and designed the
advertising campaign for a new product launched by HLL
for a consideration of Rs.8,00,000. Chitra Advertisers had
to pay Rs.40,000 to Massom Ltd. It has been agreed between
the parties that HLL will discharge this Rs.40,000 liability of
Chitra Advertisers. The price of Rs.8,00,000 has been
agreed upon after consideration of this additional payment to
made by HLL directly to Massom Ltd. on behalf of Chitra
Ltd. Therefore value of supply shall be aggregate of
Rs.8,00,000 and Rs.40,000 i.e., 8,40,000
Arun of Delhi supplied 50 tons of Chemical to Barun of Kolkata
@ 4,000 per ton. Besides he charged freight Rs.16,000,
packing charges Rs.7,000 weighing charges Rs.2,500 and
inspection charges Rs.8,000. what is the value of supply?
Example ( discount allowed at the time of supply)
Shubham enterprises has sold goods with list price of Rs.5,000
to a customer. A discount of 20% is given to the customer,
which is reflected in invoice to arrive at the final price of
Rs.4,000. Since the discount is allowed at the time of supply
and is shown in the invoice, the taxable value is Rs.4,000.
Determination of value of taxable supply where section 15(1) is not
applicable section 15(4) is applicable.
Valuation rule where the consideration is not wholly in money (Rule
27) it is applicable in the following cases
1) Barter transaction
2) Exchange transaction
3) Permanent transfer or disposal of business assets where input tax
credit has been availed on such assets.
Methodology of valuation:
a) Open market value of such supply
b) If open market value of the supply is not known, the consideration
in money plus the money equivalent of the non-monetary
consideration, if such amount is known at the time of supply.
c) If the value cannot be determined under the previous two clauses, the
value of supply of goods/services of like kind and quality
d) Finally is the value is not ascertainable by using above methods then:
i) first rule 30 is to be applied (cost based valuation)
ii) then rule 31 (Best Judgement method) is used, if rule 30 is not
feasible.
Value of supply of goods or services or both between distinct or related
persons other than through an agent [rule 28]
1) The open market value is taken as the value of supply of goods or
services. If the recipient is eligible to take full input tax credit then
the value declared in the invoice shall be deemed to be the open
market value of goods or services
2) If open market value of supply is not available then the value of
supply of goods/ or services of ‘like kind & quality’ shall be used.
3) When both the above situations are not applicable , the value is
determined by the application of rule 30 or rule 31 in that order.
Value of supply of goods made or received through an Agent [rule 29]
a) Where open market value of supply of goods is available
1) the open market value of the goods being supplied
OR
2) the 90% of the price charged for the supply of goods of like kind
and quality by the recipient to his customer not being a related person,
where the goods are intended for further supply by the said recipient.
b) The value is determined by the application of rule 30 or rule 31 in
that order.
Value of supply of Goods or services or both based on Cost[Rule 30]
Where the value of supply of goods or services or both is not
determinable by any of the preceding rules, then the value shall be 110%
of the cost of production or manufacture or the cost of acquisition of
such goods or cost of the production of such services.
Residual method for determination of value of supply of goods or
services or both [ sec 31]
Where the value of supply of goods or services or both cannot be
determined under rules 27 the same shall be determined using
reasonable means consistent with the principles and the general
provisions of section 15 and the provisions of Chapter IV of CGST Rule,
2017.
1) Indian Machine private ltd. Delhi supplies plastic granulation
machine to Shobraj Plastics ltd. Delhi. It furnishes the following details
of such supply.
List price of the machine ( exclusive of taxes and discounts) –
Rs.1,00,000
Corrugated Boxes used for packing the machine ( not included in the
price above) – 1,000
Subsidy received from Delhi Government on sale of such machine
(considered in price above ) - 5,000
Discount @2% is offered on list price of the machine ( recorded in the
invoice for the machine)
Determine the value of taxable supply made by India Machine private
limited.
2) Calculate the value of supply of machine by a trader from the following
particulars:
Amount
Invoice price ( exclusive of taxes and payments mentioned below 55,000

Duty and Cess levied by Municipal Authority 5,500

Insurance charges for despatch of the final product 275
Packing charges 1,200
Miscellaneous incidental expenses incurred by supplier before delivery 3,225

Subsidy from private trust but not passed on to the buyer 3,000
Subsidy from NGO ( passed on to the buyer) 2,000
Subsidy received from Government ( passed on to the buyer) 6,000
3) Reliance group own an institute Reliance Education limited. The
Company imparts certificate courses in the field of animation and film
editing. The institute is situated in Andheri Mumbai. The Reliance
Education limited fees for the course offered are 1,70,000 per student for the
entire course . However the course is subsidized by the following:
a) Subsidy received from Maharastra Government – Rs.10,000
b) Subsidy from Cine Association, Mumbai - Rs.15,000
c) Subsidy from Warren Brothers of Hollywood – Rs.8,000
d) Subsidy from US Government - 17,000
The benefit of all the four types of subsidies is passed on to the student.
Consequently REC charges Rs.1,20,000 plus GST per student
Find out the taxable value of supply, GST @18% and what is the amount
receivable from the student
4) The Ashoka Hotel Group of companies provided the following
services within the sate of Kerala from its various establishments.
Compute the amount of GST payable for the month March 2020.
1. Supply of food or drinks in restaurant not having facility in air
conditioning facilities @12% GST Rs.30,000
2. Supply of food or drinks in restaurant having license to serve liquor
@18% GST Rs.90,000
3. Supply of food or drink in outdoor catering @18% GST Rs.1,50,000
4. Renting of Hotels rooms @18% GST Rs.2,25,000
5. Supply of food and drink in Air conditioning restaurant in 5 star or
above rated hotel @28% GST Rs.1,50,000
5) The Move N Pick (5 star) provides the following services within the
state of Karnataka from its various establishments. Compute the
amount of GST payable for the month August 2020.
1. Supply of food in restaurant Rs.15,000 without air conditioning
facilities @12% GST
2. Supply of drink in restaurant Rs.50,000 with license to serve liquor
@18% GST
3. Supply of Food or drink in outdoor catering Rs.80,000 @18% GST
4. Hotels rooms Rs.2,50,000 @18% GST
5. Supply of Food and drink in 5 star hotel and restaurant service
Rs.75,000 @28% GST
6. Gifts to office staff Rs.20,000
6) Mr. Harish a registered dealer in Jaipur. From the following
particulars, find out GST payable on outward supply.
1) Chocolates not containing cocoa worth Rs.2,04,000 sold to a
registered dealer of Punjab.(IGST Rate @18%)
2) Mineral water worth Rs.2,20,00 were transferred to their branch at
Kolkatta (IGST Rate is 18%)
3) Ayurvedic medicines worth Rs.1,64,800 are sold to the registered
dealer of MP (IGST @5%)
4) Skimmed Milk Powder worth Rs.54,000 are sold to the registered
dealer of UP (IGST @5%)
5) Goods amounting Rs.3,10,000 were sold firm of London in the
course of export outside India.
6) Silver worth Rs.5,40,000 are sold to a registered dealer of
UP(IGST@3%)
7) Coffee beans worth Rs.2,20,000 were transferred to their branch at
Kolkatta
8) Sale of petroleum products to a register dealer in UP for
Rs.2,50,000
9) Sale of alcoholic liquor for human concumption to a register dealer
in MP for Rs.4,50,000.
7) Vijay’s limited is into business of electronic items. From the
following supplies made in the month of March, 2020 determine GST
liability. GST rates on goods are subject to 28% and services @18%
Sale of Air conditioning bearing HSN code 8415 Rs.4,00,000
Transportation charges Rs.50,000
Annual maintenance service Rs.1,50,000
Spare parts supplied along with AMC services Rs.40,000

8) From the following particulars, Calculate net GST @12%payable.

Purchase of raw materials within the state Rs.10,500 ( inclusive of GST
@5% ) profit margin Rs.500, manufacturing expenses Rs.500, wages
Rs.500 , storage cost Rs.500 and consultation fees Rs.500.
9) Mistake company manufacturers 10,000 units of products and
sold to a wholesaler at Rs.50 per unit. 20% trade discount is allowed
to the wholesaler as per the normal practice. What is the amount of
GST payable if rate of GST is 18%
10) Compute the transaction value of goods from the following
information and GST payable by a dealer registered in Karnataka.
Selling price (including IGST of Rs.2,000) - 43,000
Following transactions are not included in the above price:
Freight charges paid by supplier charged separately - 1,000
Normal secondary packing cost - 1,500
Cost of durable and returnable packing - 1,500
Insurance on freight paid by supplier charged separately – 500
Trade discount 1,000 and rate of GST 18%
11)The provisions of GST Act, 2017. Compute the transaction
value of goods from the following information and GST
payable.
Selling price ( including GST of Rs.5,000) 80,000
Transactions are not included in the above price
Secondary packing cost 3,000
Cost of special packing 2,000
Cost of durable and returnable packing 2,500
Freight charges paid by supplier charged separately 2,500
Insurance on freight paid by supplier charged
Seperately 800
Trade discount 10% of transaction value GST rate 18%
12) Compute the transaction value of taxable goods and IGST payable from the
following information:
Wholesale price of a product sold to Pune from a dealer in Nagpur( including
GST 12%)
1,94,400
Price is exclusive of the following:
Secondary packaging cost 10,800
Cost of special secondary packing
16,200
Cost of durable and returnable packing 8,100
Freight 6,750
Insurance on freight 1,350
Trade Discount 20,000
13) Mr. Gopal Krishna submits the following information. Calculate the
transaction value
Goods “U” purchased with in the state (inclusive of GST @5%) 6,15,000
Goods “S” purchased with in (inclusive of GST @12%) 6,12,000
Goods “H” purchased from registered dealer at 12% GST 60,000
Goods “A” purchased in the local market from unregistered dealer
@12% GST 6,08,000
Goods “D” purchased with in the state from composite dealer @5%
GST 6,68,050
Goods “E” imported from HP excluding IGST @18% 60,000
Goods “I” imported from Srilanka including BCD and excluding
IGST @18% 6,50,000
Goods “N” imported from Thailand (inclusive of BCD and GST@18% 6,18,000
Labourcharges – 63,950 sold entire stock to Mr. Prashad at a profit of 16% on
Cost of production.
14) CA Gulecha, a practicing Chartered Accountant (Banglore) received money
from various clients for the services rendered in the month of November,
2018
i) Accounting and auditing services Rs.1,25,000
ii) Representation before various statutory authorities Rs.1,00,000
iii) Costing accounting and cost auditing Rs. 50,000
iv) Secretarial auditing Rs.35,000
v) Verification of declaration is prescribed forms of compliance for obtaining a
certificate of commencement of business Rs.40,000
vi) Certification of documents to be filled before registrar of companies
Rs.25,000
vii) Ledger Maintenance, non-professional services and preparation of
coaching material Rs.20,000
viii) Fee for routine visits to income tax office Rs.55,000
ix) Remuneration for teaching CA and ICWA students Rs.30,000
x) Fee from outsourcing work of a client such as billing and ledger posting
Rs.75,000
xi) Services rendered in Delhi Rs.70,000
xii) Fees paid to state government Rs.2,000
You are required to calculate GST payable on outwards supply (IGST @18%,
CGST @9% and SGST @9%)
15) From the following information compute the amount of output tax to be
uploaded by the dealer who has registered in Karnataka for the month of
October and which is the last date to upload it in credit ledger.
1.Product P sold to a dealer in Banglore rate of GST notified to this product is
18% Rs.2,00,000
2. Product Q sold to a dealer in Mysore GST @12% - 70,000
3. Product R @0% rate GST sold to dealer in Puducherry 2,50,000
4. Product S @5% GST sold to a dealer in J & K - 2,80,000
5. Product T 28% GST sold to a unregistered dealer within the state – 1,20,000
6. Product U rate of GST notified is 12% sold to a SEZ developer in
Banglore - 4,00,000
7. Product V sold to a dealer in Union Territory rate of GST notified is 18% -
3,00,000
8. Product W which is exempted from GST is sold to a registered dealer of Pune
- 5,00,000
9. Product X exported to China, the GST rate notified by GST council for this
product is 28% if it sold in India 2,00,000
10. Product Y sold to a unit of SEZ in Mysore the rate of GST notified to this
product is 12% - 6,00,000
11. Product Z sold to a registered dealer within the state the rate of GST notified
is 18% - 4,50,000
12. Product A sold to a registered dealer in Belagavi who has registered under
composition scheme @28% GST.
Reimbursement of expenses refers to the repayment of money spent by a
person. In business transactions, this usually happens when a supplier incurs
expenditure on behalf of the recipient who is supposed to incur the said
expenditure.

There are two types of expenses that may get reimbursed to the supplier
under GST:

Incidental expenses incurred by the supplier in the course of supply. This

could be in the form of commission, packing, travelling expenses, etc.,
and form a part of the supply value. These expenses are usually incurred
before or at the time of delivery of the goods or supply of the services.
Expenses that the supplier incurs as a pure agent. These are expenses that
the supplier has incurred on behalf of the recipient but do not form a part
of the supply value. Examples include registration fees or taxes paid to
the government, transportation charges paid to a third-party transporter
that the recipient has authorised the supplier to incur, etc. 

he following section explains the pure agent concept under GST in detail.

Who is a pure agent under GST?

Under GST, a pure agent refers to a supplier who makes a supply to a

recipient and incurs expenditure on some other related supply on behalf of
the recipient for which they claim a reimbursement.
The reimbursement sought by the supplier is at the actual cost incurred, and
no value is added to the original value of the supply made by the supplier. 

The relationship between the supplier and the recipient for the main supply
made is that of a principal to principal basis. On the other hand, the
relationship between the supplier and the recipient for the ancillary supply
made is that of a pure agent.

 Rule 33 of the Central Goods and Services Tax Rules explains the concept
of a pure agent as follows. A pure agent is a person who-

 Agrees with the recipient of supply as their pure agent to incur

expenditure during the supply of goods or services or both.
 Does not hold nor intend to hold any title to the goods or services or both
that have been procured or provided as a pure agent of the recipient of
the supply. 
 Does not use such goods or services procured for his interest. Receives
just the actual amount incurred to procure such goods or services, besides
the amount received for the supply provided on the supplier’s account.

Examples of a pure agent under GST

Example 1: X, a Chartered Accountant, collects Rs.1,00,000 from their
client ABC Ltd. as professional fees for services rendered for the
financial year 2020-21. In addition to this, X also collects Rs.45,000 as a
reimbursement for income tax paid to the government on behalf of ABC
Ltd.
While the first amount of Rs.1,00,000 collected is on a principal to principal
basis, the second amount of Rs.45,000 is collected from the client as a pure
agent.

Example 2: Y is an importer, and Z is a customs broker. Z takes on the

task of customs clearance on behalf of Y in respect of an import
consignment. This customs clearance work also required the services of
a transporter, for which Y has authorised Z to hire the transporter and
make the payment on their behalf. Hence, the services of customs
clearance provided by Z are on a principal to principal basis. The
transportation services, on the other hand, which was procured by Z and
reimbursed by Y, is on a pure agent basis.
What is the impact of GST on reimbursement of expenses? 

All reimbursements of expenses shall form a part of the value of supply,

except when incurred as a pure agent. To break this down-

Section 15 of the CGST Act provides that the value of a supply of goods or
services or both shall be the transaction value. This is the price paid or
payable for the supply of these goods or services and applies where the
supplier and the recipient are not related, and the price is the sole
consideration for the supply.
Section 15(2) clause (c) states that any incidental expenses charged by the
supplier to the recipient and any other amount charged for anything done
during the supply until the time of delivery of the goods or supply of the
services shall be included in the value of the supply. Hence, any goods or
services provided by the supplier, for which a consideration is charged from
the recipient, shall be included in the transaction value and chargeable to tax.
With regard to reimbursement of expenses incurred as a pure agent, Rule 33
of the CGST valuation rules provides that any expenditure incurred as a pure
agent will be excluded from the value of supply, and hence, from the
aggregate turnover as well. However, the supplier will need to satisfy the
following conditions for the exclusion from the value of supply:
 The supplier acts as a pure agent of the recipient when he makes a
payment to a third party after authorisation by such recipient.
 The payment that the pure agent made on behalf of the recipient is
indicated separately on the invoice issued by the pure agent to the
recipient. 
 The supplies procured by the pure agent from the third party are in
addition to the supplier supplies’ services on his account.

If these conditions are not satisfied, then such expenditure incurred will be
included in the value of supply under GST.
Exemptions from GST
The power to grant exemption from GST has been granted vide
section 11 of the CGST Act and vide section 6 of the IGST Act.
State GST laws also contain identical provisions granting power to
exempt SGST.
Types of Exemptions
a) Absolute exemption
b) Conditional Exemption
Goods exempt from Tax on para 6.11
List of services given in exemption notification
Trust Activities
1. ( Entry 1) Services by an entity registered under section 12AA of the
Income Tax Act, 1961 by way of charitable activities.
Charitable activities are :
i) Public health by way of
a) care or counselling of terminally ill persons , physical and mental
disability.
b) persons affected with HIV or AIDS
c) persons addicted to a dependence forming substance such narcotic drugs
or alcohol. Or
ii) Advancement of religion, or Yoga .
iii) Advancement of educational programmes or skill development
relating to :
a) Abandoned, orphaned or homeless children
b) Physically or mentally abused and traumatized persons
c) Prisoners or
d) Persons over the age of 65 years residing in a rural area.

(Entry 9D) services by an Old age home run by Central Government,

State Government or by an entity registered under sec.12AA of the
income tax Act, 1961 to its residents (aged 60 years or more) against
consideration up to Rs.25,000 per month per member, provided that
the consideration charged is inclusive of charges for boarding, lodging
and maintenance.
( Entry 13) Services by a person by way of
a) Conduct of any religious ceremony
b) Renting of premises of a religious place meant for general
public owned or managed by an entity registered as a charitable
or religious trust under section 12AA or u/s 10(23C) or u/s
10(23BBA)
exemption will not be applicable if
i) renting of rooms where charges are Rs.1,000 or more per day
ii) renting of premises, community halls, kalyana mandapam and
the like where charges are Rs.10,000 or more per day
iii) renting of shops or other spaces for business or commerce
where charges are Rs.10,000 or more per month.
(Entry 80) Services by way of training or coaching in recreational activities
relating to
a) Arts or culture
b) Sports by charitable entities registered under section 12AA of income tax
Act.
Agriculture and animals
 (Entry 53A) services by way of fumigation in a warehouse of agricultural
produce
 ( Entry 54) Services relating to cultivation of plants and rearing of all life
forms of animals except the rearing of horses.
 All the activities of farming are included.
 (Entry 55) carrying out an intermediate production process as job work in
relation to cultivation of plants and rearing of life forms of animals
expect the rearing of horses.
 (Entry 55A) Services by way of artificial insemination of livestock(other
than horses)
 (Entry 56) services by way of slaughtering animals
 ( Entry 57) services by way of packing fruits or vegetables
 (Entry 58) services provided by the National Centre for Cold chain
development under the ministry of Agriculture, Cooperation and Farmer’s
Welfare.
 (Entry 24) Services by way of loading, unloading, packing, storage or
warehousing of Rice.
 (Entry 24A) services by way of warehousing of minor forest produce
 (Entry 24B) services by way of storage /warehousing of cereals, pulses,
fruits, nuts and vegetables, spices, copra and so on.
 (Entry 10A) Services supplied by Electricity distribution utilities by way of
construction, erection, commissioning or installation of infrastructure for
extending electricity distribution network up to the tube well of the farmer or
agriculturalist for agricultural use.
 Government related exemptions
 (Entry 3) Pure services provided to the central, state /Union territory or local
authority or a governmental authority or a government Entity by way of any
activity
 (Entry 3A) Composite supply of goods and services in which the value of
goods constitutes not more than 25% of the value of the said composite supply
provided to the Central Government, State Government or local authority .
 (Entry 4) Services by governmental authority by way of any activity in relation
to any function entrusted to a municipality under article 243W of the
Constitution
(Entry 5) Services by governmental authority by way of any activity in
relation to any function entrusted to a Panchayat under article 243 G of
the constitution.
(Entry 6) services by Central Government, State Government, Union
Territory or local authority excluding the following services-
a) Services by the Department of posts by way of speed post, life
insurance and agency services provided to a person other than
government.
b) Services in relation to an aircraft or a vessel or outside the premises of
the port or an airport;
c) Transport of goods or passengers; or
d) Any service other than services covered under entities a to c above
provided to business entities.
 (Entry 7) Services provided by the CG,SG and LA to a business
entity with an aggregate turnover of up to such amount in the
preceding Financial year as makes it eligible for exemption form
registration under the CGST Act, 2017.
 ( Entry 8) services provided by the CG,SG and LA to another CG,
SG and LA provided that nothing in this entry shall apply to services
of department of posts, in relation to aircraft , of transport of goods or
passengers.
 (Entry 9) Services provided by the CG,SG and LA where the
consideration for such services does not exceed Rs.5,000 provided
that nothing in this entry shall apply to services of department of
posts, in relation to aircraft , of transport of goods or passengers.
 (Entry 9C) The supply of service by a government entity is available
only if consideration is received from the CG,SG in the form of grants

 ( Entry 34A) Services supplied by CG,SG,UT to their undertakings or

PSU’s by way of guaranteeing the loans taken by such undertaking or
PSU’s from the Banking Companies and financial institutions.

 (Entry 40) Services provided to the CG,SG,UT under any insurance

scheme for which total premium is paid by the CG,SG and UT.
 (Entry 41) Premium payable in respect of service by way of
granting of long term lease of thirty years or more of industrial plots
or plots for development of infrastructure for financial business,
provided by the SG Industrial Development corporation or under
taking or by any other entity having 20% or more ownership of CG,
SG,UT to the industrial units or the developers in any industrial or
Financial business area.
 ( Entry 42) Services provided by CG,SG, UT or local authority by
way of allowing a business entity to operate as a telecom service
provider or use radio frequency spectrum during the period prior to
the 1st April, 2016 on payment of licence fee or spectrum user
charges as the case may be.
(Entry 47) Services provided by CG ,SG, UT by way of
a) Registration required under any law for the time being in force
b) Testing, calibration, safety check or certification relating to
protection or safety of workers, consumers or public at large
including fire license, required under any law for the time being in
force.
(Entry 47A) services by way of licensing, registration and analysis
or testing of food samples supplied by the Food Safety and standards
authority of India (FSSAI) to Food Business operators
(Entry 59) Services by a foreign diplomatic mission located in India

(Entry 60) Services by a specified organisation in respect of a

religious pilgrimage facilitated by the government of India, under
bilateral arrangement

(Entry 61) Services provided by CG,SG,UT or LA by way of issuance

of passport, visa, driving license, birth and death certificate

(Entry 61A) Services by way of granting National Permit to a Goods

carriage to operate through out India
(Entry 62) Services provided to CG, SG, UT or local authority by way
of tolerating non-performance of a contract for which consideration in
the form of fines or liquidated damages is payable to the CG,SG,UT or
local authority under such contract

(Entry 63) Services provided by CG,SG, UT or LA by way of

assignment of right to use any natural resource to an individual farmer
for cultivation of plants and rearing of animals.

(Entry 65) Services by the CG,SG,UT by way of deputing officers after

office hours or on holidays for inspection or container stuffing or such
other duties in relation to import, export cargo on payment of merchant
overtime charges.
(Entry 65A) Services by way of providing information under the Right
to Information Act, 2005.

(Entry 65B) Services supplied by a SG to excess royalty collection

contractor by way of assigning the right to collect royalty on behalf of
the SG on the mineral dispatched by the mining lease holders.

(Entry 72) Services provided to CG,SG,UT territory administration

under any training programme for which 75% or more of the total
expenditure is borne by the CG,ST,UT.
Exemptions related to Transport
(Entry 9B) Supply of services associated with cargo to Nepal and
Bhutan (landlocked countries)

(Entry 15) Transport of passengers with or without accompanied

belongings by :
a) Air, embarking from or terminating in an airport located in the state
of SATNAM(Sikkim, Arunachal Pradesh, Tripura, Nagaland,
Assam, Manipur ) or at Bag-Dogra located in West Bengal.
b) Non air-conditioning contract carriage other than radio taxi for
transportation of passengers excluding tourism, conducted tour,
charter or hire; or
c) Stage carriage other than air-conditioned stage carriage.
(Entry 17) Service of transportation of passengers with or without
accompanied belongings, by –
a) Railways in class other than –
i) First class; or
ii) An air-conditioned coach;
b) Metro, monorail or tramway
c)Inland waterways;
d) Public Transport other than predominantly for tourism purpose,
in a vessel between places located in India; and
e) Metered cabs or auto(including e-rickshaws)
(Entry 18) Services by way of transportation of goods
a) By road except the services of –
i) a Goods Transportation Agency
ii) a courier agency
b)Inland waterways

(Entry 19) Services by way of transportation of goods by an aircraft

from a place outside India up to the customs station of clearance in
India.

( Entry 19A) services by way of transportation of goods by an

aircraft from customs station of clearance in India to a place outside
India. This exemption has been granted up to 30-9-2022 only.
(Entry 19B) services by way of transportation of goods by a vessel
from customs station of clearance in India to a place outside India.
This exemption has been granted up to 30-9-2022 only.

(Entry 19C) Satellite launch services supplied by ISRO, Antrix

Corporation limited or New space India limited are exempt

(Entry 20) Services by way of Transportation by rail or a vessel from

one place to another of the following goods:
a) Relief materials meant for victims of natural or man-made disasters
b) Defence or military equipments
c) Newspaper or magazine registered with the Registrar of
Newspapers
d) Railway equipment or materials
e) Agricultural produce
f) Milk , salt and food grain including flours, pulses and rice
g)Organic manure

(Entry 21)services provided by Goods Transport Agency by way of

transport in a goods carriage of
a) Agricultural produce
b) Goods where consideration charged for the transportation of goods
on a consignment transported in a single carriage does not exceed
Rs.1,500
c) Relief materials meant for victims of natural or man-made disasters
d) Defence or military equipments
e) Newspaper or magazine registered with the Registrar of Newspapers
f) Milk , salt and food grain including flours, pulses and rice
g)Organic manure

(Entry 21A) services provided by Goods Transport Agency to an

unregistered person including unregistered casual taxable person.

(Entry 21B) Services provided by a goods transport agency by way of

transport of goods in a goods carriage to CG,SG,UT, LA and
Governmental agencies.
(Entry 22) Services by way of giving on hire:
a) To a state transport undertaking and local authority , a motor
vehicle( normal & Electrically operated vehicle) meant to carry
more than 12 passengers
b) To a goods transport agency, a means of transportation of goods
c) Motor vehicle for transport of students, faculty and staff to a
person providing services by way of pre-school education up to
higher secondary school or equivalent.

(Entry 23) Service by way of access to a road or a bridge on

payment of toll charges
(Entry 23A) Service by way of access to a road or a bridge on
payment of annuity
Exemptions related to Bank
(Entry 26) Services by the Reserve Bank of India

( Entry 27) services by way of

a) Extending deposits, loan and advances in so far as the
consideration is represented by way of interest or discount
b) Sale or purchase of foreign exchange amongst banks &
authorised dealer of foreign exchange
(Entry 27A) service provided to account holders under (PMJDY)
Exemptions related to LIC & GIC
 Services of LIC provided by way of annuity under the National
Pension system regulated by the Pension Fund Regulatory and
Development Authority of India
 ( Entry 28)LIC services provided or agreed to be provided by the
Army, Navy and Air Force group under the group insurance schemes
of the Central Government

 (Entry 29) LIC services provided to Coast Guard under the group
insurance schemes of central government

 ( Entry 29B) LIC services provided to Central Armed Police Force

 Services by the
(Entry 32) Services provided by the IRDA of India to insurers under
IRDA, 1999.
(Entry 36) Services of LIC provided under schemes like Janashree
Bima Yojana, PMJJBY, PMJDY,PMVVY and so on.

(Entry 35) Services of General insurance business provided under

Cattle insurance scheme, tribal insurance, group accident policy for
self employed women, Agricultural pump set, export credit insurance,
weather based crop scheme, National Agricultural insurance, seed crop
insurance, coconut palm insurance scheme, Pradhan Mantri Suraksha
Bima Yojana and so on.
House related exemptions
(Entry 10) Services provided by way of pure labour contracts of
construction, repair, maintenance, renovation pertaining to the
beneficiary led individual house construction or enhancement under the
Housing for all (Urban) mission or Pradhan Mantri Awas yojana.
(Entry 11) Services by way of pure labour contracts of construction to a
single residential unit .

Entry 41A & 41B) supply of TOR(Transfer of ownership rights),

FSI(floor space Index), long term lease (premium) of land by a
landowner to a developer have been exempted subject to the condition
that the constructed flats are sold before issuance of completion
certificate and tax in paid on them.
PDS related Exemptions

(Entry 11A) : Service provided by Fair price shops to central government

of way of sale of wheat, rice and coarse grains under public distribution
scheme(PDS) against consideration in the form of commission or
margin.

(Entry 11B): Service provided by Fair price shops to state government or

Union Territories by way of sale of Kerosene, sugar, Edible oil etc.,
under public distribution scheme(PDS) against consideration in the form
of commission or margin.
Entrepreneurship related Exemptions
(Entry 44) Services provided by an incubatee up to a total turnover of
Rs.50 lakh in a financial year subject to the following conditions:
i) The total turnover had not exceeded 50 lakh during the previous
financial year; and
ii) A period of three years has not elapsed from the date of entering
into an agreement with an incubate
(Entry 48) taxable services provided or to be provided by a Technology
Business Incubator or a science and technology park recognised by
National Science and Technology entrepreneurship development board.
Medical related exemptions
(Entry 46) Services by a Veterinary Clinic in relation to health care
of animals or birds.
(Entry 73) services by provided by the cord blood banks by way of
preservation of stem cells or any other service in relation to such
preservation.
(Entry 74) Services by way of
a) Health care services by a clinical establishment an authorised
medical practitioner or para-medics
b) Services provided by way of transportation of a patient in an
ambulance.
(Entry 75) Services provided by operators of the common bio-
medical waste treatment facility.
(Entry 78) Services by an artist by way of a performance in folk or
classical art forms of a) Music or b) Dance or c) Theatre if the
consideration charged is not more than 1,50,000

(Entry 79) services by way of admission to a museum, national park,

wildlife sanctuary, tiger reserve, Zoo

(Entry 66) services provided by

a)An educational institution to its students, faculty and other staff.
b) To an educational institution by way of
Transportation, catering , security , housekeeping work, admission and
examination related work, supply of online educational journal or
periodicals.
(Entry 49) Services by way of collecting or providing news by an
independent journalist, Press trust of India or United news of India

(Entry 50) services provided by public libraries

(entry 51) Services provided by the goods and services taxes
network t the CG or SG or UT
(Entry 52) Services by an organiser to any person in respect of a
business exhibition held outside India.
Small supplies – Composition Scheme
In the case of small tax payers the high rate of GST as well as huge
unnecessary procedural requirements, creates hassles which stops the
registered person from following the provisions diligently.
In order to bring simplicity and to reduce the compliance cost for the
‘Small Tax Payers’ a simplified scheme has been introduced under
section 10 of the CGST Act called Compostion Levy or Composition
Scheme.
Tax payable under composition scheme:
Sec 10(1) has been amended in the following manner with a view to
remove any interpretational ambiguity and stipulate that the composition
tax payers shall pay tax as a percentage of their turnover intead of the tax
payable on the invoice value of transactions.
Important to note:
1) A Registered person who has opted for composition levy is not
permitted to collect GST
2) A composition scheme person cannot avail the benfits of Input Tax
credit.
3) Under the composition levy, quarterly returns is uploaded in form
GSTR-4 on or before 18th day succeeding the quarter.
Conditions pertaining to Composition Scheme:
They can be classified broadly into the following:-
4) Turnover limit
5) Persons not eligible as per section 10(2)
6) Conditions and restrictions as per rule 5 of the CGST Rules
The above provisions as regards the turnover limit for composition
scheme may be summarised as follows:
Eligible Registered Person in any Aggregate Turnover in
preceding Financial
Year did not exceed
1. Union Territory Rs.1.5 Crore
2. State (other than Special states)
3. Special Category States:
(a) Category I. Rs.1.5 Crore
Assam and Himachal Pradesh
(b) Category II Rs. 75 lakhs
Arunchal Pradesh, Manipur, Meghalaya ,
Mizoram, Nagaland , Sikkim, Triupura and
Uttarakhand.
Determination of Aggregate Turnover
a)All taxable supplies of goods and services
b) The exempted supplies
c) Export of goods/ services
d) Inter-state Supplies
In Relation to Aggregate turnover they are 3 important points:
1) a) Any exempted supply of goods to be included.
b) As regards exempt supply of services
i) Interest on loan or deposit (not included)
ii) other services included
2) Same PAN: For aggregate turnover the supplies shall be determined
for all units/branches of the registered person having the same PAN and
the aggregate turnover is computed on all India Basis.
3) Exclusions: te aggregate turnover does not include the following :=
1) Value of inward supplies on which tax is payable under Reverse
charge mechanism
2) The amount of GST
Persons not eligible as per section 10(2) of CGST Act, 2017.
a) He is engaged in the supply of services (other than supplier of Food
articles) of value not exceeding 10% of turnover in state/UT in the
preceding financial year or Rs.5,00,000 , which ever is higher.
b) He is engaged in making any supply of goods or services which are
not leviable to tax under CGST Act
c) He does inter-state outward supplies of goods or services
d) He supplies goods and services through an electronic commerce
operator who is required to collect tax at source under section 52.
e) He is a manufacturer of such goods as may be notified by the
government on the recommendations of the council ( example ice
cream and other edible ice, whether or not containing cocoa, pan
masala, Aerated water & Tobacco related products and
f) He is casual taxable person or non resident taxable person.

Rule 5 conditions to be complied with by the person opting for

composition levy. They are as follows:
1) He is neither a casual taxable person nor a non-resident taxable
person.
2) The goods purchased by him should not have been purchased in the
course of inter-state trade, imported goods, goods from his branch
office situated outside the state.
3) The goods held in stock by him have not been purchased from an
unregistered supplier and where purchased he pays the tax under
reverse charge under section 9(4)
4) He was not engaged in the manufacture of goods as notified.
5) He shall mention the words composition taxable person not
eligible to collect tax on supplies at the top of the bill of supply
issued by him; and
6) He shall mention the words “Composition Taxable Person” on
every notice or signboard displayed at a prominent place at his
principal place of business and at every additional place or place of
business.
Intimation of opting for Composition Levy
1) Unregistered person applying for registration may give an option
to pay tax under composition levy in Part B of the registration
form (FORM GST REG-01)
2) Registered person opting for scheme, pay tax under section 10
shall electronically file an intimation in FORM GST CMP-02.
No fresh declaration is required every year.
Rate of tax of the composition levy (Rule 7)

1) Manufacturers GST Rate is 1% (CGST-0.5% and SGST – 0.5%)

2) Supply by way of or as part of any service or in any other manner

whatsoever, of goods being food or any other article for human
consumption - GST Rate is 5% (CGST – 2.5%, SGST – 2.5%)

3) Traders or any other supplier eligible for composition scheme- GST

-1% (CGST -0.5% , SGST -0.5%)
Percentage of GST Rates are to be applied in the following manner
1)Manufacturer - Aggregate turnover = taxable + Exempted

2) For Restaurant supplier – Aggregate turnover = taxable + Exempted

3) For Traders or other eligible supplier :

As a percentage on turnover of taxable supplies of goods and services
1) ABC Ltd is in the business of Computer Monitors(20 inches), digital
cameras , recorders and projectors. The 28% GST rate is applicable on
these items. The company also manufactures Agricultural implements
like spades, forks, axes, etc., which are exempt from GST. The
following is the turnover of the company during April to June 2021.

Particulars of Supplies value of supply GST rate

a) Computer monitors 21,00,000 18%
b) Digital Camera 11,00,000 28%
c) Projector 7,00,000 28%
D) Agricultural implements 9,00,000 Nil
Total 49,00,000
The company fulfils all the conditions required for adoption of
composition levy scheme, calculate the total tax liability under
composition scheme if the company ABC Ltd is
Case I- Manufacture of these items
Case II – A Trader2

2) KRVV Enterprises has opted for composition scheme in the

Financial year 2021-22 . Its aggregate turnover in Financial year
2020-21 is Rs.70 Lakhs. In Financial year 2021-22 , the entity
desires to supply services (Other than restaurant services) also but in
such a manner so that it may continue to remain eligible for
composition scheme. Under section 10(1) what is the maximum
value of services that can be supplied by the firm?
3) VIVA Enterprises is trading concern and has opted for composition
scheme in financial year 2020-21. It furnishes the following detail for
the quarter ending 30th June, 2020.
a) Intra state supply of taxable goods – Rs.16,00,000
b) Intra state supply of exempted goods – Rs.12,00,000
Rs.28,00,000
You are required to determine GST Liability
4) Examine the following cases, keeping in view the latest provisions of
GST Law regulating composition scheme
c) Mr. X is a manufacturer of ice-cream and Pan masala in state of
Maharastra. His turnover for the year does not exceed Rs.1 crore. He
wants to register for composition scheme. Is he eligible for it?
b) Mr. Y of Gujarat opt for composition scheme during a financial year
2019-2020. But on October 10, 2019 his turnover crosses Rs.1.5 crore.
Can he continue under composition scheme?
c) Z limited has 2 branches branch K and branch L in Delhi(having
the same PAN), Branch K opts for normal scheme. Z limited wants
to opt for composition scheme inthe case of branch L. is it
possible?
5) Mr. Sanjay is a consultant and provides consultancy services in
Mumbai. Besides, he has a ready made garment showroom in
Mumbai registered in same PAN . The turnover of the show is
Rs.80,00,000 and receipt of consultancy unit is Rs.14,00,000 in the
preceding financial year 2020-21. You are required to answer the
following:
a) What is the eiligibility turnover limit for omposition scheme from 1-
4-21.
b) In financial year 2021-22 Mr. Sanjay decides to discontinue
providing consultancy. He wants opt for compositions scheme with
effect from 1-4-2021. Is he eligible for that?
c) How your answer will change if in (b) above, Mr.Sanjay decides to
continue consultancy services also? The expected consultancy receipt is
Rs. 9,00,000
Problems on Composite and Mixed Supply
1) Mr. Shekhar (dealer in Delhi) entered into a contract with a
supplier in Mysore to deliver machinery along with essential
accessories. From the information determine the total amount of
GST payable.
Price of machinery (exclusive of GST) - Rs.6,00,000
Installation and erection expenses charged separately in invoice –
Rs.46,000
Packing charges charged separately in invoice – Rs.4,000
Design and engineering charges charged separately in invoice –
Rs.55,000
Pre-delivery inspection charges - Rs.6,000
Rate of GST on machinery - 18%
Cash discount of Rs.25,000 was allowed as per terms of contracts, since
full payment was received before dispatch machinery.
The machine is supplied along with accessories (optional) at Rs.10,000
and the rate of duty applicable to these accessories is 28%
Find the GST payable, if the rate of GST on principal supply is 18%.

2) Mr. Rahul Roy a dealer in Banglore entered a contract with a supplier

in Mysore to deliver a machinery along with essential accessories.
From the information determine the total amount of GST payable under
section 15 of the GST Act, 2017.
Price of Machinery(excluding GST) - 10,00,000
Installation expenses charged separately in invoice- 50,000
Insurance charges, charged separately in invoice – Rs.35,000
Warranty charges, charged separately in invoice – Rs.28,000
Transport charges charged separately in invoice - Rs.5,000
Other information:
1) Cash discount 5% on price of machinery was allowed as per terms
of the contracts. Since full payment was received before despatch
of machinery.
2) Accessories were supplied (essential) along with machinery, for
Rs.20,000 and accessories are charged for tax @5%
3) GST rate on machinery is 18%
For classification of goods and services: study from the below
mentioned link: https://cbic-gst.gov.in/gst-goods-services-rates.html
Problems on Exemptions
Dharmadasa Charitable trust registered under section 12AA of the Income Tax
Act, 1961, has furnished you the following details with respect to the activities
undertaken by it. You are required to calculate the GST @18%
1) Amount received from renting of commercial property belonging to the trust
– Rs.3,60,000
2) Fees for educational activities conducted for orphaned children –
Rs.1,20,000
3) Amount received from activities of preservation of forests – Rs.80,000
4) Fee received for skill development activities for the prisoners – Rs.25,000
5) Fee received for educational program for person living in rural area above
65 years. Rs.86,000
6) Fee received for Physically or Mentally abused skill development
programme Rs.40,000
2) Asha Medical Centre, a clinical establishment, offers the following
services
a) Reiki healing treatments - Rs.10,00,000
b) Plastic surgeries (one such surgery was conducted to repair cleft lip of
a new born baby, consideration of Rs.1,00,000 was charged for the
same) - Rs.20,00,000
c) Air Ambulance services to transport critically ill patients from distant
locations to Ash Medical centre - Rs.1,00,000
d) Alternative medical treatments by way of Ayurveda - Rs.2,50,000
e) It also operates a cord blood bank which provide services in relation
to preservation of stem cells. – Rs.5,00,000
You are required to calculate GST liability @18% of Asha Medical
Centre.
3) State whether the following services are exempted under GST
1) Right to admission to Circus ( price of ticket Rs.400 per person)
2) Right to admission to dance performance (Price of Ticket is Rs.350
per person)
3) Right to admission to Drama (Price of Ticket Rs.600 per person)
4) Performance in Folk Dance on consideration of Rs.1,00,000 per
performance
5) Performance in Western Dance (Consideration Rs.80,000 per
performance)
6) Collecting or providing news by an independent journalist
7) Health services by a veterinary clinic
8) Hotel with declared Tariff Rs.1,200 per day but actually charged at
Rs.900 perday.
Discuss whether GST is payable is respect of transportation
services provided by Dua Goods Transport Agency in each of
the following independent cases:
a) Transportation of Agricultural produce Rs.41,000
b) Transportation of Milk, salt Rs.4,000
c) Transportation of Organic Manure Rs.11,000
d) Transportation of Newspaper (Registered) Rs.7,000
e) Transportation of Defence Equipment - Rs.62,000
f) Transportation of goods on a consignment transporter in
single goods carriage Rs.3,000