Central levies to be subsumed Central Excise Duty & Additional Excise Duties Service Tax Excise Duty under Medicinal & Toilet Preparation Act CVD & Special CVD Central Sales Tax Central surcharges and Cesses in so far as they relate to supply of goods & services State surcharges and cesses in so far as they relate to supply of goods & services Entertainment Tax (except those levied by local bodies) Tax on lottery, betting and gambling Entry Tax (All Forms) & Purchase Tax VAT/ Sales tax Luxury Tax Taxes on advertisements Statelevies to Intra-State Supply ILLUSTRATION-1 In case of local supply of goods/ services, the supplier would charge dual GST i.e., CGST and SGST at specified rates on the supply. I. Supply of goods/ services by A to B Amount (in `) Value charged for supply of goods/ services 10,000 Add: CGST @ 9% 900 Add: SGST @ 9% 900 Total price charged by A from B for local supply of goods/ 11,800 Services
CHAPTER 2 SUPPLY UNDER GST CHAPTER OVERVIEW (Supply) Taxable Event with consideration in course/ furtherance of business Import of services with consideration whether or not in course/ furtherance of business Supply without consideration Activities treated as Supply of goods or Supply of services Activities neither the supply of goods nor the supply of services Composite and Mixed Supplies
1860 or under any other law for the time being in force in any part of India; or any co-operative society established by or under any law; or any person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act; or any body corporate established, by or under any law; or anypartnership firm whether registered or not under any law including association of persons; or any casual taxable person. India; or any co- operative society established by or under any law; or (d) any person registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act; or (e) any body corporate established, by or under any law; or any partnership firm whether registered or not under any law including association of persons; or any casual taxable person; located in the taxable territory. 2. Services supplied by an An individual Any business entity individual advocate advocate including located in the including a senior a senior advocate taxable territory. advocate by way of or firm of
Corporate taxable territory. to the said company/body corporate. 7. by an insurance agent to any person carrying on insurance business. An insurance agent Any person carrying on insurance business, located in the taxable territory. 8. 9. by a A to a or a financial institution or a non- banking financial company. Supply of services by Author or music an author, composer, composer, photographer, photographer, artist artist, or the like or the like by way of transfer or permitting the use or enjoyment of a copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like. A banking company or a financial institution or a banking financial company, located in the taxable territory. Publisher, music company, producer the like, located in the taxable territory.
4.35 C single goods carriage does not exceed ` 1,500. Transportation of ` 600 Exempt. chairs for a single Transportation of consignee in the goods where goods carriage consideration for transportation of all goods for a single consignee does not exceed ` 750 is No, the person supplying exempted goods or services or both shall not collect the tax in excess of the effective rate. .
5.30 Summary The provisions relating to time of supply of goods and services can be better understood if the same are studied simultaneously appreciating the similarities and differences between the two scenarios. Therefore, such provisions have been summarised by way of a comparison table to help students remember and retain the provisions in a better and effective manner: TIME OF SUPPLY WHERE TAX IS PAYABLE UNDER FORWARD CHARGE Time of supply of goods [Section 12(2)] Earliest of the following: Date of issue of invoice by the supplier or the last date on which he is required, to issue the invoice under section 31(1) with respect to the supply Date on which the supplier receives the payment (entering the payment in books of account or crediting of payment in bank account, whichever is earlier) with respect to the supply Time of supply of services [Section 13(2)] Invoice issued within the time period prescribed under section 31(2) Earliest of the following: Date of issue of invoice by Date of receipt of payment (entering the payment in books of account or crediting of payment in bank whichever is Invoice not issued within the time period prescribed under section 31(2) Earliest of the following: Date of provision of Date of receipt of payment (entering the payment in books of account or crediting of payment in bank account, whichever is
Indian legal tender Foreign Currency Cheque Promissory note Bill of Exchange Letter of Credit Money Draft Pay Order Traveller Cheque Money Order Postal or electronic remittance Any other instrument recognised by RBI When used as a consideration to settle an Currency obligation or exchange with EXCLUDING held for its numismatic Indian legal value tender of another denomination
Organisation of an event  B2B: Location of such registered person B2C: Location where the event is actually  If the event is held outside India: Location of the Transportation of goods,  B2B: Location of such registered including mails B2C: Location at which such goods are handed over for their Passenger transportation  B2B: Location of such registered person B2C: Place where the passenger embarks on the conveyance for a continuous 8. Services on board a Location of the first scheduled point of conveyance departure of that conveyance for the journey 9. Banking and other Location of the recipient of services financial services on the records of the supplier Location of the supplier of services if the location of the recipient of services is not available 10. Insurance services B2B: Location of such registered person B2C: Location of the recipient of services on the records of the supplier 11. Advertisement services to Each of States/Union Territory
Proportionate value in case of multiple States 12. Telecommunication Services involving fixed line, services circuits, dish etc: Location of such fixed equipment Mobile/ Internet post-paid services: Location of billing address of the recipient Sale of pre-paid voucher: Place of sale of such vouchers Other cases: Address of the recipient in records For the rest of the services other than those specified above, the default provision has been prescribed as under: Default rule for the services other than the 12 specified services S. Description of Place of Supply No. Supply 1. B2B Location of such registered person B2CWhere the address on record exists:Location of the recipient Other cases: Location of the supplier of Place of supply of services where location of supplier OR location of recipient is outside India [Section 13] In respect of the following categories of services, the place of supply is determined with reference to a proxy; rest of the services are governed by the default provision.
banking 6.15 APPORTIONMENT OF CREDIT & BLOCKED CREDITS [SECTION 17] STATUTORY PROVISIONS Section 17 Sub-section Clause Apportionment of credit and blocked credits (1) (2) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. (3) (4) The value of exempt supply under (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. A banking company or a financial institution including a financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub-section (2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse: Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:
6.17 such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and travel benefits extended to employees on vacation such as leave or home travel concession; works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) (e) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business Explanation.––For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property goods or services or both on which tax has been paid under section 10; goods or services or both received by a non-resident taxable person except on goods imported by him; goods or services or both used for personal consumption; goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and any tax paid in accordance with the provisions of sections 74, 129 and 130. The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed.
Rule 43 (1) Manner of of input tax credit in respect of capital goods and reversal thereof in certain cases Subject to the provisions of (3) of section 16, the input tax credit in respect of capital goods, which attract the provisions of (1) and (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely,- the amount of input tax in respect of capital goods used or intended to be used exclusively for non-business purposes or used or intended to be used exclusively for effecting exempt supplies shall be indicated in FORM GSTR-2 and shall not be credited to his electronic credit ledger; the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting supplies other than exempted supplies but including zero-rated supplies shall be indicated in FORM GSTR-2 and shall be credited to the electronic credit ledger; the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as ‘A’, shall be credited to the electronic credit ledger and the useful life of such goods shall be taken as five years from the date of the invoice for such goods: Provided that where any capital goods earlier covered under clause (a) is subsequently covered under this clause, the value of ‘A’ shall be arrived at by reducing the input tax at the rate of five percentage points for every quarter or part thereof and the amount ‘A’ shall be credited to the electronic credit ledger; Explanation: An item of capital goods declared under clause on its receipt shall not attract the provisions of (4) of section 18 if it is subsequently covered under this clause. sections
Mr. B, a registered taxable person, was paying tax at composition rate upto 30th July. However, w.e.f. 31st July, Mr. B becomes liable to pay tax under regular scheme. Mr. B will be eligible for ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods as on 30 th July. ITC on capital goods will be reduced by 5% per quarter from the date of the invoice. Capital goods have been in use for 4 years, 6 month and 15 The useful remaining life in months = 5 months ignoring a part of the month. ITC taken on such capital goods = C ITC attributable to remaining useful life = C x 5/60 6.43 Utilisation of ITC ITC is credited to a registered person’s electronic credit ledger. The person may use this to pay his output tax liability. The use of ITC for payment of tax on supplies is the point in which GST differs sharply from the previous system of central and state taxation. In GST, inter-state supplies are levied to IGST, which is the sum of the applicable CGST and SGST / UTGST. In terms of section 49(5),  ITC of IGST can be used to pay IGST, CGST and SGST/UTGST in that order.  ITC of CGST can be used to pay CGST and IGST in that order.  ITC of SGST/UTGST can be used to pay SGST/UTGST and IGST in that order. ITC of CGST cannot be utilized towards payment of SGST/UTGST and vice
Invoicing is very crucial aspect for ensuring tax compliance under any indirect taxation system. In order to ensure transparency, issuance of invoice for every taxable transaction is a pre-requisite. In case of supply of goods or provision of services, an invoice is raised by the supplier of such goods or services to the recipient of the same. Tax invoice acts as a document evidencing the payment of the value of the goods or services or both as also the tax portion in the same. In certain cases, an invoice serves as a demand for payment and becomes a document of title when paid in full. Significance of invoices has enhanced manifolds under GST regime. The reason behind the same is the invoice matching mechanism that has been introduced under GST. For the purpose of claiming the input tax credit, the invoice matching needs to be done. The inwards supplies of the person claiming the credit (recipient) should match with the outward supplies of the supplier(s). Thus, a registered person cannot avail Input Tax Credit unless he is in possession of a tax invoice or a debit note.
8.11 the supply An insurer or a banking company or a financial involves institution, including NBFC, or a telecom operator, movement of or any other class of supplier of services as may be goods; or notified by the Government, making taxable supplies of services between distinct persons as (b) delivery of goods specified in section 25 or making available thereof to the recipient, in any other case. In case of continuous In case of continuous supply of services supply of goods Where successive Where the invoice shall be statements of issued accounts/ successive payments are (a) due date of payment is on or before the due involved, ascertainable from the date of payment the invoice shall be contract issued before/at the (b) due date of payment is before or at the time Time each such statement is issued or not ascertainable from the when the supplier of each such payment is contract service receives the received. payment (c) payment is linked to the on or before the date completion of an event of completion that event. Ritu Manufacturers, Delhi supplies goods to Prakhar Electronics, Haryana. The goods were removed from its factory in Delhi on 23rd September. Ritu Manufacturers needs to issue a tax invoice on or
In case of continuous supply of goods •before/at the time each successive statements of accounts is issued or each successive payment is received In case of continuous supply of services due date of payment is on/before due date of payment ascertainable from the contract not so ascertainable before/at the time of receipt of payment payment is linked to the on/before the date of completion of an event completion of that event Important contents of tax invoice GSTIN of Consecutive GSTIN of Name & address of HSN Serial Number recipient, if supplier recipient, if not & date of issue registered registered Description of Tax rate – Quantity in Total Value of Taxable Value Central tax & goods or State tax or case of goods supply of supply services Integrated tax, cess Amount of tax Address of Tax payable on Signature of Place of supply delivery where reverse charge authorised charged different than basis signatory place of supply
DEFINITIONS OF CERTAIN KEY TERMS Output Tax means excludes CGST on taxable supply of goods and /or services by by agent taxable of taxable person person Taxable Person means a person who is registered liable to be registered tax payable on reverse charge under section under section
Payment of Tax via Electronic Ledger Electronic Cash Ledger (Assume it as an account statement provided by bank, for easy understanding) Debit Amount (DR) Credit Amount (CR) • Credit amount of this ledger may be used • Any deposit made towards tax, for payment of tax, interest, fees etc. interest, penalty, late fee etc. • Remaining credit balance amount after via internet banking, RTGS, payment of above tax etc. will be fund transfer etc. refunded to taxable person. • TDS/TCS claimed B. Electronic Credit ledger Debit Amount (DR) Credit Amount (CR) • Credit amount of this ledger may be •Input Tax credit as self-assessed used for payment of output tax viz in the return in the form of IGST, IGST, CGST, SGST, UTGST in the CGST, SGST, UTGST prescribed order. Electronic Liability Register Debit Amount (DR) Credit Amount (CR) • Amount payable towards tax, interest, • Electronic cash ledger fees etc. • Tax or interest payable due to mismatch • Any other dues • Amount payable towards output tax • Electronic credit ledger
4. Returns to be filed by a normal taxpayer GSTR-1 Statement of Outward Supplies GSTR-2 Statement of Inward Supplies GSTR-3- Return •This signifies the tax liability of the supplier for the supplies effected during the previous month. •It needs to be filed by the 10th of every month in relation to supplies effected during the previous month. •For example, a statement of all the outward supplies made during the month of July, needs to be filed by 10th August. •This Statement signifies accrual of ITC (Input Tax Credit) from the inputs received during the previous month. •It is auto-populated from the GSTR- 1s filed by the corresponding suppliers of the Taxpayer except for a few fields like imports, and purchases from unregistered suppliers. •It needs to be filed by the 15th of every month in relation to supplies received during the previous month. •For example, a statement of all the inward supplies received during the month of July needs to be filed by 15th August. •This is a consolidated return. It needs to be filed by the 20th of every month. It consolidates the following details •a. Outward Supplies (Auto-Populated from GSTR-1) •b. Inward Supplies (Auto-Populated from GSTR-2) •c. ITC availed •d. Tax Payable •e. Tax Paid (Using both Cash and ITC)
The due date of filing of GSTR-2 is ______? on or before 10th day of the next month after 10th day but on or before 15th day of the next month on or before 17th day of the next month on or before 20th day of the next month Composition tax payer is required to file return in Form no. ______. GSTR-2 GSTR-3 GSTR-4 GSTR-5 The due date for filing GSTR-3 is _______. on 10th day of the next month on 15th day of the next month on 17th day of the next month on or before 20th day of the next month Which of the following are not required to file the Annual Return? Input Service Distributor Casual Taxable Person Non-resident Taxpayer All of the above The maximum amount of late fee payable by any registered person on failure to furnish GSTR-3 by the due date is ` ____. 1,000 5,000 10,000 25,000