Table Of ContentCONTENTS OF THE BOOK:
TOPIC PAGE
NO
3
INTRODUCTION
REGISTRATIONS 16
TIME OF SUPPLY 25
VALUE OF SUPPLY 31
PLACE OF SUPPLY 34
INPUT TAX CREDIT 44
PAYMENT OF TAX 48
COMPOSITION SCHEME 57
INVOICING 64
ACCOUNTS AND RECORDS 70
REVERSE CHARGE 74
TDS & TCS 80
GST RETURNS 85
JOB WORK 90
REFUNDS 93
PENALTY 96
ASSESSMENTS 98
APPEALS 100
DEMAND AND RECOVERY 103
INSPECTION, SEARCH, SEIZURE 104
AND ARREST
IMPORTANT DEFINITIONS 107
ABOUT THE AUTHOR: VIVEK KR AGRAWAL, is a member of The Institute of Chartered
Accountants of India. He is fellow member of the Institute. He has the experience of more than 10 years in
the field of Tax Consultancy. He has also qualified L.L.B., Diploma in Insurance & Risk Management and
Diploma in Information System Audit. Associated in different capacities with several Professional
Institutes, Management colleges and Business houses in India and abroad. He can be reached at
INTRODUCTION
The Goods and Services Tax (GST) the biggest reform in Indirect taxation of
st
India has been rolled out from 01 July, 2017. It extends to whole of India. It is
based on the principle of destination-based consumption taxation.
By the Constitution amendments passed in parliament and ratified by various
state, now the Central and State governments will have simultaneous powers to
levy the GST on Intra-State supply. Though the Parliament alone shall have
exclusive power to make laws with respect to levy of Goods and Services Tax on
Inter-State supply. GST to be levied by the Centre would be called Central GST
(CGST) and that to be levied by the States would be called State GST (SGST).
An Integrated GST (IGST) would be levied an inter-state supply of goods or
services.
As the government wants to have unified tax structure across the country the
cooperation is required from every state on various matter, so The Goods and
Service Tax Council (GSTC) was formed. GSTC comprises of the Union
Finance Minister, the Minister of State (Revenue) and the State Finance
Ministers to recommend on the GST rate, exemption and thresholds, taxes to be
subsumed and other matters.
The whole GST system will be backed by a robust IT system. In this regard,
Goods and Services Tax Network (GSTN) has been set up by the Government.
It will provide front end services and will also develop back end IT modules for
States who opted for the same.
Major taxes subsumed in GST are:
Central Excise Duty
Duties of Excise (Medicinal and Toilet Preparations)
Additional Duties of Customs (CVD)
Special Additional Duty of Customs(SAD)
Service Tax
State Value Added Tax (VAT)
Central Sales Tax (CST)
Entry Tax
Purchase Tax
Luxury Tax
Taxes on lotteries, betting and gambling
GST would apply on all goods and services except Alcohol for human
consumption. GST on five specified petroleum products (Crude, Petrol, Diesel,
ATF & Natural Gas) would by applicable from a date to be recommended by the
GST Council.
Below a simple example to explain the significance of various terms and topics
to be covered going forward.
Example – Rahul from Mumbai has purchased laptop from Flipkart, Bengaluru
for Rs 40,000. The market price of product is Rs 50000/-. The tax rate is 18%.
Question: Is this transaction liable to GST?
Answer: To know this we need to understand the basic structure of gst, meaning
of supply and related concepts.
Question: Who needs to pay GST?
Answer: Basic concept and Reverse charge mechanism.
Question: On what value of amount, tax rate will apply?
Answer: Value of Supply topic.
Question: Whether CGST-SGST or IGST needs to be charged?
Answer: Place of Supply topic.
Question: When is liability to pay tax to the tax department arise?
Answer: Time of Supply topic.
Question: How to pay the tax?
Answer: Input Tax Credit and Payment of tax topic.
Question: What proof should be kept of the transaction for future purpose?
Answer: Invoicing, Accounts and Records topic.
Question: What related compliances needs to be done?
Answer: GST returns topic.
Another simple example to elucidate the working of GST.
Example: Rajesh sold the goods to Mahesh for Rs 10,000. GST rate is 18%.
Both are located in Karnataka.
Answer:
Value of goods – Rs 10,000
CGST – Rs 900
SGST – Rs 900
Gross Value – Rs 11,800
Example: Ranbir, Mumbai sold the goods to Rajni, Chennai for Rs 10,000. GST
rate is 18%.
Answer:
Value of goods – Rs 10,000
IGST – Rs 1800
Gross Value – Rs 11,800
CONCEPT OF “SUPPLY”
A taxable event is any event or occurrence that results in a tax liability. The taxable event in GST
is supply of goods or services or both. So the first and the foremost condition to
make transaction taxable to GST is Supply.
Various taxable events like manufacture(for excise), sale(for VAT), rendering of
service(for Service tax), purchase(for purchase tax), entry into a territory of
state(for Entry tax) and many other have been done away with in favour of just
one event i.e. Supply.
In general words, Supply means To Provide. It includes sale, transfer, barter,
exchange, license, rental, lease or disposal.
Next we discuss few universal condition to be fulfilled by a transaction to make
it chargeable to GST. This can be better understood in terms of following six
parameters:
1. Supply of goods or services. Supply of anything other than goods or services
does not attract GST. So it is important to know what is Goods and what is
Services (Covered under Definition Chapter)
2. Supply should be made for a consideration( a payment or reward) . It is immaterial
whether the payment is made by the recipient or by any other person.
Example – Tata Motors sold a car to Abhishek Bachchan, the car was registered
under his name. The payment for the car was however made by Amitabh
Bachchan. Is the selling of the car to Abhishek Bachchan considered as Supply?
Answer is YES.
3. Supply should be made in the course or furtherance of business. That is
personal dealing won’t be regarded as supply.
Example - A Dealer of Cement buys cement for trading, is considered as Supply.
Example – The same dealer if buys laptop to keep accounting of the stock, this
buying of laptop of his business will also be regarded as Supply, as it will be
used in the furtherance of his business.
Example – A homemaker lady selling of old newspaper or plastic waste to
raddiwala won’t be considered as supply. As the lady is just selling the unusable
material on her house which is primarily not for business purpose.
Example – A lady went to Jewellery shop to sell her old jewels. As she is not a
regular dealer selling jewellery, this won’t be considered as supply under GST.
4. Supply should be made by a taxable person.
A “taxable person” is a person who is registered or liable to be registered
under the GST law. Hence, even an unregistered person who is liable to be
registered is a taxable person. Similarly, a person not liable to be registered but
has taken voluntary registration and got himself registered is also a taxable
person.
Example – A dealer having a turnover of Rs 2 lakh pa only and has taken GST
registration shall be considered as a taxable person, even if his turnover is below
threshold limit.
5. Supply should be a taxable supply. GST will not be charged on non-taxable
supply or exempt supply.
6. Supply should be made within the taxable territory. So the place of supply
should be in India.
Example – Bill gates selling his software to Warren Buffett in US won’t be
considered as taxable under Indian GST.
To charge GST – Transaction should be a supply of the taxable goods or
services or both by a taxable person in the taxable territory for consideration
in the course or furtherance of business.
IS THIS GOODS OR SERVICES??
Sometimes there might be a confusion as to whether the transaction is a supply
of goods or supply of service. Example-Photography. The photographer provides
the photo (goods) but at the same time it can be said that he is providing services
of clicking and converting to photo as the paper cost is very low as compared to
the price charged.
It is essential to bifurcate as this classification might decide the exemption or tax
rate.
The GST law to minimize this uncertainty lists a few specific activities
which are specifically be treated as supply of goods or supply of services
which are detailed below:
1. Transfer of the title in goods (ownership) or 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.
Example – Raj makes an agreement with Anjali to sell his car after 3 month for
Rs 5 lakhs. This has shall be considered as supply of goods and not supply of
services even if title has not been passed to Anjali today.
2. Transfer of right in goods without the transfer of title is a supply of services.
Example – Company hiring a laptop on rental basis. The company has authority
to use the laptop as per their will but the ownership is still with the shopkeeper.
This will be regarded as supply of services and not goods, even though the
laptop is goods.
3. Supply of goods by any unincorporated association or body of persons to a
member shall be treated as supply of goods.
Example – A partnership firm giving some of its asset or goods to partner shall
be considered as supply.
