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GOOD AND SERVICE TAX

GST is a huge reform for indirect taxation in India, the likes of which the country has not seen
post-Independence. GST will simplify indirect taxation, reduce complexities, and remove the
cascading effect. Experts believe that it will have a huge impact on businesses both big and small
and change the way the economy functions.

A. GST Vs Current Indirect Tax Structure

To understand GST, it is important that we understand the current indirect taxation system. Direct taxes
such as income tax are borne by the person liable to pay the tax; this means that the tax burden cannot be
shifted to anyone else. The liability of an indirect taxes on the other hand, can be shifted to another person.
So, the person liable to pay the tax can collect the tax from someone else and then pay it to the
government; thus, shifting the tax burden. The GST tax falls in this category. The current indirect tax
structure, which comprises of so many different taxes, can be classified as: Central taxes: levied by the
Central govt (includes Central Sales Tax, Excise Duty etc.) State taxes: levied by the various state govts
(VAT, Service Tax, Octroi)

The previous tax structure has been replaced by GST and several changes have taken place as a
result. Here are the most prominent differences between the VAT structure and GST:

Parameter VAT GST

Under the old taxation system, the

central taxes applicable were custom
Under GST, all the central and state
duty/central excise duty, central sales tax
taxes will be subsumed, and a single tax
on commodities and services, surcharge
will be levied on all commodities and
Structure and cesses. The state taxes included state
services apart from motor spirit,
VAT, WCT, entertainment tax, luxury
petroleum, natural gas and high-speed
tax, tax on gambling, betting and lottery,
diesel.
sales tax deducted at source, and
surcharge and cesses.

Under GST, tax will be levied at the

Basis of Levy Under VAT, tax will be levied at the place of consumption, like a
place where goods are manufactured or destination-based tax.
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Parameter VAT GST

sold, or the place at which services are

rendered.

Under VAT, the registration is Under GST, there will be uniform e-

Registration decentralised under state and central registration depending upon the PAN
authorities. of the entity.

Under GST, the validation will take

Under VAT, the system will partly
place on the system, and consistency
validate the returns, and full verification
Validation checks will be carried out on input
will be subject to assessments by state or
credit availed, tax payments, and
central authorities.
utilisation.

Under the old scenario, service tax and Under GST, the process is uniform and
Filing of Returns and
central excise were uniform, but VAT the dates for collecting or depositing
Collection of Tax
varied from state to state. tax and filing returns are common.

Under VAT, the centre charges service

Under GST, the State GST subsumes
tax on a list of services under the
Service Tax service tax depending upon rules
Finance Act on provision/payment
relating to Place of Supply.
basis.

Under VAT, all commodities apart from Under GST, the State GST subsumes
State VAT
those exempts are taxed. this tax.

Under GST, the excise duty will be

Under VAT, excise duty will be levied
Excise Duty replaced by Central GST and tax will be
up to the point of manufacturing.
levied up to retail level.

Under VAT, the centre charges tax on

Basic Customs Duty No change.
imports under a separate act.

Special Additional Under Vat, the centre charges tax on Under GST, this duty is subsumed by
Duty imports separately. State GST.
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Parameter VAT GST

Under GST, entry tax is not applicable,

Under VAT, entry tax is charged by
but an additional 1% will be levied as
Entry Tax certain states for inter-state transfers,
tax on inter-state supply of certain
detained as import in local area.
commodities.

Under VAT, CST is charged at a

concessional rate of 2% so far as inter-
Under GST, the Integrated GST
Central Sales Tax state transfers are concerned against C-
subsumes CST.
Forms. The full rate applicable
otherwise ranges from 5% to 14.5%.

Tax on Export of
Commodities and Under VAT, this tax is exempt. No change.
Services

Tax on Inter-State
Transfer of Under VAT, this tax is exempt against Under GST, this tax is levied but
Commodities to Form F. dealers will have access to full credit.
Agent or Branch

Under VAT, set-off of service tax and Under GST, set-off between State GST
Cross Set-Off of Levy
excise duty is permitted. and Central GST is not allowed.

Tax on Transfer of Under VAT, this tax is generally exempt, Under GST, this tax may be levied
Commodities to but its applicability depends upon state unless TIN of the transferor and
Agent or Branch procedures. transferee is the same.

Under VAT, there are a few non- Under GST, there will be no such
Disallowance of credit
creditable commodities and services disallowance unless the GST Council
on certain items
under VAT as well as CENVAT rules. specifically allows it.

Disallowance of Under GST, there will be no such

inputs or input disallowance, unless the GST Council
Under VAT, this is not permitted.
services utilised in finalises a list of those items falling
exempted under the Negative List.
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Parameter VAT GST

commodities or
services

Under VAT, credit between service tax

Under GST, credit available on the
Cascading Effect and excise duty is available, but there is
whole amount of taxes up to retailer.
no set-off against VAT on excise duty.

Under VAT,
the threshold
for central
excise is
Rs.1.5 crore,
and the
threshold for
Under GST, the State GST will range
VAT ranges
Threshold limits for between Rs.10 lakh to Rs.20 lakh based
between Rs.5
levy of tax on recommendations of the GST
lakh to Rs.20
Council.
lakh
depending
upon the
state. The
threshold for
service tax is
Rs.10 lakh.

Levy of tax on NGOs Under VAT, certain government bodies,

and government non-profit organisations and PSUs will No changes.
bodies be covered.

Under GST, there will be no such

Under VAT, certain areas such as the
exemptions, and the GST Council may
Exemptions North-East will be able to enjoy
introduce an Investment Refund
exemptions.
Scheme for certain zones.

B. Introduction and Overview of GST

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GST is considered as an indirect tax for the whole nation that would make India one unified
common market. It is a tax which is imposed on the sale, manufacturing and the usage of the goods
and services. It is a single tax that is imposed on the supply of the goods and services, right from
the manufacturer to the customer. The credits of the input taxes that are paid at each stage will be
available in the subsequent stage of value addition which makes GST essentially a tax only on the
value addition on each stage. The final consumers will bear only the tax charged by the last dealer
in the supply chain with the set of benefits that are at all the previous stages.

It is charged at the national and state level at similar rates for the same products and it also replaces
almost all the current indirect taxes that are imposed separately by the Centre and the States. Goods
& Services Tax is a destination-based tax which means that the tax is paid at the place of supply.

Some of the State taxes that will be subsumed under GST are –

Some of the Central taxes that will be subsumed under GST are –
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1. Benefits of GST:

1. Eliminating the cascading effects of taxes

2. Tax rates would be comparatively lower
3. Reduce tax evasion and increase the revenue and GDP by widening the tax base
4. There would be seamless flow of the input tax credit
5. Price of the goods and the services would fall
6. There would efficient supply chain management
7. It would promote the shift from unorganized sector to organized sector.
8. It would eliminate 17 indirect taxes and therefore the compliance cost would fall

2. Date from which GST came into force in India:

With a lot of constitutional amendments and years of delay the Goods and Service tax finally been made
applicable in India from 1st July 2017. Although the foundation was laid way back in 2004 when the idea
was initiated by the Kelkar Task Force. Since then after a lot of discussions, approvals and debates GST
successfully rolled out in the year 2017 as one of the biggest taxation reform witnessed by the Indian
economy after the eve of Independence.

3. Objective of GST:

GST which is the biggest tax reform brought into INDIA post-independence has paved its way to
resolving major inherent flaws in the Indian indirect taxation system. Such as,

1. Deficiencies in the VAT system:

VAT system was the biggest victim of cascading effect i.e. double tax or tax on taxes already paid.
The same has been resolved with the implementation of GST. Earlier, a manufacturer was paying
excise on production on goods which formed part of goods for the dealer selling the same on a
later stage. And while making the sales he was either paying VAT or CENVAT on price inclusive
of excise. Which lead to double taxation and ultimately increased the burden on the consumer.
GST has addressed this flaw efficiently.

2. Removing the confusions of the existing tax regime:

The major talked about the issue of Classification of a product as a good or service has been
redressed by the newly introduced Goods and Service Tax. There were a lot of confusions and
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litigations over the subject matter whether as to classify a product as a good or service also it leads
to dispute in deciding the rate of taxes. With the concept of supply introduced by GST, all such
paradoxes have settled down.

3. Integration of all existing taxes:

Under the old taxation policies, there were a lot of ambiguities like

 CENVAT and VAT both were Value-added taxes still imposed separately
 Service tax and VAT was charged separately
 Luxury tax and VAT were imposed simultaneously

All these led to a lot of inconvenience in complying with different procedural requirements under
different laws and statues. Also, Central taxes like CENVAT were not allowed to be set off against
State taxes.

4. Easy compliances:
Trying to do 1000 things at a time obviously leads to mismanagement and ineffectiveness. The
same goes for our old indirect tax structure. So many taxes with different constitutional bodies
was not an easy task to do. GST has made compliances easier, as separate records or compliance
under varied provisions of the law are no longer needed.

5. Increased Transparency:
Easy compliances have led to better monitoring. The synergies arising out of GST can now be
used to take the much-needed actions timely. Which will help to build a sound structure
of indirect taxes into India.

6. Faster redressal and quicker actions

GST has made tracking a lot easier. A person who was aggrieved or had a query previously was
redirected from one place to other in name of different prevalent laws. Also no conclusion to
disputes pending could be concluded because of multiple legislations applicable. All these
grievances would be reduced after implementation of GST. As it is One Nation One Tax.
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7. Single window clearances:
Multiple registrations and formalities under different laws led a person running the business into a
pathetic situation. GST is like a blessing for all those who were running to different offices for
compliances procedures. After GST, taxpayers would be happy to follow the simple set of rules
under just one tax norm.

8. The ease at both ends:

Old tax regimes led people to file taxes differently for different taxes. GST has eradicated the
problem from its root. Now common tax payments are required to be made. Additionally, a
simple set of returns called GTSRs are required to file under GST law and no separated due dates
as per varied laws need to be bookmarked.

9. Economies to scale:
The savings of resources like time, cost and efforts will enable both a taxpayer and the nodal
officers to improvise and effectively use the available assets. The Taxpayers can now invest the
same in business expansion and the government in better implementation.

10. Effective set off of ITC:

Taxes were being levied both at Central and State level, along with inconvenience and added costs
it also led to the problem with setting up of tax credits. GST being one single tax both at central
and state level has proved to be a boon for the taxpayers by ensuring maximum credit sett offs.

C. Structure or framework of GST in India (Types of GST Tax)

In India, we have the federal government, which means we have ministers both at centre and state
levels. The same modal has been adopted under GST. The government has adopted GST in its
Dual or concurrent model. As a result of which both Centre and State government will levy GST
simultaneously. The implemented GST structure is categorised under four heads, namely –

 IGST – Integrated Goods and Service Tax

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 CGST – Central Goods and Service Tax (CGST)

 SGST – State Goods and Service Tax
 UGST – Union Territory Goods and Service Tax

A big applicative tax reform brought by GST is that it extends to the whole of India including the
State of Jammu and Kashmir, unlike the Service Tax Act 1994.

State Good and Service Tax (SGST)

The full form of SGST is State Goods and Services Tax. It is a tax levied by the State Government
on the supplies of both goods and services within the state i.e. intrastate. The tax liability under
SGST will be first set off against SGST or UTGST and then the balance can be set off against
IGST input tax credit only. The tax amount collected under SGST is used by the State
Government of the state where the transaction took place. The rate of State Goods and Services
Tax shall be equal to the rate of CGST on a particular product or service.

Central Good and Service Tax (CGST)

The full form of CGST is Central Goods and Services Tax. It is a tax levied by the Central
Government on the supplies of both goods and services within the state i.e. intrastate. The tax
liability under CGST will be first set off against CGST and the balance can be set off against IGST
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input tax credit only. The tax amount collected under CGST shall be transferred to the Central
Government. On a particular product or service, the rate of Central Goods and Services Tax shall
be equal to the rate of SGST.

Union Territory Good and Service Tax (UGST)

The full form of UTGST is Union Territory Goods and Services Tax. It is a tax levied by the
Government of Union Territory on the supplies of both goods and services within the state i.e.
intrastate. The tax liability under UTGST will be first set off against UTGST and the balance can
be set off against IGST input tax credit only. The concept of this tax is the same as SGST, the
only difference is that instead of SGST this tax is applicable in the union territories of India. The
tax amount collected under UTGST shall be transferred to the Government of Union Territory.
The rate of Union Territory Goods and Services Tax shall be equal to the rate of CGST on a
particular product or service.

Integrated Territory Good and Service Tax (IGST)

The full form of IGST is Integrated Goods and Services Tax. It is a tax levied by the Central
Government on the supplies of both goods and services outside the state i.e. intrastate as well as
on imports. The tax liability under IGST will be first set off against IGST and the balance can be
first set off against CGST and then against SGST/ UTGST input tax credit only. Integrated
Goods and Services Tax shall be collected by the Central Government and then distributed to
various States.
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Difference between CGST, SGCT, and IGST

CGST, SGST or UTGST and IGST are the different levies introduced under the GST framework
in India from 1st July 2017. Since GST has been implemented in India in its dual modal i.e. both
Central and state government can levy and collect taxes simultaneously there was urge to give
them specific legislative powers. The above-mentioned different Acts lay down the foundation
guidelines on the scope and powers to different authorities.

GST is bifurcated based on its structure into these categories

 IGST – is a Central Government levy and collection of tax on

1. – Import & Export or (outside country)
2. – Interstate supplies (outside the state)

GST has dual modal where both central and state government concurrently levy taxes.
Because of which matters like import/export or supply of goods and services to another
state was a subject of dispute. The decision will directly affect revenue interests of both
states; hence, the government came out with a way out via IGST. Also, harmony has been
kept in IGST rate. It is approximately aggregate of CGST and SGST. For eg, if CGST is
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9% and SGST is 9%, then the rate of IGST for the same transaction would be 18%
(approx).

 CGST – is a Central Government levy and collection of tax on intrastate supplies (within the
state). The legislation governing levy of CGST is CGST Act 2017.
 SGST- is State Government levy and collection of tax on intrastate supplies (within the state).
Though every state has its own legislation for governing its state levy. The core things (to the
extent feasible) have been kept intact to preserve the basic nature of GST law. Some common
features in all SGST acts
1. The Basic Law
2. Chargeability
3. Taxable Events
4. Taxable Persons
5. Classification
6. Valuation
7. Collection and levy of Tax etc
 UTGST - is Levy and collection of GST on Union territories on intrastate supplies (within the
state). The Union territories like Andaman & Nicobar Islands, Lakshadweep, Dadra and Nagar
Haveli, Daman and Diu and Chandigarh are governed by UTGST Act, 2017.

Note: Union territories such as Delhi and Puducherry have their own legislature hence are
governed under SGST and not under UTGST.

Transaction Type Type of GST Example

Applicable

Intra-state (i.e. sale within the CGST + SGST A dealer in Delhi makes a sale to another
same state) dealer in Delhi. GST rate is 18%, so
CGST of 9% and SGST of 9% will be
applicable.
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Inter-state (i.e sale outside IGST A dealer in Mumbai makes a sale to a

state) dealer in Delhi. GST rate is 5%, so 5%
IGST will be applicable.

 GST Cess – Rate, Applicability and Calculation

GST cess is a compensation cess levied under section 8 of The Goods and Services Tax (Compensation to
State) Act, 2017. GST cess is levied on intra-state supply of goods or services and inter-state supply of goods or
services to provide compensation to the States for loss of revenue due to implementation of GST in India. In
this article, we look at the applicability of GST Cess, rate of GST cess and methodology for calculation.

a) Why is GST Cess Levied

As GST is a consumption-based tax, the state in which the consumption of goods and supply happen would be
eligible for the indirect tax revenue. Hence, after GST coming into effect, some states that are net exporter of
goods and/or services are expected to experience a decrease in indirect tax revenue.

To compensate the States for the loss in tax revenue, the GST Compensation Cess has been declared by the
Central Government. As per the Goods and Services Tax (Compensation to State) Act, 2017, GST
compensation cess would be levied for a period of 5 years from GST implementation.

b) Usage of GST Cess

All the proceeds received from the GST compensation cess would be credited to a non-lapsable fund known as
the Goods and Services Tax Compensation Fund. The funds would then be used for compensating tax revenue
loss to States on account of GST implementation. If any funds are unutilised, then at the end of the transition
period, it would be shared in half by the Central Government and all State Government. State government’s
share would be distributed in the ratio of their total revenues from the State tax or the Union territory goods
and services tax, in the last year of the transition period.

c) Applicability
GST Cess would be applicable to both the supply of goods or services that have been notified by the Central
Government. Also, both intra-state supplies of goods or services and inter-state supplies of goods or services
would attract GST cess. All taxable person under GST, except taxpayers registered under GST composition
scheme is expected to collect and remit GST cess. The following goods will attract GST Cess :

 Pan Masala
 Tobacco and manufactured tobacco substitutes, including tobacco products
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 Coal, briquettes, ovoids and similar solid fuels manufactured from coal, lignite, whether or not
agglomerated, excluding jet, peat (including peat litter), whether or not agglomerated
 Aerated waters
 Motor cars and other motor vehicles principally designed for the transport of persons (other than
motor vehicles for the transport of ten or more persons, including the driver), including station wagons
and racing cars.
 Any other supplies as notified from time to time.

d) How to Calculate
In case the goods or service attracts GST cess, cess must be calculated on the basis of the taxable value of the
supply and as provided in the GST cess rate schedule. In case GST cess is applicable on goods imported into
India, then cess must be levied and collected along with the IGST and customs duty.

For example, if the assessable value of goods imported into India is Rs. 100/-, the GST rate is 18%, and
customs duty is 10%.

Then IGST tax payable would be calculated as:

Assessable Value= Rs. 100/-

Basic Customs Duty (BCD) = Rs. 10/-
Value for the purpose of levying IGST = Rs. 110/-
GST – Integrated Tax = 18% of Rs.110/- = Rs. 19.80
Total Taxes = Rs. 29.80

If the goods attract GST Compensation Cess, then GST Compensation Cess would be levied on Rs. 110/-, as
Compensation Cess is not levied IGST.

e) GST Cess Rate

Name of Goods or Service HSN Code GST Cess

Pan Masala 2106 90 20 60%

Aerated waters, containing added sugar or other sweetening matter or flavoured

Aerated waters 2202 10 10 12%

Lemonade 2202 10 20 12%

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Others 2202 10 90 12%

Tobacco and Tobacco Products

Unmanufactured tobacco bearing a brand name 2401 65%

Tobacco refuse, bearing a brand name 2401 30 00 61%

Chewing tobacco (without lime tube) 2403 99 10 160%

Chewing tobacco (with lime tube) 2403 99 10 142%

Filter khaini 2403 99 10 160%

Jarda scented tobacco 2403 99 30 160%

Pan masala containing tobacco ‘Gutkha’ 2403 99 90 204%

Cigarettes

Non-filter

Not exceeding 65 mm 2402 20 10 5% + Rs.1591 per

thousand

Exceeding 65 mm but not 70 mm 2402 20 20 5% + Rs.2876 per

thousand

Filter
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Not exceeding 65 mm 2402 20 30 5% + Rs.1591 per

thousand

Exceeding 65 mm but not 70 mm 2402 20 40 5% + Rs.2126 per

thousand

Exceeding 70 mm but not 75 mm 2402 20 50 5% + Rs.2876 per

thousand

Others 2402 20 90 5% + Rs.4170 per

thousand

Other Tobacco Products

Cigar and cheroots 2402 10 10 21% or Rs. 4170 per

thousand, whichever is
higher

Cigarillos 2402 10 20 21% or Rs. 4170

per thousand,

whichever is higher

Cigarettes of tobacco substitutes 2402 90 10 Rs.4006 per thousand

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Cigarillos of tobacco substitutes 2402 90 20 12.5% or Rs. 4,006 per

thousand whichever is
higher

Other 2402 90 90 12.5% or Rs. 4,006 per

thousand whichever is
higher

Hookah’ or ‘gudaku’ tobacco bearing a 2403 11 00 72%

brand name

Tobacco used for smoking ‘hookah’ or ‘chilam’ 2403 11 00 17%

commonly known as ‘hookah’ tobacco or ‘gudaku’

Other smoking tobacco not bearing a brand name. 2403 11 90 11%

Smoking mixtures for pipes and cigarettes 2403 19 10 290%

Other smoking tobacco bearing a brand name 2403 19 90 49%

Other smoking tobacco not bearing a brand name 2403 19 90 57%

“Homogenised” or “reconstituted” tobacco bearing a brand 2403 91 00 72%

name

Preparations containing chewing tobacco 2403 99 20 72%

Snuff 2403 99 40 72%

Preparations containing snuff 2403 99 50 72%

Tobacco extracts and essence bearing a brand name 2403 99 60 72%

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Tobacco extracts and essence not bearing a brand name 2403 99 60 65%

Cut tobacco 2403 99 70 20%

All goods, other than pan masala containing tobacco ‘gutkha’, 2403 99 90 96%
bearing a brand name

All goods, other than pan masala containing tobacco ‘gutkha’, 2403 99 90 89%
not bearing a brand name

Other Products

Coal; briquettes, ovoids and similar solid fuels manufactured 2701 Rs.400 per tonne
from coal.

Lignite, whether or not agglomerated, excluding jet 2702 Rs.400 per tonne

Peat (including agglomerated) 2703 Rs.400 per tonne

Motor Vehicles

Motor vehicles (10<persons <13) 8702 15%

Small Cars (length < 4 m ; Petrol<1200 cc ) 8703 1%

Small Cars (length < 4 m ; Diesel < 1500 cc) 8703 3%

Mid Segment Cars (engine < 1500 cc) 8703 15%

Large Cars (engine > 1500 cc) 8703 15%

Sports Utility Vehicles (length > 4m ; engine > 1500 cc; ground 8703 15%
clearance > 170 mm)

Mid Segment Hybrid Cars (engine < 1500 cc) 8703 15%
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Hybrid motor vehicles > 1500 cc 8703 15%

Hydrogen vehicles based on fuel cell tech > 4m 8703 15%

Motorcycles (engine > 350 cc) 8711 3%

Aircraft for personal use. 8802 3%

Yacht and other vessels for pleasure or sports 8903 3%

D. Basic Definition

1. "Goods" under GST

Goods in GST means every kind of movable property like pen, car, food, animals etc. It also
includes actionable claims and growing crops or grass, although these things are not normally
construed as movable and are attached to earth. Reason for the same being, these things can be
sold separately or sold under a combined contact with land. But, goods in GST does not include

 Money
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 Securities
The definition of goods has been given under section 2(52) of CGST Act 2017
2. "Services" under GST
Services under Goods and Service Tax means anything which is NOT

 Goods,
 Securities,
 Money
But activities like the conversion of money-by-money exchanges or authorized
dealers for a service charge or fee is included under the ambit of Service. The
definition of service has been given under section 2(102) of CGST Act 2017.
3. Consideration under GST
Section 2(31) ‘consideration’ in relation to the supply of goods or services or both includes––
(a) any payment made or to be made, whether in money or otherwise, in respect of, in
response to, or for the inducement of, the supply of goods or services or both, whether by
the recipient or by any other person but shall not include any subsidy given by the Central
Government or a State Government.
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient or by any
other person but shall not include any subsidy given by the Central Government or a State
Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not
be considered as payment made for such supply unless the supplier applies such deposit as
consideration for the said supply.
4. Agent: means a person, including a factor, broker, commission agent, arhatia, del credere agent,
an auctioneer, or any other mercantile agent, by whatever name called, who carries on the business
of supply or receipt of goods or services or both on behalf of another [Section 2(5)].
5. Common portal: means the common goods and services tax electronic portal referred to in section 146
[Section 2(26)].
6. Council: means the Goods and Services Tax Council established under article 279A of the Constitution
[Section 2(36)].
7. Place of business includes [Section 2(85)]:
 a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place
where a taxable person stores his goods, supplies or receives goods or services or both; or
 a place where a taxable person maintains his books of account;or
 a place where a taxable person is engaged in business through an agent, by whatever name called.
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8. Taxable supply: means a supply of goods or services or both which is leviable to tax under this Act
[Section 2(108)]
 Taxable territory: means the territory to which the provisions of this Act apply [Section 2(109)].
 Taxable person: means a person who is registered or liable to be registered under section 22
or section 24 [The concept of taxable person has been discussed in detail in subsequent paras]
[Section 2(107)].
9. Principal place of business: means the place of business specified as the principal place of business in the
certificate of registration [Section 2(89)].
10. Proper officer: in relation to any function to be performed under this Act, means the Commissioner
or the officer of the central tax who is assigned that function by the Commissioner in the Board [Section
2(91)].
11. Registered person: means a person who is registered under section 25, but does not include a person having a
Unique Identity Number [Section2(94)].
12. Fixed establishment: means a place (other than the registered place of business) which is characterised by
a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply
services, or to receive and use services for its own needs [Section 2(50)].
13. Tax period: means the period for which the return is required to be furnished [Section 2(106)].

E. Registration under GST

Important Notes
1. Under any taxation law, registration is the most “fundamental requirement” for “identification of
taxpayers (Based on unique ID such as GSTIN number, IEC Code) ensuring tax compliance in the
economy.
2. Without registration, a person can neither collect tax from his customers nor claim any credit of tax
paid by him.
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3. Registration legally recognizes a person as “Supplier” of goods or services or both and legally authorizes
him to collect taxes and pass on the credit of the taxes.
4. Registration ensures the seamless flow of input tax credit from suppliers to recipients at the national
level.
5. Under GST law, a supplier is required to obtain State-wise registration (no concept of a centralized
registration under GST).
6. Since registration in GST is PAN based, once a supplier is liable to register, he has to obtain
registration in each of the States/UTs in which he operates under the same PAN
7. Further, he is normally required to obtain single registration in a State/UT. However, where he has
multiple places of business in a State/UT, he has the option either to get a single registration for said
State/UT [wherein it can declare one place as principal place of business (PPoB) and other branches as
additional place(s) of business (APoB)] or to get separate registrations for each place of business in
such State/UT.
8. Registration under GST is not tax specific, which means that there is single registration for all the taxes i.e. CGST,
SGST/UTGST, IGST and GST compensation cess.

“A supplier has to obtain registration in every State/UT from where he makes a taxable supply
provided his aggregate turnover exceeds a specified threshold limit. Thus, he is not required to
obtain registration from a State/UT from where he makes a non-taxable supply”

a. Types of GST Registration

 Normal Taxpayer
 Composition
 Casual Taxable Person
 Input Service Distributor (ISD)
 Non-Resident Taxable Person
 Non-Resident Online Service Distributor
 Embassy/UN Body/ Other Notified Persons
 Special Economic Zone (SEZ) Developer/ Unit
 Tax Deductor at Source (TDS) /Tax Collector at Source (TCS)

1. Normal Taxpayer

i. Once the Threshold limit of Rs 20 Lac in case of special category states) and 40 lacs in
case of Normal category states crosses registration required.
ii. A Registered Person, whose aggregate turnover in the preceding financial year did not
exceed Seventy-Five Lakh Rupees.
iii. The taxpayers related to Service industry other than the restaurant sector. The
taxpayers registered under the regular scheme has to file returns monthly.
iv. Currently, GSTR 3B and GSTR 1 are required to be filed.
v. Regular taxpayers can avail input tax credit of GST Paid on purchase of goods or
services or both
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2. Composition Scheme

i. Composition Scheme is a simple and easy scheme under GST for taxpayers.
ii. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of
turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs.
1.5 crore.
iii. The following are the advantages of registering under composition scheme:
iv. Lesser compliance (returns, maintaining books of record, issuance of invoices)
v. Limited tax liability
vi. High liquidity as taxes are at a lower rate

3. Casual Taxable Person

i. Any person who occasionally supplies goods and/or services in a territory where GST
is applicable, but he does not have a fixed place of business. Such a person will have
to treat as a casual taxable person as per GST.
ii. For example, A person who has a place of business in Bangalore supplies taxable
consulting services in Pune where he has no place of business would be treated as a
casual taxable person in Pune

4. Input Service Distributor

i. Input Service Distributor means an office of the supplier of goods/services which

receives tax invoices on receipt of input services and issues tax invoices for the
purpose of distributing the credit of CGST/SGST/IGST paid on the said services to
your branch with same PAN.
ii. (It must be a supplier of taxable goods /services having the same PAN as that of the
office referred to above).
iii. Thus, only credit on ‘input services’ can be distributed and not on input goods or
capital goods.
iv. This will be a new concept for assesses who are currently not registered as input
service distributor. However, this facility is optional in nature.

5. Non-Resident Taxable Person

i. When a non-resident occasionally supplies goods/services in a territory where GST

applies, but he does not have a fixed place of business in India.
ii. As per GST, he will be treated as a non-resident taxable person.
iii. It is similar to above except the non-resident has no place of business in India.

6. Non-Resident Online Service Distributor

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i. Online information and database access or retrieval services mean services provided
by the means of Information Technology, over internet or electronic network such as
advertising on the internet, cloud services, e-books, downloading movies, software,
online supplies of digital content (movies, t.v shows, music, data storage, gaming, etc.
ii. Every person supplying online information and database access or retrieval services
from a place outside India to person in India, other than the registered person
(hereinafter referred to as Non-Resident Online Services Provider), is required to
register in GST as a provider of OIDAR Services.
iii. other than the registered person (hereinafter referred to as Non-Resident Online
Services Provider), is required to register in GST as a provider of OIDAR Services.
iv. So for provision of OIDAR Services by such foreign services providers to
the unregistered persons in India, obtaining Registration by such foreign service
providers is mandatory.
v. In the case of Non-Resident Online Service Providers, Single Registration will be valid
for PAN India.
vi. All such persons, the processing of registration and subsequent action will be done
centrally at the Office of Principal Commissioner of Central Tax, Bengaluru West.
vii. Such Non-Resident Online Service Providers need to appoint an Authorised
Signatory (Indian) in India possessing a valid PAN. That Authorised person shall
apply for registration at GST portal on behalf of such Non-Resident Online Service
Providers.

7. Embassy/UN Body/ Other Notified Persons

i. UIN stands for Unique Identity Number, granted to UN Bodies and Embassies on
the basis of letter issued by the Ministry of External Affairs (MEA).
ii. UIN can also be granted to any other Notified Persons (as may be notified by the
Commissioner) on the basis of request received from the respective notified
organization.
iii. UIN enables the UN Bodies, Embassies and Other Notified Persons to get the
supplies of taxable goods /services from the registered persons.
iv. The relevance of UIN is that it needs to be mentioned on purchase invoices so that
the UIN holder could claim a refund of GST paid on such transactions on the basis
of Form RFD -10, which is generated after their filing Statement of such inward
supplies in Form GSTR-11.
v. You can apply for registration as UN Bodies/ Embassies/Other Notified Person for
allotment of UIN directly on the GST Portal. Navigate to Services > Registration >
New Registration option.
vi. Select the New Registration option and United Nation Body/ Consulate or Embassy
of Foreign Country/ Other Notified Person from I am a drop-down list.
vii. UN Bodies/ Embassies/Other Notified Person must fulfill following conditions so
that they can file an application for allotment of UIN on the GST Portal:

1. The applicant is not already registered in the State i.e. he does not have UIN for this
entity in that State.
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Note: UN Bodies/ Embassies are not required to take state-wise registration but one
single registration is enough for them for the whole of India. Other Notified Person is
required to take state wise registration.

2. Applicant has a valid Indian mobile number

3. Applicant has valid E-mail Address

4. The applicant has the prescribed documents and information on all mandatory fields as
required for registration

5. Applicant has authorized signatory with valid details.

8. Special Economic Zone (SEZ) Developer/ Unit

i. SEZ developers and SEZ Units are required to be registered a-fresh in GST regime.
ii. You need to apply for new registration, as a separate business vertical under GST.
iii. And You need to select SEZ Unit or SEZ developer in the “reason to obtain
registration” in Business Detail tab. You are required to upload the necessary
certificate/documents issued by Government of India, as a proof of you being SEZ
unit or Developer in the “principal place of business” tab, to substantiate your claim.
iv. In case you had selected SEZ as one of the Business Activity in the Enrolment Form,
your Primary Authorized signatory should have received an email seeking your inputs
for identifying the GSTIN as SEZ Unit or Developer. In case, you have not received
such email from GST system ID or missed to select SEZ as Business Activity, you
may approach the Jurisdictional Tax Authority, who in turn may raise a request to
GST system for making this change.
v. In case, you have not received such email from GST system ID or missed to select
SEZ as Business Activity, you may approach the Jurisdictional Tax Authority, who in
turn may raise a request to GST system for making this change.
vi. In case, you have not received such email from GST system ID or missed to select
SEZ as Business Activity, you may approach the Jurisdictional Tax Authority, who in
turn may raise a request to GST system for making this change

9. Tax Deductor at Source (TDS) /Tax Collector at Source (TCS)

i. TDS stands for Tax Deducted at Source (TDS). All Department or establishment of
Centre / State Government, Local Authority, Government Agencies & Persons or
category of persons notified by Central / State Government Governments, making
contractual payments in excess of INR 2.5 Lakhs to suppliers need to register as a
TDS under GST.
ii. In the GST regime, while making such a payment in excess of INR 2.5 Lakhs, the
concerned Department or establishment of Centre / State Government, Local
Authority, Government Agencies & Persons or category of persons notified by
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Central / State Government Governments needs to deduct 1% under CGST Act and
1% under SGST Act;
iii. In case of inter-state transactions, 2% (under the IGST Act) of the total payable
amount and remit it into the appropriate GST account. The credit for such GST
payments will be given to the suppliers.
iv. The Registration Application for Tax Deductor/Tax Collector can be filed by the
applicant directly by themselves.
v. In GST regime, the registration process is online and any person/entity wishing to
register will have to access the GST system for the same.
vi. Any person who wish to get registered as the Tax Deductor/Tax Collector needs to
apply in the form prescribed.

The preconditions are:

1. Applicant has valid PAN or TAN.
2. Applicant must have a valid mobile number.
3. Applicant must have valid E-mail ID.
4. Applicant must have the prescribed documents and information on all mandatory fields as
required for registration.
5. Applicant must have a place of business.
6. Applicant must have an authorized signatory with valid details.

b. CONCEPT OF TAXABLE PERSON [SECTION 2(107)]

As per section 2(107) of the CGST Act, taxable person means a person who is registered or liable to be registered
under section 22 or section 24.
Thus, 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.

c. PERSONS LIABLE FOR REGISTRATION [SECTION 22]

(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than
special category States, from where he makes a taxable supply of goods or services or both, if his
aggregate turnover in a financial year exceeds forty lakh rupees.
Provided that where such person makes taxable supplies of goods or services or both from any of the
special category States, he shall be liable to be registered if his aggregate turnover in a financial year
exceeds twenty lakh rupees
Explanation––For the purposes of this sub-section, a person shall be considered to be engaged
exclusively in the supply of goods even if he is engaged in exempt supply of services provided by
way of extending deposits, loans or advances in so far as the consideration is represented by way
of interest or discount.

(2) Every person who, on the day immediately preceding the appointed day, is registered or holds a
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license under an existing law, shall be liable to be registered under this Act with effect from the
appointed day.

(3) Where a business carried on by a taxable person registered under this Act is transferred, whether on
account of succession or otherwise, to another person as a going concern, the transferee or the successor,
as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.

(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction
of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more
companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be
registered, with effect from the date on which the Registrar of Companies issues a certificate of
incorporation giving effect to such order of the High Court or Tribunal

(5) Explanation––For the purposes of this section, ––

(i) the expression “aggregate turnover” shall include all supplies made by the taxable person, whether
on his own account or made on behalf of all his principals

(ii) the supply of goods, after completion of job work, by a registered job worker shall be treated as
the supply of goods by the principal referred to in section 143, and the value of such goods shall
not be included in the aggregate turnover

of the registered job worker

(iii) the expression “special category States” shall mean the States as specified in sub-clause (g) of
clause (4) of article 279A of the Constitution except the State of Jammu and Kashmir and States
of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand. the
expression “special category States” shall mean the States as specified in sub-clause (g) of clause
(4) of article 279A of the Constitution except the State of Jammu and Kashmir and States of
Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.
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d. Section 2(6) [definition of ‘aggregate turnover’ as given above] read with
explanation (i) to section 22 has been analysed as follows:
(A) Aggregate turnover to exclude inward supplies on which tax is payable under
reverse charge: It may be noted that the inward supplies on which recipient is required
to pay tax under Reverse Charge Mechanism (RCM) do not form part of the ‘aggregate
turnover’. The law stipulates certain supplies like, Goods Transport Agency services, legal
services, sponsorship services, to name a few, where the recipient of service is made to pay the tax
– Discussed in detail in Chapter 3 – Charge of tax. The value of such supplies would not
form part of the ‘aggregate turnover’ of recipient of such supplies.

Aggregate turnover

--CGST
Value of all outward supplies
--SGST

--UTGST

--IGST
--Exports
--Compensation cess
--Inter-State supplies
which tax
is payable under reverse charge
computedonallIndiabasis

(B) Aggregate turnover excludes the element of CGST, SGST, UTGST, and IGST
and compensation cess.
(C) Aggregate turnover to include total turnover of all branches under same PAN
aggregate turnover is calculated by taking together the value in respect of the activities carried out
on all-India basis.
(D) Value of exported goods/services, exempted goods/services, inter-State supplies
between distinct persons having same PAN, to be included in aggregate
turnover.
(E) Aggregate turnover to include all supplies made by the taxable person,
whether on his own account or made on behalf of all his principals.
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(F) ‘Aggregate turnover’ Vs. ‘Turnover in a State’: The aggregate turnover is different
from turnover in a State. The former is used for determining the threshold limit for
registration and eligibility for composition scheme [Discussed in Chapter 3 – Charge
of GST]. However, once a person is eligible for composition levy, the amount payable under
composition levy would be calculated as a specified % of ‘turnover in the State/UT’.
(G) Value of goods, after completion of job work, supplied directly from the premises
of the registered job worker not to be included in its aggregate turnover

e. COMPULSORY REGISTRATION IN CERTAIN CASES [SECTION 24]

The category of persons requiring compulsory registration under GST have been enlisted below:

(1) Persons making any inter-State taxable supply. However, threshold limit of ` 20 lakh (`
10 lakh in case of Special Category States of Mizoram, Tripura, Manipur and Nagaland) is available
in case of inter-State supply of taxable services and of notified handicraft goods.
(2) Casual taxable persons (CTP) making taxable supply. However, threshold limit of ` 20 lakh
(` 10 lakh in case of Special Category States of Mizoram, Tripura, Manipur and Nagaland) is available in
case of CTP who is making inter-State taxable supplies of notified handicraft goods and availing the
benefit of exemption from registration as mentioned in point (i) above.
(3) Persons who are required to pay tax under reverse charge on inward supplies received.
However, persons engaged exclusively in making supplies, tax on which is liable to be paid on
reverse charge basis are exempt from registration.
(4) Non-resident taxable persons (NRTP) making taxable supply.
(5) E-commerce: (i) Every ECO (Electronic Commerce Operator) who is required to collect tax
at source under section 52, (ii) persons who supply goods and/or services, other than supplies
specified under section 9(5), through such ECO who is required to collect tax at source under section 52,
but threshold limit of ` 20 lakh (` 10 lakh in case of Special Category States of Mizoram, Tripura, Manipur
and Nagaland) is available in case of suppliers supplying services through ECO.
(6) persons who are required to deduct tax under section 51, whether or not separately
registered under this Act
(7) persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise
(8) Input Service Distributor, whether or not separately registered under this Act
(9) every person supplying online information and data base access or retrieval (OIDAR) services from a place
outside India to a person in India, other than a registered person; and
(10) such other person or class of persons as may be notified by the Government on the
recommendations of the Council and
(11) persons who are required to pay tax under reverse charge under section 9(5) .

f. PERSONS NOT LIABLE FOR REGISTRATION [SECTION 23]

(ii) Persons not liable to registration

Section 23 lists the persons who are not liable to registration. Thus, the persons so listed will not be the ‘taxable
persons’

(a) any person engaged exclusively in the business of supplying goods or services or both
that
— arc not liable to tax
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or
— wholly exempt from tax
under this Act or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.

(iii) Specified category of persons notified by the Government exempted from obtaining
registration
Following category of persons have been notified as being exempted from obtaining registration under GST law:

 Agriculturists
 Persons falling in Threshold Exemption Limit
 Persons making Nil-Rated/ Exempt supplies of goods and services
 Persons making Non-Taxable/ Non-GST supplies of goods and services
 Activities that are neither Supply of Goods nor Services
 Persons making only supplies covered under reverse charge

The provisions of section 23 can be summarized in the following diagram:

Persons not liable for

registration
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g. PROCEDURE FOR REGISTRATION [SECTIONS 25, 26 & 27]

Section 25 Procedure for registration

(1) Every person who is liable to be registered under section 22 or section 24
shall apply for registration in every such State or Union territory in which
he is so liable within thirty days from the date on which he becomes liable
to registration, in such manner and subject to such conditions as may be
prescribed.
Provided that a casual taxable person or a non-resident taxable person shall
apply for registration at least five days prior to the commencement of
business.
Provided further that a person having a unit, as defined in the Special
Economic Zones Act, 2005, in a Special Economic Zone or being a Special
Economic Zone developer shall have to apply for a separate registration,
as distinct from his place of business located outside the Special Economic
Zone in the same State or
Union territory.

(2) A person seeking registration under this Act shall be granted a single
registration in a State or Union territory.
Provided that a person having multiple places of business in a State or
Union territory may be granted a separate registration for each such place
of business, subject to such conditions as may be prescribed
(3) A person, though not liable to be registered under section 22 or section 24
may get himself registered voluntarily, and all provisions of this Act, as are
applicable to a registered person, shall apply to such person.
(4) A person who has obtained or is required to obtain more than one
registration, whether in one State or Union territory or more than one State or
Union territory shall, in respect of each such registration,
be treated as distinct persons for the purposes of this Act
(5) Where a person who has obtained or is required to obtain registration in a
State or Union territory in respect of an establishment, has an establishment
in another State or Union territory, then such establishments shall be treated
as establishments of distinct persons for the purposes of this Act.
(6) Every person shall have a Permanent Account Number issued under the
Income- tax Act, 1961 in order to be eligible for grant of registration:
Provided that a person required to deduct tax under section 51 may have, in
lieu of a Permanent Account Number, a Tax Deduction and Collection
Account Number issued under the said
Act in order to be eligible for grant of registration.
(6A) Every registered person shall undergo authentication, or furnish proof
of possession of Aadhaar number, in such form and manner and within
such time as may be prescribed.
Provided that if an Aadhaar number is not assigned to the registered
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person, such person shall be offered alternate and viable means of

identification in such manner as Government may, on the
recommendations of the Council, prescribe.
Provided further that in case of failure to undergo authentication or
furnish proof of possession of Aadhaar number or furnish alternate
and viable means of identification, registration allotted to such person
shall be deemed to be invalid and the other provisions of this Act shall
apply as if such person does not have a registration.
(6B) On and from the date of notification, every individual shall, in order to
be eligible for grant of registration, undergo authentication, or furnish
proof of possession of Aadhaar number, in such manner as the
Government may, on the recommendations of the Council, specify in
the said notification.
Provided that if an Aadhaar number is not assigned to an individual,
such individual shall be offered alternate and viable means of
identification in such manner as the Government may, on the
recommendations of the Council,
specify in the said notification.
(6C) On and from the date of notification, every person, other than an
individual, shall, in order to be eligible for grant of registration,
undergo authentication, or furnish proof of possession of Aadhaar
number of the Karta, Managing Director, whole time Director, such
number of partners, Members of Managing Committee of Association,
Board of Trustees, authorised representative, authorised signatory and
such other class of persons, in such manner, as the Government may,
on the recommendation of the Council, specify in the said notification
Provided that where such person or class of persons have not been
assigned the Aadhaar Number, such person or class of persons shall
be offered alternate and viable means of identification in such manner
as the Government may, on the recommendations of the Council,
specify in the said
notification.
(6D) The provisions of sub-section (6A) or sub-section (6B) or sub-section
(6C) shall not apply to such person or class of persons or any State or
Union territory or part thereof, as the Government may, on the
recommendations of the Council, specify by notification.
Explanation—For the purposes of this section, the expression
“Aadhaar number” shall have the same meaning as assigned to it in
clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial
and Other Subsidies, Benefits and
Services) Act, 2016
(10) The registration or the Unique Identity Number shall be granted or rejected
after due verification in such manner and within such period as may be
prescribed
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h. Section 26 Deemed registration

(1) The grant of registration or the Unique Identity Number under the State Goods and Services
Tax Act or the Union Territory Goods and Services Tax Act shall be deemed to be a grant of
registration or the Unique Identity Number under this Act subject to the condition that the
application for registration or the Unique Identity Number has not been rejected under this
Act within the time specified in sub-section (10) of section 25.

(2) Notwithstanding anything contained in sub-section (10) of section 25, any rejection of application
for registration or the Unique Identity Number under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act shall be deemed to be a rejection of application for
registration under this Act

i. Section 27 Special provisions relating to casual taxable person and non-

resident taxable person

(A) The certificate of registration issued to a casual taxable person or a non- resident taxable
person shall be valid for the period specified in the application for registration or ninety days
from the effective date of registration, whichever is earlier and such person shall make
taxable supplies only after the issuance of the certificate of registration.
(B) Provided that the proper officer may, on sufficient cause being shown by the said taxable
person, extend the said period of ninety days by a further period not exceeding ninety days.
(C) A casual taxable person or a non-resident taxable person shall, at the time of submission of
application for registration under sub-section (1) of section 25, make an advance deposit of
tax in an amount equivalent to the estimated tax liability of such person for the period for
which the registration is sought.
(D) Provided that where any extension of time is sought under sub- section (1), such taxable
person shall deposit an additional amount of tax equivalent to the estimated tax liability of
such
(E) person for the period for which the extension is sought.
(F) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of
such person and shall be utilized in the manner provided under section 49
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F. Composition Scheme under GST – Sec 10

a. What is Composition Scheme?

A scheme under which there is an option to pay tax at lower rate than the normal rate. Many start-ups
and Small and Medium Enterprises (SMEs) may struggle to comply with these provisions of this act
therefore under this provision, compliance burden is reduced.
Composition scheme is an option
Section 10- This Section provides for a registered person to opt for payment of taxes under a scheme of
composition, the conditions attached thereto and the persons who are entitled, but not mandated, to
make payment of tax under this Scheme.

b. Benefits of composition scheme

 Easy compliance as no elaborate accounts and records to be maintained
 Simple Quarterly Return
 Quarterly payment of tax

c. Eligibility to opt this scheme

i. Registered Person having aggregate turnover of: -
• For North eastern states, H.P. and Sikkim: upto 75 Lacs
• For Other states: upto Rs. 1.5 Crore
Turnover to be seen for previous financial year and Turnover of all businesses with the same PAN must
be added up to calculate turnover for the purpose of the composition scheme.

ii. Only Manufacturers of goods, Dealers, and Restaurants (not serving alcohol) can opt for the
composition scheme under Section 10. However, service providers can opt into a similar scheme for
composition dealers notified by the CGST (Rate) notification no. 2/2019 dated 7th March 2019 where
the total turnover limit is Rs.50 lakh

iii. In order to be eligible to opt for the scheme, the registered person must not be in possession of stock of
goods which has been purchased from unregistered persons. In any such case, due tax ought to have
been paid thereon under Section 9(4)

iv. The registered person would not be eligible to effect –

 Supply of goods through an e-commerce operator who is liable to collect tax at source (TCS)
 Supply of non-taxable goods, i.e., alcoholic liquor for human consumption, petroleum crude,
high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel;
 Supply of services, other than services specified in Entry 6(b) to Schedule II.

v. The composition scheme is available only for dealers doing intra-state supplies. If a dealer is involved in
inter-state supplies, then they have to opt out of the scheme.

d. opt for composition scheme

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1. Taxpayer can opt to switch between the composition scheme and the normal scheme based on your
turnover. However, you will have to keep in mind that this will affect the way you issue invoices and file
your returns. The declaration of change can be submitted on the GST Portal.

2. Before the beginning of every financial year, a registered taxpayer is required to provide a declaration on
the GST Portal. This cannot be done anytime during the year. Form CMP-02 must be used to opt into
the composition scheme (both supplier of goods and service provider)

3. When a dealer opts out of the composition scheme all the normal rules are applicable from the day of
opting out. For example, a composition dealer opts out of the composition scheme on 15th October
2020. This means that the dealer will have to file two CMP-08 for the quarters of July – September, and
October (15 days). The dealer will also have to file GSTR-1 and GSTR-3B for the period of October
2020 (sales from 15th October until end of the month).

e. Intimation for Composition Levy:

a. File intimation electronically in Form GST CMP-01 prior to appointed day or within 30 days after the
said day or further period as may be extended by the Commissioner;

b. If intimation filed after the appointed day then no tax to be collected and issue bill of supply;

c. Any person applying for registration, if he opts to pay tax under Composition in the Form GST REG-
01 then it shall be considered as an intimation;

d. Composition Supplier shall intimate in Form GST CMP-02 prior to commencement of financial year
and also furnish Form GST ITC-3 giving details of ITC within 60 days from the commencement of
relevant financial year;

e. Composition Supplier shall furnish in GST CMP-03, details of:

 Stock
 Inward supply of goods received from unregistered person
held as on the preceding day from which he opts for composition, within 60 days from the date from
which option is exercised or such further period as may be extended by the Commissioner.

f. Any intimations as above for any place of business in any State or Union Territory shall be deemed to
be intimation of all other place of business registered on the same PAN.
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f. Effective date for Composition Levy:

 If Composition scheme is opted from the appointed date then effective date would be the appointed
date.
 If Composition scheme is opted by already registered person then effective date would be from the
beginning of the financial year
 If the registered person has applied for Composition then the intimation shall be considered only after
the grant of registration to the applicant

g. Tax rate applicable to a Composition taxable person - As per section 10(1) of CGST Act
and rule7 of CGST Rules, 2017

Type of Business CGST SGST Total

Manufacturers and Traders (Goods) 0.5% 0.5% 1%

Restaurants not serving Alcohol 2.5% 2.5% 5%

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Service Providers 3% 3% 6%

h. Payment of Taxes

1. A taxpayer registered under composition levy scheme has to pay an amount equal to certain
fixed percentage of his annual turnover as tax to the government. This tax has to be paid on
quarterly basis.

2. Also, the dealer has to pay tax under reverse charge on specified purchases, purchase from
unregistered dealers and import of services.

This means that Total GST payable = Tax on supplies (net of advance and goods returned) +
tax on B2B transactions where reverse charge is applicable + tax on B2B purchases from
unregistered suppliers, if applicable + Tax on Import of services.

The rate of tax on transactions under reverse charge, purchase from an unregistered dealer and
import of services will be at normal rates, i.e. the rates applicable to the supplies. Rates under the
composition scheme are applicable only to sales of a composition dealer.

i. Type of Returns and Due date for filing the return

The taxable person is required to pay tax on quarterly basis in a challan-cum-statement from FY 2019-
20, i.e CMP-08 filed by 18th of the month succeeding every quarter instead of furnishing return, i.e.
GSTR-4.

Moreover, the frequency of filing GSTR-4 returns has been made annual by 30th April of the year
following the relevant financial year with effect from FY 2019-20 replacing the GSTR-9A annual
return

j. Conditions applicable on a composition supplier

1) The person opting for the scheme must neither be a casual taxable person nor a non-resident
taxable person
2) The goods held by him in stock on the appointed date must not be purchased from a place
outside his state. The goods should therefore not be classified as:
3) Once a person has opted to pay tax under the composition scheme, the following conditions
he must follow-
 Every notice or signboard in every registered place of business, displayed at a prominent
place, shall carry the words “Composition taxable person”
 Every bill of supply issued by the composition suppliers shall carry the declaration
“Composition taxable person, not eligible to collect tax on supplies”
 RCM on inward supplies – The composition supplier shall be liable to make payment at
the rate applicable on the supply in respect of every inward supply liable to tax under the
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reverse charge mechanism, regardless of the rate of tax that is applied by him on the
outward supplies effected by him
k. CANCELLATION OF PERMISSION TO OPT COMPOSITION Levy - Sections 66, 67 and 68
If proper officer believes that person opting composition scheme is not eligible for the same OR
permission granted to opt composition scheme was granted incorrectly,
He may cancel the permission to opt composition scheme and demand the following amount:
a. Differential tax i.e. tax payable under normal scheme if the person would not opt the
composition scheme and,
b. Penalty equivalent to the tax or any higher amount as may be prescribed by the Govt from
time to time.

l. Important Points

1. Books of Accounts - Taxpayer registered as composition dealer does not have to maintain elaborate
accounts and records and instead of two monthly statements and a return (which a normal taxpayer
has to file under GST)
2. Collection of GST - Composition dealer is not allowed to collect composition tax from the buyer and
cannot charge GST on their sales in the bill of supply
3. Bill of Supply - A composition dealer has to issue a Bill of Supply. They cannot issue a tax invoice.
This is because the tax has to be paid by the dealer out of pocket. A composition dealer is not allowed
to recover the GST from the customers.
4. ITC Credit - Composition dealer is not allowed to avail input tax credit of GST on purchases

G. GST Rates Slab

 GST has been structured in a way that essential services and food items are placed in the lower tax
brackets, while luxury services and products have been placed in the higher tax bracket.
 The GST council has fitted over 1300 goods and 500 services under four tax slabs of 5%, 12%, 18% and
28% under GST. This is aside the tax on gold that is kept at 3% and rough precious and semi-precious
stones that are placed at a special rate of 0.25% under GST.

 Under GST, all goods and services transacted in India are classified under the HSN code system or SAC
Code system. Goods are classified under HSN Code and services are classified under SAC Code. Based
on the HSN or SAC code, GST rates have been fixed in five slabs, namely NIL, 5%, 12%, 18% and 28%
 IIM SKILLS

 A total of 81% of all the goods and services fall below or in the 18% tax slab. This means 7 % of the
items come under the exempted list, 14% of the items attract a 5% tax, 17% of the items attract a 12%
tax, and 43% of the items attract an 18 % tax slab, while only 19% of the items fall under the highest slab
of 28% in the new regime. Below is a list of some of the products that will be a part of the respective
slabs:

Exempted GST Rate Slab (No Tax)

7% goods and services fall under this category. Some of these that are of regular consumption include
fresh fruits and vegetables, milk, butter milk, curd, natural honey, flour, besan, bread, all kinds of salt,
jaggery, hulled cereal grains, fresh meat, fish, chicken, eggs, along with bindi, sindoor, kajal, bangles,
drawing and coloring books, stamps, judicial papers, printed books, newspapers, jute and handloom,
hotels and lodges with tariff below INR 1000 and so on.

5% GST Rate Slab

14% goods and services fall under this category. Some of these include apparel below INR 1000 and
footwear below INR 500, packaged food items, cream, skimmed milk powder, branded paneer, frozen
vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, cashew nut, cashew nut in shell, raisin, ice, fish
 IIM SKILLS
fillet, kerosene, coal, medicine, agarbatti (incense sticks), postage or revenue stamps, fertilizers, rail and
economy class air tickets, small restaurants, and so on.

12% GST Rate Slab

Edibles like frozen meat products, butter, cheese, ghee, dry fruits in packaged form, animal fat, sausages,
fruit juices, namkeen, ketchup & sauces, ayurvedic medicines, all diagnostic kits and reagents, cellphones,
spoons, forks, tooth powder, umbrella, sewing machine, spectacles, indoor games like playing cards, chess
board, carom board, ludo, apparels above INR 1000, non-AC restaurants, business class air ticket, state-
run lottery, work contracts and so on attract a 12% GST. 17% of goods and services fall under this
category.

18% GST Rate Slab

43% of goods and services fall under this category. Pasta, biscuits, cornflakes, pastries and cakes,
preserved vegetables, jams, soups, ice cream, mayonnaise, mixed condiments and seasonings, mineral
water, footwear costing more than INR 500, camera, speakers, monitors, printers, electrical transformer,
optical fiber, tissues, sanitary napkins, notebooks, steel products, headgear and its parts, aluminum foil,
bamboo furniture, AC restaurants that serve liquor, restaurants in five-star and luxury hotels, telecom
services, IT services, branded garments and financial services and so on attract an 18% GST.

28% GST Rate Slab

19% of goods and services fall under this category. The rest of edibles like chewing gum, bidi, molasses,
chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water,
personal care items like deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, paint,
water heater, dishwasher, weighing machine, washing machine, vacuum cleaner, automobiles,
motorcycles, 5-star hotel stays, race club betting, private lottery and movie tickets above INR 100 etc.
have been clubbed together under the 28% GST slab.
Some other items that will get costlier also include:
 Courier services, mobile phone tariffs, Mobile bills, tuition fees, salon visits, insurance premiums,
banking charges, broadband services will get costlier by 3%. These were earlier charged a 15%
service tax, and will now fall under 18% tax slab.
 Taxes on aerated drinks, tobacco and luxury goods will now come under the 28 percent tax
bracket under GST, so it will get costlier.
 Real Estate will also get expensive as it will now attract a GST of 12% as opposed to 6%.

HSN Code
HSN code or Harmonized System Nomenclature code number is an internationally adopted commodity
description and coding system developed by the World Customs Organization (WCO). HSN code is used
by more than 200 countries as a basis for their customs tariffs. Currently, over 98% of the merchandise in
international trade is classified under HSN code. With the HSN code acting as a universal classification for
goods, the Indian Government has decided to adopt the use of HSN code for classification of goods under
GST and levy of GST.
HSN Code 2017 Edition is the currently valid version applied in international trade transactions. Prior to
the implementation of the HSN Code- 2017 Edition, HSN Code - 2012 Edition was applied in all
international trade transactions. The HSN Codes are first classified into sections, chapters, contains the six-
digit codes of the Harmonized System.

SAC Code
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SAC Code or Services Accounting Code is a classification system for services developed by the Service Tax
Department of India. Using SAC code, the GST rates for services are fixed in five slabs namely 0%, 5%,
12%, 18% and 28%. If a service is not exempted from GST or if the GST rates are not provided, then the
default GST rate for services of 18% would be applicable.
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H. GST Returns Filing

1. Type of return forms

GST return is a form that a taxpayer registered under the Goods and Services Tax (GST) law
must file for every GSTIN that he is registered.

In short, the number and types of GST return that a business/professional must file is based on
the type of taxpayer registered. These types include regular taxpayer, composition taxable
persons, e-commerce operators, TDS deductor, non-resident taxpayer, Input Service Distributor
(ISD), casual taxable persons, etc.

Further, the frequency of filing some GST returns may differ among the GSTR-1 and GSTR-3B
filers, if they opt into the Quarterly Return filing and Monthly Payment of taxes (QRMP)
scheme.

 GSTR-1

GSTR-1 is the return to be furnished for reporting details of all outward supplies of goods and
services made. In other words, it contains the invoices and debit-credit notes raised on the sales
transactions for a tax period. GSTR-1 is to be filed by all normal taxpayers who are registered
under GST, including casual taxable persons.

Any amendments to sales invoices made, even pertaining to previous tax periods, should be
reported in the GSTR-1 return by all the suppliers or sellers.

The filing frequency of GSTR-1 is currently as follows:

(a) Monthly, by 11th* of every month- If the business either has an annual aggregate turnover
of more than Rs.5 crore or has not opted into the QRMP scheme.
(b) Quarterly, by 13th** of the month following every quarter- If the business has opted
into the QRMP scheme.

 GSTR-2A

GSTR-2A is a view-only dynamic GST return relevant for the recipient or buyer of goods and
services. It contains the details of all inward supplies of goods and services i.e., purchases made
from GST registered suppliers during a tax period.

The data is auto-populated based on data filed by the corresponding suppliers in their GSTR-1
returns. Further, data filed in the Invoice Furnishing Facility (IFF) by the QRMP taxpayer, also
get auto-filled.

Since GSTR-2A is a read-only return, no action can be taken in it. However, it is referred by the
buyers to claim an accurate Input Tax Credit (ITC) for every financial year, across multiple tax
periods. In case any invoice is missing, the buyer can communicate with the seller to upload it in
their GSTR-1 on a timely basis.
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It was used frequently for claiming ITC for every tax period until August 2020. Thereafter, the
buyers must mostly refer to GSTR-2B, static return, to claim the input tax credit for every tax
period.

 GSTR-2B

GSTR-2B is again a view-only static GST return important for the recipient or buyer of goods
and services. It is available every month, starting in August 2020 and contains constant ITC data
for a period whenever checked back.

ITC details will be covered from the date of filing GSTR-1 for the preceding month (M-1) up to
the date of filing GSTR-1 for the current month (M). The return is made available on the 12th of
every month, giving sufficient time before filing GSTR-3B, where the ITC is declared.

GSTR-2B provides action to be taken against every invoice reported, such as to be reversed,
ineligible, subject to reverse charge, references to the table numbers in GSTR-3B.

 GSTR-2

GSTR-2 is currently a suspended GST return, that applied to registered buyers to report the
inward supplies of goods and services, i.e. the purchases made during a tax period.

The details in the GSTR-2 return had to be auto-populated from the GSTR-2A. Unlike GSTR-
2A, the GSTR-2 return can be edited. GSTR-2 is to be filed by all normal taxpayers registered
under GST. However, the filing of the same has been suspended ever since September 2017.

 GSTR-3

GSTR-3 is again currently a suspended GST return. It was a monthly summary return for
furnishing summarized details of all outward supplies made, inward supplies received and input
tax credit claimed, along with details of the tax liability and taxes paid.

This return would have got auto-generated on the basis of the GSTR-1 and GSTR-2 returns
filed. GSTR-3 is to be filed by all normal taxpayers registered under GST, however, the filing of
the same has been suspended
ever since September 2017.

 GSTR-3B

GSTR-3B is a monthly self-declaration to be filed, for furnishing summarised details of all

outward supplies made, input tax credit claimed, tax liability ascertained and taxes paid.

GSTR-3B is to be filed by all normal taxpayers registered under GST. The sales and input tax
credit details must be reconciled with GSTR-1 and GSTR-2B every tax period before filing
GSTR-3B. GST reconciliation is crucial to identify mismatches in data, that may lead to GST
 IIM SKILLS

notices in future or suspension of GST registration as well.

The filing frequency of GSTR-3B is currently as follows:

(a) Monthly, 20th* of every month- For taxpayers with an aggregate turnover in the previous
financial year of more than Rs.5 crore or have been otherwise eligible but still opted out of the
QRMP scheme.
(b) Quarterly, 22nd of the month following the quarter for ‘X’** category of States and
24th of the month following the quarter for ‘Y’** category of States- For the taxpayers with
aggregate turnover equal to or below Rs 5 crore, eligible and remain opted into the QRMP
scheme.

* Effective from January 2021 tax period onwards. Previously, was as follows-
(i) Was staggered as 20th (turnover of previous FY was more than Rs.5 crore), 22nd and 24th
(turnover of previous FY was up to Rs.5 crore, for ‘X’ and ‘Y’ category of States) of every
month, from January 2020 till December 2020.
(ii) Was 20th of every month till December 2019.

** ‘X’ category States/UT – Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka,

Goa, Kerala, Tamil Nadu, Telangana or Andhra Pradesh or the Union territories of Daman and
Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep.
‘Y’ category States/UT- Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar
Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya,
Assam, West Bengal, Jharkhand or Odisha or the Union Territories of Jammu and Kashmir,
Ladakh, Chandigarh and New Delhi.

 GSTR-4

GSTR-4 is the annual return that was to be filed by the composition taxable persons under GST,
by 30th April of the year following the relevant financial year. It has replaced the erstwhile
GSTR-9A (annual return) from FY 2019-20 onwards.

Prior to FY 2019-20, this return had to be filed on a quarterly basis. Thereafter, a simple challan
in form CMP-08 filed by 18th of the month succeeding every quarter replaced it.

The composition scheme is a system in which taxpayers dealing with goods and having a
turnover up to Rs.1.5 crores can opt into and pay taxes at a fixed rate on the turnover declared.
Further, the service providers can avail a similar scheme CGST (Rate) Notification 2/2019 dated
7th March 2019 if turnover is up to Rs.50 lakh.

 GSTR-5

GSTR-5 is the return to be filed by non-resident foreign taxpayers, who are registered under
GST and carry out business transactions in India.

The return contains details of all outward supplies made, inward supplies received, credit/debit
notes, tax liability and taxes paid.
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The GSTR-5 return is to be filed monthly by the 20th of each month under GSTIN that the
taxpayer is registered in India.

 GSTR-5A

GSTR-5A refers to a summary return for reporting the outward taxable supplies and tax payable
by Online Information and Database Access or Retrieval Services (OIDAR) provider under
GST.

The due date to file GSTR-5A is the 20th of every month.

 GSTR-6

GSTR-6 is a monthly return to be filed by an Input Service Distributor (ISD).

It will contain details of input tax credit received and distributed by the ISD. It will further
contain details of all documents issued for the distribution of input credit and the manner of
distribution.

The due date to file GSTR-6 is the 13th of every month.

 GSTR-7

GSTR-7 is a monthly return to be filed by persons required to deduct TDS (Tax deducted at
source) under GST.

This return will contain details of TDS deducted, the TDS liability payable and paid and TDS
refund claimed if any.

The due date to file GSTR-7 is the 10th of every month.

 GSTR-8

GSTR-8 is a monthly return to be filed by e-commerce operators registered under the GST who
are required to collect tax at source (TCS).

It contains details of all supplies made through the e-commerce platform, and the TCS collected
on the same.

The GSTR-8 return is to be filed on a monthly basis by the 10th of every month.
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 GSTR-9

GSTR-9 is the annual return to be filed by taxpayers registered under GST. It is due by 31st
December of the year following the relevant financial year, as per the GST law.

It contains the details of all outward supplies made, inward supplies received during the relevant
financial year under different tax heads i.e. CGST, SGST & IGST and a summary value of
supplies reported under every HSN code, along with details of taxes payable and paid.

It is a consolidation of all the monthly or quarterly returns (GSTR-1, GSTR-2A, GSTR-3B) filed
during that financial year. GSTR-9 is required to be filed by all taxpayers registered under GST.

However, there are few exceptions such as taxpayers who have opted for the composition
scheme, casual taxable persons, input service distributors, non-resident taxable persons and
persons paying TDS under section 51 of the CGST Act.

Note: As per the CGST notification no. 47/2019, later amended, the annual return under GST
for taxpayers having an aggregate turnover that does not exceed Rs.2 crore has been made
optional for FY 2017-18, FY 2018-19 and FY 2019-20.

 GSTR-9A

GSTR-9A is currently a suspended annual return earlier required to be filed by composition

taxpayers. It had a consolidation of all the quarterly returns filed during that financial year.

Ever since GSTR-4 (annual return) was introduced from FY 2019-20, this return stands
scrapped. Prior to that, GSTR-9A filing for composition taxpayers had been waived off for FY
2017-18 and FY 2018-19.

 GSTR-9C

GSTR-9C is the reconciliation statement to be filed by all taxpayers registered under GST whose
turnover exceeds Rs.2 crore in a financial year, as per the GST law.

It must be certified by a Chartered Accountant/Cost & Management Accountant after

conducting a thorough GST audit of the books of accounts and comparing the figures with the
GSTR-9.

The deadline to file this statement is the same as the due date prescribed for GSTR-9, i.e., 31st
December of the year following the relevant financial year.

GSTR-9C is to be filed for every GSTIN, hence, one PAN can have multiple GSTR-9C forms
being filed.

As per the Union Budget 2021 outcome, the GST audit requirement by professionals such as
CAs and CMAs has been removed from the GST law. Sections 35 and 44 were amended for this
but yet to be notified by CBIC. Accordingly, GSTR-9 needs to be filed on the GST portal by
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taxpayers on a self-certification basis, completely removing the requirement for GSTR-9C.
However, the financial year and date of applicability of this removal are yet to be clarified by the
government.

Note: As per the CBIC notification 16/2020, which was further amended, GSTR-9C is waived
off for the taxpayers with an aggregate turnover of more than Rs.5 crore for the financial year
2018-19 and 2019-20.

 GSTR-10

GSTR-10 is to be filed by a taxable person whose registration has been cancelled or surrendered.
This return is also called a final return and has to be filed within three months from the date of
cancellation or cancellation order, whichever is earlier.

 GSTR-11

GSTR-11 is the return to be filed by persons who have been issued a Unique Identity Number
(UIN) in order to get a refund under GST for the goods and services purchased by them in
India. UIN is a classification made for foreign diplomatic missions and embassies not liable to
tax in India, for the purpose of getting a refund of taxes. GSTR-11 will contain details of inward
supplies received and refund claimed.

2. Late filing of GST Returns

Return filing is mandatory under GST. Even if there is no transaction, you must file a Nil return.

There are few points to note:

 You cannot file a return if you do not file the previous month/quarter’s return.
 Hence, late filing of GST return will have a cascading effect leading to heavy fines
and penalty.
 The late filing fee of the GSTR-1 is populated in the liability ledger of GSTR-3B
filed immediately after such delay.

3. Interest and Late fee to be paid

 Interest is 18% per annum. It has to be calculated by the taxpayer on the amount
of outstanding tax to be paid. It shall be calculated on the net tax liability identified
in the ledger at the time of payment. The time period will be from the next day of
filing due date till the actual date of payment.
 As per the CGST Act, the late fee is Rs.100 per day per Act. So it is Rs.100 under
CGST & Rs.100 under SGST. The total shall be Rs.200/day. However, there is a
maximum levy of Rs. 5,000. There is no late fee separately prescribed under the
IGST Act. Also, for GSTR-1 and GSTR-3B, the total late fee was reduced to Rs.
50 /day (Rs.20 /day for Nil filing)
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4. Quarterly Return Filing and Monthly Payment of Taxes (QRMP) Scheme under GST

The Central Board of Indirect Taxes & Customs (CBIC) introduced Quarterly Return Filing and
Monthly Payment of Taxes (QRMP) scheme under Goods and Services Tax (GST) to help small
taxpayers whose turnover is less than Rs.5 crores. The QRMP scheme allows the taxpayers to file
GSTR-3B on a quarterly basis and pay tax every month.

 Who is eligible for the QRMP scheme?

A registered person who is required to furnish a return in GSTR-3B, and who has an aggregate
turnover of up to Rs.5 crore in the preceding financial year, is eligible for the QRMP Scheme.
Further, in case the aggregate turnover exceeds Rs.5 crore during any quarter in the current
financial year, the registered person shall not be eligible for the scheme from the next quarter.
It is clarified that the aggregate annual turnover for the preceding financial year shall be
calculated in the common portal taking into account the details furnished in the returns by the
taxpayer for the tax periods in the preceding financial year.
The quarterly GSTR-3B filing option was made available from 1st January 2021 onwards. It is
clarified that this scheme is optional and can be availed based on GSTIN.

 How to exercise Option for QRMP Scheme?

A registered person who intends to file his GSTR-3B quarterly should indicate the same on the
GST portal, from the 1st of the second month of the preceding quarter until the last day of the
first month of the quarter for which such option is being exercised.
For example: If A wishes to file quarterly returns for the quarter of Apr-Jun 2021, he should
have opted for quarterly filing on the common GST portal between 1st February 2021 and 30th
April 2021.
Once the registered person has opted for quarterly filing, he will have to continue to furnish his
return every quarter for all future tax periods, except in the following situations:
 If the taxpayer becomes ineligible for furnishing a quarterly return (for example, if
the aggregate turnover crosses Rs.5 crore during a quarter, then from the next
quarter he will not be able to file quarterly returns). In such a case, the taxpayer
must furnish GSTR-3B on a monthly basis.
 A registered person will not be eligible to opt for furnishing quarterly returns if the
last return, which was due on the date of exercising such an option, has not been
furnished.
For example, if the person is opting for quarterly GSTR-3B filing on 1st December 2020, he will
need to furnish his GSTR-3B return for October 2020, which would have been the last return
due on the date of exercising the quarterly filing option.

 Deemed monthly/quarterly filing of GSTR-3B

The taxpayer has to follow the above procedure to opt for the quarterly GSTR-3B. However, in
case of registered persons falling in the categories specified in the table below, who have
furnished their GSTR-3B return for October 2020 by 30th November 2020, it shall be deemed
that they have opted for monthly or quarterly filing as detailed below-
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S.No. Class of Registered person Deemed Option

1 Registered individuals with an aggregate turnover of up Quarterly

to Rs.1.5 crore, who have furnished Form GSTR-1 GSTR-3B
quarterly in the current financial year

2 Registered persons with an aggregate turnover of up to Monthly GSTR-

Rs.1.5 crore, who have furnished Form GSTR-1 monthly 3B
in the current financial year

3 Registered persons having an aggregate turnover Quarterly

exceeding Rs.1.5 crore and up to Rs.5 crore in the GSTR-3B
preceding financial year

The taxpayers referred to in the Sl. No. 2 in the above table could have changed the default
option and opt for quarterly GSTR-3B filing between 5th December 2020 and 31st January
2021.

 How to submit details of outward supplies?

The taxpayers who opted for the QRMP scheme can use the Invoice Furnishing Facility(IFF)
which allows quarterly GSTR-1 filers to upload their invoices every month. One should keep the
following points in mind before utilising the IFF:
 The IFF can be utilised only for the first two months of a quarter.
 The invoices relating to the last month of a quarter are to be uploaded in the
GSTR-1 return only.
 There is no requirement to upload invoices in GSTR-1 if the same has been
uploaded in the IFF.
 The taxpayer has to submit the B2B invoice details of sale transactions (both inter-
state and intra-state) along with debit and credit notes of the B2B invoices issued
during the month.
 The total net value of invoices that can be uploaded is restricted to Rs.50 lakh per
month.
 The details submitted in IFF will be reflected in the GSTR-2A, GSTR-2B, GSTR-
4A or GSTR-6A of the recipients as the case may be.
 The Invoice Furnishing Facility will come into effect from 1st January 2021.

 How to make monthly tax payments under the QRMP scheme?

The taxpayer has to deposit tax using form PMT-06 by the 25th of the following month, for the
first and second months of the quarter. The taxpayers can pay their monthly tax liability either in
the Fixed Sum Method (FSM), also popular as 35% challan method, or use the Assessment
Method (SAM).

Fixed Sum Method (FSM) or 35% challan method:

The taxpayer must pay an amount of tax mentioned in a pre-filled challan in the form GST
PMT-06 for an amount equal to 35% of the tax paid in cash.
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S.No. Type of Taxpayer Tax to be paid

1 Who furnished GSTR-3B quarterly for the last 35% of tax paid in cash in
quarter the preceding quarter

2 Who furnished GSTR-3B monthly during the 100% of tax paid in cash in
last quarter the last month of the
immediately preceding
quarter

Scenario 1: If GSTR-3B for January 2021 to March 2021 was filed on a quarterly basis

Tax required to be paid in each of

Tax paid in cash during Jan’21 – Mar’21 quarter Apr’21 and May’21

CGST 10,000 CGST 3,500

SGST 10,000 SGST 3,500

IGST 20,000 IGST 7,000

Cess 3,000 Cess 1,050

Scenario 2: If GSTR-3 was filed on a monthly basis during the quarter of January 2021 to March
2021

Tax required to be paid in each of Apr’21 and

Tax paid in cash during Mar’21 May’21

CGST 3,000 CGST 3,000

SGST 3,000 SGST 3,000

IGST 5,000 IGST 5,000

Cess 1,000 Cess 1,000

 Self-Assessment Method (SAM):

This is the existing method where a taxpayer can pay the tax liability by considering the tax
liability on inward and outward supplies and the input tax credit available. The taxpayer has to
manually arrive at the tax liability for the month and has to pay the same in form PMT-06. For
ascertaining the amount of ITC available for the month the taxpayer can use form GSTR-2B.
There are certain instances where no amount may be required to be deposited, such as–
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 For the first month of the quarter – where the balance in the electronic
cash/credit ledger is adequate for the tax liability of the said month OR where the
tax liability is nil.
 For the second month of the quarter – where the balance in the electronic
cash/credit ledger is adequate for the cumulative tax liability for the first and
second months of the quarter OR where the tax liability is nil.
It is to be noted that a registered person will not be eligible for the said procedures unless he has
furnished the return for the complete tax period preceding such month. A complete tax period is
a tax period where the said person is registered from the first until the last day of the tax period.

 Due dates for filing quarterly GSTR-3B

The due dates filing quarterly GSTR-3B has been notified as follows:
S.No. GST Registration in State and UT Due dates

1 Chhattisgarh, Madhya Pradesh, Gujarat, Dadra and Nagar 22nd of

Haveli, Daman and Diu, Maharashtra, Karnataka, Goa, the month
Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and succeeding
Nicobar Islands, Telangana and Andhra Pradesh such
quarter

2 Jammu and Kashmir, Ladakh, Himachal Pradesh, Punjab, 24th of

Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar the month
Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, succeeding
Mizoram, Manipur, Tripura, Meghalaya, Assam, West Bengal, such
Jharkhand and Odisha quarter

 Input Tax Credit Claims under QRMP Scheme

There is no procedural difference in the way Input Tax Credit (ITC) is claimed by a registered
person opting into the QRMP scheme. The QRMP taxpayers who are using the self-assessment
method of calculating the tax payments for the first two months of the quarter can consider the
ITC available as per their GSTR-2B for the month. Accordingly, they can pay the balance as cash
towards the GST liability.
However, the GSTR-2B for the quarter gets generated on 14th of the month following the
quarter upon the filing of quarterly GSTR-1. Hence, the buyers who deal with the vendors under
the QRMP scheme will need to refer to quarterly GSTR-2B for ITC claims.
 Interest under QRMP scheme

The interest will be applicable as follows if the taxpayer opts for one of the following methods:
Fixed Sum Method (FSM) or popularly known as the 35% challan method

S Scenario Interest to be paid

No

1 Tax liability mentioned in pre-filled form GST PMT- Nil

06 is paid by 25th of the following month
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2 Tax liability mentioned in pre-filled form GST PMT- 18% of the tax
06 is not paid by 25th of the following month liability(from 26th of
the following month
till the date of
payment)

3 The final tax liability for the first two months is less Nil
than or equal to the amount paid through pre-filled
form GST PMT-06

4 The final tax liability for the first two months is Nil
higher than the tax amount paid through pre-filled
form GST PMT-06, and such excess liability has
been paid within quarterly GSTR-3B due date

5 The final tax liability for the first two months is 18% of the tax
higher than the tax amount paid through pre-filled liability(from GSTR-
form GST PMT-06, and such excess liability has not 3B due date* till the
been paid within quarterly GSTR-3B due date date of payment)

*22nd or 24th of the month succeeding such quarters based on the state of the taxpayer.
The interest will be applicable as follows if the taxpayer opts for Self Assessment Method (SAM):

The taxpayer has to pay interest at 18% on the net tax liability which remains unpaid or paid
beyond the due date for the first two months of the quarter.
It is important to note that the taxpayer has to pay interest at18% if there is any late payment of
tax in the third month of a quarter. This is applicable irrespective of Fixed Sum Method (FSM),
popular as 35% challan method, or Self-Assessment Method (SAM).

 Late fee under QRMP scheme

The late fee should be paid as follows if the quarterly GSTR-3B is not filed within due date,
subject to a maximum late fee of Rs 5,000:
Name of the Act Late fee for everyday of delay Late fee for everyday of delay
(in case of ‘Nil’ tax liability)

CGST Act Rs.25 Rs.10

SGST Act Rs.25 Rs.10

IGST Act Rs.50 Rs.20

However, it is clarified that no late fee is applicable for delay in payment of tax in the first two
months of the quarter in form PMT-06.