Chapter 1

1. Concept, objective and differences of tax management, tax planning, tax evasion and tax
avoidance
Ans:

Tax Management

Concept: Tax management encompasses the entire process of handling one's tax obligations
efficiently and accurately. It includes maintaining proper records, timely filing of returns, and
ensuring compliance with tax laws.

Objective: The primary objective of tax management is to fulfill all legal tax obligations while
optimizing the process to avoid unnecessary penalties and interest. This involves staying updated
with changes in tax laws and making informed decisions to ensure compliance.

Tax Planning

Concept: Tax planning involves strategizing financial decisions to minimize tax liability within
the legal framework. It is a proactive approach to organizing financial affairs to take advantage
of all available deductions, credits, and exemptions.

Objective: The main objective of tax planning is to minimize tax liability legally and maximize
after-tax income. This involves long-term planning as well as tactical decisions made in response
to tax law changes.

Tax Evasion

Concept: Tax evasion is the illegal practice of not paying taxes by not reporting all taxable
income, or by claiming unauthorized deductions. It is a criminal offense and involves
deliberately misrepresenting or concealing information to reduce tax liability.

Objective: The objective of tax evasion is to reduce tax liability illegally. It aims to deceive tax
authorities by providing false information or failing to report income.

Tax Avoidance

Concept: Tax avoidance involves using legal methods to minimize tax liability. It is the practice
of structuring financial activities to take full advantage of all legal tax deductions, credits, and
exemptions without breaking the law.

Objective: The main objective of tax avoidance is to legally reduce tax liability by utilizing the
loopholes and provisions in the tax laws.

Differences:
 Basis Tax Tax Planning Tax Evasion Tax Avoidance
Management
Legality legal practices legal practices Illegal and Legal, but
punishable by sometimes
law considered
unethical.
Objective Ensure Minimize tax Illegally reduce Legally reduce
compliance and liability within tax liability tax liability using
accuracy the law the law’s
provisions
Methods Timely filing, Strategic Concealment, Utilizing tax
accurate record- financial underreporting loopholes,
keeping, decisions, long- income, inflating claiming
adherence to term planning expenses legitimate
laws deductions and
credits
Consequences No penalties, Reduced tax Legal Possible scrutiny
smooth tax liability, better consequences from tax
process financial health including fines authorities,
and although not
imprisonment. illegal

2.MAT and AMT concept and difference

Minimum Alternate Tax (MAT)

Context: Primarily used in India.

Objective: To ensure that companies with substantial book profits but low taxable income due to
various deductions and exemptions still pay a minimum amount of tax.

Key Features:

 Applicable To: Companies, including foreign companies operating in India.

 Calculation Basis: Based on "book profits" as per the financial statements prepared in
accordance with the Companies Act.
 Rate: The MAT rate is specified under the Income Tax Act and can change from year to
year. For example, it was 15% for the financial year 2020-21.
 Carry Forward: Companies paying MAT can carry forward the MAT credit (the
difference between MAT and regular tax liability) and set it off against future tax
liabilities for up to 15 years.
 Exemptions: Certain income such as income from life insurance business, shipping
income, etc., might be exempt from MAT.
Alternate Minimum Tax (AMT)

Context: Used in the United States (and some other countries with variations).

Objective: To prevent individuals, corporations, trusts, and estates from using excessive tax
preferences (like deductions and credits) to pay little or no tax.

Key Features:

 Applicable To: Individuals, corporations (other than S corporations), estates, and trusts.
 Calculation Basis: Adjusted taxable income, which includes adding back certain tax
preferences and adjustments to regular taxable income.
 Rate: The AMT rate varies. For example, in the U.S., as of the Tax Cuts and Jobs Act
(TCJA) of 2017, the corporate AMT was repealed, but individual AMT rates still apply,
typically at 26% or 28%.
 Exemptions: AMT exemptions and phase-outs apply based on filing status and income
levels.
 Carry Forward: AMT paid in excess of regular tax can be carried forward as a credit
against future regular tax liabilities.

Key Differences

1. Scope:
o MAT: Primarily applicable to companies in India.
o AMT: Applicable to individuals, corporations , estates, and trusts.
2. Calculation Basis:
o MAT: Based on book profits as per the financial statements.
o AMT: Based on adjusted taxable income, which includes adding back specific tax
preferences.
3. Tax Rates:
o MAT: The rate is typically around 15% of book profits in India.
o AMT: Varies, with individuals in the U.S. facing rates of 26% or 28% on
adjusted income above exemption thresholds.
4. Carry Forward Provisions:
o MAT: MAT credit can be carried forward for up to 15 years.
o AMT: AMT credit can be carried forward indefinitely to offset regular tax
liabilities in future years.
5. Legislative Changes:
o MAT: Continues to be in force in India with periodic updates.
o AMT: The corporate AMT was repealed in the U.S. by the Tax Cuts and Jobs Act
of 2017, but individual AMT provisions remain

3.Chapter VI-A(Read from notes)

 Chapter 2
1. Tax planning in special economic zones (SEZ).
Ans:
To promote exports and attract foreign investment, the Government of India introduced Section 10AA
under the Foreign Policy Act. However, it became fully functional in 2006, after which tax concessions
were offered to specific businesses. On fulfilling certain conditions, Section 10AA of the Income Tax
Act allows new businesses or units offering services in Special Economic Zones (SEZs) to enjoy income
tax exemption and holidays. This zone is generally a part of the nation’s diverse business and trade
legislation and is located within a nation’s borders.

Eligibility For Section 10AA Deduction

Entrepreneurs, firms, companies, individuals and other categories of assesses can claim a
deduction under Section 10AA. However, to claim a deduction under this section, SEZ units
need to meet the following conditions or criteria:

 The entrepreneur should enrol within the provisions of Section 2(j) of the Special
Economic Zone Act, 2005.

 The company should not have been established by relocating previously used plants or
machinery. However, in certain cases, SEZ units can use second-hand machinery.

 The SEZ unit must commence its production on or after April 1, 2006.

 The SEZ unit should not be incorporated by reconstructing or splitting an existing business.

 If SEZ businesses have already reaped the deduction benefit under Section 10AA for 10
years, they are ineligible to claim this deduction.

10AA Exemption Limit

The amount of deduction available under this existing section is as follows:

 100% of the profit coming from export is entitled to a tax deduction for the first 5
consecutive years (1st to 5th year).

 50% of the export profit is entitled to a deduction for the next 5 years (6th to 10th year).

 50% of Export Profits (or) the amount credited to the SEZ Reinvestment Allowance
reserve, whichever is lower (11th to 15th year)

Section 10AA Limit

Take a look at the following conditions that apply to the exemption amount under this section:

 Business owners of units in SEZs need to create a reserve account (Special Economic Zone
Reinvestment Reserve Account) after claiming the deductions for the first 10 years.
Businesses can use the amount only for buying new machinery and plants.

 Owners need to use the newly purchased plant or machinery for 3 years from the date of
creating their reserve account.

 Owners need to provide the necessary particulars of the purchase of machinery in Form
No.56FF for taxable income calculation.

If the amount in the said reserve account is not utilised within 3 years or mis-utilized, then the
amount deduction claimed shall be added to the profit of the year after the completion of 3 years
or the year in which it is mis-utilized and shall be charged to tax.

Calculation For Section 10AA Deduction Under Income Tax

In order to compute the deduction under Section 10AA, you can use the formula below:

Profit from export = (Profit of the unit’s business X Unit’s Export Turnover) / Total Turnover of
the Business.
Here, export turnover refers to the amount that a business receives for its exports. This turnover
does not include insurance expenses, telecommunication charges, etc.

2. Taxation of dividend

Previously i.e, up to Assessment Year 2020-21, if a shareholder gets a dividend from a domestic
company then he shall not be liable to pay any tax on such dividend as it is exempt from tax
under section 10(34) of the Act subject to Section 115BBDA which provides for taxability of
dividend more than Rs. 10 lakh. However, in such cases, the domestic company is liable to pay a
Dividend Distribution Tax (DDT) under section 115-O.

The Finance Act, 2020 has abolished the DDT and moved to the classical system of taxation
wherein dividends are taxed in the hands of the investors. So now, dividend income will become
taxable in the hands of taxpayers irrespective of the amount received at applicable income tax
slab rates.

Taxability of dividend will depend upon whether the dividend receiver deals in securities either
as a trader or as an investor. Thus, if shares are held for trading purposes then the dividend
income shall be taxable under the head income from business or profession.

Whereas, if shares are held as an investment then income arising in the nature of dividend shall
be taxable under the head of income from other sources.

Where the dividend is assessable to tax as business income, the assessee can claim the
deductions of all those expenditures which have been incurred to earn that dividend income such
as collection charges, interest on loan, etc. Whereas if the dividend is taxable under the head of
income from other sources, the assessee can claim a deduction of only interest expenditure which
has been incurred to earn that dividend income to the extent of 20% of total dividend income. No
deduction shall be allowed for any other expenses including commission or remuneration paid to
a banker or any other person for the purpose of realising such dividend.

Tax rates on Dividend Income

Tax Rates on dividend depends upon the type of assessee receiving dividend and the instrument on which
dividend is distributed. This can be easily understandable via the following table:-
 Category of Assessee Dividend nature Rate of Tax

Resident Dividend received from domestic Normal rate of tax

company applicable to the assessee

NRI Dividend on GDR of Indian co./PSU 10%

(purchased in foreign currency)

NRI Dividend on shares of Indian co. 20%

(purchased in foreign currency)

NRI Any other Dividend income 20%

FPI Dividend on securities other than 20%

115AB

Investment Division of Dividend on securities other than 10%

offshore banking unit 115AB

Chapter 3
1.DTAA

The Double Taxation Avoidance Agreement or DTAA is a tax treaty signed between India and
another country ( or any two/multiple countries) so that taxpayers can avoid paying double taxes
on their income earned from the source country as well as the residence country.

At present, India has double tax avoidance treaties with more than 80 countries around the world.

The need for DTAA arises out of the imbalance in tax collection on global income of
individuals. If a person aims to do business in a foreign country, he/she may end up
paying income taxes in both cases, i.e. the country where the income is earned and the country
where the individual holds his/her citizenship or residence.

For instance, if you are moving to a different country from India while leaving income sources
such as interest from deposits in here, you will be charged interest by both India and the country
of your current residence as per your consolidated global earnings. Such a scenario can have you
pay twice the tax over the same income. This is where the DTAA becomes useful for taxpayers

Benefits of DTAA
There are lots of benefits associated with DTAA for taxpayers. The basic benefit includes not
having to pay double taxes on the same income. Apart from this,

 Lower Withholding Tax (Tax Deduction at Source or TDS)

 Tax credits
 Exemption from taxes

The primary idea behind DTAA agreements with various countries is to minimize the
opportunity for tax evasion for tax payers in either or both of the countries between which the
bilateral/multilateral DTAA agreement have been signed.

Lower withholding tax is a plus for taxpayers as they can pay lower TDS on their interest,
royalty or dividend incomes in India, while some agreements provide for tax credits in the source
or country of operations so that taxpayers don’t pay the same tax twice. In some cases, such as
agreements with Mauritius, Cyprus, Singapore, Egypt etc. capital gains tax is exempted which
can be a boon to taxpayers as they can use the DTAA agreement to minimize taxes.

DTAA Rates
The rates and rules of DTAA vary from country to country depending on the particular signed
between both parties. TDS rates on interests earned for most countries is either 10% or 15%,
though rates range from 7.50% to 15%. List of DTAA rates for particular countries is given in
the next section.

Double Taxation Avoidance Agreement Country List

A total of 85 countries currently have DTAA agreements with India. The following countries
having Double Taxation Avoidance Agreement with India. TDS rates on interests are listed
below. (Listed alphabetically)

Sl No. Country TDS Rate

1 Armenia 10%
2 Australia 15%
3 Austria 10%
4 Bangladesh 10%
5 Belarus 10%
6 Belgium 15%
 7 Botswana 10%
8 Brazil 15%
9 Bulgaria 15%
10 Canada 15%

DTAA is an effective financial agreement that is beneficial to both the taxpayer as well as the
respective tax collection authorities in various countries.

2. Arms length price

Ans:

"ARM'S LENGTH PRICE" means a price which is applied or proposed to be applied in

a transaction between persons other than associated enterprises, in uncontrolled conditions.
An arm's length transaction refers to a business deal in which buyers and sellers act
independently without one party influencing the other. Arm's length transactions assert that both
parties act in their own self-interest and are not subject to pressure from the other party. They
also assure others that there is no collusion between the buyer and seller. In the interest of
fairness, both parties usually have equal access to information related to the deal.

 An arm's length transaction is a business deal that involves parties who act
independently of one another.
 Both parties involved in an arm's length sale usually have no relationship with each
other.
 These types of deals in real estate help ensure that properties are priced at their fair
market value.
 Arm's length transactions can have an effect on financing and taxes.
 Deals between family members or companies with related shareholders are not
considered arm's length transactions.

3. Methods of computation of arms-length price

Methods for Determining Arm’s Length Price

Comparable The price charged or paid for property transferred or services provided in a
Uncontrolled Price comparable uncontrolled transaction + Adjustments
(CUP) Method

Re-sale Price Resale Price charged by the tested party for the goods or services obtained
Method (RPM) from the AE to the unrelated party minus the normal uncontrolled gross
profit and the expenses incurred by the assessee + Adjustments

Cost Plus Method A sum of direct and indirect costs incurred and [normal uncontrolled gross
(CPM) profit + Adjustments]
Profit Split Method Employed in transactions involving the transfer of unique intangibles. The
(PSM) combined net profit of the AEs in a transaction is compared to their relative
contribution to arrive at an apportioned transfer price profit

Transaction Net The net profit of the tested party is determined against costs incurred, sales
Margin Method affected assets employed or any other relevant base, and the same is
(TNMM) compared against the net profit of comparable determined against the same
base + Adjustment.
Other Method The other method can be any method that considers the price that has been
charged or paid or would have been charged or paid for the same or similar
uncontrolled transaction with or between unrelated parties under similar
circumstances, considering all the relevant facts.

4. Tranfer pricing concepts and methods

Ans:
Definition: Transfer pricing, for tax purposes, is the pricing of intercompany transactions that
take place between affiliated businesses. The transfer pricing process determines the amount of
income that each party earns from that transaction.
Taxpayers and the taxing authorities focus exclusively on related-party transactions, which are
called controlled transactions, and have no direct impact on independent party transactions,
which are termed as uncontrolled transactions.

Importance of Transfer Pricing

For the purpose of management accounting and reporting, multinational companies (MNCs)
have some amount of discretion while defining how to distribute the profits and expenses to the
subsidiaries located in various countries.
Sometimes a subsidiary of a company might be divided into segments or might be accounted for
as a standalone business. In these cases, transfer pricing helps in allocating revenue and expenses
to such subsidiaries in the right manner.
The profitability of a subsidiary depends on the prices at which the inter-company transactions
occur. These days the inter-company transactions are facing increased scrutiny by the
governments. Here, when transfer pricing is applied, it could impact shareholders wealth as this
influences company’s taxable income and its after-tax, free cash flow.
It is important that a business having cross-border intercompany transactions should understand
the transfer pricing concept, particularly for the compliance requirements as per law and to
eliminate the risks of non-compliance.

STEPS INVOLVED IN TRANSFER PRICING

 Maintenance of TP study report

 Reference to a TPO
 Transfer Pricing Order
 Draft Assessment Order
  Reference to Dispute Resolution Panel
 Directions of DRP
 Final Assessment Order

TRANSFER PRICING METHODOLOGIES

 Comparable Uncontrolled Price (CUP) Method

 Resale Price Method or Resale Minus Method
 Cost Plus Method
 Profit Split Method
 Transaction Net Margin
 Another method – rationale on TP was on arm's length
 Most Appropriate Method (MAM) – Rule 10C of Income Tax Rules

Specified domestic transactions (SDT): Transfer pricing regulations are applicable to

domestic transactions that fall under domestic pricing only if the aggregate value is more
than the threshold limit of INR 200 million (US$2.7 million). Transactions with related
domestic parties that qualify as SDT include:
 Two or more enterprises are associated enterprises if:
⇒ One of them participates in the management, control, or capital of another; or
⇒ There is common management, control, or capital exercised by some persons.

 Transactions relating to the transfer of goods or services, such as profit-linked deductions

for enterprises engaged in infrastructure development or industrial undertakings,
producers and distributors of power, or telecommunication service providers.
 Transactions between the entity located in a tax holiday area and the one which is
situated in a non-tax holiday area in case both are under the same management structure.

5. Advance tax provisions, due dates and installments

Ans:

Advance tax is the income tax that is paid in advance instead of lump sum payment at the end of
the financial year. It is the tax that you pay as you earn. These payments have to be made in
installments as per due dates provided by the income tax department.
Who Should Pay Advance Tax?

 Salaried individuals, freelancers and businesses– If your total tax liability is Rs 10,000 or
more in a financial year, you have to pay advance tax. The advance tax applies to all
taxpayers, salaried individuals, freelancers, and businesses.
 Senior citizens– People aged 60 years or more who do not run a business are exempt
from paying advance tax. So, only senior citizens (60 years or more) having business
income must pay advance tax.
 Presumptive income for businesses–The taxpayers who have opted for the presumptive
taxation scheme under section 44AD have to pay the whole amount of their advance tax
in one instalment on or before 15th March. They also have the option to pay all of their
tax dues by 31st March.
 Presumptive income for professionals– Independent professionals such as doctors,
lawyers, architects, etc. come under the presumptive scheme under section 44ADA. They
have to pay the whole of their advance tax liability in one instalment on or before 15th
March. They can also pay the entire amount by 31st March.

Advance Tax Due Dates For FY 2024-25

FY 2024-25 for both individual and corporate taxpayers

Due Date Advance Tax Payment Percentage

On or before 15th June 15% of advance tax

On or before 15th September 45% of advance tax (-) advance tax already paid

On or before 15th December 75% of advance tax (-) advance tax already paid

On or before 15th March 100% of advance tax (-) advance tax already paid

For taxpayers who have opted for Presumptive Taxation Scheme under sections
44AD & 44ADA – Business Income

Due Date Advance Tax Payment Percentage

On or before 15th 100% of advance tax

March

Chapter 4

1. Difference between composite scheme and mixed supply scheme

Ans:

Aspect Mixed Supply Composite Supply

 Consolidating at least two
A supply of items or
things or administrations into
administrations that is
one arrangement where no
Definition bundled and sold as a
less than one of them is
solitary unit at a solitary
burdened, and at least one of
cost.
them isn’t.

Depending on its individual Considered as a single

Tax tax rate or exemption status, taxable supply, and the
Treatment each component is taxed entire bundle is taxed at
separately. a single rate.

Typically, separate invoices A single invoice is

are generated for each generated with a single
Invoicing component, and taxes are tax charge for the
computed separately for each complete composite
component. supply.

The composite supply is

Taxes paid on each element typically not eligible for
Input Tax
of the mixed supply can be ITC because it is
Credit (ITC)
claimed as ITC. considered to be a single
supplier.

Taxes for each component of Simpler taxes because

Compliance the mixed supply are more just one supply is
Complexity difficult to determine and considered, and only
compute. one tax rate is applied.

A wedding package that

A restaurant that serves both
Examples includes photography,
food and drink.
decorating, and catering.

2. Place of effective management

Ans:

Presently, a foreign company is considered resident in India if the control and management of its
affairs is situated wholly in India.

To bring to tax those companies that are incorporated outside India but controlled from India, the
condition of PoEM has been introduced. PoEM is an internationally recognised concept accepted
by the Organisation for Economic Co-operation and Development (OECD).

A foreign company will be regarded as a resident in India if its PoEM is in India in that year.
Since ‘residency’ is determined for each year, PoEM is also required to be determined on a year-
to-year basis. The concept of PoEM is one of substance over form. The term PoEM has been
explained to mean a place where key management and commercial decisions that are necessary
for the conduct of the business of an entity as a whole are, in substance, made.

3. Reverse charge mechanism

Ans:
Reverse charge is a mechanism where the recipient of the goods or services is liable to pay
Goods and Services Tax (GST) instead of the supplier.
Typically, the supplier of goods or services pays the tax on supply. Under the reverse charge
mechanism, the recipient of goods or services becomes liable to pay the tax, i.e., the
chargeability gets reversed.
The objective of shifting the burden of GST payments to the recipient is to widen the scope of
levy of tax on various unorganized sectors, to exempt specific classes of suppliers, and to tax the
import of services (since the supplier is based outside India).
Only certain types of business entities are subject to the reverse charge mechanism.
When is Reverse Charge Applicable?
Section 9(3), 9(4) and 9(5) of Central GST and State GST Acts govern the reverse charge
scenarios for intrastate transactions. Also, sections 5(3), 5(4) and 5(5) of the Integrated GST Act
govern the reverse charge scenarios for inter-state transactions. Let’s have a detailed discussion
regarding these scenarios:
A. Supply of certain goods and services specified by the CBIC
As per the powers conferred in section 9(3) of CGST Acts, the CBIC has issued a list of goods
and services on which reverse charge is applicable.
B. Supply from an unregistered dealer to a registered dealer
Section 9(4) of the CGST Act states that if a vendor is not registered under GST supplies goods
to a person registered under GST, then reverse charge would apply. This means that the GST will
have to be paid directly by the receiver instead of the supplier. The registered buyer who has to
pay GST under reverse charge has to do self-invoicing for the purchases made.

C. Supply of services through an e-commerce operator

All types of businesses can use e-commerce operators as an aggregator to sell products or
provide services. Section 9(5) of the CGST Act states that if a service provider uses an e-
commerce operator to provide specified services, the reverse charge will apply to the e-
commerce operator and he will be liable to pay GST.
4. Input tax credit
Ans:
Input Tax Credit’ or ‘ITC’ means the Goods and Services Tax (GST) paid by a taxable person on
any purchase of goods and/or services that are used or will be used for business. Input ITC can
be reduced from the GST payable on the sales by the taxable person only after fulfilling some
conditions.
Conditions to claim an input tax credit under GST
Section 16 of the CGST Act lays down the conditions to be fulfilled by GST registered buyers to
claim ITC. The conditions are summarized as follows:

 Such input tax credit is eligible for claims if the goods or services purchased are further
used for business purposes and not personal use.
 Buyer must hold such tax invoice or debit note or document evidencing payment towards
the purchase.
 Such tax invoice or debit note is filed by the supplier in Form GSTR-1 and it appears in
the buyer’s Form GSTR-2B.
 The buyer has received the goods and/or services. The goods are said to be received if it
is delivered by the supplier to the buyer or his representative or agent or another person
as directed, against a document of transfer of title of goods. On the other hand, the
services are said to be received if it is rendered by the supplier to the buyer or another
person as directed.
 The buyer must furnish the GST returns in Form GSTR-3B.
 Where the goods are received in lots or installments, ITC will be allowed to be availed
when the last lot or installment is received.
 The buyer must pay towards the supply of goods and/or services within 180 days from
the invoice date. If they fail to, then the ITC already claimed will need to be paid to the
government, along with interest payable under Section 50.* The ITC claim can be again
made once the payment is made to the supplier.
 ITC on a tax invoice or debit note belonging to a financial year must be claimed within
the time limit given by the GST provisions, explained in the next section.
Time limit to claim an input tax credit under GST
The time limit to claim ITC against an invoice or debit note is earlier of two dates, given below:

 30th November of the next financial year.

 The date of filing the annual returns in form GSTR-9 relating to that financial
year.
Items on which ITC is not allowed
The input tax credit is not available for claims in the following cases-

 Motor vehicles, with a seating capacity of less than or equal to 13 persons (including the
driver), goods transport agencies, vessels and aircraft, except for a few cases. So as an
exception, ITC is allowed in the below cases:
 Services of general insurance, servicing, repair and maintenance relating to motor
vehicles, vessels or aircraft in Sl. no.1.
 Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and
plastic surgery.
 Membership in a club, health, and fitness centre.
 Leasing, renting or hiring motor vehicles, vessels or aircraft, except cases in Sl.no. 1.
 Goods and/or services where tax has been paid under the composition scheme.
 Goods and/or services used for personal use.

5. Time and value of supply

Ans:
Time of Supply
Time of supply means the point in time when goods/services are considered supplied’. When the
seller knows the ‘time’, it helps him identify due date for payment of taxes.CGST/SGST or IGST
must be paid at the time of supply. Goods and services have a separate basis to identify their time
of supply.
Time of Supply of Goods
Time of supply of goods is earliest of:
1. Date of issue of invoice
2. Last date on which invoice should have been issued
3. Date of receipt of advance/ payment.
Time of Supply for Services
Time of supply of services is earliest of:
 1. Date of issue of invoice
2. Date of receipt of advance/ payment.
3. Date of provision of services (if invoice is not issued within prescribed period)
Place of Supply of Goods
Usually, in case of goods, the place of supply is where the goods are delivered. So, the place of
supply of goods is the place where the ownership of goods changes.
What if there is no movement of goods. In this case, the place of supply is the location of goods
at the time of delivery to the recipient.
Place of Supply for Services
Generally, the place of supply of services is the location of the service recipient. In cases where
the services are provided to an unregistered dealer and their location is not available the location
of service provider will be the place of provision of service.
Special provisions have been made to determine the place of supply for the following services:
Services related to immovable property
Restaurant services
Admission to events
Transportation of goods and passengers
Telecom services
Banking, Financial and Insurance services
In case of services related to immovable property, the location of the property is the place of
provision of services.
6. Levy of tax
Ans:
A. Levy and Collection of GST Under CGST Act. (Section 9)
1. Levy of central goods and service tax [Section 9(1)]
Under CGST Act, central tax called as the central goods and services tax (CGST)
shall be levied on all intra-State supplies of goods or services or both, except on the
supply of alcoholic liquor for human consumption. It shall be levied on the value
determined under section 15 and at such rates, not exceeding 20%, as may be notified
by the Government on the recommendations of the Council and collected in such
manner as may be prescribed and shall be paid by the taxable person. [Similar rates
have been prescribed under SGST/UTGST]
 2. Central tax on petroleum products to be levied from the date to be notified
[Section 9(2)] The central tax on the supply of petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall
be levied with effect from such date as may be notified by the Government on the
recommendations of the Council.

3. Tax payable on reverse charge basis [Section 9(3)]

The Government may, on the recommendations of the Council, by notification,
specify categories of supply of goods or services or both, the tax on which shall be
paid on reverse charge basis by the recipient of such goods or services or both.
Further, all the provisions of this Act shall apply to such recipient as if he is the
person liable for paying the tax in relation to the supply of such goods or services or
both.

4. Tax payable on reverse charge if the supplies are made to a registered person by
unregistered person [Section 9(4)]:
The central tax in respect of the supply of taxable goods or services or both by a
supplier, who is not registered, to a registered person shall be paid by such person on
reverse charge basis as the recipient and all the provisions of this Act shall apply to
such recipient as if he is the person liable for paying the tax in relation to the supply
of such goods or services or both.

5. Tax payable on intra-State supplies by the electronic commerce operator on notified

services [Section 9(5)]
As per section 2(45) of the CGST Act, 2017, "electronic commerce operator" means
any person who owns, operates or manages digital or electronic facility or platform
for electronic commerce. Further, "electronic commerce" means the supply of goods
or services or both, including digital products over digital or electronic network.

B. Levy and Collection of GST under IGST Act. (Section 5)

The provisions under section 5 of the IGST Act are similar to section 9 of CGST Act except:

1. The word CGST has been substituted by IGST under IGST Act.
2. Under IGST Act, tax called integrated tax is to be levied on all inter State supplies
and on goods imported into India.
3. maximum rate under section 5(1) of the IGST Act is 40% (i.e. 20% CGST +20%
UTGST)

C. Levy and Collection of GST Under UTGST Act. (Section 7)

The provisions under section 7 of the UTGST Act are similar to section 9 of CGST Act

Except:
1. The word CGST has been substituted by the word UTGST under the UTGST Act.
2. under UTGST Act, tax called UT tax is be levied on all intra-State supplies,
3. Maximum rate 7(1) of UTGST Act is 20%.

Chapter 5
1. Payment and refund of tax
Ans:
A. Payments
Under GST the tax to be paid is mainly divided into 3 –

 IGST – To be paid when interstate supply is made (paid to center)

 CGST – To be paid when making supply within the state (paid to center)
 SGST – To be paid when making supply within the state (paid to state)

GST payment can be made in 2 ways

 Payment through Credit Ledger:The credit of ITC can be taken by dealers for GST
payment. The credit can be taken only for payment of Tax. Interest, penalty and late fees
cannot be paid by utilizing ITC.
 Payment through Cash Ledger:GST payment can be made online or offline. The
challan has to be generated on GST Portal for both online and offline GST payment.
Where tax liability is more than Rs 10,000, it is mandatory to pay taxes Online.

B. Refunds
Usually when the GST paid is more than the GST liability a situation of claiming GST refund
arises. Under GST the process of claiming a refund is standardized to avoid confusion. The
process is online and time limits have also been set for the same.
When can the refund be claimed?
There are many cases where refund can be claimed. Here are some of them –
  Excess payment of tax is made due to mistake or omission.

 Dealer Exports (including deemed export) goods/services under claim of rebate or

Refund
 ITC accumulation due to output being tax exempt or nil-rated
 Refund of tax paid on purchases made by Embassies or UN bodies
 Tax Refund for International Tourists
 Finalization of provisional assessment

2. Block credit
Ans:
Section 17(5) of CGST Act, also referred to as blocked credits, is a very important provision for
every regular taxpayer under GST. It defines a list of purchases on which GST is paid but
businesses cannot claim these as the Input Tax Credit (ITC).

Under the Goods and Services Tax (GST) Act in India, Input Tax Credit (ITC) is a mechanism to
avoid cascading of taxes. However, there are certain situations where ITC is blocked, meaning
businesses cannot claim credit for certain inputs, input services, or capital goods.

Here are the key provisions under which ITC is blocked under the GST Act:

1. Motor Vehicles and Conveyances (Section 17(5)(a))

ITC is not allowed on motor vehicles and other conveyances except when they are used for:

o Making taxable supplies like transportation of passengers or goods.

o Imparting training on driving, flying, navigating such vehicles or conveyances.

2. Specified Goods and Services (Section 17(5)(b))

ITC is not allowed for the following goods and services except where it is obligatory for an
employer to provide them to employees under any law:

o Food and beverages, outdoor catering, beauty treatment, health services, cosmetic
and plastic surgery.
o Membership of a club, health, and fitness center.
o Rent-a-cab, life insurance, and health insurance.
o Travel benefits extended to employees on vacation such as leave or home travel
concession.

3. Works Contract Services (Section 17(5)(c))

ITC is blocked on works contract services when supplied for the construction of an immovable
property (other than plant and machinery), except where it is an input service for further supply
of works contract service.

4. Construction of Immovable Property (Section 17(5)(d))

ITC is blocked on goods or services received by a taxable person for construction of an

immovable property (other than plant and machinery) on his own account, including when such
goods or services are used in the course or furtherance of business.

5. Composition Scheme (Section 17(5)(e))

ITC is not allowed on goods or services on which tax has been paid under the composition
scheme.

6. Non-Business Use (Section 17(5)(g))

ITC is not allowed for goods or services used for personal consumption.

7. Free Samples and Lost Goods (Section 17(5)(h))

ITC is not allowed for goods lost, stolen, destroyed, written off, or disposed of by way of gift or
free samples.

8. Tax Paid Due to Fraud (Section 17(5)(i))

ITC is not allowed on any tax paid in accordance with the provisions of sections 74, 129, and
130, which pertain to the situations of fraud, willful misstatement, suppression of facts,
detention, seizure, and confiscation of goods.

3. Registration under GST

Ans:

Step-by-Step Process of GST Registration

1. Visit the GST Portal: Go to the official GST portal: gst.gov.in.

2. Click on Services: Navigate to "Services" -> "Registration" -> "New Registration".
3. Fill in the Part-A of the Registration Form
o Select "New Registration".
o Fill in the details:
 Select "Taxpayer" under "I am a".
 Select the state and district.
 Enter the business name, PAN, email, and mobile number.
 Enter the captcha code and click on "Proceed".
 4. Receive OTP and Verify: You will receive two OTPs, one on your email and another on
your mobile number. Enter both OTPs to proceed.
5. Temporary Reference Number (TRN):After verification, you will receive a Temporary
Reference Number (TRN) on your email and mobile number.
6. Fill in Part-B of the Registration Form
o Go back to the GST portal and click on "Services" -> "Registration" -> "New
Registration".
o Select "Temporary Reference Number (TRN)".
o Enter the TRN and the captcha code and click on "Proceed".
o Enter the OTP received on your mobile number.
7. Complete the Application
o You will be directed to the "My Saved Application" page. Click on the edit icon
to fill in the required details in the following sections:
 Business Details: Legal name of the business, PAN, trade name,
constitution of the business, etc.
 Promoter/Partners: Personal details of the promoter/partners.
 Authorized Signatory: Details of the authorized signatory.
 Principal Place of Business: Address of the principal place of business.
 Additional Place of Business: If applicable.
 Goods and Services: Details of the goods and services the business deals
in.
 Bank Account: Bank account details.
 Verification: Verify the details and submit the application.
8. Submit Application
o After filling in all the details, click on "Save and Continue".
o You need to digitally sign the application using Digital Signature Certificate
(DSC), e-Sign, or Electronic Verification Code (EVC).
9. Acknowledgement: Once the application is successfully submitted, an Application
Reference Number (ARN) will be generated and sent to your registered email and mobile
number.
10. Processing by GST Officer
o The GST officer will process your application. If additional information or
clarification is needed, you will be contacted.
o If the application and documents are in order, the GST officer will approve your
registration.
11. GSTIN Allocation
o Upon approval, you will receive the GSTIN (Goods and Services Tax
Identification Number) and a GST registration certificate via email.

Documents Required for GST Registration

 PAN Card of the business or applicant.

 Proof of business registration or incorporation certificate.
 Identity and address proof of promoters/partners (Aadhaar card, passport, driving
license, etc.).
 Address proof of the place of business (electricity bill, rent agreement, etc.).
 Bank account statement or canceled cheque.
 Digital Signature (for companies and LLPs).
 Authorization letter/board resolution for authorized signatory.