Levy of and Exemption

from Tax
R KIRAN GAIKWAD, MBA (Fin)
Partner
KGS CESTAX ADVISORS LLP
BENGALURU
+91 98441 69712
[email protected]

THINK OF COMPLIANCE - THINK OF

US 1
CONCEPT UAL CHANGES
 GST is applicable on “supply” of goods or
services as against the earlier concept of tax
on manufacture of goods or on sale of goods
or on provision of services
 Prevents cascading of taxes as Input Tax

Credit will be available across goods and

services at every stage of supply
 Destination based consumption tax.
 Place of supply plays an important role.
 Single Registration in one state

THINK OF COMPLIANCE - THINK OF

US 2
Power to levy GST
 Article 246A of the Constitution, which was
introduced by the Constitution (101st
Amendment) Act, 2016 confers concurrent
powers to both, Parliament and State
Legislatures to make laws with respect to GST
i. e. central tax (CGST) and state tax (SGST) or
union territory tax (UTGST). However, clause 2
of Article 246A read with Article 269A
provides exclusive power to the Parliament to
legislate with respect to inter-State trade or
commerce i.e. integrated tax (IGST)
THINK OF COMPLIANCE - THINK OF
US 3
Taxable event under GST
 Taxable event under GST is supply of goods
or services or both. CGST and SGST/ UTGST
will be levied on intra-State supplies. IGST
will be levied on inter-State supplies

THINK OF COMPLIANCE - THINK OF

US 4
CHAPTER III of CGST Act, 2017 - LEVY
AND COLLECTION OF TAX
 7. Scope of supply. — (1) For the purposes of this Act,
the expression “supply” includes —
 (a) all forms of supply of goods or services or both such
as sale, transfer, barter, exchange, licence, rental, lease or
disposal made or agreed to be made for a consideration
by a person in the course or furtherance of business;
 (b) import of services for a consideration whether or not
in the course or furtherance of business;
 (c) the activities specified in Schedule I, made or agreed
to be made without a consideration; and
 (d) the activities to be treated as supply of goods or
supply of services as referred to in Schedule II.

THINK OF COMPLIANCE - THINK OF

US 5
Section 7 ..cont’d
 (2) Notwithstanding anything contained in sub-
section (1), —
 (a) activities or transactions specified in Schedule

III; or
 (b) such activities or transactions undertaken by

the Central Government, a State Government or any

local authority in which they are engaged as public
authorities, as may be notified by the Government
on the recommendations of the Council,
shall be treated neither as a supply of goods nor a
supply of services

THINK OF COMPLIANCE - THINK OF

US 6
SCHEDULE I
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF
MADE WITHOUT CONSIDERATION
 1. Permanent transfer or disposal of business assets where input tax
credit has been availed on such assets.
 2. Supply of goods or services or both between related persons or
between distinct persons as specified in section 25, when made in the
course or furtherance of business :
 Provided that gifts not exceeding fifty thousand rupees in value in a
financial year by an employer to an employee shall not be treated as
supply of goods or services or both.
 3. Supply of goods —
 (a) by a principal to his agent where the agent undertakes to supply
such goods on behalf of the principal; or
 (b) by an agent to his principal where the agent undertakes to receive
such goods on behalf of the principal.
 4. Import of services by a taxable person from a related person or from
any of his other establishments outside India, in the course or
furtherance of business.

THINK OF COMPLIANCE - THINK OF

US 7
SCHEDULE II
ACTIVITIES TO BE TREATED AS SUPPLY OF
GOODS OR SUPPLY OF SERVICES
 1. Transfer
 (a) any transfer of the title in goods is a supply of goods;
 (b) any transfer of right in goods or of undivided share in goods without
the transfer of title thereof, is a supply of services;
 (c) any transfer of title in goods under an agreement which stipulates
that property in goods shall pass at a future date upon payment of full
consideration as agreed, is a supply of goods.
 2. Land and Building
 (a) any lease, tenancy, easement, licence to occupy land is a supply of
services;
 (b) any lease or letting out of the building including a commercial,
industrial or residential complex for business or commerce, either wholly
or partly, is a supply of services.
 3. Treatment or process
 Any treatment or process which is applied to another person’s goods is a
supply of services.

THINK OF COMPLIANCE - THINK OF

US 8
SCHEDULE II
ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR
SUPPLY OF SERVICES
 4. Transfer of business assets
 (a) where goods forming part of the assets of a business are transferred or
disposed of by or under the directions of the person carrying on the business
so as no longer to form part of those assets, whether or not for a
consideration, such transfer or disposal is a supply of goods by the person;
 (b) where, by or under the direction of a person carrying on a business,
goods held or used for the purposes of the business are put to any private
use or are used, or made available to any person for use, for any purpose
other than a purpose of the business, whether or not for a consideration, the
usage or making available of such goods is a supply of services;
 (c) where any person ceases to be a taxable person, any goods forming part
of the assets of any business carried on by him shall be deemed to be
supplied by him in the course or furtherance of his business immediately
before he ceases to be a taxable person, unless —
 (i) the business is transferred as a going concern to another person; or
 (ii) the business is carried on by a personal representative who is deemed to
be a taxable person.

THINK OF COMPLIANCE - THINK OF

US 9
SCHEDULE II
ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR
SUPPLY OF SERVICES
 5. Supply of services
 The following shall be treated as supply of services, namely :—
 (a) renting of immovable property;
 (b) construction of a complex, building, civil structure or a part thereof,
including a complex or building intended for sale to a buyer, wholly or partly,
except where the entire consideration has been received after issuance of
completion certificate, where required, by the competent authority or after its
first occupation, whichever is earlier.
 Explanation. — For the purposes of this clause —
 (1) the expression “competent authority” means the Government or any
authority authorised to issue completion certificate under any law for the
time being in force and in case of non-requirement of such certificate from
such authority, from any of the following, namely :—
   (i) an architect registered with the Council of Architecture constituted
under the Architects Act, 1972 (20 of 1972); or
   (ii) a chartered engineer registered with the Institution of Engineers
(India); or
   (iii) a licensed surveyor of the respective local body of the city or town
or village or development or planning authority;
THINK OF COMPLIANCE - THINK OF
US 10
SCHEDULE II
ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR
SUPPLY OF SERVICES
 (2) the expression “construction” includes additions,
alterations, replacements or remodelling of any existing
civil structure;
 (c) temporary transfer or permitting the use or enjoyment

of any intellectual property right;

 (d) development, design, programming, customisation,

adaptation, upgradation, enhancement, implementation of

information technology software;
 (e) agreeing to the obligation to refrain from an act, or to

tolerate an act or a situation, or to do an act; and

 (f) transfer of the right to use any goods for any purpose

(whether or not for a specified period) for cash, deferred

payment or other valuable consideration.

THINK OF COMPLIANCE - THINK OF

US 11
SCHEDULE II
ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR
SUPPLY OF SERVICES
 6. Composite supply
 The following composite supplies shall be treated as a supply of
services, namely :—
 (a) works contract as defined in clause (119) of section 2; and
 (b) supply, by way of or as part of any service or in any other
manner whatsoever, of goods, being food or any other article
for human consumption or any drink (other than alcoholic liquor
for human consumption), where such supply or service is for
cash, deferred payment or other valuable consideration.
 7. Supply of Goods
 The following shall be treated as supply of goods, namely :—
Supply of goods by any unincorporated association or body of
persons to a member thereof for cash, deferred payment or
other valuable consideration

THINK OF COMPLIANCE - THINK OF

US 12
SCHEDULE III
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE
TREATED NEITHER AS A SUPPLY OF GOODS NOR A
SUPPLY OF SERVICES
 1. Services by an employee to the employer in the course of or in
relation to his employment.
 2. Services by any court or Tribunal established under any law for
the time being in force.
 3. (a) the functions performed by the Members of Parliament,
Members of State Legislature, Members of Panchayats, Members of
Municipalities and Members of other local authorities;
 (b) the duties performed by any person who holds any post in
pursuance of the provisions of the Constitution in that capacity; or
 (c) the duties performed by any person as a Chairperson or a
Member or a Director in a body established by the Central
Government or a State Government or local authority and who is
not deemed as an employee before the commencement of this
clause.

THINK OF COMPLIANCE - THINK OF

US 13
SCHEDULE III
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE
TREATED NEITHER AS A SUPPLY OF GOODS NOR A
SUPPLY OF SERVICES
 4. Services of funeral, burial, crematorium or
mortuary including transportation of the
deceased.
 5. Sale of land and, subject to clause (b) of
paragraph 5 of Schedule II, sale of building.
 6. Actionable claims, other than lottery,
betting and gambling.
 Explanation. — For the purposes of paragraph
2, the term “court” includes District Court, High
Court and Supreme Court.

THINK OF COMPLIANCE - THINK OF

US 14
Section 8
 8. Tax liability on composite and mixed supplies.
— The tax liability on a composite or a mixed
supply shall be determined in the following
manner, namely :—
 (a) a composite supply comprising two or more
supplies, one of which is a principal supply, shall be
treated as a supply of such principal supply; and
 (b) a mixed supply comprising two or more
supplies shall be treated as a supply of that
particular supply which attracts the highest rate of
tax.

THINK OF COMPLIANCE - THINK OF

US 15
Section 8
 Section 2 (30) “composite supply” means a supply
made by a taxable person to a recipient consisting of
two or more taxable supplies of goods or services or
both, or any combination thereof, which are
naturally bundled and supplied in conjunction with
each other in the ordinary course of business, one of
which is a principal supply;
 SECTION 2 (74) “mixed supply” means two or more

individual supplies of goods or services, or any

combination thereof, made in conjunction with each
other by a taxable person for a single price where
such supply does not constitute a composite supply

THINK OF COMPLIANCE - THINK OF

US 16
Section 9
 9. Levy and collection. — (1) Subject to the
provisions of sub-section (2), there shall be levied
a tax called the central goods and services tax on
all intra-State supplies of goods or services or
both, except on the supply of alcoholic liquor for
human consumption, on the value determined
under section 15 and at such rates, not exceeding
twenty per cent., 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.

THINK OF COMPLIANCE - THINK OF

US 17
Cont’d…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) 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 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.
 (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

THINK OF COMPLIANCE - THINK OF

US 18
Cont’d…Section 9
 (5) The Government may, on the recommendations of the Council, by
notification, specify categories of services the tax on intra-State
supplies of which shall be paid by the electronic commerce operator if
such services are supplied through it, and all the provisions of this Act
shall apply to such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply of such
services :
 Provided that where an electronic commerce operator does not have a
physical presence in the taxable territory, any person representing
such electronic commerce operator for any purpose in the taxable
territory shall be liable to pay tax :
 Provided further that where an electronic commerce operator does not
have a physical presence in the taxable territory and also he does not
have a representative in the said territory, such electronic commerce
operator shall appoint a person in the taxable territory for the purpose
of paying tax and such person shall be liable to pay tax.

THINK OF COMPLIANCE - THINK OF

US 19
Section 10
Notification No. 46/2017-C.T., dated 13-10-2017 & Notification No. 1/2018-C.T.,
dated 1-1-2018
 10. Composition levy. — (1) Notwithstanding anything to the contrary
contained in this Act but subject to the provisions of sub-sections (3) and (4) of
section 9, a registered person, whose aggregate turnover in the preceding
financial year did not exceed (NOW ONE CRORE) fifty lakh rupees, may opt to pay,
in lieu of the tax payable by him, an amount calculated at such rate as may be
prescribed, but not exceeding, —
 (a) one (now half) per cent. of the turnover in State or turnover in Union territory

in case of a manufacturer,
 (b) two and a half per cent. of the turnover in State or turnover in Union territory

in case of persons engaged in making supplies referred to in clause (b) of

paragraph 6 of Schedule II, and
 (c) half per cent. of the turnover in State or turnover in Union territory in case of

other suppliers (goods only),

subject to such conditions and restrictions as may be prescribed :
(Notification No. 8/2017-C.T., dated 27-6-2017 (as amended))
Provided that the Government may, by notification, increase the said limit of fifty
lakh rupees to such higher amount, not exceeding one crore rupees, as may be
recommended by the Council.

THINK OF COMPLIANCE - THINK OF

US 20
Cont’d…Section 10
 (2) The registered person shall be eligible to opt under sub-section (1), if :—
 (a) he is not engaged in the supply of services other than supplies referred to
in clause (b) of paragraph 6 of Schedule II;
 (b) he is not engaged in making any supply of goods which are not leviable to
tax under this Act;
 (c) he is not engaged in making any inter-State outward supplies of goods
(now certain notified handicrafts are allowed);
 (d) he is not engaged in making any supply of goods through an electronic
commerce operator who is required to collect tax at source under section 52;
and
 (e) he is not a manufacturer of such goods as may be notified by the
Government on the recommendations of the Council (certain goods):
 Provided that where more than one registered persons are having the same
Permanent Account Number [issued under the Income-tax Act, 1961 (43 of
1961)], the registered person shall not be eligible to opt for the scheme under
sub-section (1) unless all such registered persons opt to pay tax under that
sub-section.

THINK OF COMPLIANCE - THINK OF

US 21
Cont’d…Section 10
 (3) The option availed of by a registered person under sub-
section (1) shall lapse with effect from the day on which his
aggregate turnover during a financial year exceeds the limit
specified under sub-section (1).
 (4) A taxable person to whom the provisions of sub-section
(1) apply shall not collect any tax from the recipient on supplies
made by him nor shall he be entitled to any credit of input tax.
 (5) If the proper officer has reasons to believe that a taxable
person has paid tax under sub-section (1) despite not being
eligible, such person shall, in addition to any tax that may be
payable by him under any other provisions of this Act, be liable
to a penalty and the provisions of section 73 or section 74
shall, mutatis mutandis, apply for determination of tax and
penalty.

THINK OF COMPLIANCE - THINK OF

US 22
Composition levy
 The threshold for composition scheme is Rs.
1 Crore of aggregate turnover in the
preceding financial year. The benefit of
composition scheme can be availed up to the
turnover of Rs. 1 Crore in current financial
year. (75 lakhs for 9 special category states
viz 1. Arunachal Pradesh, 2. Assam, 3.
Manipur, 4. Meghalaya, 5. Mizoram, 6.
Nagaland, 7. Sikkim, 8. Tripura, and 9.
Himachal Pradesh)

THINK OF COMPLIANCE - THINK OF

US 23
Power to grant exemption from tax
 11. Power to grant exemption from tax. — (1) Where the Government is satisfied
that it is necessary in the public interest so to do, it may, on the recommendations
of the Council, by notification, exempt generally, either absolutely or subject to
such conditions as may be specified therein, goods or services or both of any
specified description from the whole or any part of the tax leviable thereon with
effect from such date as may be specified in such notification.
 (2) Where the Government is satisfied that it is necessary in the public interest so

to do, it may, on the recommendations of the Council, by special order in each

case, under circumstances of an exceptional nature to be stated in such order,
exempt from payment of tax any goods or services or both on which tax is leviable.
 (3) The Government may, if it considers necessary or expedient so to do for the

purpose of clarifying the scope or applicability of any notification issued under

sub-section (1) or order issued under sub-section (2), insert an explanation in such
notification or order, as the case may be, by notification at any time within one year
of issue of the notification under sub-section (1) or order under sub-section (2),
and every such explanation shall have effect as if it had always been the part of the
first such notification or order, as the case may be.

THINK OF COMPLIANCE - THINK OF

US 24
Exemption Notifications
 Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017 - Exemption from
CGST to specified goods
 Notification No. 3/2017-Central Tax (Rate), dated 28-6-2017 - Exemption to
goods supplies for specified petroleum and other explorations and productions
under various Schemes from CGST – Effective rates
 Notification No. 6/2017-Central Tax (Rate), dated 28-6-2017 - Exemption to
Canteen Stores Department for all inward supplies of goods for subsequent
supplies to unit run canteens of CSD or to the authorised customers of CSD by
way of 50% refund of CGST
 Notification No. 7/2017-Central Tax (Rate), New Delhi, dated 28-6-2017 -
Exemption to goods supplied by CSD to units run canteens and to the authorized
customers by them from CGST
 Notification No. 9/2017-Central Tax (Rate), dated 28-6-2017 - Exemption from
CGST to intra-State supplies of goods and services received by a TDS deductor
from any supplier who is not registered
 Notification No. 10/2017-Central Tax (Rate), dated 28-6-2017 - Exemption
from CGST on intra-State supplies of second hand goods received by registered
person from any supplier who is not registered

THINK OF COMPLIANCE - THINK OF

US 25
Exemption Notifications
 Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 - Exemption from
CGST on specified intra-State services
 Notification No. 16/2017-Central Tax (Rate), dated 28-6-2017 - Exemption to
goods and services supply to specialize agency of UNO, Embassies and other
specified international organisation by way of refund under Section 55 of CGST
Act
 Notification No. 26/2017-C.T. (Rate), dated 21-9-2017 - Exemption to intra-
State supply of heavy water and nuclear fuels by dept. of Atomic Energy to NPCIL
 Notification No. 32/2017-C.T., dated 15-9-2017 - GST Registration — Handicraft
goods supplier below the annual threshold limit of 20 lakh, engaged in inter-
State supplies exempted from registration
 Notification No. 38/2017-C.T. (Rate), dated 13-10-2017 - Exemption from CGST
under Reverse Charge Mechanism for intra-State supplies of goods and services
obtained from unregistered persons, till 31-3-2018 — Amendment to Notification
No. 8/2017-C.T. (Rate)
 Notification No. 66/2017-C.T., dated 15-11-2017 - Exemption from payment of
tax on advances received for supply of goods — Notification No. 40/2017-C.T.
superseded

THINK OF COMPLIANCE - THINK OF

US 26
RETURNS

ONLY ONLINE

THINK OF COMPLIANCE - THINK OF

US 27
RETURN FORMS
1 FORM GSTR-1 - Rule 59(1)
Details of outward supplies of taxable goods and/or services
effected
 2 FORM GSTR-1A - Rule 59(4)
Details of outward supplies as added, corrected or deleted by the recipient
 3 FORM GSTR-2 - Rule 60(1)

Details of inward supplies of taxable goods and/or services claiming input tax
credit
 4 FORM GSTR-2A - Rule 60(1)

Details of inward supplies made available to the recipient on the basis of FORM
GSTR-1 furnished by the supplier
 5 FORM GSTR-3 - Rule 61(1)

Monthly return on the basis of finalization of details of outward supplies and

inward supplies along with the payment of amount of tax
 6 Form GSTR-3B - Rule 61(5)
Monthly returns of outward supply, RCM, ITC and payment of tax till such time
GSTR-2 and GSTR-3 becomes operational

THINK OF COMPLIANCE - THINK OF

US 28
RETURN FORMS
 7 FORM GSTR-3A - Rule 68
Notice to a registered taxable person who fails to furnish return under section 39 and section 45

 8 FORM GSTR-4 - Rule 62

Quarterly Return for Taxable persons under Section 10 – Composition levy

 9 FORM GSTR-4A - Rules 59(3) and 66(2)

Details of inward supplies made available to the recipient registered under composition scheme on the basis of
FORM GSTR-1 furnished by the supplier

 10 FORM GSTR-5 - Rule 63

Return for Non-Resident foreign taxable person

 11 FORM GSTR-5A - Rule 64

Details of supplies of online information and database access or retrieval services by a person located outside
India made to non-taxable persons in India

 12 FORM GSTR-6 - Rule 65

ISD Return

 13 FORM GSTR-6A - Rules 59(3) & 65

Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the
supplier

THINK OF COMPLIANCE - THINK OF

US 29
RETURN FORMS
 14 FORM GSTR-7 - Rule 66(1)
Return for authorities deducting tax at source
 15 FORM GSTR-7A - Rule 66(3)
TDS Certificate
 16 FORM GSTR-8 - Rule 67(1)
Details of supplies effected through e-commerce operator and the amount of tax collected as required
under sub-section (1) of section 43C
 17 FORM GSTR-9 -
Annual return
 18 FORM GSTR-9A
Simplified Annual return by Compounding taxable persons registered under section 10
 19 FORM GSTR-9B
Reconciliation Statement
 20 FORM GSTR-10
Final return
 21 FORM GSTR-11 - Rule 82
Details of inward supplies to be furnished by a person having UIN
 22 ITC 04 – Rule 45
The details of challans in respect of goods dispatched to a job worker or received from a job worker or
sent from one job worker to another during a quarter

THINK OF COMPLIANCE - THINK OF

US 30
Return filing
 Section 37. Furnishing details of outward supplies - “details of
outward supplies” shall include details of invoices, debit notes, credit
notes and revised invoices issued in relation to outward supplies made
during any tax period – GSTR-1 by 10th
 Section 38. Furnishing details of inward supplies – GSTR-2 – by 15th
 39. Furnishing of returns –
 (1) Every registered person, other than an Input Service Distributor or a
non-resident taxable person or a person paying tax under the
provisions of section 10 or section 51 or section 52 shall, for every
calendar month or part thereof, furnish, in such form and manner as
may be prescribed, a return, electronically, of inward and outward
supplies of goods or services or both, input tax credit availed, tax
payable, tax paid and such other particulars as may be prescribed, on
or before the twentieth day of the month succeeding such calendar
month or part thereof.

THINK OF COMPLIANCE - THINK OF

US 31
Returns
 (2) A registered person paying tax under the provisions of section
10 shall, for each quarter or part thereof, furnish, in such form and
manner as may be prescribed, a return, electronically, of turnover
in the State or Union territory, inward supplies of goods or services
or both, tax payable and tax paid within eighteen days after the
end of such quarter.
 (3) Every registered person required to deduct tax at source under
the provisions of section 51 shall furnish, in such form and manner
as may be prescribed, a return, electronically, for the month in
which such deductions have been made within ten days after the
end of such month.
 (4) Every taxable person registered as an Input Service Distributor
shall, for every calendar month or part thereof, furnish, in such
form and manner as may be prescribed, a return, electronically,
within thirteen days after the end of such month.

THINK OF COMPLIANCE - THINK OF

US 32
Returns
 (5) Every registered non-resident taxable person shall, for every
calendar month or part thereof, furnish, in such form and manner as
may be prescribed, a return, electronically, within twenty days after the
end of a calendar month or within seven days after the last day of the
period of registration specified under sub-section (1) of section 27,
whichever is earlier.
 (6) The Commissioner may, for reasons to be recorded in writing, by
notification, extend the time limit for furnishing the returns under this
section for such class of registered persons as may be specified therein :
 Provided that any extension of time limit notified by the Commissioner
of State tax or Union territory tax shall be deemed to be notified by the
Commissioner
 8) Every registered person who is required to furnish a return under
sub-section (1) or sub-section (2) shall furnish a return for every tax
period whether or not any supplies of goods or services or both have
been made during such tax period

THINK OF COMPLIANCE - THINK OF

US 33
Returns
 (9) Subject to the provisions of sections 37 and 38, if any
registered person after furnishing a return under sub-section (1)
or sub-section (2) or sub-section (3) or sub-section (4) or sub-
section (5) discovers any omission or incorrect particulars
therein, other than as a result of scrutiny, audit, inspection or
enforcement activity by the tax authorities, he shall rectify such
omission or incorrect particulars in the return to be furnished for
the month or quarter during which such omission or incorrect
particulars are noticed, subject to payment of interest under this
Act
 Provided that no such rectification of any omission or incorrect

particulars shall be allowed after the due date for furnishing of

return for the month of September or second quarter following
the end of the financial year, or the actual date of furnishing of
relevant annual return, whichever is earlier.

THINK OF COMPLIANCE - THINK OF

US 34
Returns
 (10) A registered person shall not be allowed to furnish a return for a
tax period if the return for any of the previous tax periods has not been
furnished by him.
 40. First return. — Every registered person who has made outward
supplies in the period between the date on which he became liable to
registration till the date on which registration has been granted shall
declare the same in the first return furnished by him after grant of
registration.
 41. Claim of input tax credit and provisional acceptance thereof. — (1)
Every registered person shall subject to such conditions and restrictions
as may be prescribed, be entitled to take the credit of eligible input tax,
as self-assessed, in his return and such amount shall be credited on a
provisional basis to his electronic credit ledger.
 (2) The credit referred to in sub-section (1) shall be utilised only for
payment of self-assessed output tax as per the return referred to in the
said sub-section.

THINK OF COMPLIANCE - THINK OF

US 35
Returns
 42. Matching, reversal and reclaim of input tax credit. — (1) The details of
every inward supply furnished by a registered person (hereafter in this section
referred to as the “recipient”) for a tax period shall, in such manner and within
such time as may be prescribed, be matched —
 (a) with the corresponding details of outward supply furnished by the
corresponding registered person (hereafter in this section referred to as the
“supplier”) in his valid return for the same tax period or any preceding tax
period;
 (b) with the integrated goods and services tax paid under section 3 of the
Customs Tariff Act, 1975 (51 of 1975) in respect of goods imported by him; and
 (c) for duplication of claims of input tax credit.
 (2) The claim of input tax credit in respect of invoices or debit notes relating to
inward supply that match with the details of corresponding outward supply or
with the integrated goods and services tax paid under section 3 of the Customs
Tariff Act, 1975 (51 of 1975) in respect of goods imported by him shall be finally
accepted and such acceptance shall be communicated, in such manner as may
be prescribed, to the recipient.

THINK OF COMPLIANCE - THINK OF

US 36
Returns
 (3) Where the input tax credit claimed by a recipient in respect of an
inward supply is in excess of the tax declared by the supplier for the same
supply or the outward supply is not declared by the supplier in his valid
returns, the discrepancy shall be communicated to both such persons in
such manner as may be prescribed.
 (4) The duplication of claims of input tax credit shall be communicated to
the recipient in such manner as may be prescribed.
 (5) The amount in respect of which any discrepancy is communicated
under sub-section (3) and which is not rectified by the supplier in his valid
return for the month in which discrepancy is communicated shall be added
to the output tax liability of the recipient, in such manner as may be
prescribed, in his return for the month succeeding the month in which the
discrepancy is communicated.
 (6) The amount claimed as input tax credit that is found to be in excess
on account of duplication of claims shall be added to the output tax liability
of the recipient in his return for the month in which the duplication is
communicated.

THINK OF COMPLIANCE - THINK OF

US 37
Returns
 (7) The recipient shall be eligible to reduce, from his output tax liability, the amount
added under sub-section (5), if the supplier declares the details of the invoice or debit
note in his valid return within the time specified in sub-section (9) of section 39.
 (8) A recipient in whose output tax liability any amount has been added under sub-
section (5) or sub-section (6), shall be liable to pay interest at the rate specified under
sub-section (1) of section 50 on the amount so added from the date of availing of
credit till the corresponding additions are made under the said sub-sections.
 (9) Where any reduction in output tax liability is accepted under sub-section (7), the
interest paid under sub-section (8) shall be refunded to the recipient by crediting the
amount in the corresponding head of his electronic cash ledger in such manner as
may be prescribed :
 Provided that the amount of interest to be credited in any case shall not exceed the
amount of interest paid by the supplier.
 (10) The amount reduced from the output tax liability in contravention of the
provisions of sub-section (7) shall be added to the output tax liability of the recipient
in his return for the month in which such contravention takes place and such recipient
shall be liable to pay interest on the amount so added at the rate specified in sub-
section (3) of section 50.

THINK OF COMPLIANCE - THINK OF

US 38
Returns
 43. Matching, reversal and reclaim of reduction in output tax liability. — (1) The
details of every credit note relating to outward supply furnished by a registered
person (hereafter in this section referred to as the “supplier”) for a tax period
shall, in such manner and within such time as may be prescribed, be matched —
 (a) with the corresponding reduction in the claim for input tax credit by the
corresponding registered person (hereafter in this section referred to as the
“recipient”) in his valid return for the same tax period or any subsequent tax
period; and
 (b) for duplication of claims for reduction in output tax liability.
 (2) The claim for reduction in output tax liability by the supplier that matches
with the corresponding reduction in the claim for input tax credit by the recipient
shall be finally accepted and communicated, in such manner as may be
prescribed, to the supplier.
 (3) Where the reduction of output tax liability in respect of outward supplies
exceeds the corresponding reduction in the claim for input tax credit or the
corresponding credit note is not declared by the recipient in his valid returns, the
discrepancy shall be communicated to both such persons in such manner as may
be prescribed.

THINK OF COMPLIANCE - THINK OF

US 39
Returns
 (4) The duplication of claims for reduction in output tax liability shall
be communicated to the supplier in such manner as may be prescribed.
 (5) The amount in respect of which any discrepancy is communicated
under sub-section (3) and which is not rectified by the recipient in his
valid return for the month in which discrepancy is communicated shall
be added to the output tax liability of the supplier, in such manner as
may be prescribed, in his return for the month succeeding the month in
which the discrepancy is communicated.
 (6) The amount in respect of any reduction in output tax liability that is
found to be on account of duplication of claims shall be added to the
output tax liability of the supplier in his return for the month in which
such duplication is communicated.
 (7) The supplier shall be eligible to reduce, from his output tax liability,
the amount added under sub-section (5) if the recipient declares the
details of the credit note in his valid return within the time specified in
sub-section (9) of section 39.

THINK OF COMPLIANCE - THINK OF

US 40
Returns
 (8) A supplier in whose output tax liability any amount has been added
under sub-section (5) or sub-section (6), shall be liable to pay interest at
the rate specified under sub-section (1) of section 50 in respect of the
amount so added from the date of such claim for reduction in the output
tax liability till the corresponding additions are made under the said sub-
sections.
 (9) Where any reduction in output tax liability is accepted under sub-
section (7), the interest paid under sub-section (8) shall be refunded to the
supplier by crediting the amount in the corresponding head of his
electronic cash ledger in such manner as may be prescribed :
 Provided that the amount of interest to be credited in any case shall not
exceed the amount of interest paid by the recipient.
 (10) The amount reduced from output tax liability in contravention of the
provisions of sub-section (7) shall be added to the output tax liability of the
supplier in his return for the month in which such contravention takes place
and such supplier shall be liable to pay interest on the amount so added at
the rate specified in sub-section (3) of section 50

THINK OF COMPLIANCE - THINK OF

US 41
Returns
 44. Annual return. — (1) Every registered person, other than an
Input Service Distributor, a person paying tax under section 51 or
section 52, a casual taxable person and a non-resident taxable
person, shall furnish an annual return for every financial year
electronically in such form and manner as may be prescribed on
or before the thirty-first day of December following the end of
such financial year.
 (2) Every registered person who is required to get his accounts

audited in accordance with the provisions of sub-section (5) of

section 35 shall furnish, electronically, the annual return under
sub-section (1) along with a copy of the audited annual accounts
and a reconciliation statement, reconciling the value of supplies
declared in the return furnished for the financial year with the
audited annual financial statement, and such other particulars as
may be prescribed.

THINK OF COMPLIANCE - THINK OF

US 42
Returns
 45. Final return. — Every registered person who is required to furnish a return
under sub-section (1) of section 39 and whose registration has been cancelled shall
furnish a final return within three months of the date of cancellation or date of
order of cancellation, whichever is later, in such form and manner as may be
prescribed.
 46. Notice to return defaulters. — Where a registered person fails to furnish a

return under section 39 or section 44 or section 45, a notice shall be issued

requiring him to furnish such return within fifteen days in such form and manner as
may be prescribed.
 47. Levy of late fee. — (1) Any registered person who fails to furnish the details of

outward or inward supplies required under section 37 or section 38 or returns

required under section 39 or section 45 by the due date shall pay a late fee of one
hundred rupees for every day during which such failure continues subject to a
maximum amount of five thousand rupees.
 (2) Any registered person who fails to furnish the return required under section 44

by the due date shall be liable to pay a late fee of one hundred rupees for every day
during which such failure continues subject to a maximum of an amount calculated
at a quarter per cent. of his turnover in the State or Union territory.

THINK OF COMPLIANCE - THINK OF

US 43
ANY QUESTIONS..

THINK OF COMPLIANCE - THINK OF

US 44