Goods and Service Tax

(GST)
 BASICS of
GST
GST is a single tax on the supply of goods and services, right from
the manufacturer to the consumer

The Input Tax credit paid at each stage will be available in the
subsequent stage of value addition, which makes GST essentially
a tax only on value addition at each stage.

It is the end consumer who will bear only the GST charged by the
last dealer in the supply chain, with set-off benefits at all the
previous stages.

With the streamlining of the multiple taxes, the final cost to the
consumer will turn out to be low because of elimination of
double charging system.
 Meaning & Scope of Supply

Supply includes :

(a) All forms of supply of goods and/or services such as sale, transfer,
barter, exchange, license, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course or
furtherance of business,

(b) Importation of services, whether or not for a consideration and

whether or not in the course or furtherance of business, and

(c) Supply made or agreed to be made without a consideration(SCH-

I).
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 Inward Supply

“Inward Supply” in relation to a person, shall mean receipt of goods and/or

services whether by purchase, acquisition or any
other means and whether or not for any consideration

Outward Supply

“Outward Supply” in relation to a person, shall mean supply of goods and/or

services, whether by sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made by such person in the course or furtherance
of business
Continuous Supply

Means a supply of services which is provided, or agreed to be provided,

continuously or on recurrent basis, under a contract, for a period exceeding three
months with periodic payment obligations and includes supply of such services as
the Government may, subject to such conditions, by notification, specify
 When it is not a ‘Supply’
 Activities and transactions specified in Schedule III:

– Services by an employee to the employer in

the course of or in relation to his employment;
– Services of funeral, burial, crematorium
mortuary or including transportation of
deceased. the
– Actionable claims, other than lottery, betting and
gambling

 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.
 Exempt Supply

Supply of any goods and/or services which are

NOT TAXABLE under this Act

Supply of goods and/or services under this Act

which attract NIL rate of tax or which may be exempt
from tax (Non-Taxable Supply)

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 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;

Illustration

A supply of a package consisting of canned foods, sweets,

chocolates, cakes, dry fruits, aerated drink and fruit juices
when supplied for a single price is a mixed supply. Each of
these items can be supplied separately and is not dependent
on any other. It shall not be a mixed supply if these items are
supplied separately.

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 Taxability : Mixed Supply

The tax liability on a mixed supply comprising

two or more supplies shall be treated as supply of
that particular supply which attracts the highest
rate of tax .

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 Composite Supply
A supply made by a taxable person to a recipient comprising
two or more supplies of goods or services, or any
combination thereof, which are naturally bundled and
supplied in conjunction with each other in the ordinary
course of trade, one of which is a principal supply;

Illustration

Where goods are packed and transported with insurance,

the supply of goods, packing materials, transport and
insurance is a composite supply and supply of goods is the
principal supply.

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 Principal Supply

Means: The supply of goods or services which constitutes

the predominant element of a composite supply and to
which any other supply forming part of that composite
supply is ancillary and does not constitute, for the
recipient an aim in itself, but a means for better
enjoyment of the principal supply.

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 Zero Rated Supply
Means export of goods or services or both; or
supply of goods or services or both to a Special
Economic Zone developer or a Special Economic
Zone unit (eligible for ITC)
 Time of Supply-Goods & Services
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General Rule
Time of supply of goods could be the earlier of the
following:
 The date of issue of the invoice with respect to the
supply; or
 The date on which the supplier receives the
payment.
 Where it is not possible to determine the Time
of Supply, then Time of Supply would be:
 In case where Return to be filed, then the date on
which Return to be filed.
 Taxes to be subsumed
CENTRAL TAXES STATE TAXES
• Central Excise Duty • Central Sales Tax
• Service Tax • State VAT
• Additional Duties of Excise • Luxury Tax
• Duties of Excise (Medicinal and • Entry Tax and Octroi (all forms)
Toilet Preparations) • Entertainment and Amusement Tax
• Additional Duties of Customs (except when levied by the local
(known as CVD) & Special bodies)
Additional Duty of Customs (SAD) • Taxes on lotteries, betting and
• Surcharge and Cess levied by gambling
Centre so far as they relate to • Purchase Tax
supply of goods and services • Surcharges and Cesses levied by
• Surcharge & Cess levied by the State
Centre
 Taxes not to be subsumed
● Basic Customs Duty ● Export Duty ● Toll Tax
● Road and Passenger Tax ● Electricity Duty
● Stamp Duty ● Property Tax

Note: Alcoholic beverages for human consumption are proposed to be

kept out of the purview of GST

Note: GST on petroleum products would be levied from a notified date to

be recommended by the GST Council
 GST Rates
• The four GST slabs are 5%, 12% 18% and 28%. The fifth rate
for gold and precious metals, which was earlier proposed at
4%, will be decided later but is likely to be lower.
• Basic food such as milk, food grains, vegetables, will
be exempt under the GST.
• Other essential items such as edible oil, tea, spices, packaged
food items etc. the GST rate may likely be 5%.
• Two standard rates of 12% and 18% will cover almost every
other goods and services.
• Luxury cars, tobacco and aerated drinks would also be
levied with an additional cess on top of the highest tax rate.
 Persons liable to be Registered in GST

• Every supplier who makes a taxable supply of goods and /

or services liable to get himself registered in the state from
where he supplies

• Threshold limit (computed on all India basis)

– Special category states – Rs.10 lakhs
– Other states –Rs.20 lakhs

• Application to be made within 30 days

• PAN based Registration
• Following persons to obtain registration irrespective of their
threshold limit:
– Persons making inter-state taxable supply
– Casual taxable persons
– Non-resident taxable persons
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 Persons liable to be Registered in GST

• Following persons to obtain registration irrespective

of their threshold limit:

– Persons acting as agents or who supply on

behalf of other taxable persons
– Input service distributor
– Electronic commerce operator
– Persons who supply electronic commerce
through
operator
– Exemption from Registration :
• Persons dealing in goods and/services that are not liable
to tax or are exempted under GST Act.
• Agriculturists
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 GST Working Model
Q. How a particular transaction of goods and services
would be taxed simultaneously under Central GST (CGST)
and State GST (SGST)?

• The Central GST and the State GST would be levied simultaneously on
every transaction of supply of goods and services except the
exempted goods and services.

• Further, both would be levied on the same price or value

• While the location of the supplier and the recipient within the
country is immaterial for the purpose of CGST, however, SGST
would be chargeable only when the supplier and the recipient are
both located within the State.
Working Example of GST under CGST &
SGST
 How GST will operate under
Integrated GST (GST) ?
• Integrated GST (IGST) would be levied and collected by the
Centre on inter-State supply of goods and services.

• The GST on supplies in the course of Inter-State trade or

commerce shall be levied and collected by the
Government of India.

• Such tax shall be apportioned between the Union and the

States in the manner as may be provided by the law
Working example of GST under IGST Model
 How to adjust Input Tax Credit (ITC) ?

Setoff of IGST, CGST & SGST will be as follows in the chronological order

Credit Off To be adjusted with

IGST 1. IGST
2. CGST
3. SGST
CGST 1. CGST
2. IGST
SGST 1. SGST
2. IGST
GST Return Filing Process
 Returns under GST
Return / Form Details Frequency Due Date

GSTR – 1 Outward sales by business Monthly 10th of next month

GSTR – 2 Purchases made by Business Monthly 15th of next month

GSTR – 3 GST monthly return along with the Monthly 20th of next month
payment of amount of tax

GSTR – 4 Quarterly return for GST ( compounding Quarterly 18th of month next quarter
cases)
GSTR – 5 Periodic return by Non-Resident foreign Monthly 20th of next month
taxpayer

GSTR – 6 Return for Input Service Distributor (ISD) Monthly 15th of next month

GSTR – 7 GST Return for TDS Monthly 10th of next month

GSTR – 8 GST return for ecommerce suppliers Monthly 10th of next month

GSTR - 9 GST Annual Return Annually 31st December of next

financial year
 E-Commerce Businesses under GST Regime
E-commerce industry in India is faced with the levy of multiple taxes,
with every state imposing its own set of rules and taxes. The lack of
clarity on the tax treatment of the various types of e-commerce
transactions has resulted in a chaotic tax environment for the
industry.
GST Law recognizes the need for rules specific to the e-commerce
industry, with specific provisions with respect to e- commerce
broadly under two categories :

• The e-commerce operator and

• Suppliers on e-commerce platforms
An e-commerce operator is a person who owns, operates or manages digital
or electronic facility or platform for electronic commerce. The requirements
from an e-commerce operator under GST are-

• All e-commerce operators are mandatorily required to register under GST

irrespective of their turnover.

• Certain service categories may be notified, on supply of which, tax shall be

paid by the e-commerce operator, and If the e-commerce operator does not
have an establishment in a state, any person representing the e-commerce
operator will be liable to pay the tax

• E-commerce operator should collect tax @ 2% on the net value of taxable

supplies made through their platform, where the consideration, with
respect to such supplies, has to be collected by the operator & need to file
GSTR 8 by 10th of the month
 Service Sector ( IT / ITES) under GST Regime
• Service Sector contributes significantly in export as well as
provide a large scale employment, and covers a wide variety of
activities such as Information technology, Information
Technology Enabled Services, hotel and restaurants, transport,
Warehousing –storage, financing, insurance, real estate, and
other business services.
• Currently Service tax provisions applies to all over India except
J&K, but GST will extend to all over India including J&K and also
allows Central Govt. to collect the service taxes on rendered
services in the state of J&k.
• Currently, service tax is levied @15% on Services rendered
which includes 0.5% for Swatch Bharat Cess and 0.5% for Krishi
Kalyan Cess , under GST regime services will be charged @
higher rate of 18% to 26% which will make the services costlier.
• Earlier, Service Providers could not claim input credit of
VAT/Excise paid by them on purchase of assets or any other
goods. But under GST, they can claim input tax credit charged on
the same and hence can reduce their GST liability.
 Service Sector ( IT / ITES) under GST Regime
• At Present there are disputes between Central and State Governments
on various services in nature of products / SAAS model, wherein both
central govt and state governments are sending notices.

• But with the introduction of single tax GST regime, the double taxation
effect due to disputed goods and services in the current tax system will
get eliminated. In GST tax structure both supplies of goods and
services will be treated once with the unique rate of tax respectively.

• Currently there are centralized registration provisions under Service

tax that mean provider of services can render services from any place
in India, under GST regime centralized registration will not be available
as the dealer or the service provider needs to get registered with that
particular state Govt from where he is intended to provide services.

• In current Service tax system there are provisions for two half-yearly
returns in regards to services rendered during that period but in GST
Model law there are multiple returns prescribed adding to compliance
costs.