GST guide for Students: Making GST - Good & Simple Tax

CONTENTSOFTHEBOOK:

TOPIC PAGENO

INTRODUCTION3

REGISTRATIONS 16TIMEOFSUPPLY 25VALUEOFSUPPLY 31PLACEOFSUPPLY 34INPUTTAXCREDIT 44PAYMENTOFTAX 48COMPOSITIONSCHEME 57INVOICING 64ACCOUNTSANDRECORDS 70REVERSECHARGE 74TDS&TCS 80GSTRETURNS 85JOBWORK 90REFUNDS 93PENALTY 96ASSESSMENTS 98APPEALS 100DEMANDANDRECOVERY 103INSPECTION,SEARCH,SEIZUREANDARREST

104

IMPORTANTDEFINITIONS 107

ABOUTTHEAUTHOR:VIVEKKRAGRAWAL,isamemberofTheInstituteofCharteredAccountantsofIndia.HeisfellowmemberoftheInstitute.Hehastheexperienceofmorethan10yearsinthefieldofTaxConsultancy.HehasalsoqualifiedL.L.B.,DiplomainInsurance&RiskManagementandDiplomainInformationSystemAudit.AssociatedindifferentcapacitieswithseveralProfessionalInstitutes,ManagementcollegesandBusinesshousesinIndiaandabroad.Hecanbereachedatvivek.vka@gmail.com.

INTRODUCTION

TheGoods andServicesTax (GST) the biggest reform in Indirect taxation ofIndiahasbeenrolledoutfrom01stJuly,2017.ItextendstowholeofIndia.Itisbasedontheprincipleofdestination-basedconsumptiontaxation.By the Constitution amendments passed in parliament and ratified by variousstate,nowtheCentralandStategovernmentswillhavesimultaneouspowerstolevy the GST on Intra-State supply. Though the Parliament alone shall haveexclusivepowertomakelawswithrespecttolevyofGoodsandServicesTaxonInter-Statesupply.GSTtobeleviedbytheCentrewouldbecalledCentralGST(CGST)andthattobeleviedbytheStateswouldbecalledStateGST(SGST).An IntegratedGST (IGST)would be levied an inter-state supply of goods orservices.As the governmentwants to have unified tax structure across the country thecooperation is required fromevery state on variousmatter, soTheGoods andService Tax Council (GSTC) was formed. GSTC comprises of the UnionFinance Minister, the Minister of State (Revenue) and the State FinanceMinisterstorecommendontheGSTrate,exemptionandthresholds,taxestobesubsumedandothermatters.ThewholeGST systemwill be backed by a robust IT system. In this regard,GoodsandServicesTaxNetwork(GSTN)hasbeensetupbytheGovernment.ItwillprovidefrontendservicesandwillalsodevelopbackendITmodulesforStateswhooptedforthesame.MajortaxessubsumedinGSTare:

CentralExciseDutyDutiesofExcise(MedicinalandToiletPreparations)AdditionalDutiesofCustoms(CVD)SpecialAdditionalDutyofCustoms(SAD)ServiceTax

StateValueAddedTax(VAT)CentralSalesTax(CST)EntryTaxPurchaseTaxLuxuryTaxTaxesonlotteries,bettingandgambling

GST would apply on all goods and services except Alcohol for humanconsumption.GSTonfivespecifiedpetroleumproducts(Crude,Petrol,Diesel,ATF&NaturalGas)wouldbyapplicablefromadatetoberecommendedbytheGSTCouncil.

Belowasimpleexampletoexplainthesignificanceofvarioustermsandtopicstobecoveredgoingforward.Example–RahulfromMumbaihaspurchasedlaptopfromFlipkart,BengaluruforRs40,000.ThemarketpriceofproductisRs50000/-.Thetaxrateis18%.Question:IsthistransactionliabletoGST?Answer:Toknowthisweneedtounderstandthebasicstructureofgst,meaningofsupplyandrelatedconcepts.Question:WhoneedstopayGST?Answer:BasicconceptandReversechargemechanism.Question:Onwhatvalueofamount,taxratewillapply?Answer:ValueofSupplytopic.Question:WhetherCGST-SGSTorIGSTneedstobecharged?Answer:PlaceofSupplytopic.Question:Whenisliabilitytopaytaxtothetaxdepartmentarise?Answer:TimeofSupplytopic.Question:Howtopaythetax?Answer:InputTaxCreditandPaymentoftaxtopic.Question:Whatproofshouldbekeptofthetransactionforfuturepurpose?Answer:Invoicing,AccountsandRecordstopic.Question:Whatrelatedcompliancesneedstobedone?Answer:GSTreturnstopic.AnothersimpleexampletoelucidatetheworkingofGST.

Example:RajeshsoldthegoodstoMaheshforRs10,000.GSTrateis18%.BotharelocatedinKarnataka.

Answer:

Valueofgoods–Rs10,000

CGST–Rs900SGST–Rs900GrossValue–Rs11,800

Example:Ranbir,MumbaisoldthegoodstoRajni,ChennaiforRs10,000.GSTrateis18%.

Answer:

Valueofgoods–Rs10,000IGST–Rs1800GrossValue–Rs11,800

CONCEPTOF“SUPPLY”Ataxableeventisanyeventoroccurrencethatresultsinataxliability. ThetaxableeventinGSTissupplyofgoodsorservicesorboth.SothefirstandtheforemostconditiontomaketransactiontaxabletoGSTisSupply.Varioustaxableeventslikemanufacture(forexcise),sale(forVAT),renderingofservice(for Service tax), purchase(for purchase tax), entry into a territory ofstate(forEntrytax)andmanyotherhavebeendoneawaywithinfavourofjustoneeventi.e.Supply.In general words, Supplymeans To Provide. It includes sale, transfer, barter,exchange,license,rental,leaseordisposal.Nextwediscussfewuniversalconditiontobefulfilledbyatransactiontomakeit chargeable toGST.This can be better understood in terms of following sixparameters:1.Supplyofgoodsorservices.Supplyofanythingotherthangoodsorservicesdoes not attract GST. So it is important to knowwhat is Goods and what isServices(CoveredunderDefinitionChapter)2.Supplyshouldbemadeforaconsideration( apaymentorreward) .Itisimmaterialwhetherthepaymentismadebytherecipientorbyanyotherperson.Example–TataMotorssoldacartoAbhishekBachchan,thecarwasregisteredunder his name. The payment for the car was however made by AmitabhBachchan.IsthesellingofthecartoAbhishekBachchanconsideredasSupply?AnswerisYES.3. Supply should bemade in the course or furtherance ofbusiness. That ispersonaldealingwon’tberegardedassupply.Example-ADealerofCementbuyscementfortrading,isconsideredasSupply.Example–Thesamedealerifbuyslaptoptokeepaccountingofthestock,thisbuyingof laptopof his businesswill alsobe regarded asSupply, as itwill beusedinthefurtheranceofhisbusiness.

Example – A homemaker lady selling of old newspaper or plastic waste toraddiwalawon’tbeconsideredassupply.Astheladyisjustsellingtheunusablematerialonherhousewhichisprimarilynotforbusinesspurpose.Example–AladywenttoJewelleryshoptosellheroldjewels.Assheisnotaregulardealersellingjewellery,thiswon’tbeconsideredassupplyunderGST.4.Supplyshouldbemadebyataxableperson.A “taxable person” is a person who is registered or liable to be registeredunder the GST law. Hence, even an unregistered person who is liable to beregisteredisataxableperson.Similarly,apersonnotliabletoberegisteredbuthas taken voluntary registration and got himself registered is also a taxableperson.Example–AdealerhavingaturnoverofRs2lakhpaonlyandhastakenGSTregistrationshallbeconsideredasataxableperson,evenifhisturnoverisbelowthresholdlimit.5.Supplyshouldbeataxablesupply.GSTwillnotbechargedonnon-taxablesupplyorexemptsupply.6.Supplyshouldbemadewithinthetaxableterritory.SotheplaceofsupplyshouldbeinIndia.Example–BillgatessellinghissoftwaretoWarrenBuffettinUSwon’tbeconsideredastaxableunderIndianGST.

To charge GST – Transaction should be a supply of the taxable goods orservicesorbothbyataxablepersoninthetaxableterritoryforconsiderationinthecourseorfurtheranceofbusiness.

ISTHISGOODSORSERVICES??

Sometimestheremightbeaconfusionastowhetherthetransactionisasupplyofgoodsorsupplyofservice.Example-Photography.Thephotographerprovidesthephoto(goods)butatthesametimeitcanbesaidthatheisprovidingservicesofclickingandconvertingtophotoasthepapercostisverylowascomparedtothepricecharged.Itisessentialtobifurcateasthisclassificationmightdecidetheexemptionortaxrate.The GST law to minimize this uncertainty lists a few specific activitieswhich are specifically be treated as supply of goods or supply of serviceswhicharedetailedbelow:1. Transfer of the title in goods (ownership) or under an agreement whichstipulatesthatpropertyingoodsshallpassatafuturedateuponpaymentoffullconsiderationasagreed,isasupplyofgoods.Example–RajmakesanagreementwithAnjalitosellhiscarafter3monthforRs5 lakhs.Thishas shallbeconsideredas supplyofgoodsandnot supplyofserviceseveniftitlehasnotbeenpassedtoAnjalitoday.2.Transferofrightingoodswithoutthetransferoftitleisasupplyofservices.Example–Companyhiringalaptoponrentalbasis.Thecompanyhasauthoritytousethelaptopaspertheirwillbuttheownershipisstillwiththeshopkeeper.This will be regarded as supply of services and not goods, even though thelaptopisgoods.3.Supplyofgoodsby anyunincorporated associationorbodyofpersons to amembershallbetreatedassupplyofgoods.Example–Apartnershipfirmgivingsomeofitsassetorgoodstopartnershallbeconsideredassupply.

4.Anylease,tenancy,easement,licensetooccupylandisasupplyofservices.5.Anyleaseorlettingoutofthebuildingincludingacommercial,industrialorresidential complex for business or commerce, either wholly or partly, is asupplyofservices.6.TransferofBusinessAssetsunderthedirectionsofthepersoncarryingonthebusiness so as no longer to form part of those assets, whether or not for aconsideration,isasupplyofgoods.7.BelowlistshallalsobetreatedasServices:

Rentingofimmovableproperty.

Any treatment or process which is applied to another person'sgoods,constructionofacomplex,building,civilstructureorapartthereof, including a complex or building intended for sale to abuyer,whollyorpartly.

Temporary transfer or permitting the use or enjoyment of anyintellectualpropertyright.

Development, design, programming, customisation, adaptation,upgradation, enhancement, implementation of informationtechnologysoftware.

Agreeingto theobligationtorefrainfromanact,or to tolerateanactorasituation,ortodoanact.

Transferoftherighttouseanygoodsforanypurpose(whetherornotforaspecifiedperiod).

CompositeSupply–WorksContractandSupplyofgoods:beingfoodoranyotherarticleforhumanconsumptionoranydrink.

Examples:

TakinganofficespaceonrentisServices.RepairingavehiclebelongingtootherisServices.

PermittingtheuseofpatenttomanufacturetheproductisServices.DevelopmentofcustomizedsoftwareisServices.GivingthebikeonrentforonedayisServices.WorksContract,amixtureofserviceandtransferofgoodsisregardedasServices.RestaurantsprovidingfoodisconsideredServices.

NEITHERASUPPYOFGOODSNORSERVICESFurtheronfewactivitiesortransactionsgovernmentdonotintendtochargethetax and hence they have listed activities or transactions which shall not betreatedasasupplyofgoodsorservicesi.e.nontaxablesupply:1.Servicesbyanemployeetotheemployerinthecourseoforinrelationtohisemployment.NoGSThastobepaid/collectedwhilepayingsalary.2. Services by any court or Tribunal established under any law.As they helpparties resolving the disputedmatter. To keep the justice at low cost this hasbeenkeptoutofGST.3. The functions performed by theMembers of Parliament,Members of StateLegislature,MembersofPanchayats,MembersofMunicipalitiesandMembersofotherlocalauthorities.4.Servicesoffuneral,burial,crematoriumormortuaryincludingtransportationofthedeceased.Thegovernmentismercifulanddesirethatdeathshouldbetaxfreeandhencenogstoncethepersonlivesthisworld.5. Sale of land and Sale of building where the entire consideration has beenreceived after completion certificate is issued or after its first occupation.Therelevantstampdutyandstatetaxesneedstobepaid.Morewillbediscussedinupcomingchapters.6.Actionableclaims,otherthanlottery,bettingandgambling.Actionableclaimisaclaimtoanydebt(exceptsecureddebts)whichthecivilcourtsrecognizeasaffordinggroundsofrelief.

COMPOSITEANDMIXEDSUPPLIES

Acompositesupplymeansasupplycomprisingtwoormoresuppliesofgoodsor services or any combination thereof, which are naturally bundled andsuppliedinconjunctionwitheachotherintheordinarycourseofbusiness,oneofwhichisaprincipalsupply.Example—AtravelticketfromMumbaitoDelhimayincludeserviceoffoodbeingservedonboard,freeinsurance,andtheuseofairportlounge.Inthiscase,the transport of passenger, constitutes the pre-dominant element of thecompositesupply,andis treatedas theprincipalsupplyandallothersuppliesareancillary.Mixedsupplymeanstwoormore individualsuppliesofgoodsorservices,oranycombination,madeinconjunctionwitheachotherforasingleprice.Example — A supply of a package consisting of canned foods, sweets,chocolates,cakes,dryfruits,aerateddrinksandfruitjuiceswhensuppliedforasingleprice is amixed supply.Eachof these itemscanbe supplied separatelyandisnotdependentonanyother.TheGSTLawlaysdownthetaxliabilityonacompositeormixedsupplyinthefollowingmanner.1. Composite Supply comprising two or more supplies one of which, is aprincipalsupply,shallbetreatedassupplyofsuchprincipalsupply.IncaseofaboveexampletaxrateapplicableonTransportofpassengerwillbeapplicabletothepricecharged.2.MixedSupplycomprisingtwoormoresupplies,shallbetreatedassupplyofthatparticularsupplywhichattractsthehighestrateoftax.Example—ApackageworthRs2000containing-Cashewnuts(5%),Almond(12%)andChocolateBiscuitspacket(18%).As chocolate biscuits attracts the highest rate of rate eighteen percent among

othergoodsinthepackage,Taxwillbe18%onRs2000/-.

Bird’seyeviewoftopiccovered

REGISTRATIONS

Registrationofbusiness entityunder theGSTLaw impliesobtaining auniquenumberfromthetaxauthoritiesforthepurposeofcollectingtaxonbehalfofthegovernmentandtoavail InputTaxCredit for the taxesonhis inwardsupplies.Without registration, a person can neither collect tax from his customers norclaimanyInputTaxCreditoftaxpaidbyhim.Advantagesofregistrationtoataxpayer:•Heislegallyrecognizedassupplierofgoodsorservices.•He is legally authorized to collect taxes fromhis customers and pass on thecreditofthetaxes.• He can claim Input Tax Credit of taxes paid and can utilize the same forpaymentoftaxesdueonsupplyofgoodsorservices.•SeamlessflowofInputTaxCreditfromsupplierstorecipientsatthenationallevel.• Increases the credibility of the Business, thus helps in attracting morecustomers.TogiverelieftothesmallbusinessmenathresholdlimitofRs20lakhshasbeenannounced.SmallbusinesseshavingallIndiaaggregateturnoverbelowRupees20 lakh (10 lakh if business is inAssam,Arunachal Pradesh, J&K,HimachalPradesh, Uttarakhand, Manipur, Mizoram, Sikkim, Meghalaya, Nagaland orTripura)neednotregister.Thesmallbusinesseshavingturnoverbelowthethresholdlimitcanvoluntarilyopt to register. But then then the liability to payGST shall arise immediatelyevenifthethresholdlimitisnotreached.Furtherfollowingpersonsarenotrequiredtotaketheregistration:

1. Personsdealing ingoodsorservicesorboth thatarenot liable totaxorwhollyexemptfromtax.

2. An agriculturist, to the extent of supply of produce out ofcultivationofland.

3. Personsengagedinmakingsuppliesthetaxonwhichisliabletobe

paidonreversechargebasisbytherecipient.MoredetailwillbediscussedinReversechargetopic.

TheGSTlawalsoenlistscertaincategoriesofsupplierswhoarerequiredtogetcompulsory registration irrespective of their turnover, i.e. no threshold limitshallapply.Thosearelistedbelow:•Inter-statesuppliersofgoodsi.e.outofState.•Apersonreceiving suppliesonwhich tax ispayableby recipienton reversechargebasis•CasualtaxablepersonwhoisnothavingfixedplaceofbusinessintheStateorUnionTerritoryfromwherehewantstomakesupply.•Non-residenttaxablepersonswhoarenothavingfixedplaceofbusiness inIndia.•Apersonwhosuppliesonbehalfofsomeothertaxableperson(i.e.anAgentofsomePrincipal)•Ecommerceoperators,whoprovideplatformtothesupplierstosupplythroughitlikeFlipkart,Amazon.• Suppliers who supply through an e-commerce operator. Example – PersonsellinggoodsthroughFlipkart,Amazon.•NotifiedEcommerceoperators–Housekeeping,TaxiandHotelsServices.•TDSDeductorandInputServiceDistributor.•ThosesupplyingonlineinformationanddatabaseaccessorretrievalservicesfromoutsideIndiatoanon-registeredpersoninIndia.InReverseChargemechanismtheliability topaytaxrestwiththerecipientof

supply of goods or services instead of the supplier. The chargeability getsreversedthatiswhyitiscalledreversecharge.Thistopichasbeencoveredinmoredetailinupcomingchapter.Examples:ArethefollowingpersonliabletotakeGSTregistration?1.Atraderwhoisonlydealingwithexemptgoodi.e.SalthavingaturnoverofRs10crores.NO2.AfarmersellingpaddytoAgricultureGraminSamitiofRs80lakhs.NO3.A lawyergivinghis servicesonly toa factorywherein tax ispayableunderreversecharge.NOregistrationisrequiredbythelawyer.4.Afreelancer-ITengineerhavingturnoverofRs15lakhspaisworkingforcompanieslocatedinBangalore,Delhi,PuneandKolkata.NO5.Afreelancer-ITengineerhavingturnoverofRs25lakhspaisworkingforcompanieslocatedinBangalore,Delhi,PuneandKolkata.YES6. A trader having turnover of Rs 50 lakhs pa supplying goods to customerslocatedinBangalore,Delhi,PuneandKolkata.YES7. A trader having turnover of Rs 5 lakhs pa supplying goods to customerslocatedinBangalore,Delhi,PuneandKolkata.YES8.A factory unregistered underGST having a turnover ofRs 2 lakh taking aservice from lawyer. YES factory needs to register and pay under reversecharge.9. Do flipkart and Amazon have to take GST registration as they are onlyprovidingplatform?YES.10.Apersonturnoverofonly2lakhspasellinghisgoodsfromAmazon.YES

MULTIPLEGSTIN

SupplierhastoregisterineachofsuchStateorUnionterritoryfromwhereheeffects supply. In GST registration, the supplier is allotted a 15-digit GSTidentification number called “GSTIN”. Registration under GST is not taxspecific,whichmeansthatthereissingleregistrationforallthetaxesi.e.CGST,SGST/UTGST,IGSTandcesses.AlegalentitywouldhaveoneGSTINperState,whichmeansanentityhavingitsbranches inmultipleStateswillhave to takeseparatestate-wiseregistrationforthebranchesineachdifferentStates.Example –SBIhavingbranches in every state.SBIhas to take separateGSTregistrationineverystate.GSTINwillbedifferentinallthestates.WithinaState,anentitywithdifferentbrancheswouldhavesingleregistrationwherein it can declare one place as principal place of business and otherbranches as additionalplaceofbusiness.Exception -Abusiness entityhavingseparatebusinessverticalsinastatemayobtainseparateregistrationforeachofits business verticals (see definition chapter to understand what is businessverticals).Apersonwhohasobtainedor is required toobtainmore thanoneregistration,whether in one or more State shall, in respect of each such registration, betreated as Distinct Persons for the purposes of GST law. All separatelyregisteredbusinessverticalsofapersonshallpaytaxonsupplymadetoanotherregistered business vertical of such person and issue a tax invoice for suchsupply.Example–SBIlocatedinBangaloreprovidingservicestoSBIBhopalwillhavetochargeGSTand issue tax invoice,even thoughbothbelongs to sameentitySBI.

PROCEDURALASPECTS

PROCEDURALASPECTS

An application for registration has to be submitted online within thirty daysfrom the date when liability to register arise. The Casual and Non-Residenttaxablepersonsneed toapplyat least fivedaysprior to thecommencementofthebusinessalongwiththesecuritydeposit.DocumentsrequiredtogetGSTregistration:

PANcardandAadharCardPhotoBusinessAddressproof-ElectricitybillandRentagreement/NOCCancelledchequeIn case of Partnership firm - Partnership deed and KYC of allpartnersIn case ofLLP/Company - IncorporationCertificate andKYCofalldirectors

KYCmeansPANandAadharCard/Passport/DrivingLicense.

TheProperOfficerhastoeitherapprovetheregistrationorraiseaquerywithinthreeworkingdaysfailingwhich,registrationwouldbeconsideredasdeemedtohavebeenapproved.The registration shallbe effective from thedateonwhich thepersonbecomesliable to registrationwhere the application for registration has been submittedwithinaperiodofthirtydaysfromsuchdate;otherwisethedateofthegrantofregistration.Thisdateiscrucialbecauseinputtaxcreditcanbeclaimedfromthisdate.Physicalverificationistoberesortedonlywhereitisfoundnecessary.Ifatall,itis felt necessary, itwill beundertakenonly after granting the registration, andthe verification report along with the supporting documents and photographs,shallhave tobeuploadedon theonlinecommonportalwithin fifteenworkingdaysfollowingthedateofsuchverification.Every registered person shall display Goods and Services Tax IdentificationNumberonthenameboardandregistrationcertificateinaprominentlocationat

his principal place of business and at every additional place or places ofbusiness.Amendments-Incasethechangeisforlegalnameofthebusiness,ortheStateofplaceofbusinessoradditionalplaceofbusiness,thetaxablepersonwillapplyforamendment(change)within15daysoftheeventnecessitatingthechange.Cancellation-Theproperofficermaycanceltheregistrationofapersonfromsuchdate,includinganyretrospectivedate,ashemaydeemfit,where,––(a)AregisteredpersonhascontravenedsuchprovisionsoftheActortherules;or(b)ApersonpayingtaxunderCompositionSchemehasnotfurnishedreturnsforthreeconsecutivetaxperiods;or(c)Any registeredperson, other than a personopted forComposition scheme,hasnotfurnishedreturnsforacontinuousperiodofsixmonths;or(d) Any person who has taken voluntary registration has not commencedbusinesswithinsixmonthsfromthedateofregistration;or(e) Registration has been obtained bymeans of fraud, wilful misstatement orsuppressionoffacts;or(f)Doesnotconductanybusinessfromthedeclaredplaceofbusiness;or(g)Issuesinvoiceorbillwithoutsupplyofgoodsorservices.Theyareknownashawaladealers.Before cancelling the registration, tax officer shall give the person anopportunityofbeingheard.Thatistosaytaxofficerbeforecancellingwillissueshow-causenoticetoseektheexplanationwhyhisregistrationcertificateshouldnotbecancelled.

Example:

1.AregisteredpersonhasnotfiledhisGSTreturnfromJuly2017toDecember2017.

2.AregisteredpersonhasnotfiledhisGSTreturnfromJuly2017toSeptember2017andNovember2017toFebruary2018.

3.AregisteredpersonhavingasaleofaroundRs5croresinlastyeardoesnothave a single rupees sale in last 7 month, filing his GST return timely withdepartment.

4.Avoluntary registeredpersonhasnot commencedhisbusinessevenafter6monthsoftakingregistrationbutisfilinghisGSTreturntimelywithdepartment.

5.Avoluntaryregisteredpersonhascommencedthebusinessbutunfortunatelynocustomerwalkedinandthesaleiszerofromlasteightmonths.

6.AregisteredpersonregisteredinMumbaiaddressbutheisnomoreworkingfromMumbai.Hehasshiftedtopunefromlast4months.

Case–1,4,6-Officermaycanceltheregistration.

Case–2,3,5–Officercannotcanceltheregistration.

TopicsCovered:Advantages,Exemptions,MandatoryRegistrations,MultipleGSTIN,ProceduralAspects,Amendments,Cancellation

TIMEOFSUPPLYInordertocalculateanddischargetaxliability,itisimportanttoknowthedateonwhich the charging event has occurred i.e. thedate when the tax liabilityarises.ThiseventisknownasTimeofSupply.Thephrase“thedateonwhichsupplierreceives thepayment”or“thedateofreceiptofpayment”meansthedateonwhichpaymentisenteredinhisbooksofaccounts or the date on which the payment is credited to his bank account,whicheverisearlier.Time of issue of invoice for supply It’s important to learn about the time ofissueofinvoicebecausepracticallyinvoiceisthemaindocumentwhichdecidesthetimeofsupply.An invoice for supply of goods needs to be issued before or at the time ofremoval of goods for supply to the recipient, where the supply involvesmovementofgoods.However, inothercases,aninvoiceneedstobeissuedbeforeorat thetimeofdeliveryofgoodsorwhilemakinggoodsavailabletotherecipient.Similarlyaninvoiceforsupplyofservicesneedstobeissuedbeforeoraftertheprovisionofservicebutnotlaterthanthirtydaysfromthedateofprovisionofservice(performanceofservices).Timeofsupplyofgoods(DefaultRule)Earliestofthefollowingdates:•Dateofissueofinvoicebythesupplier.Iftheinvoiceisnotissued,thenthelastdateonwhich the supplier is legallybound to issue the invoicewith respect to thesupply.•Dateonwhichthesupplierreceivesthepayment.Example

Date ofremoval

Date ofInvoice

Date ofpayment

Time ofSupply

01.09.2017 01.09.2017 05.09.2017 01.09.201701.09.2017 01.09.2017 04.08.2017 04.08.201701.09.2017 03.09.2017 05.09.2017 03.09.201701.09.2017 Notissued 05.09.2017 01.09.201701.09.2017 Notissued 04.08.2017 04.08.2017Timeofsupplyofservices(DefaultRule)•Iftheinvoiceisissuedwithintheprescribedperiod-Dateofissueofinvoicebythesupplierorthedateofreceiptofpayment,whicheverisearlier.•Iftheinvoiceisnotissuedwithintheprescribedperiod-Dateofprovisionofserviceorthedateofreceiptofpayment,whicheverisearlier.Example:Date ofprovisionofservice

Date ofInvoice

Date ofpayment

Time ofSupply

01.09.2017 01.09.2017 05.09.2017 01.09.201701.09.2017 01.09.2017 04.08.2017 04.08.201701.09.2017 03.09.2017 05.09.2017 03.09.201701.09.2017 03.10.2017 05.09.2017 01.09.201701.09.2017 28.08.2017 05.09.2017 28.08.2017

01.09.2017 28.08.2017 04.08.2017 04.08.201701.09.2017 Notissued 05.09.2017 01.09.201701.09.2017 Notissued 04.08.2017 04.08.2017

Time of supply of goods when tax is to be paid on reverse charge basisEarliestofthefollowingdates:•Dateofreceiptofgoods.•Dateonwhichthepaymentisenteredinthebooksofaccountsoftherecipientor thedateonwhich thepayment isdebited inhisbankaccount,whichever isearlier.•Date immediatelyfollowing30days fromthedateof issueof invoicebythesupplier.

Goodsreceived

Paymentdate

Invoicedate

Time ofSupply01.09.2017 01.09.2017 05.09.2017 01.09.201701.09.2017 03.09.2017 05.09.2017 01.09.201701.09.2017 03.09.2017 01.09.2017 01.09.201701.09.2017 03.09.2017 28.08.2017 01.09.201701.09.2017 27.08.2017 28.08.2017 27.08.2017

Timeof supply of serviceswhen tax is tobepaidon reverse chargebasisEarliest of the following dates: • Date of payment as entered in the books ofaccountoftherecipientorthedateonwhichthepaymentisdebitedinhisbankaccount,whichever is earlier; •Date immediately following 60 days from thedateofissueofinvoicebythesupplier.

Date ofpaymentinbooks

Date ofpaymentin bankaccount

Date ofInvoice

Time ofSupply01.09.2017 01.09.2017 05.09.2017 01.09.201701.09.2017 03.09.2017 05.09.2017 01.09.201704.09.2017 01.09.2017 05.09.2017 01.09.201702.09.2017 02.09.2017 01.09.2017 02.09.201702.09.2017 02.09.2017 01.07.2017 30.08.2017

VALUEOFSUPPLY

In GST, tax is payable on ad-valorem basis i.e. percentage of value of thesupplyofgoodsorservices.Therefore,itisessentialtoknowthevaluesoastoascertainthetaxliability.Ifthesupplier&therecipientarenotrelatedandpriceisthesoleconsiderationthetaxablevalueshallbethetransactionvaluei.e.priceactuallypaidorpayable.In most of the cases of regular normal trade, the invoice value will be thetaxable value. In case of imported goods, value shall be determined inaccordancewiththeprovisionsofsection3oftheCustomsTariffAct,1975.Thetransactionvalueofsupplyshallinclude–––(a)Taxes,fees,chargesleviedunderanylawexceptGSTlaw.(b)Expensesincurredbytherecipientonbehalfofthesupplier.(c) Incidental expenses, including commission and packing, charged by thesuppliertotherecipientofasupplyandanyamountchargedforanythingdonebythesupplierinrespectofthesupplyofgoodsorservicesorbothatthetimeoforbeforedeliveryofgoodsorsupplyofservices.(d)Interestorlatefeeorpenaltyfordelayedpaymentofanyconsideration.Discountsliketradediscount,quantitydiscountetc.arepartofthenormaltradeand commerce.Therefore, pre-supply discounts i.e. discountsrecorded in theinvoicehavebeenallowedtobeexcludedwhiledeterminingthetaxablevalue.Examples:•MrParkersoldthepentoMrWriterforRs500/-.TransactionvaluewillbeRs500.TaxwillbecalculatedonRs500/-• Mr Parker sold the pen to Mr Writer for Rs 500/- at a discount of 10%.

TransactionvaluewillbeRs450.TaxwillbecalculatedonRs450(500-10%)•MrParkersoldthepenpricingRs500alongwithspecialpackingcostingRs100extra.TransactionvaluewillbeRs600.TaxwillbecalculatedonRs600(500+100)TaxablevaluewhenconsiderationisnotsolelyinmoneyInsuchcasesfollowingvalueshavetobetakenSEQUENTIALLYtodeterminethetaxablevalue:i.OpenMarketValueofsuchsupply.ii.Totalmoneyvalueofthesupplyi.e.monetaryconsiderationplusmoneyvalueofthenon-monetaryconsideration.iii.Valueofsupplyoflikekindandquality.iv.Valueofsupplybasedoncosti.e.costofsupplyplus10%mark-up.v. Value of supply determined by using reasonable means consistent withprinciples&generalprovisionsofGSTlaw.(BestJudgementmethod)Example:Amobiledealergavemobile fromhisshop tohis friendMrJai forfree.TheopenmarketvalueofmobileisRs25000.So,transactionValuewillbetakenasRs25000forcalculatingGST.Example: A car dealer gave a customized car from his shop to Mr Viru inexchangeof iPhoneXandcash2 lakh.As thecar iscustomizedone theopenmarket value is not available.However, it is known that iPhone price isRs 1lakh.SoherethetransactionvaluewillbetakenasRs3lakhs(2lakh+1lakh).Example:Amobiledealergavemobile fromhisshop tohis friendMrJai forfree.ThecostofthemobileisRs20000/-andtheopenmarketvalueofmobileisRs25000.So,transactionValuewillbetakenasRs25000,astheruleshavetobeappliedsequentially.

PLACEOFSUPPLYANDIGST

IGST tax would be levied by the Central Government on all Inter-Statetransactionsoftaxablegoodsorservices.Itisveryimportanttodeterminetheplaceofsupply–whetheritisinter-Stateorintra-State, as the kind of tax to be paid (IGST or CGST+SGST) depends onthat.IntraStateSupplymeansSupplyofgoodsorServicesorbothwithintheStateorUnionTerritory.InterStateSupplymeans–•SupplyofgoodsfromoneStatetoanotherState.•SupplyofservicesfromoneStatetoanotherState.•Importofgoodstilltheythecrosscustomsfrontier.•Importofservices.•Exportofgoodsorservices.•SupplyofgoodsorservicestoSEZ.•SupplyofgoodsorservicesbySEZ.•Suppliestointernationaltourists.•Anyothersupplyinthetaxableterritorywhichisnotintra-Statesupply.

PLACEOFSUPPLY

Placesofsupplyprovisionshavebeenframedforgoodsandservices,keepinginmindthedestination/consumptionprinciple.Inotherwords,theplaceofsupplyisbasedontheplaceofconsumptionofgoodsorservices.Asgoodsare tangible, thedeterminationof theirplaceofsupply,basedon theconsumptionprinciple,isnotdifficult.Generally,theplaceofdeliveryofgoodsbecomestheplaceofsupply.However,theservicesbeingintangibleinnature,itisnoteasytodeterminetheexactplacewhereservicesareacquired,enjoyedandconsumed.In respect of certain categories of services, the place of supply is determinedwithreferencetoaprescribedrules.Separateprovisionsforthesupplyofgoodsand services, and further in respect of domestic supplies and cross bordersupplies,havebeenmadeforthedeterminationoftheirplaceofsupply.ImportantNote:

Intra-State supply of goods or services is when thelocation of the supplier and the place of supply are insame state. In an Intra-State transactions, a seller has tocollectbothCGSTandSGSTfromthebuyer.Inter-State supply of goods or services is when thelocation of the supplier and the place of supply are indifferentstates.InanInter-State transaction,asellerhastocollectonlyIGSTfromthebuyer.A.Placeofsupplyofgoodsotherthanimportandexport

NatureofSupply PlaceofSupplyWhere the supply involves themovementofgoods,whetherby thesupplier or the recipient or by anyotherperson

Locationofthegoodsatthetimeofdeliverytotherecipient.

Wherethegoodsaredeliveredtotherecipient, or any person on thedirectionof thethirdpersonbyway

The principal place of business ofsuchperson.

of transfer of title or otherwise, itshallbedeemedthatthethirdpersonhasreceivedthegoodsWhere there is no movement ofgoodseitherbysupplierorrecipient.

Location of such goods at the timeofdeliverytotherecipient

Where goods are assembled orinstalledatsite

The place where the goods areassembledorinstalled

Where the goods are suppliedonboardaconveyance likeavessel,aircraft,trainormotorvehicle

The place where such goods aretakenonboard.

B.PlaceofsupplyofgoodsincaseofImport&Export

Import LocationofImporterExport LocationofExporter

Example:NewtonofMumbai,Maharashtrasells10TVsetstoVijayofNagpur,Maharashtra.

TheplaceofsupplyisNagpur,Maharashtra.SinceitisthesamestateCGST&SGSTwillbecharged.

Example: Newton of Mumbai, Maharashtra sells 30 TV sets to Vinod ofBangalore,Karnataka.

TheplaceofsupplyisBangaloreinKarnataka.SinceitisadifferentstateIGSTwillbecharged.

Example:IfpersonAinMaharashtrashipsgoodstoPersonCinTamilNaduontheinstructionsofPersonBinMaharashtra,whatistheplaceofsupply?WhensupplierAdeliversgoodstorecipientCatthedirectionofthirdpersonB,thegoodswillbedeemed tohavebeen receivedbyBand theplaceof supplyshall be the place of B. Therefore, even if the goods were moved by A inMaharashtra toC inTamilNadu, itwould be deemed to be received byB inMaharashtraandthereforeCGST+SGSTwouldbechargedbyA.

Example:Mr.RajofMumbai,Maharashtragetsanorderof100TVsetsfromHeavenLtd.ofChennai,TamilNadu.HeavenLtdmentionsthatitwillarrangeitsowntransportationandtakeTVsetsfromMr.Rajex-factory.

Inthiscase,PlaceofsupplywillbeMaharashtraandtherefore,CGST&SGSTwill be charged. For the reason that the goods are received ex-factory, i.e., inMaharashtra,themovementofthegoodsterminatesfordeliverytotherecipientthere.Itisimmaterialwhetherthereceiverfurthertransportsthegoodsornot.

Example: Iron&SteelLtd. (Multi state located) asksM/sSASConstructions(WestBengal)tobuildablastfurnaceintheirJharkhandsteelplant.

PlaceofsupplywillbeJharkhand.

Example: Jay is travelling fromMumbai toDelhibyair.Hepurchasescoffeeand snackswhile on the plane. The airlines is registered in bothMumbai andDelhi.

PlaceofsupplywillbeMumbaiasthefooditemswereloadedintotheplaneatMumbai.So,placeofsupplybecomesMumbai.

Example:RameshistravellingtoMumbaiviatrain.ThetrainstartsatDelhiandstops at certain stations before Mumbai. Vinod boards the train at Vadodara(Gujarat)andpromptlypurchaseslunchonboard.ThelunchhadbeenboardedinDelhi.

Place of supplywill be Delhi as the food itemswere loaded into the train atDelhi.So,placeofsupplybecomesDelhi.Example:Ms.MadhuriimportsschoolbagsfromChinaforhershop(registeredinMumbai)PlaceofsupplywillbeMumbai.

C. Place of supply of services in case of Domestic Supplies (Where thelocationofsupplierofservicesandthelocationoftherecipientofservicesisinIndia)

NatureofSupply PlaceofSupplyImmovable property related to services,includinghotelaccommodation

Location at which the immovable property orboat or vessel is located or intended to belocated.

If located outside India: Location of therecipient.

Restaurant and catering services, personalgrooming, fitness, beauty treatment and healthservice

Location where the services are actuallyperformed

Trainingandperformanceappraisal B2B:LocationofsuchRegisteredRecipientB2C: Location where the services are actuallyperformed

Admissiontoaneventoramusementpark Placewhere the event is actually heldorwheretheparkortheotherplaceislocated

Organisationofanevent B2B:LocationofsuchRegisteredRecipientB2C:LocationwheretheeventisactuallyheldIftheeventisheldoutsideIndia:Locationoftherecipient

Transportationofgoods,includingmails B2B:LocationofsuchRegisteredPersonB2C:Location atwhich such goods are handedoverfortheirtransportation

PassengerTransportation B2B:LocationofsuchRegisteredPersonB2C:Placewherethepassengerembarksontheconveyanceforacontinuousjourney

ServicesonboardaConveyance Locationofthefirstscheduledpointofdepartureofthatconveyanceforthejourney

Bankingandotherfinancialservices Location of the recipient of services on therecords of the supplierLocation of the supplierof services if the location of the recipient ofservicesisnotavailable

Insuranceservices B2B:LocationofsuchRegisteredPersonB2C:Locationoftherecipientofservicesontherecordsofthesupplier

AdvertisementservicestotheGovernment Theplaceofsupplyshallbe takenas located ineachof suchStates.Proportionatevalue in caseofmultipleStates

TelecommunicationServices Services involving fixed line, circuits, dish etc.,andplaceofsupplyisthelocationofsuchfixedequipment. In case of mobile/Internet post-paidservices, it is the location of billing address oftherecipient.Incaseofsaleofpre-paidvoucher,the place of supply is the place of sale of suchvouchers. Inothercases, it is theaddressof therecipientinrecords.

OtherServices–B2B LocationofsuchRegisteredRecipient

OtherServices–B2C Location of the recipient where the address onrecordexists.Locationofthesupplierofservicesinothercases

ExportsandsuppliestoSEZsareconsideredas‘zeroratedsupply’onwhichnotaxispayable.However,ITCisallowedandrefundsinrespectofsuchsuppliesmaybeclaimed.

Example:RajuHotels inMumbai,Maharashtra,providescatering services toKailashLtd. (registered inGujarat)fortheirannualsaleseventinMumbai.

Supplyofservice:CateringPlaceofsupply:MaharashtraGST:CGST+SGSTExample:Jairaj,acharteredaccountant(Karnataka)hasbeenadvisedtotakeanayurvedictreatmentatSaiAyurvedicCentreinKerala.

Supplyofservice:HealthServicesPlaceofsupply:KeralaGST:CGST+SGST

Example:MayaIndustriesLtd(Gujarat)hiresSourceConsultancy(Mumbai)toimpartsoft-skillstrainingtoitsemployees.ThetrainingwillbeconductedinMumbai.

Supplyofservice:TrainingPlace of supply: Gujarat (since the recipient is a registered person, location of recipient is the place ofsupply)GST:IGST

Example:Ms.Anita(unregisteredpersonbasedinBangalore)signsupwithPatroConsultancy(Mumbai)foratrainingonpublicspeaking.SheattendsthetraininginMumbai.

Supplyofservice:TrainingPlace of supply: Maharashtra (since the recipient is unregistered person, location where services areprovidedistheplaceofsupply)GST:CGST+SGST

Example:ApersoninKarnatakabuysadmissionticketsforNiccoPark(amusementpark)inKolkata,WestBengalfromtheNiccoParkorganizers.

Supplyofservice:AdmissionPlaceofsupply:WestBengal(Locationofthepark)GST:CGST+SGSTExample: First EventManagers (Mumbai) is hired by Samsung Electronics (Gujarat) to organize theirannualsaleseventinMumbai.

Supplyofservice:EventmanagementPlace of supply: Gujarat (since the recipient is a registered person, location of recipient is the place of

supply)GST:IGST

Example: ThirdEventManagers (Mumbai) is hired byMs.Malini (based inBangalore) tomanage hersister’swedding(heldinMumbai).

Supplyofservice:EventmanagementPlaceofsupply:Mumbai(sincetherecipientisunregisteredperson,locationofeventistheplaceofsupply)GST:CGST+SGSTExample:SecondEventManagers(Mumbai)ishiredbyKailashElectronicsLimited(Gujarat)toorganizetheirannualbusinesscollaborationeventinSingapore.Supplyofservice:EventmanagementPlace of supply: Gujarat (since the recipient is a registered person, location of recipient is the place ofsupply).Locationofeventisimmaterial.GST:IGSTExample:JackandJackEventManagers(Mumbai)ishiredbyMs.Shalini(basedinBangalore)tomanagehersister’swedding(heldinDubai).

Supplyofservice:EventmanagementPlaceofsupply:Bangalore(sincethelocationofeventisoutsideIndia,thelocationofrecipientistheplaceofsupply)GST:IGSTNote:Relevantassumptionshasbeenmadetosimplifythetopicandtomakeitmorelucid.

INPUTTAXCREDIT

Inputtaxcreditmeansatthetimeofpayingtaxonoutput,youcanreducethetaxyouhavealreadypaidoninputsandpaythebalanceamount.Uninterruptedandseamlesschainofinputtaxcredit(hereinafterreferredtoas,“ITC”)isoneofthekeyfeaturesofGoodsandServicesTax.ITCisamechanismtoavoidcascadingoftaxes.Anyregisteredpersoncanavailcreditoftaxpaidontheinwardsupplyofgoodsor services or both, which is used or intended to be used in the course orfurtheranceofbusiness.Example-Taxpayableonoutput(Sales)isRs450Taxpaidoninput(Purchases)isRs300InputCreditofRs300canbetakenandonlybalanceRs150needstobepaid.Theruletoavailandutilisethecreditofthesetaxesisasfollows:Creditof Tobeutilizedfirstfor

paymentofMaybeutilizedfurtherforpaymentof

CGST CGST IGST

SGST/UTGST SGST/UTGSTIGST

IGST IGSTCGST,thenSGST/UTGST

Thepre-requisitesforavailingcreditbyregisteredpersonare:a.Heisinpossessionoftaxinvoice.b.Hehasreceivedthegoodsorservices.c.Taxisactuallypaidbythesupplier.d.Hehasfurnishedthereturn.Iftheinputsarereceivedinlots,hewillbeeligibletoavailthecreditonlywhenthelastlotoftheinputsisreceived.Further, Receiver should pay the supplier, the value of the goods or servicesalongwith the taxwithin 180 days from the date of issue of invoice, failingwhichtheamountofcreditavailedbytherecipientwouldbeaddedtohisoutputtaxliability,withinterest@18%pa.Thiswillhelpsmallbusinesstoensurethattheyreceivepaymentwithin180days.Wherethegoodsorservicesorbothareusedbytheregisteredpersonpartlyforthepurposeofanybusinessandpartlyforotherpurposes,theamountofcreditshallberestrictedtosomuchoftheinputtaxasisattributabletothepurposesofhisbusiness.

To avoid the misuse of credit provision, law has listed few goods andservices inwhichcredit shallnotbeallowed. ITC isnotavailable in somecasesasmentionedbelow:a.motorvehiclesandotherconveyances.1b. Goods or services provided in relation to Food and beverages, outdoorcatering,beautytreatment,healthservices,cosmeticandplasticsurgery.c.Membershipofaclub,healthandfitnesscenter.d.Rent-a-cab,lifeinsuranceandhealthinsurance.2e.Travelbenefits extended to employees onvacation such as leave or hometravelconcession.f. Works contract services when supplied for construction of immovableproperty (other thanplant&machinery),exceptwhere it isan input serviceforfurthersupplyofworkscontractservice.g.Goodsorservicesreceivedbyataxablepersonforconstructionofimmovablepropertyonhisownaccount,otherthanplant&machinery,evenwhenusedincourseorfurtheranceofbusiness.e.Goodsand/orservicesonwhichtaxhasbeenpaidundercompositionscheme.f.Goodsand/orservicesusedforprivateorpersonalconsumption,totheextenttheyaresoconsumed.g.Goodslost,stolen,destroyed,writtenoff,gifted,orfreesamples.Sofor theabove inputs,nocredit shallbeallowed i.e.nobenefitofGSTpaidcanbetaken.Note:1.Exception-whentheyareused––

(i)forfurthersupplyofsuchvehiclesorconveyances;ortransportationofpassengers;orimpartingtrainingondriving,flying,navigatingsuchvehiclesorconveyances;(ii)fortransportationofgoods.2.Exception - where it isobligatory foranemployerunderany lawor such inwardsupplyofgoodsorservices or both of a particular category is used by a registered person for making an outward taxablesupplyofthesamecategoryofgoodsorservicesorbothoraspartofataxablecompositeormixedsupply.3. Construction includes re-construction, renovation, additions or alterations or repairs, to the extent ofcapitalisation,tothesaidimmovableproperty.4. Plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation orstructuralsupportthatareusedformakingoutwardsupplyofgoodsorservicesorbothandincludessuchfoundationandstructuralsupportsbutexcludes—(i)land,buildingoranyothercivilstructures;(ii)telecommunicationtowers;and(iii)pipelineslaidoutsidethefactorypremises.

PAYMENTOFTAX

There are three different ledgerswhich need to bemaintained for payment oftax.Electronic Tax Liability Ledger All liabilities of a taxable person shall berecorded and maintained in an electronic liability register. The electronic taxliability ledger would show the tax due from a regular tax return, and theinterest,penalty,demandnoticeundereachofthemajorheads.Date Reference

noDescription Amountdebited/credited Balance

IGST SGST CGST

IGST SGST CGST

ElectronicCreditLedgerAllthetaxespaidontheinputswouldberecordedintheelectroniccreditledger.Detailsof the input taxcredit availableunderallheadswouldbe reflected intheElectronicCreditLedger.IGST: The IGST input tax credit is used for payment of IGST then theremainingITCcanbeusedtopaytaxliabilityunderCGSTandatlastSGST.CGST:TheCGSTinputtaxcreditcannotbeusedtopaytheSGSTliabilitybutcanbeusedtopaytheliabilityunderIGST.SGST:TheSGSTinputtaxcreditcannotbeusedtopaytheCGSTliabilitybutcanbeusedtopaytheliabilityunderIGST.ElectronicCashLedgerThetaxpayercanpaythetaxduethroughelectronicmodeslikeinternetbanking

orbyusingcredit/debitcardsorNationalElectronicFundTransferorRealTimeGross Settlement and it will be automatically reflected to his electronic cashledger.ItismandatoryforbusinessesmakingpaymentformorethanRs10,000todoitelectronically.Paymentswouldbemadeunder3majorheadsnamedCGST,SGST,IGSTanditisfurtherdividedintothedifferentminorheadsliketax,interest,penalty,feesand others. The electronic cash ledger will also display the balance availableunderthevariouscombinationofthemajor-minorhead.AllthepaymentsunderGSThavetobemadebyeitherusingtheinputtaxcreditavailableintheelectroniccreditledgerorthroughtheelectroniccashledger.Aunique identificationnumbershallbegeneratedat thecommonportal foreachdebitorcredittotheelectroniccashorcreditledger.TheamountdeductedunderTDSprovisionortheamountcollectedunderTCSmechanismortheamountpayableonreversechargebasisortheamountpayableundercompositionschemeoranyamountpayabletowardsinterest,penaltyandfeesshallbepaidbydebitingtheelectroniccashledgeronly.Every taxable person shall first discharge his tax and other dues (includesinterest,penalty, feeoranyotheramountpayable)ofprevious taxperiodsandthereafterofthecurrenttaxperiod.InterestondelayedpaymentofGSThastobepaidattherateof18%p.a.andincaseofexcessITCclaimed/excessreductioninoutputtaxliabilitybytaxpayertheninterestratewillbe24%p.a.Question:SlowAssociateswaslatefilingthereturnforthemonthofSeptember2017, thegstportal shows thatheneeds topay the late feesofRs1500underCGSTandRs1500underSGST.He ishavingsufficientbalance inElectronicCreditLedger.Canthefirmutilisethisbalance?Answer:No,interest,penaltyorlatefeeshastobepaidthroughElectronicCashLedger.SofirstthefirmhastodeposittheamountintoElectronicCashLedgerthroughthebankaccountandthencleartheliability.Question:KKRLtdhasnotfiledtheAugustandSeptemberreturn.Therelevant

detailsofAugustisnotavailabletofilethereturn.ButforSeptembermonthhehasalltherelateddetails.CanhefileSeptembermonthreturnbeforefilingAugustreturn?Answer:No,previousperiodreturnandliabilityhastobeclearedbeforefilingthecurrentperiod.

Question:FollowingarethebalancesshownintheGSTElectronicLedgerofMrMohan.Kindlyguidehimhowtheliabilitywillbecleared.

CGST SGST IGST TOTALLiabilityLedger 10,000 10,000 25,000 45,000

CreditLedger

8,000 8,000 8,000 24,000

CashLedger

50,000 50,000 50,000 1,50,000

Answer:

Liabilitywillbeset-offinthefollowingmanner:


CreditLedger

8,000 8,000 8,000 24,000

CashLedger

2,000 2,000 17,000 21,000

BalanceleftintheElectronicLedgersafterset-off:

CGST SGST IGST TOTALLiabilityLedger 0 0 0 0

CreditLedger

0 0 0 0

0 0 0 0

CashLedger

48,000 48,000 33,000 1,29,000

Question:FollowingarethebalancesshownintheGSTElectronicLedgerofMrRaju.Kindlyguidehimhowtheliabilitywillbecleared.


CreditLedger

18,000 18,000 8,000 44,000

CashLedger

50,000 50,000 50,000 1,50,000

Answer:



CreditLedger

10,000 10,000 *24,000 44,000

CashLedger

0 0 1,000 1,000



CreditLedger

0 0 0 0

0 0 0 0

CashLedger

50,000 50,000 49,000 1,49,000

*8,000fromIGST,8000CGST,8000SGSTCreditLedger.

Question:FollowingarethebalancesshownintheGSTElectronicLedgerofMrRaju.Kindlyguidehimhowtheliabilitywillbecleared.


CreditLedger

8,000 8,000 50,000 66,000

CashLedger

50,000 50,000 50,000 1,50,000

Answer:



CreditLedger

*10,000 ~10,000 25,000 45,000

CashLedger

0 0 0 0



CreditLedger

0 0 21,000 21,000

0 0 21,000 21,000

CashLedger

50,000 50,000 50,000 1,50,000

*8,000fromCGSTand2000fromIGSTCreditLedger.~8,000fromSGSTand2000fromIGSTCreditLedger.

Question:FollowingarethebalancesshownintheGSTElectronicLedgerofMrRam.Kindlyguidehimhowtheliabilitywillbecleared.


CreditLedger

8,000 8,000 26,000 42,000

CashLedger

50,000 50,000 50,000 1,50,000

Answer:



CreditLedger

*9,000 8,000 25,000 42,000

CashLedger

1,000 2,000 0 3,000



CreditLedger

0 0 0 0

0 0 0 0

CashLedger

49,000 48,000 50,000 1,47,000

*8,000fromCGSTand1000fromIGSTCreditLedger.

Question:FollowingarethebalancesshownintheGSTElectronicLedgerofMrDixit.Kindlyguidehimhowtheliabilitywillbecleared.


CreditLedger

8,000 8,000 28,000 44,000

CashLedger

50,000 50,000 50,000 1,50,000

Answer:


CGST SGST IGST TOTALLiabilityLedger

10,000 10,000 25,000 45,000

CreditLedger

*10,000 ~9,000 25,000 44,000

CashLedger

0 1,000 0 1,000



CreditLedger

0 0 0 0

0 0 0 0

CashLedger

50,000 49,000 50,000 1,49,000

*8,000fromCGSTand2000fromIGSTCreditLedger.~8,000fromSGSTand1000fromIGSTCreditLedger.

Question:FollowingarethebalancesshownintheGSTElectronicLedgerofMrBabu.Kindlyguidehimhowtheliabilitywillbecleared.


CreditLedger

11,000 8,000 25,000 44,000

CashLedger

50,000 50,000 50,000 1,50,000

Answer:



CreditLedger

10,000 8,000 25,000 43,000

CashLedger

0 2,000 0 2,000



CreditLedger

1,000 0 0 1,000

1,000 0 0 1,000

CashLedger

50,000 48,000 50,000 1,48,000

COMPOSITIONSCHEME

Thecompositionlevyisanalternativemethodoflevyoftaxdesignedforsmalltaxpayers whose aggregate turnover is up toRs. 1 crores. The objective ofcompositionschemeistobringsimplicityandtoreducethecomplianceburdenforthesmalltaxpayers.Moreover,itisoptionalandtheeligiblepersonoptingtopaytaxunderthisschemecanpaytaxataprescribedpercentageofhisturnovereveryquarter,insteadofpayingtaxatnormalrate.However,inthecaseofthefollowingStates,thelimitofturnoverisRs.75lakhs-a)ArunachalPradeshb)Assamc)Manipurd)Meghalayae)Mizoramf)Nagalandg)Sikkimh)Tripurai) Himachal Pradesh The person exercising the option to pay tax undercompositionshallcomplywiththefollowingotherconditionsshallmentionthewords“compositiontaxableperson,noteligibletocollecttaxonsupplies”atthetop of the bill of supply issued by him and the words “composition taxableperson” on every notice or signboard displayed at a prominent place at hisprincipalplaceofbusinessandateveryadditionalplaceorplacesofbusiness.Theoptionisrequiredtobeexercisedpriortothecommencementoftherelevantfinancialyear.Aggregate turnoverwill be computedon thebasisof turnoveronanall Indiabasisandwillincludevalueofalltaxablesupplies,exemptsuppliesandexportsmadebyallpersonswithsamePAN,butwouldexcludeinwardsuppliesunderreversechargeaswellascentral,State/UnionTerritoryandIntegratedtaxesandcess.Question:TiscoLtdtraderofsteelhasfivebranches,saleofeachbranchintheprecedingyearwasasfollows:Maharashtra–15lakhspaKarnataka–20lakhspaOrissa–10lakhspaRajasthan–12lakhspaGujarat–20lakhspaCanTiscoLtdoptforcompositionscheme?Answer:Yes, as the total turnover isbelow1crores, thecompanycanopt for

compositionscheme.Question: JetLtd trader of steel has five branches, sale of eachbranch in theprecedingyearwasasfollows:Maharashtra–15lakhspaAssam–20lakhspaOrissa–10lakhspaRajasthan–22lakhspaGujarat–20lakhspaCanJetLtdoptforcompositionscheme?Answer:No,asthetotalturnoverisaboveRs75lakhs,thecompanycannotoptfor composition scheme. Limit ofRs 75 lakhswill be applicable asAssam isspecialcategorystate.

Question:Motabhaihavingtwobusinesswhosesalelastyearwasasfollows:FruitbusinessofApple–Rs50lakhsSaleofpizzabread–Rs75lakhs.ThereisnotaxonFruitbusiness.Canheoptforcompositionscheme?Answer:No,astheaggregateturnoverismorethanonecrore.PAYMENTThe tax calculation under this scheme is simple - Instead of doing detailedcalculation,inputtaxcrediteligibilityandusingdifferenttaxrates,compositiondealer can simply pay the following rate of tax on his turnover and completecompliance.S.No. CategoryofRegisteredperson RateofTax

1Manufacturers,otherthanofsuchgoodsasmaybenotifiedbytheGovernment(Icecream,PanMasala,Tobaccoproductsetc.)

2%(1%Centraltaxplus1%Statetax)oftheturnover

2RestaurantServices 5%(2.5%Centraltaxplus

2.5%Statetax)oftheturnover

3Tradersoranyothersuppliereligibleforcompositionlevy

1%(0.5%Centraltaxplus0.5%Statetax)oftheturnover

Incaseapersonhasregistration inmultiplestates, theoption topay taxundercompositionschemewillhavetobeexercisedforallStates.If anybusinessverticalofa registeredperson thathasbeengranteda separateregistrationbecomes ineligible topay taxunder composition scheme, all otherbusinessverticalsofthesaidpersonshallbecomeineligibletopaytaxunderthesaidsection.Thus,anyintimationorapplicationforwithdrawalinrespectofanyplace of business in any State or Union territory, shall be deemed to be an

intimation in respect of all other places of business registered on the samePermanentAccountNumber.

Question:TataAssociateshasbusinessinthreestate–WestBengal,KeralaandBihar.NowthefirmwantstoapplyforthebenefitofcompositionschemeinKeralabranchonly.Canthefirmdothat?Answer:No,schemehastobeapplicableacrossallbranchesinIndia.

EXCLUSIONSFROMCOMPOSITIONSCHEME

Followingpersonsarenotallowedtooptforthecompositionscheme:a) Supplierswhose aggregate turnover in the preceding financial year crossedRs.1crores.

b)Acasualtaxablepersonoranon-residenttaxableperson.

c)SupplierwhohaspurchasedanygoodsorservicesfromunregisteredsupplierunlesshehaspaidGSTonsuchgoodsorservicesonreversechargebasis.

d)Supplierofservices,otherthanrestaurantservice.

e)PersonsupplyinggoodswhicharenottaxableunderGSTlaw.

f)Personsmakinganyinter-Stateoutwardsuppliesofgoods.

g) Suppliers making any supply of goods through an electronic commerceoperatorwhoisrequiredtocollecttaxatsource.

h)AmanufacturerofIcecream,PanMasalaandTobaccoproducts.

Question:TwinkleAssociates,ArchitecthavingaturnoverofonlyRs25lakhspa.Cansheoptforcompositionscheme?Answer: No, composition scheme is not available to Service provider (exceptRestaurantServices)Question:Tarachand&Bhagat,afamousrestauranthavingaturnoverofRs80lakhspa.Canthefirmoptforcompositionscheme?Answer:Yes,Restaurantservicesareallowedtoavailcompositionscheme.Question: Bharat Ltd, Mumbai is selling goods to its customer based inMaharashtraandGujarat.Iscompanyeligibleforcompositionscheme?

Answer:No,asthecompanyismakinginter-statesales.Question:YogiLtd,KanpurisbuyinggoodsfromMaharashtraandsellingthemtoitslocalcustomer.Iscompanyeligibleforcompositionscheme?Answer:Yes,asthecompanyismakinginter-statepurchaseandnotinter-statesale.

NOINPUTTAXCREDIT

Ataxablepersonoptingtopaytaxunder thecompositionschemeisoutof thecredit chain. So he cannot avail InputTaxCredit on his inward supplies. Thecompositiondealercannotcollecttaxpaidbyhimonoutwardsuppliesfromhiscustomers,theregisteredpersonmakingpurchasesfromataxablepersonpayingtaxunderthecompositionschemecannotavailcredit.Question:AretailtraderduringthemonthJulytoSeptember2017hadasaleofRs10lakh.Healsoboughtthegoodsofaround8lakhsandpaidRs40,000asGSTtaxonpurchaseduringtheperiod.Howmuchtaxheneedstopay?Answer:Traderhas topayCGSTofRs5000andSGSTofRs5000.TotalRs10000(10lakhx1%)asGST.Further,taxpaidonpurchasesisnotrelevantasundercompositionschemeasInputTaxCreditisnotallowed.

WITHDRAWAL

The option to pay tax under composition levywould remain valid so long asconditionsmentioned.Theregisteredpersoncanvoluntarilywithdrawfromthecompositionscheme.Theoptiontopaytaxundercompositionschemelapsesfromthedayonwhichhisaggregateturnoverduringthefinancialyearexceedsthespecifiedlimit(Rs.1crores/Rs75lakhs).Heisrequiredtofileanintimationforwithdrawalfromtheschemeinwithinsevendaysfromthedayonwhichthethresholdlimithasbeencrossed.

INVOICING“Taxinvoice”shouldbeissuedbyaregisteredpersonsupplyingtaxablegoods,beforeorat the timeof,—(a)Removalofgoods forsupply to the recipient,where the supply involves movement of goods; or (b)Delivery of goods ormakingavailablethereoftotherecipient,inanyothercase.A registered person supplying taxable services shall, before or after theprovision of service but within a period of thirty days from the date of thesupplyofservice,issueaTaxInvoice.Wherethegoodsbeingsentortakenonapprovalforsaleorreturnareremovedbeforethesupplytakesplace,theinvoiceshallbeissuedbeforeoratthetimeofsupplyorsixmonthsfromthedateofremoval,whicheverisearlier.Aregisteredpersonsupplyingexemptedgoodsorservicesorbothorpayingtaxundercompositionscheme,insteadofataxinvoice,shallissueaBillofSupply.Registeredpersonmaynot issuea tax invoiceorbillofsupply, if thevalueofthegoodsorservicesorbothsuppliedislessthantwohundredrupeesandcanchoosetoissueaconsolidatedtaxinvoiceforsuchsuppliesatthecloseofeachday in respect of all such supplies, provided the recipient is not a registeredpersonanddoesnotrequiresuchinvoice.Where a registered person is supplying taxable aswell as exempted goods orservicesorbothtoanunregisteredperson,asingle“invoice-cum-billofsupply”maybeissuedforallsuchsupplies.AregisteredpersonwhoisliabletopaytaxunderReversechargeshallissueaPaymentVoucheratthetimeofmakingpaymenttothesupplier.A registered person shall, on receipt of advance payment with respect to anysupplyofgoodsorservicesorboth,issueaReceiptVoucher,evidencingreceiptofsuchpayment.Where,on receiptof advancepaymentwith respect to any supplyofgoodsorservices the registered person issues a receipt voucher, but subsequently no

supplyismadeandnotaxinvoiceisissued,thesaidregisteredpersonmayissueto the person who had made the payment, a Refund Voucher against suchpayment.CreditNote -Whereataxinvoicehasbeenissuedforsupplyofanygoodsorservices and the taxable value or tax charged in that tax invoice is found toexceedthetaxablevalueortaxpayableinrespectofsuchsupply,orwherethegoodssuppliedarereturnedbytherecipient,orwheregoodsorservicessuppliedarefoundtobedeficient, theregisteredperson,whohassuppliedmayissuetotherecipientacreditnote.DebitNote -Wherea tax invoicehasbeen issued for supplyof anygoodsorservicesand the taxablevalueor taxcharged in that tax invoice is foundtobelessthanthetaxablevalueortaxpayableinrespectofsuchsupply,thesuppliershallissuetotherecipientadebitnote.TAXINVOICETheminimumdetailstobecontainedintheTaxInvoicearelistedbelow:(a)Name,addressandGSTINofthesupplier(b)Consecutiveserialnumbernotexceedingsixteencharacters,inoneormultipleseries,containingalphabetsornumeralsorspecialcharactersas“-”and“/”respectively,andanycombinationthereof,uniqueforafinancialyear(c)Dateofitsissue(d)Name,addressandGSTINorUIN,ifregistered,oftherecipient(e)Nameandaddressoftherecipientandtheaddressofdelivery,alongwiththenameofStateanditscode(f)HSNcodeofgoodsorAccountingCodeofservices(g)Descriptionofgoodsorservices(h)Quantityincaseofgoods(i)Totalvalueofsupplyofgoodsorservicesorboth(j)Taxablevalueofsupplyofgoodsorservicesorbothtakingintoaccountdiscountorabatement,ifany(k)Rateoftax(centraltax,Statetax,integratedtax,Unionterritorytaxorcess)(l)Amountoftaxchargedinrespectoftaxablegoodsorservices(centraltax,Statetax,integratedtax,Unionterritorytaxorcess)(m)PlaceofsupplyalongwiththenameofState,incaseofasupplyinthecourseofinter-Statetradeorcommerce(n)Addressofdeliverywherethesameisdifferentfromtheplaceofsupply(o)Whetherthetaxispayableonreversechargebasis(p)SignatureordigitalsignatureofthesupplierorhisauthorizedrepresentativeThetaxinvoiceshallbepreparedintriplicate,inthecaseofsupplyofgoods,inthefollowingmanner,namely,-

(a) the original copy beingmarked as ORIGINAL FORRECIPIENT; (b) theduplicate copybeingmarked asDUPLICATEFORTRANSPORTER; and (c)thetriplicatecopybeingmarkedasTRIPLICATEFORSUPPLIER.The tax invoice shall be prepared in duplicate, in the case of the supply ofservices,inthefollowingmanner,namely,-(a) the original copy beingmarked as ORIGINAL FORRECIPIENT; (b) theduplicatecopybeingmarkedasDUPLICATEFORSUPPLIER.Where the supplierof taxable service is agoods transportagency supplyingservices in relation to transportationofgoodsby road in agoods carriage, thesaid supplier shall issuea tax invoicecontaining theabove listeddetails alongwith the gross weight of the consignment, name of the consigner and theconsignee, registration number of goods carriage in which the goods aretransported, details of goods transported, details of place of origin anddestination,GoodsandServicesTaxIdentificationNumberofthepersonliableforpayingtaxwhetherasconsigner,consigneeorgoodstransportagency.

Rules regardingmentioningHSNcode (HarmonizedSystemofNomenclature)inataxinvoiceinvolvingintra-stateorinter-statesupplyislistedbelow:AnnualTurnoverinthepreceding

FinancialYearNumberofDigitsof

HSNCodeUpto Rupees One Crore FiftyLakhs

Nil

MorethanRupeesOneCroreFiftyLakhsanduptoRupeesFiveCrores

2

MorethanRupeesFiveCrores4

HSNcodenumberiswidelyusedinmanycountriestoclassifygoodsfortaxationpurpose,claimingbenefitsetc.

ChallanorTransportationofgoodswithoutissueofinvoice–Forthepurposesof:(a)supplyofliquidgaswherethequantityatthetimeofremovalfromtheplaceofbusinessofthesupplierisnotknown,(b)transportationofgoodsforjobwork(c)transportationofgoodsforreasonsotherthanbywayofsupplytheconsignermayissueadeliverychallaninlieuofinvoiceatthetimeofremovalofgoodsfortransportation,containingthefollowingdetails,namely:-

(i)Dateandnumberofthedeliverychallan(ii)Name,addressandGSTINoftheconsignerandconsignee(iii)HSNcodeanddescriptionofgoods(iv)Quantityand Taxable value (v) Tax rate and tax amount (vi) Place of supply (vii)Signature.Thisdeliverychallanshallbepreparedintriplicate.

ACCOUNTSANDRECORDS

The compliance verification is done by the department through scrutiny ofreturns, audit and/or investigation. This compliance verification can be donethroughdocumentarychecksthisrequirestaxpayerforkeepingandmaintainingaccountsandrecords.Everyregisteredpersonshallkeepandmaintainallrecordsathisprincipalplaceof business asmentioned in thecertificate of registration. In casemore thanoneplaceofbusiness isspecifiedin thecertificateofregistration, theaccountsrelatingtoeachplaceofbusinessshallbekeptatsuchplacesofbusiness.Followingaccountsandrecordswillhavetobemaintainedbyeveryregisteredperson:(a) Detailed accounts of stock in respect of goods received and supplied;containingparticularsoftheopeningbalance,receipt,supply,goodslost,stolen,destroyed,writtenoffordisposedofbywayofgiftorfreesamplesandbalanceofstockincludingrawmaterials,finishedgoods,scrapandwastagethereof.(b) A separate account of advances received, paid and adjustments madethereto.(c)Accountcontainingthedetailsoftaxpayable, taxcollectedandpaid, inputtax,inputtaxcreditclaimedtogetherwitharegisteroftaxinvoice,creditnote,debitnote,deliverychallanissuedorreceivedduringanytaxperiod.(d) Name and complete addresses of suppliers fromwhom goods or serviceschargeabletotaxhavebeenreceived.(e)Nameandcomplete addressesof thepersons towhomsupplieshavebeenmade.(f)Thecompleteaddressesofthepremiseswherethegoodsarestoredincludinggoodsstoredduringtransitalongwiththeparticularsofthestockstoredtherein.

(g) Monthly production accounts showing the quantitative details of rawmaterials or services used in the manufacture and quantitative details of thegoodssomanufacturedincludingthewasteandbyproductsthereof.(h)Accountsshowingthequantitativedetailsofgoodsusedintheprovisionofservices,detailsofinputservicesutilisedandtheservicessupplied.EveryAgent shallmaintain particulars of authorisation received by him fromeveryprincipalandkeepseparatelyaccountsoftransactionforeachprincipal.Everyowneror operator ofwarehouseor godownor anyother placeused forstorageofgoodsandeverytransporter,irrespectiveofwhetherheisaregisteredperson or not, shall maintain records of the consigner, consignee and otherrelevantdetailsofthegoods.Thegoodsshallbestoredinsuchmannerthattheycan be identified item wise and owner wise and shall facilitate any physicalverificationorinspection,ifrequiredatanytimebytaxofficer.Every person engaged in the business of transporting goods shall maintainrecordsofgoodstransported,deliveredandgoodsstoredintransitbyhimalongwith the Goods and Services Tax Identification Number of the registeredconsignerandconsigneeforeachofhisbranches.Aregisteredpersonmaykeepandmaintainsuchaccountsandotherparticularsinelectronicform.Thedatasostoredshallbeauthenticatedbywayofdigitalsignature.Thefollowingadditionalrequirementshavebeenprescribedformaintenanceofrecordsinelectronicform:(a)Proper electronicback-up of records shall bemaintained andpreserved insuchmannerthat,intheeventofdestructionofsuchrecordsduetoaccidentsornatural causes, the information can be restored within a reasonable period oftime.(b) The registered person maintaining electronic records shall produce, on

demand,therelevantrecordsordocuments,dulyauthenticatedbyhim,inhardcopyorinanyelectronicallyreadableformat.(c)Where the accounts and records are stored electronically by any registeredperson,heshall,ondemand,providethedetailsofsuchfiles,passwordsofsuchfilesandexplanationforcodesused,wherenecessary,foraccessandanyotherinformationwhichisrequiredforsuchaccessalongwithasamplecopyinprintformoftheinformationstoredinsuchfiles.All accountsmaintained together with all invoices, bills of supply, credit anddebit notes, and delivery challans relating to stocks, deliveries, inward supplyandoutwardsupplyshallbepreservedforseventytwomonths(sixyears)fromthe due date of furnishing of annual return for the year pertaining to suchaccounts and records and shall be kept at every related place of businessmentionedinthecertificateofregistration.

REVERSECHARGEMECHANISM

Reverse Charge means the liability to pay tax by the recipient of supply ofgoodsorservicesinsteadofthesupplier.Thechargeabilitygetsreversedthatiswhy it is called reverse charge. It removes theburdenof taxcompliance fromindividuals with limited resources to large organisations with sufficientresources.AllpersonswhoarerequiredtopaytaxunderreversechargehavetoregisterforGSTirrespectiveoftheturnover.Recipientofsupplyhastoissueinvoiceonhimself.TaxunderreversechargetobepaidusingElectronicCashLedger.Taxpaidonreversechargebasiswillbeavailableforinputtaxcreditifsuchgoodsorservicesareusedforbusiness.Twocategoriesofreversechargehasbeenprescribed:1)TheGSTinrespectofthe supply of taxable goods or services or both byunregistered supplier to aregisteredpersonshallbepaidbysuchregisteredpersononreversechargebasisas the recipient. However, due to practical implementation issue this hasprovisionhasbeendeferredtill01.04.2018.2)FollowingcategoriesofIntra-StateorInter-Statesupplyofgoodswillattractreversechargemechanism:DescriptionofsupplyofGoods

Supplierofgoods

Recipientofsupply

Cashewnuts,notshelledorpeeled

Agriculturist Anyregisteredperson

Bidiwrapperleaves(tendu)


Tobaccoleaves


Silkyarn Anypersonwhomanufacturessilkyarnfromrawsilkorsilkwormcocoonsforsupplyofsilkyarn

Anyregisteredperson

Supplyoflottery.

StateGovernment,UnionTerritoryoranylocalauthority

Lotterydistributororsellingagent.

Usedvehicles,seizedandconfiscatedgoods,oldandusedgoods,wasteandscrap

CentralGovernment,StateGovernment,Unionterritoryoralocalauthority

Anyregisteredperson

FollowingCategoryofServicesattractreversecharge:

Descriptionofsupplyofservice

Supplierofservice

Recipientofservice

GTAServices GoodsTransportAgency(GTA)

Any factory, society,body corporate,partnership firm,casual taxable person;located in the taxableterritory

Legal Services byadvocate

An individualadvocate,including asenioradvocate or afirm ofadvocates

Any business entitylocated in the taxableterritory

Services suppliedby an arbitraltribunal to abusinessentity

Anarbitraltribunal Any business entity located inthetaxableterritory

Services provided by wayofsponsorshiptoanybodycorporate or partnershipfirm.

Anyperson Any body corporateor partnership firmlocated in thetaxableterritory

Servicessupplied by adirector of acompany or abodycorporate.

A director of acompany or a bodycorporate

The company or abody corporatelocated in thetaxableterritory

Servicessupplied by aninsurance agentto any personcarrying oninsurancebusiness.

Aninsuranceagent Any person carrying oninsurance business, located inthetaxableterritory

Services supplied by arecoveryagenttoabankingcompany or a financialinstitutionoraNBFC

Arecoveryagent Abankingcompanyor a financialinstitution or anonbankingfinancial company,located in thetaxableterritory

Supply ofservices by anauthor, musiccomposer,photographer,artist or the likeby way oftransfer orpermittingtheuseorenjoymentofacopyright.

Author or musiccomposer,photograph her,artist,orthelike

Publisher, musiccompany, produceror the like, locatedin the taxableterritory

Services suppliedby a personlocated in non-taxable territoryby way oftransportation ofgoodsbyavesselfrom a placeoutside India upto the customsstation ofclearance inIndia.

Aperson located innon-taxableterritory

Importer located inthe taxableterritory.

Any servicesupplied by anyperson who islocated in a non-taxable territoryto any personother than non-taxable onlinerecipient.

Any person locatedin non-taxableterritory

Anyperson locatedin the taxableterritory other thannon-taxable onlinerecipient.

Thepersonwhopaysorisliabletopayfreightforthetransportationofgoodsbyroad in goods carriage, located in the taxable territory shall be treated as thepersonwhoreceivestheserviceforthepurposeofthisnotification.

Also Reverse charge mechanism is applicable on Services supplied by theCentralGovernment,StateGovernment,Union territoryor local authority to abusinessentityexcluding:-

(1)Rentingofimmovableproperty

(2)Services by theDepartment ofPosts bywayof speed post, express parcelpost,lifeinsurance,andagencyservices

(3)Servicesinrelationtoanaircraftoravessel,insideoroutsidetheprecinctsofaportoranairport

(4)Transportofgoodsorpassengers

Further following categories of services, the tax on intra-state or inter-statesupplies shallbepaidby theelectroniccommerceoperator – (i)Servicesbyway of transportation of passengers by a radio-taxi,motorcab, maxicab andmotorcycle; (ii)servicesbywayofprovidingaccommodation inhotels, inns,guesthouses,clubs,campsitesorothercommercialplacesmeantforresidentialor lodging purposes and housekeeping services except where the personsupplying such service through electronic commerce operator is liable forregistration(Turnovermorethan20lakhs/10lakhsinspecifiedstates).

TAXDEDUCTEDATSOURCE

TDSisoneofthemodes/methodstocollecttax,underwhich,certainpercentageof amount is deducted by a recipient at the time of making payment to thesupplier.ThepurposeofTDStoenabletheGovernmenttohaveatrailoftransactionsandto monitor and verify the compliances. It acts as a powerful instrument topreventtaxevasionandexpandsthetaxnet.ATDSdeductor has to compulsorily registerwithout any threshold limit.Thefollowing persons (the deductor) are required to deduct tax at source: (a) AdepartmentoranestablishmentoftheCentralGovernmentorStateGovernment(b)Localauthority(c)GovernmentalagenciesThe tax would be deducted @1% of the payment made to the supplier (thedeductee) of taxable goods or services or both, where the total value of suchsupplyunderacontract,exceedstwolakhfiftythousandrupees(excludingtheGST tax). Thus, individual supplies may be less than Rs. 2,50,000/-, but ifcontractvalue ismore thanRs.2,50,000/-,TDSwillhave tobededucted.Forthe purpose of deduction of tax specified above, the value of supply shall betakenastheamountexcludingGSTtaxindicatedintheinvoice.The TDS so deposited in the Government account shall be reflected in theelectronic cash ledger of the supplier (i.e. deductee) The amount of taxdeducted at source should be deposited to theGovernment account and returnshouldbefiledbythedeductorby10thofthesucceedingmonth.A TDS certificate is required to be issued by deductor (the person who isdeducting tax) to the deductee (the supplier from whose payment TDS isdeducted),within5daysofcreditingtheamounttotheGovernment.

Example:LocalAuthorityneeds topayRs5 lakhs to a contractor.TheLocalAuthoritywilldeduct1%i.e.Rs5000andpaythebalanceamountRs495000tothecontractor.ThisRs5000willbedepositedtotheGSTtaxdepartmentbytheLocalAuthority.TDSprovisionshasbeendeferredtill01.04.2018

TAXCOLLECTEDATSOURCETCSreferstothetaxwhichiscollectedbytheelectroniccommerceoperatorwhen a supplier supplies some goods or services through its portal and thepaymentforthatsupplyiscollectedbytheelectroniccommerceoperator.

Electroniccommercemeans thesupplyofgoodsorservicesorboth, includingdigitalproductsoverdigitalorelectronicnetwork.Electroniccommerceoperatormeansanypersonwhoowns,operatesormanagesdigitalorelectronicfacilityorplatformforelectroniccommerce.

Therearemanye-Commerceoperators[hereinafterreferredtoasanOperator],likeAmazon,Flipkart, Jabong,etc.operating in India.Theseoperatorsdisplayontheirportalproductsaswellasserviceswhichareactuallysuppliedbysomeotherpersontotheconsumer.Thegoodsorservicesbelongingtoothersuppliersare displayed on the portals of the operators and consumers buy such goodsthrough these portals.Onplacing the order for a particular product, the actualsuppliersupplies theselectedproduct to theconsumer.Theprice/considerationfortheproductiscollectedbytheOperatorfromtheconsumerandpassedontothe actual supplier after the deduction of commission by the Operator. TheGovernmenthasplacedtheresponsibilityontheOperatortocollectthetaxatarateof1%fromthesupplieronthetaxablesupplies.ThisshallbedonebytheOperatorbypayingthesupplier,thepriceoftheproduct,lessthetax,calculatedattherateof1%.Thee-CommerceOperator aswell as the supplier supplyinggoodsor servicesthroughanOperatorneed tocompulsorily register underGST.The thresholdlimitofRs.20lakhs(Rs.10lakhsforspecialcategorystates)isnotapplicabletothem.TheamountoftaxcollectedbytheOperator isrequiredtobedepositedbythe10thofthefollowingmonthalongwiththereturn.TheOperatorisalsorequiredto file an Annual statement in prescribed form by the 31st of Decemberfollowingtheendofeveryfinancialyear.ThetaxcollectedbytheOperatorshallbecreditedtotheelectroniccashledgerofthesupplierwhohassuppliedthegoods/servicesthroughtheOperator.

Further,taxofficerhavebeengivenpowertoissueNoticetoanOperator,askinghimtofurnishdetailsrelatingtovolumeofthegoods/servicessupplied,stockofgoodslyinginwarehousesetc.TheOperatorisrequiredtofurnishsuchdetailswithin15workingdays.Question: Simran is sellingMobiles through Flipkart. During the month oneMobileofRs20,000wassoldthroughtheflipkart.Answer:GrossSales

20000.00

TCS@1%200.00

Amount payable to SimranbyFlipkart 19800.00

Note:SimranwillgetthecreditofRs200andthiswillbereflectedinElectronicCashLedger.

TCSprovisionshasbeendeferredtill01.04.2018

JOB-WORK

Job-workisanytreatmentorprocessundertakenbyapersonongoodsbelongingtoanotherregisteredperson.TheonewhodoesthesaidjobwouldbetermedasJob-worker.Theownershipofthegoodsdoesnottransfertothejob-workerbutit rests with the principal (a person supplying taxable goods to the job-worker). The job-worker is required to carry out the process specified by the principal on thegoods.

TheGSTActmakesspecialprovisionswithregardtoremovalofgoodsforjob-workandreceivingbackthegoodsafterprocessingfromthejob-workerwithoutthepaymentofGST.Thebenefitof theseprovisionsshallbeavailableboth totheprincipalandthejob-worker.Principalshallbeentitledtotakethecreditofinputtaxpaidoninputssenttothejob-workerforthejob-work.

The responsibility for keeping proper accounts for the inputs or capital goodsshallliewiththeprincipal.

Certain facilities with certain conditions are offered in relation to job-work,whichareasunder:a)Aregisteredperson(Principal)cansendinputs(includingintermediategoods)or capital goods under intimationwithout payment of tax to a job-worker andfrom there to another job-worker and after completionof job-workbringbacksuchgoodswithoutpaymentoftax.TheprincipalisnotrequiredtoreversetheITCavailedoninputsorcapitalgoodsdispatchedtojob-worker.Theinputsorcapitalgoodsshallbesenttothejob-workerunderthecoverofachallanissuedbytheprincipal.Thechallanshallbeissuedevenfortheinputsorcapitalgoodssentdirectlytothejob-worker.b)Principalcansendinputsorcapitalgoodsdirectlytothejob-workerwithoutbringing themtohispremisesandcanstillavail thecreditof taxpaidonsuchinputsorcapitalgoods.c)Inputsorcapitalgoodssenttoajob-workerarerequiredtobereturnedtotheprincipalwithin1yearand3years,respectively,fromthedateofsendingsuch

goodstothejob-worker.Ifthesameisnotreturnedwithinthetimelimitthenitshallbedeemed that such inputshadbeensuppliedby theprincipal to the jobworkeronthedaywhenthesaidinputsweresentout.However,theprovisionofreturnofgoodsisnotapplicableincaseofmouldsanddies,jigsandfixturesortoolssuppliedbytheprincipaltojob-worker.d)Afterprocessingofgoods,thejob-workermayclearthegoodsto-

(i)Anotherjob-workerforfurtherprocessing(ii)Dispatch thegoods toanyof theplaceofbusinessof theprincipalwithoutpaymentoftax(iii)RemovethegoodsonpaymentoftaxwithinIndiaorwithoutpaymentoftaxforexportoutsideIndiaonfulfilmentofconditions.Thefacilityofsupplyofgoodsbytheprincipaltothethirdpartydirectlyfromthepremisesofthejob-workeronpaymentoftaxinIndiaandlikewisewithorwithoutpaymentoftaxforexportmaybeavailedbytheprincipalondeclaringpremiseofthejob-workerashisadditionalplaceofbusinessinregistration.e)Wastegeneratedat thepremisesof the job-workermaybesupplieddirectlyby the registered job-worker from his place of business on payment of tax orsuch waste may be cleared by the principal, in case the job-worker is notregistered.

REFUNDS

Timelyrefundmechanismisessentialintaxadministration,asitfacilitatestradethrough the release of blocked funds for working capital, expansion andmodernisation of existing business. Under the GST regime, there will be astandardizedformformakinganyclaimforrefunds.Theclaimandsanctioningprocedureisonlineandtimebound.Interestonwithheldrefundhastobepaidattherateof6%.Further,Interestondelayedrefund(beyond60days,arisingfromorderofauthority/court)at9%p.a.Aclaimforrefundmayariseonaccountof:1.Exportofgoodsorservices.

2.SuppliestoSEZsunitsanddevelopers.

3.Deemedexports.Eg–SupplyofgoodstoEOU.

4.RefundoftaxesonpurchasemadebyUNorembassiesetc.

5. Refund arising on account of judgment, decree, order or direction of theAppellateAuthority,AppellateTribunaloranycourt.

6.RefundofaccumulatedInputTaxCreditonaccountofinverteddutystructureotherthanNilratedorfullyexemptsupplies.

7.Finalisationofprovisionalassessment.

8.Refundofpre-deposit.

9.Excesspaymentduetomistake.

10.RefundstoInternationaltouristsofGSTpaidongoodsinIndiaandcarriedabroadatthetimeoftheirdeparturefromIndia.

11.Refundonaccountofissuanceofrefundvouchersfortaxespaidonadvancesagainstwhich,goodsorserviceshavenotbeensupplied.

12.RefundofCGST&SGSTpaidbytreatingthesupplyasintra-Statesupplywhichissubsequentlyheldasinter-Statesupplyandviceversa.

TheGSTlawrequires thateveryclaimfor refund is tobe filedwithin2yearsfrom the relevant date. The claim, if in order, has to be sanctionedwithin aperiodof60daysfromthedateofreceiptoftheclaim.Oneofthemajorcategoriesunderwhich,claimforrefundmayarisewouldbe,on account of exports. All exports (whether of goods or services) as well assupplies to SEZs have been categorised asZeroRated Supplies in the IGSTAct.Theapplicantneedstofileelaboratedocumentsalongwiththerefundclaim.Forevery claim, themaindocumentprescribed is a statement of relevant invoicespertainingtotheclaim.Astatementcontainingthenumberanddateofshippingbillsorbillsofexportandthenumberandthedateoftherelevantexportinvoices,inacasewheretherefundisonaccountofexportofgoods.Incase refund isonaccountofexportof services, apart from the statementofinvoices,therelevantbankrealisationcertificatesevidencingreceiptofpaymentinforeigncurrencyisalsorequiredtobesubmitted.No refund of unutilised input tax credit shall be allowed of Central tax andIntegrated tax, in case of supply of services for Construction of a complex,building, civil structure or a part thereof, including a complex or buildingintendedforsaletoabuyer,whollyorpartly.

PENALTY

Anoffender not paying tax ormaking short-payments has to pay a penalty of10%ofthetaxamountduesubjecttoaminimumofRs.10,000.Incaseoffraudoranywilfulmisstatementorsuppressionoffactstoevadetax,offenderhastopay a penalty amount of tax evaded/short deducted etc., i.e., 100% penalty,subjecttoaminimumofRs.10,000.In caseof non-complianceofTDSorTCSprovision, penalty shall be amountequivalenttothetaxnotdeductedorshortdeductedordeductedbutnotpaidtotheGovernmentortaxnotcollectedorshortcollectedorcollectedbutnotpaidtotheGovernment,subjecttoaminimumofRs.10,000.FurtherapenaltyofRs25000hasbeenprescribedforanypersonwho-

HelpsanyotherpersontocommitfraudunderGST

Acquires/receivesanygoods/serviceswith fullknowledge that itisinviolationofGSTrules

Failstoappearbeforethetaxauthorityonreceivingasummons

FailstoissueaninvoiceaccordingtoGSTrules

Failstoaccount/vouchanyinvoiceappearinginthebooks

There will not be any penalty for minor breaches (tax amount is less thanRs.5000) or errors which are easily rectifiable and clearly made without anymotiveoffraud.Foranyoffencecommittedbyacompany,both theofficerincharge(suchasdirector, manager, secretary) as well as the company will be held liable. ForLLPs,HUFs,trust,thepartner/karta/managingtrusteewillbeheldliable.Anypersonwhosuppliesor receivesanygoods incontraventionofanyof theprovisionsofGSTlaw,thenallgoodsshallbeliabletoconfiscation.

ASSESSMENTS

Every registered taxable person under GST shall himself assess the taxespayable and furnish a return for each tax period. The proper officer canscrutinizethereturntoverifyitscorrectness.Scrutinyofreturnsisnotalegalorjudicial proceeding, i.e. no order can be passed. The officer will ask forexplanations on discrepancies noticed. If the officer finds the explanationsatisfactorythenthetaxablepersonwillbeinformedandnofurtheractionwillbe taken. (SelfAssessment) The proper officerwill take action if the taxablepersondoesnotgiveasatisfactoryexplanationwithin30daysordoesnotrectifythediscrepancieswithinareasonabletime.

Theofficermay-

Conductauditbythetaxdepartment

ProceedforSpecialAuditprocedure

InspectandSearchtheplacesofbusinessofthetaxpayer

ProceedforDemandandRecoveryprovisions

When the assessing officer has sufficient grounds to believe any delay inassessing a tax liability can harm the interest of the revenue. To protect theinterest of the revenue, he can pass the summary assessment on the basis ofevidence of tax liability with the prior permission of Additional/Jointcommissioner.

SummaryAssessmentmeansafast-trackassessmentbasedon thereturnfiledbytheassessee. It iscompletedonaprioritybasiswithoutthepresenceofthetaxpayer because the delay in such assessments may lead to loss of revenue.Summary assessment is usually done in cases of defaulting or abscondingtaxpayers.Incaseifaregisteredtaxablepersondoesnotfilehisreturn(evenwithanotice),theproperofficerwillassessthetaxliabilitytothebestofhisjudgement.Hewillassessonthebasisoftheavailableinformation.

Rectification-Anyauthority,whohaspassedorissuedanydecisionororderornotice or certificate, may rectify any error which is apparent on the face ofrecord in such decision or order or notice or certificate, either on its ownmotion orwhere sucherror isbrought to itsnotice,withinaperiodof threemonthsfromthedateofissueofsuchdecisionororderornoticeorcertificate.

APPEAL

Any appeal under any law is an application to a higher authority/court for areversalofthedecisionofalowerauthority/court.ApersonunsatisfiedwithanydecisionororderpassedagainsthimunderGSTby an adjudicating authority/tax officer can appeal to the First AppellateAuthority.IfheisnotsatisfiedwiththedecisionoftheFirstAppellateAuthorityhecanappealtotheAppellateTribunal,thentoHighCourt,andfinallySupremeCourt.First appeal to Appellate Authority against decision or order of anadjudicatingauthoritybefiledwithin threemonthsfromthedateonwhich thesaiddecisionororder iscommunicated tohim.TheAppellateAuthoritymay,allowittobepresentedwithinafurtherperiodofonemonth.

Appealshallbefiledbytheappellantwhenhehaspaidinfull,suchpartoftheamountoftax,interest,fine,feeandpenaltyarisingfromtheimpugnedorder,asisadmittedbyhim;andasumequaltotenpercentoftheremainingamountoftax indispute arising from the saidorder, in relation towhich the appealhasbeenfiled.Therecoveryproceedingsforthebalanceamountshallbedeemedtobestayed.The Appellate Authority may, at the time of hearing of an appeal, allow anappellant to add any ground of appeal not specified in the grounds of appeal.Adjournmentshallbelimitedtothreetimestoapartyduringhearingoftheappeal.TheAppellateAuthorityshallnotreferthecasebacktotheadjudicatingauthoritythatpassedthesaiddecisionororder.Second appeal can be filed to Appellate Tribunal whose powers shall beexercisablebytheNationalBenchandRegionalBenches,StateBenchandAreaBenches. Appeal to the Appellate Tribunal can be made within three monthsfromthedateonwhichtheordersoughttobeappealedagainstiscommunicatedto the person preferring the appeal. Appellate Tribunal shall have the samepowersasarevestedinacivilcourtundertheCodeofCivilProcedure.Appeal

shall be filed after paying a sum equal to twenty percent of the remainingamountoftaxindispute,inadditiontotheamountpaidduringfirstappeal.AnypersonaggrievedbyanyorderpassedbytheStateBenchorAreaBenchesof theAppellateTribunalmayfileanappeal to theHighCourt if it involvesasubstantial question of law.An appeal should be filedwithin a period of onehundredandeightydays from thedateonwhich theorder appealedagainst isreceivedbytheaggrievedperson.AnappealshalllietotheSupremeCourtfromanyorderpassedbytheNationalBenchorRegionalBenchesoftheAppellateTribunalorfromanyjudgmentororderpassedbytheHighCourt.AllsumsduetotheGovernmentunderorderpassedbytheAppellateTribunalorpassedbytheHighCourtneedtobepaidevenifappealedtoSupremeCourt.Noappealcanbefiledifsuchorderpassedrelatestoanorderpertainingtotheseizure or retention of books of account, register and other documents or anordersanctioningprosecution.

DEMANDANDRECOVERY

If theassesseepays the taxon self-assessment correctly then therewillnotbeanyproblem.If there isanyshortpaymentorwrongutilisationof inputcredit,thentheGSTauthoritieswillinitiatedemandandrecoveryprovisionsagainsttheassessee.In non-fraud cases (where there is no motive to evade tax) when tax isunpaid/short paid or refund is wrongly made or input tax credit has beenwronglyavailed/utilized;theproperofficer(GSTauthorities)willserveashowcausenoticeonthetaxpayer.Themaximumtimelimitfortheorderofpaymentis3yearsfromtheduedateforfilingofannualreturnfortheyeartowhichtheamountrelates.Intaxevasioncasesinvolvingfraud,wilfulmisstatementorsuppressionoffactswhich results in unpaid/short paid tax or wrong refunds or wronglyavailed/utilized input tax credit; in such cases, the proper officer will serve ashowcausenoticetothetaxpayer.Theywillberequiredtopaytheamountduealongwithinterestandpenalty.Themaximumtimelimitis5yearsfromtheduedateforfilingofannualreturnfortheyeartowhichtheamountrelates.

INSPECTION,SEARCH,SEIZUREANDARREST

These provisions are to safeguard Government’s legitimate dues. Theseprovisions by checking evasion provide a level playing field to genuine taxpayers.‘Inspection’isrelativelyasofterprovisionwhichenablesofficerstoaccessanyplace of business or of a person engaged in transporting goods or who is anowneroranoperatorofawarehouseorgodown.Inspectioncanalsobedoneofthe conveyance, carrying a consignment. The person in charge of theconveyance has to produce documents/devices for verification and allowinspection.A relevantofficercando inspectiononly ifhehasreasons tobelieve that thepersonconcernedhasdoneoneofthefollowingactions:(a)Suppressionofanytransactionrelatingtosupplyofgoodsorservicesorstockinhand.(b)Claimedexcessinputtaxcredit.

(c)ContraventionofanyprovisionsoftheActortheRulestoevadetax.

(d) Transporting or keeping goods which escaped payment of tax ormanipulatingaccountsorstockswhichmaycauseevasionoftax.

Anyconsignment,valueofwhich,isexceedingRs.50,000/-maybestoppedatanyplaceforverificationofthedocuments/devicesprescribedformovementofsuch consignments. If on verification of the consignment, during transit, it isfoundthatthegoodswereremovedwithoutprescribeddocumentorthesamearebeingsuppliedincontraventionofanyprovisionsoftheActthenthesamecanbedetainedorseizedandmaybesubjectedtopenaltiesasprescribed.The provisions of search and seizure provides that search of any place ofbusiness etc. can be carried out from a relevant officer if he has a reason tobelievethatthepersonconcernedhasdoneatleastoneofthefollowing:-(a) Goods liable to confiscation or any documents/books/record/things, whichmaybeusefulfororrelevanttoanyproceedings,aresecretedinanyplacethenallsuchplacescanbesearched.

(b)Allsuchgoods/documents/books/record/thingsmaybeseized,however,ifitisnotpracticable toseizeanysuchgoods then thesamemaybedetained.Theperson fromwhom these are seized shall be entitled to take copies/extracts ofseizedrecords.

A list of seizedgoods or documents or records is required to bemadeby theofficerandthepersonfromwhomthesameareseized,shallbegivenacopyofthesame.

ArrestsIn theadministrationof taxation theprovisionsforarrestsarecreated to tacklethe situations created by unscrupulous tax evaders. Arrests are used inexceptional circumstance and only with prior authorization from theCommissioner.ApersoncanbearrestedonlyifthetaxamountisexceedingRs.100lakhsandwhere the tax amount involved is more than Rs. 500 lakhs, the offence isclassified as cognizable and non-bailable and in such cases the bail can beconsideredbyaJudicialMagistrateonly.

IMPORTANTDEFINITIONS(asdefinedintheAct)

Personincludes—

(a)anindividual;(b)aHinduUndividedFamily;(c)acompany;(d)afirm;(e)aLimitedLiabilityPartnership;(f)anAOPorBOI,whetherincorporatedornot,inIndiaoroutsideIndia;(g) any corporation established by or under any Central Act, State Act orProvincialActoraGovernmentcompanyasdefinedinclause(45)ofsection2oftheCompaniesAct,2013;(h)anybodycorporate incorporatedbyorunder the lawsofacountryoutsideIndia;(i) a co-operative society registered under any law relating to co-operativesocieties;(j)alocalauthority;(k)CentralGovernmentoraStateGovernment;(l)societyasdefinedundertheSocietiesRegistrationAct,1860;(m)trust;and(n)everyartificialjuridicalperson,notfallingwithinanyoftheabove.Businessincludes––

(a)anytrade,commerce,manufacture,profession,vocation,adventure,wageroranyothersimilaractivity,whetherornotitisforapecuniarybenefit;(b) any activity or transaction in connectionwith or incidental or ancillary toabove;(c)anyactivityortransactioninthenatureofpoint(a),whetherornotthereisvolume,frequency,continuityorregularityofsuchtransaction;(d) supply or acquisition of goods including capital goods and services in

connectionwithcommencementorclosureofbusiness;(e)provisionbyaclub,association,society,oranysuchbody(forasubscriptionoranyotherconsideration)ofthefacilitiesorbenefitstoitsmembers;(f)admission,foraconsideration,ofpersonstoanypremises;(g) services supplied by a person as the holder of an office which has beenacceptedbyhiminthecourseorfurtheranceofhistrade,professionorvocation;(h) services provided by a race club by way of totalisator or licence to bookmakerinsuchclub;(i) any activity or transaction undertaken by the Central Government, a StateGovernment or any local authority in which they are engaged as publicauthorities.Business vertical means a distinguishable component of an enterprise that isengagedinthesupplyofindividualgoodsorservicesoragroupofrelatedgoodsorserviceswhichissubjecttorisksandreturnsthataredifferentfromthoseoftheotherbusinessverticals.Considerationinrelationtothesupplyofgoodsorservicesorbothincludes––(a)anypaymentmadeortobemade,whetherinmoneyorotherwise,inrespectof, inresponse to,orfor the inducementof, thesupplyofgoodsorservicesorboth,whetherbytherecipientorbyanyotherpersonbutshallnotincludeanysubsidygivenbytheCentralGovernmentoraStateGovernment;(b)themonetaryvalueofanyactorforbearance,inrespectof,inresponseto,orfor the inducementof, thesupplyofgoodsorservicesorboth,whetherby therecipientorbyanyotherpersonbutshallnotincludeanysubsidygivenbytheCentralGovernmentoraStateGovernment.Provided that a deposit given in respect of the supply of goods or services orboth shall not be considered as payment made for such supply unless thesupplierappliessuchdepositasconsiderationforthesaidsupply.Principal supplymeans the supplyofgoodsor serviceswhich constitutes thepredominant element of a composite supply and to which any other supplyformingpartofthatcompositesupplyisancillary.

Exempt supplymeans supplyof anygoodsor servicesor bothwhich attractsNIL rate of tax or whichmay be wholly exempt from tax and includes non-taxablesupply.Non-taxablesupplymeansasupplyofgoodsorservicesorbothwhich isnotleviabletotaxunderGSTact.Familymeans––(i)thespouseandchildrenoftheperson,and(ii) the parents, grand-parents, brothers and sisters of the person if they arewhollyormainlydependentonthesaidperson.Goodsmeanseverykindofmovablepropertyother thanmoneyandsecuritiesbut includes actionable claim, growing crops, grass and things attached to orformingpartofthelandwhichareagreedtobeseveredbeforesupplyorunderacontractofsupply.MovabilityandMarketabilityarethefundamentalcharacteristicofgoods.Servicesmeans anything other than goods,money and securities but includesactivitiesrelatingtotheuseofmoneyoritsconversionbycashorbyanyothermode, fromone form, currencyordenomination, to another form, currencyordenominationforwhichaseparateconsiderationischarged.Capital goodsmeansgoods, thevalueofwhich is capitalised in thebooksofaccount of the person claiming the input tax credit and which are used orintendedtobeusedinthecourseorfurtheranceofbusiness.Inputmeansanygoodsotherthancapitalgoodsusedorintendedtobeusedbyasupplierinthecourseorfurtheranceofbusiness.Inputservicemeansanyserviceusedorintendedtobeusedbyasupplierinthecourseorfurtheranceofbusiness.Recipientofsupplyofgoodsorservicesorboth,means—(a)whereaconsiderationispayableforthesupplyofgoodsorservicesorboth,thepersonwhoisliabletopaythatconsideration;

(b) where no consideration is payable for the supply of goods, the person towhomthegoodsaredeliveredormadeavailable,ortowhompossessionoruseofthegoodsisgivenormadeavailable;and(c)wherenoconsiderationispayableforthesupplyofaservice, thepersontowhomtheserviceisrendered,andanyreferencetoapersontowhomasupplyismadeshallbeconstruedasareferencetotherecipientofthesupplyandshallincludeanagentactingassuchonbehalfoftherecipientinrelationtothegoodsorservicesorbothsupplied.Supplier in relation to any goods or services or both, shall mean the personsupplyingthesaidgoodsorservicesorbothandshallincludeanagentactingassuch on behalf of such supplier in relation to the goods or services or bothsupplied.Manufacture means processing of rawmaterial or inputs in anymanner thatresultsinemergenceofanewproducthavingadistinctname,characteranduse.Removalinrelationtogoods,means—

(a) dispatch of the goods for delivery by the supplier thereof or by any otherpersonactingonbehalfofsuchsupplier;or(b)collectionofthegoodsbytherecipientthereoforbyanyotherpersonactingonbehalfofsuchrecipient.Locationoftherecipientofservicesmeans,—(a)whereasupplyisreceivedataplaceofbusinessforwhichtheregistrationhasbeenobtained,thelocationofsuchplaceofbusiness;(b)where a supply is received at a place other than the place of business forwhich registration has been obtained (a fixed establishment elsewhere), thelocationofsuchfixedestablishment;(c)whereasupplyisreceivedatmorethanoneestablishment,whethertheplaceof business or fixed establishment, the location of the establishment mostdirectlyconcernedwiththereceiptofthesupply;and(d)inabsenceofsuchplaces,thelocationoftheusualplaceofresidenceofthe

recipient.Locationofthesupplierofservicesmeans,—(a)whereasupply ismadefromaplaceofbusinessforwhich theregistrationhasbeenobtained,thelocationofsuchplaceofbusiness;(b)where a supply ismade from a place other than the place of business forwhich registration has been obtained (a fixed establishment elsewhere), thelocationofsuchfixedestablishment;(c)whereasupplyismadefrommorethanoneestablishment,whethertheplaceof business or fixed establishment, the location of the establishment mostdirectlyconcernedwiththeprovisionsofthesupply;and(d)inabsenceofsuchplaces,thelocationoftheusualplaceofresidenceofthesupplier.Non-resident taxable person means any personwho occasionally undertakestransactionsinvolvingsupplyofgoodsorservicesorboth,whetherasprincipalor agent or in any other capacity, but who has no fixed place of business orresidenceinIndia.Fixedestablishmentmeansaplace(otherthantheregisteredplaceofbusiness)which is characterised by a sufficient degree of permanence and suitablestructure in terms of human and technical resources to supply services, or toreceiveanduseservicesforitsownneeds.Placeofbusinessincludes––(a) a place from where the business is ordinarily carried on, and includes awarehouse,agodownoranyotherplacewhereataxablepersonstoreshisgoods,suppliesorreceivesgoodsorservicesorboth;or(b)aplacewhereataxablepersonmaintainshisbooksofaccount;or(c)aplacewhereataxablepersonisengagedinbusinessthroughanagent.Usualplaceofresidencemeans––

(a)incaseofanindividual,theplacewhereheordinarilyresides;(b)inothercases,theplacewherethepersonisincorporatedorotherwiselegallyconstituted.Exportofgoodswithitsgrammaticalvariationsandcognateexpressions,meanstakinggoodsoutofIndiatoaplaceoutsideIndia.Import of goods with its grammatical variations and cognate expressions,meansbringinggoodsintoIndiafromaplaceoutsideIndia.Exportofservicesmeansthesupplyofanyservicewhen,––(i)thesupplierofserviceislocatedinIndia;(ii)therecipientofserviceislocatedoutsideIndia;(iii)theplaceofsupplyofserviceisoutsideIndia;(iv)thepaymentforsuchservicehasbeenreceivedbythesupplierofserviceinconvertibleforeignexchange;and(v) the supplier of service and the recipient of service are not merelyestablishmentsofadistinctperson.Importofservicesmeansthesupplyofanyservice,where––(i)thesupplierofserviceislocatedoutsideIndia;(ii)therecipientofserviceislocatedinIndia;and(iii)theplaceofsupplyofserviceisinIndia;Intermediarymeansabroker,anagentoranyotherperson,bywhatevernamecalled,who arranges or facilitates the supply of goods or services or both, orsecurities, between two or more persons, but does not include a person whosuppliessuchgoodsorservicesorbothorsecuritiesonhisownaccount.Zeroratedsupplymeansanyofthefollowingsuppliesofgoodsorservicesorboth,namely:––(a)exportofgoodsorservicesorboth;or(b)supplyofgoodsorservicesorbothtoaSpecialEconomicZonedeveloperoraSpecialEconomicZoneunit.

Non-taxable online recipient means any Government, local authority,governmental authority, an individual or any other person not registered andreceivingonlineinformationanddatabaseaccessorretrievalservicesinrelationto any purpose other than commerce, industry or any other business orprofession,locatedintaxableterritory.Online Information and Database Access or Retrieval Services meansserviceswhosedeliveryismediatedbyinformationtechnologyovertheinternetoranelectronicnetworkandthenatureofwhichrenderstheirsupplyessentiallyautomatedandinvolvingminimalhumaninterventionandimpossibletoensurein theabsenceof information technologyand includeselectronic services suchas:(i)advertisingontheinternet;(ii)providingcloudservices;(iii)provisionofe-books,movie,music,softwareandotherintangiblesthroughtelecommunicationnetworksorinternet;(iv) providing data or information, retrievable or otherwise, to any person inelectronicformthroughacomputernetwork;(v) online supplies of digital content (movies, television shows,music and thelike);(vi)digitaldatastorage;and(vii)onlinegaming.

Works Contract means a contract for building, construction, fabrication,completion,erection,installation,fittingout,improvement,modification,repair,maintenance, renovation, alteration or commissioning of any immovableproperty wherein transfer of property in goods (whether as goods or in someotherform)isinvolvedintheexecutionofsuchcontract.

Government Entity shall mean an authority or a board or any other bodyincludingasociety,trust,corporation,whichis:

(a)setupbyanActofParliamentorStateLegislature;or

(b)establishedbyanyGovernment,

with90percentormoreparticipationbywayofequityorcontrol,tocarryoutafunctionentrustedbytheCentralGovernment,Stategovernment,Unionterritoryoralocalauthority.

GST guide for Students: Making GST - Good & Simple Tax

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