Contents at a glance About the authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Prologue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
PART A CONCEPTUAL UNDERSTANDING OF REVISED MODEL GST LAW Chapter 1
Overview of Goods & Services Tax (GST). . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 2
Important Terms in GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Chapter 3
Constitutional Framework of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Chapter 4
Charge of GST Including Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Chapter 5
Supply of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Chapter 6
Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Chapter 7
Place of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Chapter 8
Composition Levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Chapter 9
Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Chapter 10
Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Chapter 11
Payment Under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Chapter 12
Returns Under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Chapter 13
E-commerce Transactions Under GST . . . . . . . . . . . . . . . . . . . . . . . . 183
Chapter 14
Invoices, Debit and Credit Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Chapter 15
Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Chapter 16
Job Work under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Chapter 17
Assessments under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Chapter 18
Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Chapter 19
Transitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Chapter 20
Overview of IGST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
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PART B
GST – IMPACT ANALYSIS ON SELECT INDUSTRIES Chapter 1
Services and Service Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Chapter 2
Small Businesses (SSIs, Traders and Retailers). . . . . . . . . . . . . . . . . . 309
Chapter 3
Banking and Financial Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Chapter 4
Railway Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Chapter 5
Insurance Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
Chapter 6
Hotels and Restaurants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385
Chapter 7
Education and Commercial Coaching. . . . . . . . . . . . . . . . . . . . . . . . . 395
Chapter 8
Exporter and special economic zones (SEZ). . . . . . . . . . . . . . . . . . . . 403
Chapter 9
Import of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
Chapter 10
Gems and Jewellery Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Chapter 11
Alcoholic Beverages Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441
Chapter 12
Real-estate & construction services. . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Chapter 13
Registrar to an issue (RTI) and Share transfer agents (STA). . . . . . . . 473
Chapter 14
Media and entertainment and paper industry. . . . . . . . . . . . . . . . . . . . 483
Chapter 15
Logistics management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Chapter 16
Transportation of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
Chapter 17
Telecommunication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519
Chapter 18
Textiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543
Chapter 19
Automobile & Ancillary Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
Chapter 20
E-commerce Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579
Chapter 21
Consumer Goods (Including FMCG) . . . . . . . . . . . . . . . . . . . . . . . . . 595
Chapter 22
Government Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
Chapter 23
Professional Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 PART C
ANNEXURES 1. Constitution (101st Amendment) Act, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 2. Model GST Law (Revised). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649 Model IGST Law (Revised) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Goods and Services Tax (Compensation to the States for Loss of Revenue) Bill, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831
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Table of contents About the authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c Prologue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Contents at a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
PART A CONCEPTUAL UNDERSTANDING OF REVISED MODEL GST LAW Chapter 1 Overview of Goods & Services Tax (GST). . . . . . . . . . . . . . . . . . . . . . 3 Power of Government to Levy Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Major Indirect Taxes presently levied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Deficiencies in present Indirect Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 GST & its Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Scope of Services in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Scope of Goods in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Taxes not to be subsumed in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Cascading effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Point of Levy of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Liability to Pay GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Advantages of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Likely Disadvantages of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 GST Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Dual GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Central GST (CGST) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Features of CGST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 State GST (SGST). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Features of SGST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Integrated GST (IGST). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Features of IGST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 GST Network (GSTN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Taxanomy of Proposed Tax Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Model GST law version II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Model IGST Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Tax Administration/Dual Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 GST & Budget 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 xiii
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Chapter 2 Important Terms in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 GST Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 IGST Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Explanation of terms under GST Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Actionable Claim [Section 2(1)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Meaning of Actionable Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Essential elements for actionable claim. . . . . . . . . . . . . . . . . . . . . . . . . . 29 Type of claims included in Actionable Claims. . . . . . . . . . . . . . . . . . . . . 29 Examples of claims which are ‘actionable claims’ . . . . . . . . . . . . . . . . . 29 Examples of claims which are not ‘actionable claims’ . . . . . . . . . . . . . . 30 Actionable Claims- ‘Goods’ or ‘Services’?. . . . . . . . . . . . . . . . . . . . . . . 30 Address of Delivery [Section 2(2)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Address on Record [Section 2(3)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Agent [Section 2(5)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Essential attributes of an ‘Agent’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Aggregate Turnover [Section 2(6)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Agriculture [Section 2(7)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Agriculturist [Section 2(8)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Appropriate Government [Section 2(11)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Assessment [Section 2(12)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Associated enterprise [Section 2(13)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Business [Section 2(17)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Business Vertical [Section 2(18)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Business Vertical and Composition Scheme . . . . . . . . . . . . . . . . . . . . . . 43 Input Tax Credit to a Business Vertical . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Casual Taxable Person [Section 2(21)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Deemed Exports [Section 2(37)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Government [Section 2(50)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Non-resident taxable person [Section 2(68)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Non-taxable & Taxable Territory [Section 2(69, 101)]. . . . . . . . . . . . . . . . . . . . 46 Person [Section 2(73)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Place of Business [Section 2(74)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Principal Place of Business [Section 2(77)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Recipient [Section 2(81)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Securities [Section 2(90)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Supplier [Section 2(94)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Turnover in a State [Section 2(107)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Usual Place of Residence [Section 2(108)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Zero Rated Supply [Section 2(111)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Works Contract [Section 2(110)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Explanation of other terms under GST (Schedule- IV) . . . . . . . . . . . . . . . . . . . . . . . . . 53 xiv
Table of contents
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Functions of Municipality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Functions of a Panchyat. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Health Care Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Clinical Establishment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Education Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Explanation of terms under IGST Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Custom frontiers of India [Section 2(4)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Export of Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Export of Services [Section 2(6)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Import of Goods [Section 2(10)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Import of Services [Section 2(11)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 India [Section 2(12)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Constitutional Framework of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Chapter 3 Highlights of Constitutional Amendments for GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Constitution (101st Amendment) Act, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 GST Council (GSTC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Meaning of Goods, Services and GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Taxability and Levy of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Dispute Redressal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Compensation Bill, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Salient Features of Compensation Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Charge of GST Including Exemption. . . . . . . . . . . . . . . . . . . . . . . . . 73 Chapter 4 Meaning of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Levy of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Rate of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Reverse Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Electronics Commerce Operator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Electronic Commerce Operator not having physical presence in the taxable state . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Schedule V – Persons liable for registration – Turnover based. . . . . . . . . . . . . . 76 Aggregate turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Schedule V – Registration requirements on activities. . . . . . . . . . . . . . . 77 Schedule V – Registration in Special Cases. . . . . . . . . . . . . . . . . . . . . . . 78 Schedule V – Persons not liable for registration . . . . . . . . . . . . . . . . . . . 79 Specific States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Person having more than one registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 xv
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Establishment having more than one registration. . . . . . . . . . . . . . . . . . . . . . . . 80 Power to grant exemption from tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Power under circumstances of special nature. . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Clarification of a notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Date of effectiveness of notification or order . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Supply of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Chapter 5 Meaning and Scope of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Meaning of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Meaning of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Distinction between goods and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Sale and Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Barter and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 License, Rental and Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Disposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Made or agreed to be made. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 In the course or furtherance of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Importation of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Schedule I – Supplies without consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Permanent transfer or disposal of business assets. . . . . . . . . . . . . . . . . . 90 Supply of goods or services between related or distinct persons. . . . . . . 90 Transactions between principal and agent. . . . . . . . . . . . . . . . . . . . . . . . 90 Importation of services from related or distinct person. . . . . . . . . . . . . . 90 Schedule II – Matters for determination of goods or services. . . . . . . . . . . . . . . 91 Schedule III – Activities neither supply of goods nor services. . . . . . . . . . . . . . 93 Schedule IV – Activities undertaken by Central, State government or local authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Composite Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Mixed Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Chapter 6 Relevance of time of supply in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Time of payment of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Time of Supply of goods generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Removal of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Removal of goods for purpose other than supply . . . . . . . . . . . . . . . . . 101 Meaning of date of receipt of payment . . . . . . . . . . . . . . . . . . . . . . . . . 101 Receipt of excess payment up to INR 1000/-. . . . . . . . . . . . . . . . . . . . . 101 Continuous Supply of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Supply of goods on approval or sale or return basis. . . . . . . . . . . . . . . . . . . . . 102 xvi
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Goods liable for payment of tax on reverse charge basis . . . . . . . . . . . . . . . . . 103 Supply of Vouchers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Residue Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Time of Supply of services generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Meaning of date of receipt of payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Receipt of excess payment up to INRÂ 1000/- . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Continuous supply of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Supply ceases under a contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Services liable for payment of tax on reverse charge basis. . . . . . . . . . . . . . . . 107 Reverse charge basis in case of associated enterprises . . . . . . . . . . . . . 109 Supply of Vouchers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Residue Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Change in effective rate of tax before the supply of goods and services. . . . . . . . . . . 110 Change in effective rate of tax after the supply of goods and services. . . . . . . . . . . . . 110 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Chapter 7 Meaning of Place of Supply and its relevance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Supply of goods in the course of inter state trade or commerce. . . . . . . . . . . . . . . . . . 113 Supply of goods in the course of intra state trade and commerce . . . . . . . . . . . . . . . . 114 Goods required to be moved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Goods supplied on FOR basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Supply of goods on Ex works basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 Suppliers obligation to keep record of movement of goods. . . . . . . . . . . . . . . 115 Supply of goods to a third person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Goods supplied to a third person by recipient during movement to him . . . . . 116 Supply of goods which are not required to be moved . . . . . . . . . . . . . . . . . . . . . . . . . 117 Supply of Goods required to be installed or assembled. . . . . . . . . . . . . . . . . . . . . . . . 117 Goods supplied on board a conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Supply of goods as export or import into India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Supply of goods - Non applicability of any of the above rules . . . . . . . . . . . . . . . . . . 119 Supply of services in the course of inter state trade or commerce. . . . . . . . . . . . . . . . 119 Supply of services in the course of intra state trade and commerce. . . . . . . . . . . . . . . 120 General Principles to determine place of supply of service. . . . . . . . . . . . . . . . . . . . . 120 Challenges in ascertaining place of supply of service . . . . . . . . . . . . . . . . . . . . . . . . . 120 General Rule for place of supply of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 Place of supply in relation to immovable property service. . . . . . . . . . . . . . . . . . . . . . 122 Immovable property, boat or vessel located at more than one place. . . . . . . . . 123 Restaurant, Catering, Personal grooming services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Training, Performance Appraisal services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Admission to an event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 xvii
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Organising events and auxiliary services in relation thereto . . . . . . . . . . . . . . . . . . . . 124 Event held in more than one states of India. . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Goods transport and courier services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Passenger transportation services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Return journey in case of passenger transportation. . . . . . . . . . . . . . . . . . . . . . 126 Services on board or conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Telecommunication service, data transfer, broadcasting, cable and DTH. . . . . . . . . . 126 Telecommunication and other services – address of recipient not on record . . 127 Leased circuit provided in multiple states. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Banking and other Financial Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Insurance related Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Advertisement services to Government, local authority or statutory body . . . . . . . . . 128 Either Recipient or Supplier of service is located outside India – Location of service rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Power of Central government to notify. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Composition Levy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Chapter 8 Objective of composition levy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Advantages and disadvantages of opting for composition scheme . . . . . . . . . . . . . . . 133 Taxable persons eligible for composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Taxable persons not eligible for composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 Meaning of Aggregate turnover for composition levy. . . . . . . . . . . . . . . . . . . . . . . . . 134 Rate of tax as composition levy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Other restrictions on Composition taxable person. . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Inward inter state supply and Composition taxable person . . . . . . . . . . . . . . . . . . . . . 135 Imports and Exports – Composition taxable person. . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Composition Scheme – Mandatory or optional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Collection of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Input tax credit on supply from Composition dealer . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Withdrawal of Composition Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Cancellation of permission to pay composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . 137 Penal provisions on cancellation of permission for composition levy. . . . . . . . . . . . . 137 Switch over to Composition Scheme and Vice versa. . . . . . . . . . . . . . . . . . . . . . . . . . 137 Applicability of reverse charge obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Chapter 9 Relevance of Registration in GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Persons liable to seek registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Persons not liable for registration under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 xviii
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Basic requirements for registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 Structure of GST registration number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 Various types of registrations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Time allowed for seeking registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Effective date of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Registration on voluntary basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Requisite documents for obtaining registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Centralised registration of multi unit operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Time limit for grant or refusal of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Facility of downloading registration certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 Migration of taxable person already registered under Central Excise/Service tax/State VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 Registration procedure for e commerce operator and person required to deduct tax at source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 Registration of non resident tax payer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Validity period of registration of Casual or Non resident tax payer. . . . . . . . . . . . . . . 146 Input service distributor (ISD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Central, State government or a local authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 UN bodies, consulates or embassies o foreign countries. . . . . . . . . . . . . . . . . . . . . . . 147 Unique identification number (UIN) and its relevance. . . . . . . . . . . . . . . . . . . . . . . . . 147 Suo moto registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Amendment in registration certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Rejection of request for amendment in registration. . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Cancellation of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Voluntary registration and cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Cancellation of registration by department suo moto. . . . . . . . . . . . . . . . . . . . . . . . . . 149 Implications of cancellation of registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Revocation of cancellation of registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Physical verification of business premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Chapter 10 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Relevance of Registration in GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Value to be considered for levy of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Meaning of Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Meaning of Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Deposits – treatment in valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Valuation of taxable supplies in ordinary course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Meaning of transaction value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Meaning of the term ‘Related’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 xix
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Meaning of Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 Valuation other than transaction value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 Chapter 11 Payment under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Types of tax payments required to be made in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Persons liable to make payments under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Due date for making the payment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Different payment options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Types of ledgers maintained by GSTN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Electronic Cash ledgers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Electronic Credit Ledger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Payments from electronic credit ledger and restrictions. . . . . . . . . . . . . . . . . . . . . . . . 162 Payments from electronic Cash ledger and process. . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Challan – generation and making payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Payment of tax and filing of valid return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Refund Adjustment and rejection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Delay in payment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Undue or excess claim of input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Tax deduction at source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Certificate of TDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Refund of erroneous deduction of TDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Tax collection at source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Reverse Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Chapter 12 Returns under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Return – Meaning and purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Returns prescribed under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Filing of returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 UN bodies and Government departments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 Common return form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 Deposit of self assessment tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Return of a business vertical. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Return of Non resident taxpayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Return of taxpayer paying tax on compounding basis. . . . . . . . . . . . . . . . . . . . . . . . . 172 Return of outward supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Details in return of outward supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Date of filing return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Changes in return of outward supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Return of Inward Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 xx
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Input tax credit and return of inward supplies. . . . . . . . . . . . . . . . . . . . . . . . . . 176 Monthly return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Returns of other taxable persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Annual Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 First return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Final return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Matching, reversal and reclaim of input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Non matching, its impact and consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Matching, reversal and reclaim of reduction in output tax liability. . . . . . . . . . . . . . . 181 Consequences of non filing of return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 Tax Return Preparer (TRP) and Facilitation Centres (FC). . . . . . . . . . . . . . . . . . . . . . 181 Chapter 13 E-commerce Transactions under GST. . . . . . . . . . . . . . . . . . . . . . . 183 Present taxation structure of e commerce sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Business models of E commerce trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Impact of GST on E commerce operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Meaning and scope of electronic commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Tax collected at source (TCS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Rate, collection and deposit of TCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Deposit of TCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Filing of return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Claim of TCS by Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Return of Suppliers and matching of returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Additional returns to be filed by e commerce operator. . . . . . . . . . . . . . . . . . . 187 Chapter 14 Invoices, Debit and Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Type of invoices in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Meaning and relevance of tax invoice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Tax invoice of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Tax invoice for services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 Requisite particulars to be shown on tax invoice . . . . . . . . . . . . . . . . . . . . . . . 192 Details required on Tax invoice for export . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Requirement of Additional details. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Manner of issuance of tax invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Invoice Reference number (IRN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 Meaning and purpose of Common portal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Bill of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Requisite particulars on Bill of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 Circumstances for non issuance of Bill of Supply . . . . . . . . . . . . . . . . . . . . . . 196 Consolidated Bill of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 xxi
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Meaning and usage of Credit note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 Time limit for declaration of credit note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 Non deduction in case of credit notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 Meaning and usage of Debit note/Supplementary invoice. . . . . . . . . . . . . . . . . . . . . . 198 Time limit for declaration of debit notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 Input tax credit of debit note/supplementary invoice . . . . . . . . . . . . . . . . . . . . 199 Requisite details to be shown on credit note, debit note/supplementary tax invoice. . 199 Revised Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 Revised invoice and Supplementary invoice – difference. . . . . . . . . . . . . . . . . 201 Consolidated Revised invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Consolidated Revised tax invoice for inter state supply. . . . . . . . . . . . . . . . . . 201 Invoice of Input Service Distributor (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 Details on invoice issued by ISD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 Banking company or NBFC as ISD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 Goods Transport Agency and tax invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 Passenger transportation services and tax invoice. . . . . . . . . . . . . . . . . . . . . . . 204 Chapter 15 Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Concept of Input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Meaning of Input. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Meaning of Capital goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 Meaning of Input service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Meaning of Input tax and Input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Eligibility conditions for availing Input tax credit . . . . . . . . . . . . . . . . . . . . . . 207 Entitlement Conditions for Input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Input services – Further conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Matching of invoices and Electronic credit ledger. . . . . . . . . . . . . . . . . . . . . . 208 Input tax credit on goods supplied to a third person. . . . . . . . . . . . . . . . . . . . . 209 Input tax credit on capital goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 In eligible or Blocked input tax credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Services not eligible for input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 Goods and/or services partly used for business. . . . . . . . . . . . . . . . . . . . . . . . . 211 Taxable and exempt supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 Bank, financial institution or NBFC supplying exempt services. . . . . . . . . . . . 211 Construction Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 Person applying for registration in GST for first time . . . . . . . . . . . . . . . . . . . . . . . . . 212 Person making late application for registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Registered taxable person switching over from composition levy. . . . . . . . . . . . . . . . 213 Registered taxable person switching over to composition levy. . . . . . . . . . . . . . . . . . 214 Exempt Supply of goods becoming taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 xxii
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Taxable supply of goods becoming exempt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Change in the constitution of registered taxable person. . . . . . . . . . . . . . . . . . . . . . . . 214 Supply of capital goods on which input tax credit has been availed . . . . . . . . . . . . . . 215 Inputs directly sent to job worker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Capital goods sent to job worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Meaning of Input Service distributor (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Manner of distribution of credit by ISD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Conditions for distribution of credit by ISD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 Meaning of Relevant period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Consequences of excess distribution of credit by ISD . . . . . . . . . . . . . . . . . . . 219 Chapter 16 Job Work under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Meaning of Job work and Job worker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Registration requirement of a job worker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Supply of goods by principal to a job worker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Supply of goods directly to a job worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Moulds and Dies, Jigs and Fixtures or tools. . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Supply of goods on completion of job work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Consequences of non receipts of inputs within one year. . . . . . . . . . . . . . . . . . . . . . . 223 Consequences of non receipt of capital goods within three years . . . . . . . . . . . . . . . . 224 Moulds and Dies, Jigs and Fixtures or tools. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 Scrap and waste generated during job work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 Chapter 17 Assessments under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Meaning and types of assessments in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Various type of assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 Provisional Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 Request of taxable person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Bond with Surety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Details and conditions in order permitting provisional assessment . . . . . . . . . 231 Short/Excess payment in provisional assessment. . . . . . . . . . . . . . . . . . . . . . . 232 Scrutiny of Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 Ingredients of Scrutity of returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 Consequences of non furnishing of satisfactory explanation . . . . . . . . . . . . . . 233 Assessment of non filers of return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 Time limit for finalizing the Best Judgment Assessment . . . . . . . . . . . . . . . . . 234 Withdrawal of order of Best Judgment assessment. . . . . . . . . . . . . . . . . . . . . . 234 Validity of order of Best judgment assessment. . . . . . . . . . . . . . . . . . . . . . . . . 235 Interest and late fee in case of best judgment assessment. . . . . . . . . . . . . . . . . 235 Assessment of Unregistered persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 xxiii
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Summary Assessment – Meaning, circumstances and procedure. . . . . . . . . . . . . . . . . 236 Withdrawal of Summary assessment order. . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 Chapter 18 Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 Meaning of Refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 Situations giving rise to refund in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 Application for refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 Meaning of Relevant date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 Refund of tax paid on inward supply of goods and/or services. . . . . . . . . . . . . . . . . . 242 Refund of Input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242 Refund of balance in electronic cash ledger. . . . . . . . . . . . . . . . . . . . . . . . . . . 242 Application for refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 Documents to be filed with refund application. . . . . . . . . . . . . . . . . . . . . . . . . 243 Refund application for supplies made to SEZ. . . . . . . . . . . . . . . . . . . . . . . . . . 244 Refund claim of less than INR 5 lakhs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 Refund claim of more than INR 5 lakhs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 Passing of incidence of tax or interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 Refund filed by Exporters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 Refund for Export – Bank Realisation certificate. . . . . . . . . . . . . . . . . . . . . . . 245 Refund for Export – Principle of unjust enrichment. . . . . . . . . . . . . . . . . . . . . 246 Time limit for processing of refund claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 Types of refunds payable to applicant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 Contrary directions of tribunal, court or any other provision of the Act. . . . . . 246 Procedure of rejection of refund application. . . . . . . . . . . . . . . . . . . . . . . . . . . 247 Withholding of refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 Meaning of Specified date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 Withholding of refund by Commissioner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Interest for withholding period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Refund of advance deposit by Casual or Non resident taxable person. . . . . . . . . . . . . 248 Minimum ceiling on refund amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Interest on delayed refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Consumer Welfare fund – meaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Circumstances for crediting consumer welfare fund. . . . . . . . . . . . . . . . . . . . . 249 Amounts to be credited to consumer welfare fund. . . . . . . . . . . . . . . . . . . . . . 249 Utilisation of Consumer welfare fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Chapter 19 Transitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 ‘Appointed day’ and ‘Earlier law’ meaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 Migration of existing registered taxable persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 Time limit for seeking registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 xxiv
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Mandatory requirement for migration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 Procedure of migration to GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 Information required for enrolment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 Input service distributor (ISD) migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 Primary authorized Signatory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256 Person eligible to pay tax on composition basis under Section 9. . . . . . . . . . . 256 Carry forward of Cenvat or state taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 Credit of stock lying at branches (depots). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 Credit of education cess, swachh bharat cess and krishi kalyan cess. . . . . . . . 258 Unavailed cenvat credit on Capital goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 Conditions attached for carry forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 Meaning of unavailed credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 Credit of eligible duties and taxes in respect of inputs held in stocks . . . . . . . . . . . . . 260 Conditions for availment of credit on inputs. . . . . . . . . . . . . . . . . . . . . . . . . . . 260 Exempted as well as not exempted goods or services. . . . . . . . . . . . . . . . . . . . 260 Input goods or services in transit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Inputs in stock of a person switching over from composition scheme. . . . . . . 261 Exempted goods returned on or after the appointed day . . . . . . . . . . . . . . . . . . . . . . . 262 Tax paid goods returned on or after the appointed day. . . . . . . . . . . . . . . . . . . . . . . . . 262 Inputs removed for job work returned on or after the appointed day. . . . . . . . 262 Semi finished goods removed for job work returned on or after the appointed day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 Finished goods removed for job work returned on or after the appointed day. 264 Issue of Supplementary invoices, debit or credit notes on revision of prices. . . . . . . . 264 Pending refund claims to be disposed off under earlier law. . . . . . . . . . . . . . . . . . . . . 265 Refund claims filed after the appointed day for goods cleared and/ or services provided before the appointed day and exported before or after the appointed day to be disposed off under earlier law. . . . . . . . . . . . . . . 265 Refund claims filed after the appointed day for payments received and tax deposited before the appointed day in respect of services not provided. . . 265 Claim of cenvat credit to be disposed off under earlier law . . . . . . . . . . . . . . . 266 Finalisation of proceedings relating to output duty or tax liability. . . . . . . . . . . . . . . . 266 Amount recovered or refunded in pursuance of assessment or adjudication proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 Amount recovered or refunded in pursuance of revision of returns. . . . . . . . . . . . . . . 267 Treatment of long term construction or works contract. . . . . . . . . . . . . . . . . . . . . . . . 267 Progressive or periodic supply of goods and/or services. . . . . . . . . . . . . . . . . . . . . . . 267 Taxability of supply of services in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 Taxability of supply of goods in certain cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 Credit distribution of service tax by ISD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 xxv
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Transfer of unutilized cenvat credit by taxable person having centralized registration.268 Tax paid on goods lying with agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 Tax paid on capital goods lying with agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 Treatment of branch transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 Goods sent on approval basis returned after the appointed day. . . . . . . . . . . . . . . . . . 270 Deduction of tax at source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 Availing cenvat credit in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 Chapter 20 Overview of IGST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Need of IGST and important definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Integrated goods and service tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Export and import of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Export and import of service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Establishment of a distinct person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Fixed establishment and place of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Input tax and output tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Territory of India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 Intermediary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 Supplies in the course of intra state trade and commerce. . . . . . . . . . . . . . . . . . . . . . . 274 Supplies in the course of inter state trade and commerce. . . . . . . . . . . . . . . . . . . . . . . 275 Levy of IGST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 IGST on goods imported into India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 Threshold limit in IGST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 IGST and Reverse charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 Electronic Commerce Operator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 Exemption from tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 Clarification in notification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 Payment of tax under IGST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Modes of payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Date of payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Matters to be prescribed in Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Manner of utilization of input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279 Manner of using electronic cash ledger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280 Refund of balance in cash or credit ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280 Order of discharge of tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280 Passing on the tax to recipient. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Online information and database access or retrieval services located outside India . . 281 Meaning of online information and database access or retrieval services . . . . 281 Person liable for tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 Liability of an Intermediary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 xxvi
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Single registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 Supplier not physically present in taxable territory. . . . . . . . . . . . . . . . . . . . . . 283 Claim of input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 Matching, reversal and reclaim of input tax credit. . . . . . . . . . . . . . . . . . . . . . 283 Payment of CGST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 Payment of SGST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 Apportionment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 Why is apportionment of IGST required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 Circumstances requiring apportionment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284 Manner of apportionment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 Supply to unregistered person or persons covered by composition scheme. . . 285 Supply to taxable persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 Apportionment to States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 Non determinable place of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 Taxable person non determinable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 Interest, fine and Penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 Payment of apportioned amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 Amount of SGST apportioned found to be refundable. . . . . . . . . . . . . . . . . . . 287 Zero rated Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 Input tax credit on zero rated sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 Refund on export of goods and/or services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 Refund to SEZ developer or SEZ Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 Application of provisions of CGST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 TDS and TCS rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 Power of Central government to make rules. . . . . . . . . . . . . . . . . . . . . . . . . . . 289 Tax wrongfully collected and deposited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 Refund to outbound tourist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 Transitional provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 Transactions initiated before appointed day . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 Meaning of transactions initiated before appointed day. . . . . . . . . . . . . . . . . . 291 Full payment of tax made under earlier law . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 Part payment of tax made under earlier law . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 PART B
GST – IMPACT ANALYSIS ON SELECT INDUSTRIES Chapter 1 Services and Service Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 What is Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 Territorial Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 xxvii
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Threshold Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 GST Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 Relief from Double Taxation- Sale v. Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 Taxable Person/Composition Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Place of Registration/Centralized Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Specific cases of Supply of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Inter-State or Intra-State ?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 Export of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 Import of Services/Reverse Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302 Transactions between head office and branch offices located outside/inside India. . . 302 Time of Supply of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302 Valuation of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304 Input Service Distributor concept (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 Refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 Payment of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 Domestic/SEZ Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 Place of Supply of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 Small Businesses (SSIs, Traders and Retailers) . . . . . . . . . . . . . . . 309 Chapter 2 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 Threshold Exemption Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 Composition Levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312 Registration under Composition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 Restrictions for the Composition scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 Composition scheme only to supply of goods. . . . . . . . . . . . . . . . . . . . . . . . . . 314 Supply  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314 Types of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 Time of Supply of Goods and/or Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Place of Supply of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 Inter-State or Intra-State?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 xxviii
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GST on Stock Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Input Service Distributor (ISD) Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 Reconciliation of inward and outward supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 Rate of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Blockage of Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 Adminstrative Control over Small Assessees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 Way Forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 Banking and Financial Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 Chapter 3 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Scope & Taxability under Present Tax Regime . . . . . . . . . . . . . . . . . . . . . . . . . . 327 Scope of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 Specific Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 Activities not considered as services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 Specific Abatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 Place of Provisions of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 Rate of Service Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 Cenvat Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 Reverse Charge Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 Banking and Financial Services under GST Regime. . . . . . . . . . . . . . . . . . . . . 332 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332 Scope & Taxability of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 Chit Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 Threshold Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 Distinct Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 Meaning and Scope of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 xxix
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Services by Banks in SEZ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339 Services by Banks outside India (Exports). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 Valuation of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 Valuation in case of Money Changers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341 Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 Reverse Charge Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 Input Service Distributor (ISD) Concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 Electronic Commerce Operator services (E-commerce) by Banks etc. . . . . . . . . . . . . 344 Way Forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 Railway Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 Chapter 4 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 Major issues concerning railways in GST regime at a glance . . . . . . . . . . . . . . . . . . . 348 Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 Railways under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Business Verticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Taxable Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 Meaning of Scope of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 Types of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 Time of Supply of Goods and/or Services. . . . . . . . . . . . . . . . . . . . . . . 351 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 Stock Transfers under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 Input Service Distributor Concept (ISD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 Reconciliation of Inward and Outward Supplies (matching of invoices). . . . . . . . . . . 354 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355 Rate of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 Payment of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 Tax Deduction at Source (TDS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 Tax Collection at Source (TCS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 xxx
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Job works under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358 Transactions between Head office and Branch offices located outside/inside India . . 358 Inter-State or Intra-State Supplies?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 Import of Goods – GST or Custom Duty?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360 Managing procurement vendors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 Impact on ongoing contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 Captive Consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 Works Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 Exemption from GST as available in Service Tax? . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 GST on activities of YTSK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 Cleaning/sanitation services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 Taxability of long-term lease arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 Taxability of General Sales Agent (GSA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 Specific Services provided by Railways – Taxability under GST . . . . . . . . . . . . . . . . 364 Other Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Insurance Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 Chapter 5 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
Present Indirect Taxation of Insurance Services . . . . . . . . . . . . . . . . . . . . . . . . 370 Relevant Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 Scope of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 Negative list of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 Specific Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371 Taxability under Service Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 Payment of Tax Reverse Charge Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 Insurance Services under GST Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 Distinct Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 Meaning and Scope of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 Valuation of Supply of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 xxxi
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Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 Reverse Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 Matching Concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 Input Service Distributor (ISD) Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 Hotels and Restaurants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385 Chapter 6 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385 Present Taxation Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385 Taxation under GST Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 Supply of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 Place of Supply Provisions applicable to Hotel/Restaurants . . . . . . . . . . . . . . . . . . . . 387 Likely Impact in GST Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388 Restaurant (F & B) Segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 Education and Commercial Coaching. . . . . . . . . . . . . . . . . . . . . . . 395 Chapter 7 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 Education and Coaching. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 Goods and Services Tax (GST) as a tax reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 Present Indirect Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397 Taxation under GST Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 Impact on Coaching/Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 Exporter and special economic zones (SEZ). . . . . . . . . . . . . . . . . . 403 Chapter 8 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 Special Economic Zone (SEZ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 Supply and Zero Rated Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 Supply of goods and/or services between distinct persons. . . . . . . . . . . . . . . . . . . . . . 407 Time of Supply of Goods and/or Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408 xxxii
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Continuation of Existing Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 Inter-State or Intra-State trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 Refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 Transactions between head office and branch offices located outside/inside India. . . 414 Domestic Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416 Arrangement with dealers/consignment agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Abbreviation used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 Import of Goods and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Chapter 9 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Territory/Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 Import of Goods & Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 Inter-State or Intra-State Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 Exemptions under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 Duties subsumed under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424 Liability to pay GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 Returns under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 Refund of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 Chapter 10 Gems and Jewellery Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 Threshold Limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428 Taxable event to be Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428 Time of Supply of Goods and/or Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 xxxiii
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Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 Stock Transfers to be subject in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 Possible increase in Gems and Jewellery cost and price?. . . . . . . . . . . . . . . . . . . . . . . 431 Payment of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 Reconciliation of Inward and Outward Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 Input Service Distributor Concept (ISD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433 Job Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Transactions between Head office and Branch offices located outside/inside India . . 435 Domestic/SEZ Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Units located in SEZ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 Inter-State or Intra-State Supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 Import of Goods – GST or Custom Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 Impact on ongoing Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 Arrangement with Dealers/Consignment Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 Managing Procurement Vendors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439 Chapter 11 Alcoholic Beverages Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Present Tax Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 Goods and Services Tax (GST) as a tax reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Alco-beverages under GST regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Likely Impact in GST regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Positive GST impact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 Adverse GST impact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 Major Challenges in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
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Chapter 12 Real-estate & construction services. . . . . . . . . . . . . . . . . . . . . . . . . 449 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Composition Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 Types of Supply under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 Import of Goods – GST or Custom Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 Coverage of Specific Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454 Time of Supply under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454 Tax Invoice- For time of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 Taxability of Transfer Development Rights (TDR)/Joint Development Agreements (JDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 Levy of GST on property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 Abatement under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 Treatment of Completed Property, Under-construction Property, Leasing of Property and the Land Component. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 Impact on Stakeholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 Exemptions from GST as available in Service Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 460 GST on Cancelled Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 Tax Deduction at Source (TDS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464 Input Tax Credit (ITC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464 Credit of VAT paid on inputs available to service provider . . . . . . . . . . . . . . . . . . . . . 465 Credit Eligibility to Sub-contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466 Input Service Distributor concept (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466 Compliance Requirement (Returns with Matching Concept). . . . . . . . . . . . . . . . . . . . 466 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 Inter-State or Intra-State Supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 GST on Stock Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468 Treatment in case of SEZ/ EOU/STP/EHTP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469 Contract restructuring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469 Impact on ongoing contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 Managing procurement vendors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 xxxv
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Use of IT Infrastructure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472 Chapter 13 Registrar to an issue (RTI) and Share transfer agents (STA). . . . 473 Registrar to an Issue (RTI). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 Share Transfer Agent (STA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474 Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 Threshold exemption limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 Time of Supply of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478 GST Suvidha Providers (GSTSP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478 Inter-state and intra-state supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 Reconciliation of Inward and Outward Supplies (Matching of Invoices) . . . . . . . . . . 480 Input Service Distributor Concept (‘ISD’). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 Working for Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 Procurement and distribution model for goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 Chapter 14 Media and entertainment and paper industry . . . . . . . . . . . . . . . . 483 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 Present Tax Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 Broadcasting Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 Multiplexes and Film Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 In GST Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 Major challenges in GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 Territorial Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 Taxable Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 xxxvi
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Time of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 Matching of Invoices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 Input Service Distributor concept (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 Entertainment tax levied by Local Bodies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 GST Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 Print Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 GST Preparedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 Chapter 15 Logistics management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Taxation under present regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 Under GST Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 Non-taxable Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 Threshold Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Place of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 Input Tax Credit of Fuel/HSD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501 Reconciliation of inward and outward supplies (Matching Concept) . . . . . . . . . . . . . 501 Lack of clarity about Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Lack of clarity on Abatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Required to carry invoice and other documents?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 Supply Chain Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503 Warehouse Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503 Taxability of Cargo Agent Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 Dedicated Freight Corridors by Railways. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 Increased efficiency of Service Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506 xxxvii
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Procurement practices (Third-party logistics support). . . . . . . . . . . . . . . . . . . . . . . . . 506 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 Chapter 16 Transportation of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509 Exemptions in Present Tax Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Non-taxable Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Time of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 Supply of Services to SEZ/Export . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 Threshold Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 Lack of clarity on abatements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 Credit of Aviation Turbine Fuel/High-Speed Diesel/Electricity. . . . . . . . . . . . . . . . . . 516 Reconciliation of inward and outward supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516 Reverse Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516 Inspection of Goods in Movement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518 Chapter 17 Telecommunication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 Threshold Exemption Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521 Telecom Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522 Types of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522 Composite Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522 Mixed Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523 Taxability of Spectrum Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523 Taxability of Inter-linking charges or Intra-Circle Roaming . . . . . . . . . . . . . . . . . . . . 523
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Taxability of International In-bound Roaming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524 Taxability of Mobile Wallet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524 Taxability of Supply of SIM Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 Taxability of Value Added Services (VAS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526 Taxability of Free of Charges (FOC) supplies for Marketing/Promotion. . . . . . . . . . . 526 Taxability of Supplies made/to be made to Employees . . . . . . . . . . . . . . . . . . . . . . . . 526 Taxability of Supply of Online Information and Database Access or Retrieval Services (OIDAR). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 Time of Supply under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 Rate of GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530 Rate of GST on Essential Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531 Tax Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 Valuation/Pricing Issues in case of Stock Transfer between Distinct Persons. . . . . . . 533 Stock Transfers under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533 Reconciliation of Inward and Outward Supplies (Matching Concept). . . . . . . . . . . . . 535 Input Service Distributor (ISD) concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536 Unavailed Cenvat Credit Relating to One Time Charges for Spectrum Rights Assignment by CG/SG/Local Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537 Tax Deduction at Source (TDS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 Tax Collection at Source (TCS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 Job works under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 Transactions between Head office and Branch offices located outside/inside India . . 539 Inter-State/Intra-State Supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 Import of Goods – GST or Custom Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 Impact on ongoing contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Works Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Accounting issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 Abbreviations Used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 Chapter 18 Textiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 xxxix
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Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 Threshold Exemption Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 Composition Levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 Types of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548 GST on Stock Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548 Time of Supply of Goods and/or Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549 Inter-State/Intra-State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 Transaction value shall include. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550 Valuation of Samples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Rate of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Payment of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 Issues involved in claiming Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 Credit on Capital Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 Input Service Distributor (ISD) Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 Reconciliation of inward and outward supplies (Matching Concept) . . . . . . . . . . . . . 555 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556 Procurement Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556 Anti-profiteering Measure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 Impact on Textile Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 Positive Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 Negative impact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558 Chapter 19 Automobile & Ancillary Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . 559 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 Present Indirect Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 Taxable Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561 Types of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 Composite Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 xl
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Mixed Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 Import of Goods-GST or Custom Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 Time of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 Advances for Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 Vehicle Booking Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 Free Service Coupon Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 Inter-State/Intra-State Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 GST on Stock Transfers (Supply without sale). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 Restrictions on credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 Reconciliation of inward and outward supplies(Matching Concept). . . . . . . . . . . . . . 570 Input Service Distributor (ISD) Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571 Credits on Vendor Tooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573 Rate of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573 Payment of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 Job work and GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 Transactions between head office and Branch office located outside/inside India. . . . 576 Works Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 Road Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 Anti-Profiteering Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578 Chapter 20 E-commerce Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579 Models of E-Commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 Present Indirect Tax Scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 E-commerce in GST Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 Meaning of E-Commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 Meaning E-Commerce Operator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 Transactions carried out by an e-commerce operator. . . . . . . . . . . . . . . . . . . . . . . . . . 582 Mandatory registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583 Tax Collection at Source (TCS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583 Actual suppliers can claim credit of the TCS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584 xli
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E-commerce operator required to furnish information to the Government . . . . . . . . . 584 Matching Concept in E-commerce provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 Territorial Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 Mandatory Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586 Meaning & Scope of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586 Stock Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 Branch Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 Inter-State or Intra-State Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589 Reconciliation of Inward and Outward Supplies (matching of invoices). . . . . . . . . . . 590 Input Service Distributor Concept (ISD) Concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 GST Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 Payment of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 Sales Return/Replacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592 Books of Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592 Likely Impact in GST regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593 What E-commerce companies should do. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594 Chapter 21 Consumer Goods (Including FMCG). . . . . . . . . . . . . . . . . . . . . . . . 595 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 595
Present Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596 Under GST Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 Threshold Exemption Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 Business Verticals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598 Composition Levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599 Registration under Composition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 xlii
Table of contents
Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Types of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Composite Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Mixed Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 Stock Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 Place of Supply of Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 Free Supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604 Rate of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605 Area Based Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 Anti-profiteering Measure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608 Reconciliation of Inward and Outward Supplies (matching of invoices). . . . . . . . . . . 609 Input Service Distributor (ISD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610 Import of Goods – GST or Custom Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 Blockage of Working Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 Warehouse Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 Supply Chain Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 Job works under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 Accounting and Invoicing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 Use of IT Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614 Chapter 22 Government Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615 Meaning of Government etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
Present Tax Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616 Under GST Regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 Taxable Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 Threshold Limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618 Composition Levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618 Registration under Composition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619 xliii
GST - Laws, Concepts & Impact Analysis of Select Industries
Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619 Stock Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620 Inter-State or Intra-State Supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620 Time of Supply of Goods and/or Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620 Payment of Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621 Tax Deduction at Source (TDS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622 Input Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 Reconciliation of Inward and Outward Supplies (matching concept) . . . . . . . . . . . . . 624 Input Service Distributor (ISD) Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624 ITC by Contractor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625 Transitional Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625 What contractors should do . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627 Chapter 23 Professional Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 Role of Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 Professional opportunities in Indirect Taxes at Glance. . . . . . . . . . . . . . . . . . . . . . . . . 630 Enhanced Role of Professionals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633 Specific Recognition to Professionals in GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633 Impact of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 GST: Tax of Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 Abbreviations used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 PART C
ANNEXURES 1. Constitution (101st Amendment) Act, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 Model GST Law (Revised). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649 2. Model IGST Law (Revised) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Goods and Services Tax (Compensation to the States for Loss of Revenue) Bill, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831
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Part A Conceptual understanding of Revised Model GST Law
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Chapter 1
Chapter 1
Overview of Goods & Services Tax (GST)
Chapter 1
Overview of Goods & Services Tax (GST) POWER OF GOVERNMENT TO LEVY TAXES
According to the Constitution of India, Government has the power to levy taxes on individuals and organizations. However, the Constitution states that no one has the right to levy or charge taxes except with the authority of law. Whatever tax is being charged has to be backed by the law passed by the State legislatures or the Parliament. Article 246 (Seventh Schedule) of the Indian Constitution distributes legislative powers including taxation, between the Parliament and the State Legislature. Schedule VII to the Constitution of India enumerates these subject matters as follows– List - I
enumerates the areas or subjects on which only the Parliament is competent to make laws, called as Union List
List - II
enumerates the areas or subjects on which only the State Legislatures can make laws, called as State List and
List - III enumerates the areas or subjects on which both the Parliament and the State Legislatures can make laws concurrently, called as Concurrent List. Separate heads of taxation are provided under List I and List II of Seventh Schedule of the Constitution. However, there is no head of taxation in the Concurrent List. Any tax levied by the Government which is not backed by law or is beyond the powers of the legislating authority may be struck down as unconstitutional or invalid. The Constitution (101st Amendment) Act, 2016 seeks to enable the Central Government and State Governments to levy Goods and Services Tax (GST) in the country.
MAJOR INDIRECT TAXES PRESENTLY LEVIED Following Central Indirect Taxes are levied by the Union Government on various goods and services at present – Tax Central Sales Tax Central Excise Duty Customs Duty*
Levied on Inter-state trade or commerce Manufacture of excisable goods Import of Goods 3
GST - Laws, Concepts & Impact Analysis of Select Industries
Tax Additional Customs Duties (CVD, SAD) Excise Duty under Medicinal & Toiletries Preparation(Excise Duty Act) Service Tax
Chapter 1
Levied on Import of Goods Medicinal & Toiletry preparations Providing or agreeing to provide taxable service
*(not being subsumed in GST)
Major Central Indirect Taxes Customs Duty
Central Sales Tax
Central Levies
Excise Duty
Service Tax
Following taxes and levies are imposed and collected by State Governments at present: Tax
Levied on
Value Added Tax (Sales Tax)
On sale or deemed sales of goods
Luxury Tax
On hotels, restaurants, motels etc
Entertainment Tax
On entertainment/movies/amusement activities
Entry Tax or Octroi
On entry of goods and services in state jurisdiction
Tax on Lottery/Betting/Gambling
On engaging in such activities
Electricity Duties
On distribution of electricity
State Excise Duty*
On manufacture of alcoholic beverages
Purchase Tax
On purchase of specified goods
*(not being subsumed in GST)
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Chapter 1
Overview of Goods & Services Tax (GST)
Major State Indirect Taxes
DEFICIENCIES IN PRESENT INDIRECT TAXATION The present indirect tax regime in India suffers from multiplicity of taxes and their consequential adverse impact. These can be enumerated as under: Suffers from discriminatory taxes , undue preferences , trade and non trade barriers , entry tax, octroi and check posts. A complex tax structure with multiple rates of taxes and multiple taxes across the supply chain As a developing country, India needs a transparent & progressive tax policy/tax structure Confusion/lack of clarity/interpretational issues Lack of trust between assessee and revenue – Valuation/ Classification/Exemptions Complexity and lack of consistency in provisions Cascading effect – levy of tax on tax Narrow assessee base High transaction costs High compliance costs Too much of litigation and disputes Hidden tax on exports Lack of harmony and varying inter-state practices No protection from cheaper imports 5
GST - Laws, Concepts & Impact Analysis of Select Industries
Chapter 1
In principle, there is no difference between present tax structure under VAT and proposed GST as far as the tax on goods is concerned because GST is also a form of VAT on both, goods and services. At present, the sales tax (or valued added tax), with an exception of Central Sales Tax (CST), is a VAT system and in case of service tax also, it has the Cenvat credit mechanism [sentence unclear]. Hence both sales tax and service tax are already under VAT system in India. At present, the goods and services are taxed separately but in GST, this difference will not be there. The overall system of GST is expected to be very much similar to the VAT, which can be considered as first step towards GST. One of the major differences between present indirect taxes and GST is that in contrast to CST, proposed GST is destination/consumption tax to be levied on a transaction (rather than an activity). All the states have their own VAT Laws comprising VAT Acts and VAT Rules and these Acts and Rules were formulated on the basis of “White Paper on VAT” issued by the Empowered Committee of States’ Finance Ministers on VAT. The same Empowered Committee has been working on GST since inception. Due to the fact that the taxpayers are already using the VATable sales tax and service tax system, GST is going to a matter of settlement between the Centre and the states and like VAT, the possibility of any resistance from the tax payers may not be there. India has both types of taxes - direct and indirect. There are multiple indirect taxes levied on taxable subjects, both by Centre and States. This poses challenges to all stake holders in terms of cost, complexity, compliance, audit and cascading. The indirect tax structure in GST regime is likely to be as depicted in the following figure – Indirect Tax Structure in GST regime
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Chapter 1
Overview of Goods & Services Tax (GST)
In order to move towards international best practices and consolidate indirect taxes in the country, dual GST is proposed as an alternative model as a unified indirect tax whereby over a dozen of indirect taxes shall be subsumed and in turn, only one tax, i.e., GST shall be levied which will comprise of CGST, SGST and IGST.
GST & its Necessity Goods and Services Tax (GST) shall be India’s most ambitious indirect tax reform since independence which aims to stitch together a common market by dismantling fiscal barriers between States. GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. Its main objective is to consolidates all indirect tax levies into a single tax, except customs (excluding CVD and SAD) replacing multiple tax levies, overcoming the limitations of existing indirect tax structure and creating efficiencies in tax administration. Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods and services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. GST will be a national level value added tax applicable on goods and services. A major change in administering GST will be that the tax incidence is at the point of sale as against the present system of point of origin. According to the Task Force under the 13th Finance Commission, GST, as a well designed value added tax on all goods and services, is the most elegant method to eliminate distortions and to tax consumption. The indirect tax system in India is currently mired in multi-layered taxes levied by the Centre and State Governments at different stages of the supply chain such as Excise duty, Central Sales Tax (CST), Value Added Tax (VAT) and Octroi among others. In GST, all these will be subsumed under a single tax regime. It is show cased as a single national uniform tax levied across the country on all goods and services.
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GST - Laws, Concepts & Impact Analysis of Select Industries
Chapter 1
Features of GST GST stands for ‘G’ – Goods ‘S’ – Services ‘T’ – Tax
Goods and Service Tax (GST) is a comprehensive tax.
GST will be a national level value added tax applicable on goods and services.
GST is an indirect tax in place of tax on goods (excise), tax on service (service tax) and VAT/CST.
GST is just like State level VAT which is levied as tax on sale of goods.
GST is a tax on goods and services with value addition at each stage having comprehensive and continuous chain of set-off benefits from the origin (producer’s/service provider’s) point up to the point of destination (retailer’s level ) where only the final consumer should bear the tax.
The Constitution (101st Amendment) Act, 2016 has inserted a new definition of ‘goods and service tax’ which means any tax on supply of goods, or services or 8
Chapter 1
Overview of Goods & Services Tax (GST)
both except taxes on the supply of alcoholic liquor for human consumption. According to model law on GST, goods and services tax is a tax levied on the supply of goods and/or services under the GST Act and includes amount payable under section 8, i.e., composition levy. Presently the tax structure of India is very complex and Centre and States, both charge taxes on goods. Looking to the global developments and tax structure of developed countries, GST is the need of the hour. A product or service passes through many stages till it reaches the final consumer. Governments at Central and State level have, as and when the need arose, introduced many indirect taxes on various taxable events in this value chain (such as Excise duty on manufacture, VAT on sale etc). As these taxes are levied on different taxable events they have their limitations. The need of GST can be explained by way of the following reasons or weaknesses in the present system: (i)
In present tax structure there is no system of providing input credit in between taxes levied by States and the Centre. Thus, cascading effect arises.
(ii)
There are various definitional issues related to manufacturing, sale, service, valuation etc. These need to be rationalized.
(iii)
Several transactions take the character of sales as well as services, thus there is complexity in determining the nature of transaction.
(iv)
The mechanism of imposing taxes, exemptions, abatements, other benefits are different in States and Centre.
(v)
Existing laws have resulted in significant number of issues related to interpretation/tax disputes.
(vi)
Credit mechanism is also very narrow with several conditions along with procedural formalities which make the compliances difficult.
(vii) Administrative machinery at the Centre and in different States is different , resulting in inefficiencies. (viii) India needs comprehensive levy and collection on both, goods and services at the same rate with the benefit of seamless input credit for competitiveness. (ix)
Subsume multiple taxes like luxury tax, entertainment tax, octroi etc.
(x)
To limit the number of tax rates.
(xi)
Common law and procedure is the need of the hour.
(xii) Strong administration of the legal compliances is required. Taxation of goods and services separately by Union as well as States brings in distortion in tax structure, is retrogatory and adversely affects revenues. The present consumption tax system in India is complicated as well as multi-layered. GST is a 9
GST - Laws, Concepts & Impact Analysis of Select Industries
Chapter 1
part of ongoing tax reforms which aims at evolving an efficient and harmonized consumption tax system. It shall replace the multiple taxes with a single tax operating at various levels of supply chain, thus, avoiding the cascading effect of multiple taxes. Also, it shall cover all goods and services, unlike the present system, with a negative or exempted list. It will also end the distortion in differential tax treatment of various goods and services. GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits from the producer’s point and service provider’s point up to the retailer’s level. It is essentially a tax only on value addition at each stage and a supplier at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods and services as available for set-off on the GST to be paid on the supply of goods and services. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. The illustration shown below indicates, in terms of a hypothetical example with a manufacturer, one wholesaler and one retailer, how GST will work. Let us suppose that GST rate is 10%, with the manufacturer making value addition of INR 30 on his purchases worth INR 100 of input of goods and services used in the manufacturing process. The manufacturer will then pay net GST of INR 3 after setting-off INR 10 as GST paid on his inputs (i.e. Input Tax Credit) from gross GST of INR 13. The manufacturer sells the goods to the wholesaler. When the wholesaler sells the same goods, after making value addition of (say), INR 20, he pays net GST of only INR 2, after setting-off of Input Tax Credit of INR 13 from the gross GST of INR 15 to the manufacturer. Similarly, when a retailer sells the same goods after a value addition of (say) INR 10, he pays net GST of only Re.1, after setting-off INR 15 from his gross GST of INR 16 paid to wholesaler. Thus, the manufacturer, wholesaler and retailer have to pay only INR 6 (= INR 3+INR 2+Re. 1) as GST on the value addition along the entire value chain from the producer to the retailer, after setting-off GST paid at the earlier stages. The overall burden of GST on the goods is thus much less. This is shown in the table below. The same illustration will hold in the case of final service provider as well. Stage of supply chain
Purchase Value value of addition input
Value at Rate GST Input Net which of on tax GST=GST supply GST output credit on outputgoods and input tax services credit made to next stage
Manufacturer
100
30
130
10%
13
10
13-10 = 3
Wholesaler
130
20
150
10%
15
13
15-13 = 2
Retailer
150
10
160
10%
16
15
16-15 = 1
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Chapter 1
Overview of Goods & Services Tax (GST)
Scope of Services in GST The term ‘service’ is proposed to be exhaustively defined in section 2 (92) as ‘anything other than goods’. This would imply that anything or activity will be either ‘goods’ or ‘services’ and that anything which is not ‘goods’ is a ‘service’. However, from taxation viewpoint, there may be certain exemptions provided including threshold exemption limit. To understand the scope of ‘service’, what will be more relevant is to understand ‘goods’ clearly because anything which is not a good would be deemed to be a service. If an object or subject is not falling within the frame of ‘goods’, it will be service. According to the definition, services include transaction in money but does not include money and securities. Also, services does not include transaction in money other than an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. ‘Money’ has been defined in section 2(65) and ‘securities’ has been defined in section 2(90) of the Model GST law version II.
Scope of Goods in GST In the proposed model law on GST, ‘goods’, as per section 2(49), means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply. ‘Goods’ would include –
Movable property,
Actionable claim,
Growing crops/grass,
Things attached to/forming part of land,
Materials,
Commodities,
Articles
‘Goods’ would exclude –
Money
Securities
Immovable property
Land
Taxes to be subsumed in GST 11
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Chapter 1
The following Central Taxes shall be, to begin with, subsumed under the Goods and Services Tax: (i)
Central Excise Duty under Central Excise Act, 1944
(ii)
Additional Excise Duties under Additional Duties of Excise (Goods of Special Importance) Act, 1957
(iii)
Excise Duty levied under the Medicinal and Toiletries Preparation Act, 1955
(iv)
Service Tax under Finance Act, 1994
(v)
Additional Customs Duty, commonly known as Countervailing Duty (CVD)
(vi)
Special Additional Duty of Customs (SAD) levied on import in lieu of VAT
(vii) Central Sales Tax (viii) Surcharges (e.g., National Calamity Contingent Duty) (ix)
Cesses (eg. cess on rubber, cess on tea etc)
The following State taxes and levies would be, to begin with, subsumed under GST: (i)
Sales tax/Value Added Tax (VAT)
(ii)
Entertainment tax (other than levied by the local bodies).
(iii)
Luxury tax
(iv)
Purchase Tax
(v)
Taxes on lottery, betting and gambling.
(vi)
State cesses and surcharges insofar as they relate to supply of goods and services.
(vii) Entry tax (other than levied by local bodies ) (viii) Octroi (other than levied by local bodies)
TAXES NOT TO BE SUBSUMED IN GST Following taxes and duties are not likely to be subsumed in proposed GST : Central Taxes/Levies
State Taxes/Levies
Basic Customs Duty
Taxes on liquors
Excise Duty on tobacco products
Toll Tax/Road Tax
Export Duty
Environment Tax
Specific central cesses (eg, oil cess)
Property Tax
Taxes on petroleum products
Tax on consumption or sale of electricity not certain
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Central Taxes/Levies
State Taxes/Levies
Stamp Duties
Stamp Duty - not certain Purchase tax on food grains Taxes on motor spirit & high speed diesel
CASCADING EFFECT A tax that is levied on a tax at each stage of the production process, up to the point of being sold, to the final consumer. Cascading effect of taxes is one of the major distortions of the Indian taxation regime. Federal structure of our democracy allows both, states and center to levy taxes separately on the same subject and thus in many cases, there is a tax on tax. This results in tax cascading. GST aims at eliminating tax on tax by taxing only the value addition at every stage. While Income tax, Excise duty, Service tax and Central Sales tax (CST), Securities Transaction tax is levied by the Center; VAT/sales tax, Entry tax, State excise, Property tax, Agriculture tax and octroi is charged by the State governments. There are many possible transactions which come under the ambit of two or more of these taxes and the value of the second tax is calculated on the value arrived at by adding the amount of first tax to the value of transaction. For example, inter-state purchase of goods would attract both Central Sales tax and Sales tax and manufacturing and sale would be subject to Cenvat over and above CST. In GST regime, cascading effect will be substantially mitigated due to the following:
No multiple taxes
Inter-tax set off allowed
No set-off in central sales tax
No case of tax on tax
Reduced cost of products/services
Lessor compliance costs
In GST, many taxes will get subsumed and tax cascading will be substantially eliminated on credit of inward/input taxes
However, there would be some distortions due to composition levy, exemptions and some sectors being kept out of GST ambit.
POINT OF LEVY OF GST Both, Centre and States will simultaneously levy GST across the value chain. Centre would levy and collect Central Goods and Services Tax (CGST) and States would levy and collect the State Goods and Services Tax (SGST) ,on all transactions within a State.
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The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States. GST will be a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State.
LIABILITY TO PAY GST The payment liability of CGST and SGST will arise at the time of supply as determined for goods and services. The time of supply shall be crucial for the same. The provisions stipulate payment of GST at the earliest in case of : Goods: On removal of goods or receipt of payment or issuance of invoice or date on which buyer shows receipt of goods. Services: On issuance of invoice or receipt of payment or date on which recipient shows receipt of services Given that there could be many parameters in determining ‘time’ of supply, maintaining reconciliation between revenue as per financials and as per GST could be a major challenge for businesses.
ADVANTAGES OF GST Benefits of GST shall accrue to all - trade & industry, Government and consumers. Trade and industry shall benefit in terms of easy compliance, removal of cascading effect of taxes and enhanced competitiveness. The Government shall have better control on leakages, higher revenue efficiency, consolidation of tax base and it may be easier to administer and monitor the law. Consumers will also benefit from likely reduced prices and single transparent tax structure.
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GST will end cascading effects: This will be the major contribution of GST for the business and commerce. At present, there are different state level and centre level indirect tax levies that are compulsorily imposed one after another on the supply chain till the time of its final consumption.
Growth of Revenue in States and Union: It is expected that the introduction of GST will increase the tax base but lower down the tax rates and also remove the multiple point taxation. This will lead to higher amount of revenue to both the states and the union.
Reduces transaction costs and unnecessary wastages : Government is working in an efficient mode and it would be possible that a single registration and a single compliance will suffice for both SGST and CGST with government producing effective IT infrastructure and integration of states level with that of the Union.
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Eliminates the multiplicity of taxation : One of the great advantages that a taxpayer can expect from GST is elimination of multiplicity of taxation. The reduction in the number of taxes applicable in a chain of transactions will help to reduce the paper work and clean up the current mess that is brought by existing indirect taxation laws.
One Point Single Tax : Another feature that GST will hold is it will be ‘one point single taxation’. This also gives a lot of comfort and confidence to business community focus on business rather than worrying about their taxation issues that may crop at later stages. This will help the business community to decide their supply chain, pricing modalities and in the long run helps the consumers in buying goods at competitive price as price will no longer be the function of tax components but function of sheer business intelligence and innovation.
Reduces average tax burden : Under GST mechanism, the cost of tax that consumers have to bear will be certain and it is expected that GST would reduce the average tax burdens on the consumers.
Common Market: GST will help the country by way of a common market by removing state tariffs that act as a barrier to free movement of goods and services.
Reduces the corruption: It is one of the major problems that India is saddled with. We cannot expect anything substantial unless there exists a political will to root it out. This will be a step towards corruption free Revenue Services.
Present CST will be removed and need not to be paid. At present there is no input tax credit available for CST.
Uniformity of tax rates across the states.
Ensure better compliance due to aggregate tax rate reduction.
By reducing the tax burden, the competitiveness of Indian products in international market is expected to increase and thereby leading to development of the Nation.
Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.
It will improve India’s ranking in EODB
Confidence of international investors will improve
Tax compliance and tax base will improve
Administrative cost of Government will go down
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The advantages of GST could therefore, be enumerated as follows:
Will bring India at par with developed economies with one nation one market, one tax concept
GST as comprehensive indirect tax reform will make India single largest market in the world.
GST will help broaden tax base and help increase tax - GDP ratio.
Computerization of processes.
Lower cost of production/cost reduction for business processes
Reduced prices for goods and services.
Increase in domestic and export market - increase in profit.
Single Authority to deal with the compliances - lower compliance costs
Interpretational issues will be sorted out effectively.
No dispute on classification between goods or services (e.g IPR, software, telecom etc).
Transactions where both VAT and Service Tax are levied would be liable to only one tax.
Will generate audit trail which taxmen can follow to unearth tax evasion/non-compliances
LIKELY DISADVANTAGES OF GST The likely disadvantages of GST are: (i)
Total GST rate may be higher.
(ii)
Vote weight age of States is same irrespective of their size. As such, developed states would resist
(iii)
May not be tax efficient for sectors like banking, tourism, advertisement, education, business promotion etc. but contribute more to taxes.
(iv)
Dispute resolution may be tough with poor governance and centrestates relations would hold the key. Disputes in GSTC to be resolved by GSTC only.
(v)
Small states may remain aggrieved.
GST MODELS Consistent with the federal structure of the country, the GST will have two components: one levied by the Centre (hereinafter referred to as Central GST), and
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the other levied by the States (hereinafter referred to as State GST). This dual GST model would be implemented through multiple statutes (one for CGST and SGST statute for every State). However, the basic features of law such as chargeability, definition of taxable event and taxable person, measure of levy including valuation provisions, basis of classification etc. would be uniform across these statutes as far as practicable. The salient features of the proposed model are as follows:—
The Central GST and the State GST would be applicable to all transactions of supply of goods and services except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits.
The Central GST and State GST are to be paid to the accounts of the Centre and the States separately.
Since the Central GST and State GST are to be treated separately, in general, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST.
Cross utilization of ITC between the Central GST and the State GST would not be allowed.
To the extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST.
The administration of the Central GST would be with the Centre and for State GST with the States. IGST shall be administered by the Union Government.
Imports shall be subject to IGST whereas exports shall be zero rated.
Basic customs duty will continue to be levied, besides GST.
The taxpayer would need to submit online periodical returns to both the Central GST authority and to the concerned State GST authorities on the electronic platform (GSTN).
Each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PANlinked system in line with the prevailing PAN-based system for Income tax facilitating data exchange and taxpayer compliance. The exact design would be worked out in consultation with the IncomeTax Department.
GST Network (GSTN), a special purpose vehicle owned by Central Government, State Governments and other stakeholders ,will provide IT backbone responsible for front-end and back-end processes. 17
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Keeping in mind the need of tax payers’ convenience, functions such as assessment, enforcement, scrutiny and audit would be undertaken by the authority which is collecting the tax, with information sharing between the Centre and the States. Proposed GST Model
The Models of GST require the following pre-requisites for successful implementation of GST: Extensive computerization and robust IT infrastructure National portal for access of information E-filing of periodical returns E-payment of tax Common tax period National Agency for implementations Adequate training to all stakeholders including officers Use of information technology by taxpayers directly or through facilitation centers The models developed should reflect the interests of the trade, industry, agriculture and consumers, with due concern to the Centre-State relations and protection of revenue.
DUAL GST Dual GST signifies that GST would be levied by both, the Central Government and the State, on supply of goods and/or services. Under GST, the power to tax on supply of all goods and services would be vested in the hands of both, the State and the Centre. However, in certain cases, such as the inter-state 18
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transactions, the power to tax would be vested with the Central Government, while the revenue of the final transaction would accrue to the States and the Union in the manner similar to intra state transaction. Considering the dual taxation power to tax transactions under GST, the structure is referred to as dual GST. GST will be levied under a dual structure and as such, it will have two tax components, viz, Central GST and State GST. Both, centre and states will have separate powers to legislate and administer the respective taxes. Dual GST will empower both, Centre and States to levy GST under separate legislations. India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes through appropriate legislation. Both these levels of Government have distinct responsibilities to perform according to the division of powers prescribed in the Constitution for which they need to raise resources. A dual GST is therefore, in keeping with the Constitutional requirement of fiscal federalism. The dual GST which is suited to the federal structure of India, is expected to be a simple and transparent tax with few slabs rate structure of CGST and SGST. The dual GST is expected inter alia, to result in the following:
reduction in the multiple taxes at the Central and State level as well as multiple slabs
decrease in effective tax rate for many goods
reduced exemptions which create tax distortions
removal of the current cascading effect of taxes
reduction of transaction costs of the taxpayers through simplified tax compliance
increased tax collection due to wider tax base and better compliance
CENTRAL GST (CGST) Under the Central Goods and Services Tax, the two levels of Government would combine their levies in the form of a single National GST, with appropriate revenue sharing arrangements among them. The tax could be controlled and administered by the Central Government. There are several models for such a tax. Australia is the most recent example of a National GST, where it is levied and collected by the Centre, but the proceeds are allocated entirely to the States. As against this, in Indian context, the present proposal is to have a dual GST with transactions being taxed by Centre and States simultaneously, i.e., CGST by Centre and SGST by State Governments. CGST shall be levied under the CGST Act on intra state supplies of goods and services.
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Features of CGST
CGST will be levied on both , goods and services.
To be levied , controlled and administered by Union .
Levied by the Centre through a separate statute on all transactions of goods and services made for a consideration.
Exceptions would be exempted goods and services, goods kept out of GST and transactions below prescribed threshold limits.
CGST would be levied across the value chain.
Rates for CGST would be prescribed appropriately reflecting revenue considerations and acceptability.
Two Governments (Union and State Governments) will combine their various levies into single GST.
Proceeds to be shared between Centre and States.
STATE GST (SGST) SGST would mean the tax levied under the SGST Act on intra-state supplies of goods and services and will be administered by the respective State Government. SGST could be set off against SGST credit or IGST credit only.
Features of SGST
Levied by the States through a statute on all transactions of supply of goods and services made for or without a consideration.
State GST would be paid to the accounts of the respective State.
Exceptions would be exempted goods and services, goods kept out of GST and transactions below prescribed threshold limits.
Basic features of law such as chargeability, taxable event, measure, valuation, classification would be uniform across these Statutes/States as far as practicable.
INTEGRATED GST (IGST) According to proposed Model IGST Law, IGST shall mean the tax levied under the IGST Act on the supply of any goods and/or services in the course of inter-state trade or commerce. IGST Act shall apply to whole of India.
For the purpose of IGST, a supply of goods and/or services in the course of import into the territory of India shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. Further, an export of goods
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and/or services shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. IGST will replace central sales tax which is presently levied on inter-state transactions of sale of goods. Inter-state trade or commerce will, therefore include supply of goods/services in the course of•
Inter-state trade or commerce
•
Import into Indian territory (deemed to be inter-state)
Export (deemed to be inter-state) • Thus, IGST shall apply to inter- state transactions and import as well as export transactions (deemed to be inter-state transactions) relating to supply of goods and/or services.
Features of IGST
Levied on inter-state supply of goods and services
Includes cross border transactions (only imports)
Centre would levy and collect IGST in lieu of CGST and SGST.
To be shared between Centre/States
IGST would be levied on all inter-State transactions of taxable goods and services with appropriate provision for consignment or stock transfer of goods and services.
Inter-State dealer will pay IGST after adjusting available, input IGST, CGST and SGST on purchases.
GST NETWORK (GSTN) Well-designed and well-functioning Information Technology(IT) infrastructure facility would be a pre-condition and pre-requisite for smooth administration of taxpayers, processing of returns, controlling collections, making refunds, auditing taxpayers, levying penalties etc. in the GST regime. On the IT front, all stakeholders have agreed for a common PAN-based taxpayer ID, a common return, and a common challan for tax payment and therefore a common portal providing three core services (registration, returns and payments) would ease compliance. Further, the IT infrastructure and unified tax credit clearing mechanism will be put in place. GSTN was incorporated on 28 March 2013 under Section 25 of the Companies Act, 1956 (as non-Government, not-for-profit, private limited Company) promoted jointly by Central and State governments. GSTN is a special purpose vehicle to set
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up IT backbone for GST. GOI holds 24.5%, State Governments holds 24.5% and 51% held by non-Government Institutions. GTSN has a self-sustaining revenue model, based on levy of user charges on tax payers and tax authorities availing its services. The GSTN will provide a front end portal to administer the Inter-State Taxation (IGST). The above network will work as a clearing house mechanism which will pool all the information about taxes levied on the Inter-State transactions and provide data on the amounts to be transferred to the destination state for ensuring seamless input tax credit. GSTN has the following objectives –
Integration of the common GST Portal with the existing tax administration systems of the Central/State governments and other stakeholders.
Provide common PAN based registration, enable returns filing and payment processing for all states on a shared platform.
Facilitation, implementation and set standards for providing services to the taxpayer through common GST portal to State Governments and other stake holders;
Build efficient and convenient interfaces between with tax payers to increase tax compliance;
Carry out research, study best practices and provide training to the stakeholders.
Common GST portal managed by GSTN will provide the following service –
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(a)
Registration (including existing taxpayer master migration and issue of PAN based registration number);
(b)
Payment management including payment gateways and integration with banking systems;
(c)
Return filing and processing;
(d)
Taxpayer management, including account management, notifications, information, and status tracking;
(e)
Tax authority account and ledger management;
(f)
Computation of settlement (including IGST settlement) between the Centre and States; Clearing house for IGST;
(g)
Processing and reconciliation of GST on import and integration with EDI systems of Customs;
(h)
MIS including need based information and business intelligence;
(i)
Maintenance of interfaces between the Common GST Portal and tax administration systems;
(j)
Provide training to stakeholders;
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(k)
Provide Analytics and Business Intelligence to tax authorities; and
(l)
Carry out research, study best practices and provide training to the stakeholders.
The GSTN common portal can be accessed over internet by taxpayers including their consultants (CAs, advocates etc.). Departmental officers can access the same over intranet. The common web portal will provide services in relation to all GST related services such as – (a) Tax payer registration (New, surrender, cancellation, etc.); (b) Invoices upload, auto-drafting of Purchase register of buyer, Periodic GST Returns filing; (c) Tax payment including integration with agency banks; (d) ITC and Cash Ledger and Liability Register; (e) MIS reporting for tax payers, tax officials and other stakeholders; (f) BI Analytics for tax officials. Following functions can be performed by using GST portal by taxpayers Application for registration as taxpayer and profile management; Payment of taxes, including penalties and interest; Uploading of Invoice data Filing returns/annual statements; Status review of return/tax ledger/cash ledger.
TAXANOMY OF PROPOSED TAX PROVISIONS Model law comprises of following two laws – (i)
Goods and Service Tax Act, 20....
(ii)
Integrated Goods and Service Tax Act, 20....
According to the model GST law version II, GST rates will be specified in the Schedule to the Act but not exceeding, fourteen percent for CGST, fourteen percent for SGST or twenty eight percent for IGST (i.e., upto 28% for SGST and CGST taken together or 28% for IGST). Online or e-commerce transactions would also be under the GST ambit.
MODEL GST LAW VERSION II The Model GST law was released in June, 2016 which has since been replaced by revised model GST law which consists of: 197 sections divided into 27 Chapters 5 Schedules 112 definitions 23
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All forms of ‘supply’ of goods and services such as sale, transfer, barter, exchange, license, rental, lease and import of services of goods and services made for a consideration within the State will attract CGST (central levy) and SGST (state levy). On inter-state supply of goods, IGST shall be applicable. GST would be applicable on ‘supply’ of goods and services.
MODEL IGST LAW The Model IGST law version II comprises of the following :
11 Chapters
24 Sections
30 Definitions
This legislation will be called the Integrated Goods and Services Tax Act, 20... (in short IGST), an Act to levy, collect and administer IGST in India. This Act shall be applicable to whole of India, i.e., including the State of Jammu & Kashmir. Presently, Service Tax does not apply to State of Jammu & Kashmir but Central Excise Act, 1944 applies to that state. What is meant by ‘India’ is defined in section 2(12) of Integrated Goods and Services Tax Act, 20..... The Act after being legislated shall come into force from a date which will be notified by the Central Government by way of a notification. It may also appoint different dates for enforcement of different provisions of the Act.
TAX ADMINISTRATION/DUAL CONTROL The 9th GSTC meeting agreed on issue of dual control of assessees and territorial jurisdiction. GSTC agreed on the dual control for both thresholds, i.e. below and above INR 1.50 crore limit. The administration of GST (adjudication, scrutiny, audits) as agreed by GSTC is as follows: With turnover below INR 1.50 crore 90% with states 10% with centre With turnover above INR 1.50 crore 50% with states 50% with centre However, States will also be empowered to control equally under the integrated GST which may pose practical challenges. GSTC also agreed to states being allowed to have control over territorial waters. Though general consensus is being looked at, States like West Bengal and Kerala still continue to be in opposite camp.
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The Centre and States have agreed to share the entire taxation base for assessment with a horizontal division. According to the agreed formula, which will apply for both goods producers and service providers, States will have the power to assess 90 per cent of all assessees with a GST turnover of INR 1.5 crore or less and the remainder will be with the Centre. Further, assessees with a GST turnover of over INR 1.5 crore will be assessed in a 50:50 ratio by the Centre and States. Intelligence-based enforcement powers will vest with assessing officers of both the Centre and States for all assessees. Both have agreed that no assessee would be controlled by two authorities and there would be computer-based enforcement at both the Centre and the states. Those assessees who fall under the integrated GST, involved in movement of goods and services between States, will also be administered equally by the Centre and States. The Centre will retain the power to collect this levy. The Centre also gave the right to tax economic activities within 12 nautical miles of seas to coastal states, even as these will continue to be considered Union Territories. At present, these states have the right to tax these activities.
GST & BUDGET 2017 The Union Budget 2017-18 does not contain any proposal for GST but following are the highlights of the Budget Speech in relation to GST.
No clear cut road map laid
Acknowledges Constitutional Amendment unanimously
Acknowledges State Government’s role in resolving issues in GSTC
9 meetings of GSTC held till 1.2.2017
Preparation of IT System for GST on schedule
Reach out efforts for trade and industry to make them aware about GST to start from 1st April 2017.
CBEC for implementation of GST as per schedule without compromising on spirit of co-operation federalism.
GST likely to bring more taxes to Centre and States because widening of tax base.
Not many changes in current Central Excise and Service Tax regime as these will be replaced soon by GST
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