GST Guide with Ready Reckone

Contents at a glance About the authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii PART A AT-A-GLANCE Chapter A-1

GST in India – At-a-glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chapter A-2

Compliance chart with limitation periods under GST. . . . . . . . . . . . . . 43

Chapter A-3

GST Transition – Time limits and limitation periods . . . . . . . . . . . . . . 55

Chapter A-4

Non-creditable goods/services and supplies under GST. . . . . . . . . . . . 59

Chapter A-5

Returns under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Chapter A-6

Penalties and offences under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Chapter A-7

Getting ready for smooth transition to GST – Way forward. . . . . . . . . 73

Chapter A-8

GST, a “One Nation One Tax”– Critical study . . . . . . . . . . . . . . . . . . . 85

Chapter A-9

Seamless Input Tax Credit in GST– Exceptions – Critical Study. . . . . 89 PART B COMMENTARY

Chapter B-1

Existing indirect tax structure in India. . . . . . . . . . . . . . . . . . . . . . . . . . 97

Chapter B-2

GST – concept, features and advantages and Constitutional Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Chapter B-3

Taxes or duties to be subsumed in the GST. . . . . . . . . . . . . . . . . . . . . 129

Chapter B-4

GST Council and its functions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

Chapter B-5

Whether a person is liable to pay GST − steps . . . . . . . . . . . . . . . . . . 139

Chapter B-6

Key definitions under the GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

Chapter B-7

Supply – meaning, time and valuation. . . . . . . . . . . . . . . . . . . . . . . . . 193

Chapter B-8

Concept of IGST - Inter-state supply, local supply, and imports. . . . . 223

Chapter B-9

Goods v. services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

Chapter B-10 Incidence of tax, Rates of GST, Exemptions and Zero rated supply. . 257 Chapter B-11 Input tax credit and input service distributor. . . . . . . . . . . . . . . . . . . . 273 Chapter B-12 Composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305

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Chapter B-13 Job work – special provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 Chapter B-14 E-commerce, TCS & supply of online data– special provisions. . . . . 321 Chapter B-15 Registration, Amendment and Cancellation . . . . . . . . . . . . . . . . . . . . 331 Chapter B-16 Returns under the GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 Chapter B-17 Payment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 Chapter B-18 Tax deduction at source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 Chapter B-19 Refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Chapter B-20 Invoice, accounts and records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 Chapter B-21 Assessment, audit & determination of tax. . . . . . . . . . . . . . . . . . . . . . 475 Chapter B-22 Collection of tax and Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 Chapter B-23 Inspection, search & survey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 Chapter B-24 Inspection of goods in movement and e-way bill . . . . . . . . . . . . . . . . 505 Chapter B-25 Penalties and prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 Chapter B-26 Appeal, advance ruling and information returns. . . . . . . . . . . . . . . . . 521 Chapter B-27 Transitional provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 Chapter B-28 GST Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 Chapter B-29 Industry – impact, expectations and transition. . . . . . . . . . . . . . . . . . . 593 Chapter B-30 GST in other countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615 PART C LEGISLATION I. GST ACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621-1000 II. REVISED DRAFT GST RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001-1096 III. DRAFT GST FORMS & FORMATS . . . . . . . . . . . . . . . . . . . . . . . . . . 1097-1326

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Table of contents About the authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Contents at a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi PART A AT-A-GLANCE Chapter A-1 GST in India – At-a-glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.1 GST – Meaning and its scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.2 Legislative Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.3 Taxable event and charging provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.4 Rates of GST, Import & Export. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.5 Exemptions and exempt supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.5.1 Power to grant exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.6 Meaning and Scope of the term “Supply”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.6.1 Scope of supply (Section 7 & 8 of CGST Act). . . . . . . . . . . . . . . . . . . 8 1.6.2 Inter-State supply vs. Local Supply and Place of Supply (Section 7 to 13 of IGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.6.3 Time of supply (Section 12 & 13 of CGST Act) . . . . . . . . . . . . . . . . . 9 1.6.4 Value of supply (Section 15 of CGST Act) . . . . . . . . . . . . . . . . . . . . 10 1.7 Threshold Limit (Basic Exemption) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.7.1 Exemption limit (Section 22 of CGST Act). . . . . . . . . . . . . . . . . . . . 11 When threshold limit is not applicable (Section 24 of CGST Act). . . . 11 1.7.2 1.8 Taxable Persons & Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.8.1 Taxable person [Section 2(107) of CGST Act]. . . . . . . . . . . . . . . . . . 12 1.8.2 Who is liable for registration mandatorily under GST [Section 22(1) of CGST Act]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.8.3 Who is not liable to take registration? (Section 23 of CGST Act). . . 13 1.8.4 Agriculturist [Section 2(7) of CGST Act] . . . . . . . . . . . . . . . . . . . . . 13 1.8.5 Time limit for taking registration [Section 25(1)] . . . . . . . . . . . . . . . 13 1.8.6 Voluntary Registration under GST [Section 25(3)] . . . . . . . . . . . . . . 13 1.9 Composition Scheme [Section 10] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.10 Output Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.10.1 Meaning of output tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.10.2 Steps for computation of output tax. . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.11 Input Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.11.1 Input tax credit in the GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 xiii

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1.12 1.13

1.14

1.15

1.16

1.17

1.18

1.19

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1.11.2 Restrictions in claiming ITC [Section 16 of CGST Act]. . . . . . . . . . 16 1.11.3 Non creditable goods/services/supplies [Section 17(5)] . . . . . . . . . . 17 1.11.4 Utilization of credit [Section 49(5)]. . . . . . . . . . . . . . . . . . . . . . . . . . 17 Job Work [Section 19, 143 of CGST Act]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Tax Invoice, Bill of Supply, Debit/Credit Notes. . . . . . . . . . . . . . . . . . . . . . . . . 18 1.13.1 Who is required to issue tax invoice/bill of supply and under what circumstances? (Section 31 of the CGST Act) . . . . . . . . 18 1.13.2 Contents of tax invoice (Rule 1 of the Invoice Rules). . . . . . . . . . . . 19 1.13.3 Circumstances when a debit note or credit note is issued (Section 34 of the CGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Accounts and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1.14.1 Maintenance of Accounts and Records (Section 35 of the CGST Act) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1.14.2 Retention of Accounts and Records (Section 36 of the CGST Act). . . 21 Returns under the GST (Chapter IX of the CGST Act). . . . . . . . . . . . . . . . . . . . 22 1.15.1 Types of returns or reports and periodicity. . . . . . . . . . . . . . . . . . . . . 22 1.15.2 Other features of the Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.15.3 Returns process flow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.15.4 Matching process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Payment of Tax (Section 49 of the CGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . 24 1.16.1 Broad features. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1.16.2 Payments to be made in the GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1.16.3 Persons are liable to pay GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1.16.4 Modes of payment of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Tax Deduction at Source (TDS) (Section 51). . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1.17.1 Persons may be required to deduct TDS. . . . . . . . . . . . . . . . . . . . . . . 25 1.17.2 Rates of TDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 1.17.3 When to deduct TDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 1.17.4 Obligations of deductor of TDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Tax Collection at Source (TCS)(Section 52). . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1.18.1 Time of collection of TCS and its value. . . . . . . . . . . . . . . . . . . . . . . 27 1.18.2 Rates of TCS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1.18.3 Obligations of collector of TCS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1.18.4 Matching of TCS with supplies by the supplier. . . . . . . . . . . . . . . . . 28 Supplier of online information and database access or retrieval services located outside India to specified person in the taxable territory (OIDAR) (Section 14 of IGST Act) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 1.19.1 Applicability of the provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 1.19.2 Meaning of “online information and database access or retrieval services” (OIDAR). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 1.19.3 Role of intermediary who arranges the services. . . . . . . . . . . . . . . . . 29

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1.19.4 Registration and payment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 1.20 Refund (Section 54 & 55 of the CGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 1.20.1 Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 1.20.2 Time limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 1.20.3 Procedure for claiming refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 1.21 Assessment and Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Meaning of assessment and scope . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 1.21.1 1.21.2 Audit (Section 65 of the CGST Act) . . . . . . . . . . . . . . . . . . . . . . . . . 33 1.21.3 Specific provisions for determination of tax. . . . . . . . . . . . . . . . . . . . 34 1.21.4 Special Audit (Section 66 of the CGST Act) . . . . . . . . . . . . . . . . . . . 35 1.22 E-way bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 1.22.1 Person responsible for furnishing of information and generation of e-way bill [Rule 1(1) of Draft e-way bill Rules] . . . . . 36 1.22.2 Value of consignment for mandatory generation of e-way bill . . . . . 36 1.22.3 Mode of conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 1.22.4 Manner of generation of e-way bill [Rule 1]. . . . . . . . . . . . . . . . . . . 37 1.22.5 How to furnish of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 1.22.6 Generation and acceptance of details in e-way bill . . . . . . . . . . . . . . 37 1.23 Advance ruling (Section 95 of the CGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . 38 1.24 Appeals (Chapter XVIII of the CGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 1.25 Information returns (Section 150 of the CGST Act). . . . . . . . . . . . . . . . . . . . . . 40 1.25.1 Who is required to file information return? . . . . . . . . . . . . . . . . . . . . 40 1.25.2 What type of information may be asked in the return? . . . . . . . . . . . 41 1.25.3 Penalty for non-furnishing of information return. . . . . . . . . . . . . . . . 41 Chapter A-2 Compliance chart with limitation periods under GST. . . . . . . . . . . . . . 43 Chapter A-3 GST Transition – Time limits and limitation periods . . . . . . . . . . . . . . 55 3.1 Action points after the Appointed Day (AD). . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.2 Stock holding periods as on Appointed Day (AD) for claiming input tax credit.56 3.3 Time Limits of removal/dispatch before the Appointed Day (AD) (in case of return of goods after the AD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Chapter A-4 Non-creditable goods/services and supplies under GST. . . . . . . . . . . . 59 4.1 Non creditable goods/services/supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Chapter A-5 Returns under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 5.1 Types of returns or reports and periodicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 5.2 Person-wise returns and periodicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Chapter A-6 Penalties and offences under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . 67 6.1 Penalties under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 6.2 Offences under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 xv

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6.2.1 6.2.2

Nature of acts regarded as offences (Sec 132). . . . . . . . . . . . . . . . . . 70 Quantum of punishment for offences stated in (A) (Sec 132). . . . . . 71

Chapter A-7 Getting ready for smooth transition to GST – Way forward. . . . . . . . . 73 7.1 Awareness and knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 7.2 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 7.2.1 Existing registration - transition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Circumstances when fresh registration is required even 7.2.2 though the taxpayer has already been registered under the earlier law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 7.2.3 New registration for e-commerce operator. . . . . . . . . . . . . . . . . . . . . 74 7.3 Tax credit on the closing stock as on the appointed day. . . . . . . . . . . . . . . . . . . 74 7.4 Tax credit balance available in the returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 7.5 Tax credit balance not available in the returns . . . . . . . . . . . . . . . . . . . . . . . . . . 75 7.6 Additional restrictions for claiming input tax credit. . . . . . . . . . . . . . . . . . . . . . 76 7.7 Determination of output tax and raising of invoice in time. . . . . . . . . . . . . . . . . 76 7.8 Inventory held in stock or books of accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 7.9 Existing exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 7.10 Existing long term contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 7.11 Taxpayers planning to sell their fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.12 Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.13 Invoices and records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.14 Additional working capital requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 7.15 Determination of cost or price structure in the GST. . . . . . . . . . . . . . . . . . . . . . 81 7.16 Goods at maximum retail price (MRP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 7.17 Updating of software. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 7.18 Human resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 7.19 Marketing model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Chapter A-8 GST, a “One Nation One Tax”– Critical study . . . . . . . . . . . . . . . . . . . 85 8.1 Structure of GST in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 8.2 Is GST really a “One Nation One Tax”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Chapter A-9 Seamless Input Tax Credit in GST– Exceptions – Critical Study. . . . . 89 PART B COMMENTARY Chapter B-1 Existing indirect tax structure in India. . . . . . . . . . . . . . . . . . . . . . . 97 1.1 Framework of Constitution of India in respect of taxation. . . . . . . . . . . . . . . . . 97 1.2 Main indirect taxes or duties in India at present. . . . . . . . . . . . . . . . . . . . . . . . . 98 1.3 Customs duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 xvi

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1.4 1.5 1.6

1.7 1.8

Excise duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Service tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 State value added tax (VAT) or central sales tax(CST). . . . . . . . . . . . . . . . . . . 102 1.6.1 Value added tax (VAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 1.6.2 Enactment of the Central Sales Tax Act, 1956 (CST Act). . . . . . . . 104 Other important indirect taxes or duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Shortcomings of the present structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Chapter B-2 GST – concept, features and advantages and Constitutional Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 2.1 What is GST and why GST?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 2.2 101st Constitutional Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 2.2.1 Statement of Objects & Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 2.2.2 Insertion of new Article 246A – Simultaneous powers . . . . . . . . . . 109 2.2.3 Insertion of new Article 246A – Levy of GST. . . . . . . . . . . . . . . . . 109 2.2.4 Insertion of new Article 269A – Levy of integrated GST . . . . . . . . 110 2.2.5 Distribution of IGST and CGST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 2.2.6 Creation of GST Council – Article 279A. . . . . . . . . . . . . . . . . . . . . 110 2.2.7 Other amendments in the Constitutions. . . . . . . . . . . . . . . . . . . . . . . 111 2.3 Features of Indian GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 2.4 Illustration on GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 2.5 Illustrations on GST [As given in the first discussion paper]. . . . . . . . . . . . . . 117 2.5.1 In relation to supply of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 2.5.2 In relation to supply of services – Illustration . . . . . . . . . . . . . . . . . 118 2.6 Present indirect tax structure versus GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 2.7 Advantages of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 2.8 Documents released by the government on GST so far (as on 1 May 2017) . . 125 2.9 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Chapter B-3 Taxes or duties to be subsumed in the GST. . . . . . . . . . . . . . . . . . . . . 129 3.1 Taxes or duties to be subsumed in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 3.2 Taxes or duties not to be subsumed in GST . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 3.2.1 GST will not subsume following central taxes/duties . . . . . . . . . . . 130 3.2.2 GST will not subsume following state taxes/duties. . . . . . . . . . . . . 130 3.3 Special status of tobacco and its products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 3.4 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Chapter B-4 GST Council and its functions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 4.1 What is GST Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 4.2 Manner of decision by the GST Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 4.3 Role and functions of the GST Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 4.4 Meetings of the GST Council and its conclusions. . . . . . . . . . . . . . . . . . . . . . . 135 xvii

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Chapter B-5 Whether a person is liable to pay GST − steps . . . . . . . . . . . . . . . . . . 139 Chapter B-6 Key definitions under the GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 6.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 6.2 General interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 6.3 Definitions relating to Goods, Services, Business, etc . . . . . . . . . . . . . . . . . . . 145 6.3.1 Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Actionable claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 6.3.2 6.3.3 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 6.3.4 Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 6.3.5 Input. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 6.3.6 Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 6.3.7 Telecommunication service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 6.3.8 Input service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 6.3.9 Capital Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 6.3.10 Motor vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 6.3.11 Voucher. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 6.3.12 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 6.3.13 Manufacture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 6.3.14 Job work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 6.3.15 Works contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 6.3.16 Electronic commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 6.3.17 Deemed Exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 6.3.18 Online information and database access or retrieval services . . . . . 158 6.4 Definitions relating to Person (Supplier, Recipient, etc). . . . . . . . . . . . . . . . . . 159 6.4.1 Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 6.4.2 Family. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 6.4.3 Taxable person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 6.4.4 Registered person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 6.4.5 Non-resident taxable person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 6.4.6 Casual taxable person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 6.4.7 Supplier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 6.4.8 Recipient. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 6.4.9 Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 6.4.10 Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 6.4.11 Agriculturist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Associated enterprise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 6.4.12 6.4.13 Business vertical. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 6.4.14 Electronic commerce operator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 6.4.15 Input Service Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 6.4.16 Special Economic Zone developer. . . . . . . . . . . . . . . . . . . . . . . . . . 168 xviii

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6.5

6.6

6.7

6.4.17 Intermediary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 6.4.18 Non-taxable online recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Definitions relating to Supply, Export, Import, etc. . . . . . . . . . . . . . . . . . . . . . 169 6.5.1 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 6.5.2 Taxable supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 6.5.3 Non-taxable supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Exempt supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 6.5.4 6.5.5 Intra-State supply of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 6.5.6 Intra-State supply of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 6.5.7 Continuous supply of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 6.5.8 Continuous supply of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 6.5.9 Inward supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 6.5.10 Outward supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 6.5.11 Composite supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 6.5.12 Mixed supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 6.5.13 Principal supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 6.5.14 Zero rated supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 6.5.15 Place of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 6.5.16 Export of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 6.5.17 Export of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 6.5.18 Import of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 6.5.19 Import of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 6.5.20 Customs frontiers of India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 6.5.21 Special Economic Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 6.5.22 Continuous journey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 6.5.23 Removal of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Definitions relating to place, address, location, etc. . . . . . . . . . . . . . . . . . . . . . 176 6.6.1 Principal place of business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 6.6.2 Place of business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 6.6.3 Location of the supplier of services. . . . . . . . . . . . . . . . . . . . . . . . . 177 6.6.4 Location of the recipient of services. . . . . . . . . . . . . . . . . . . . . . . . . 177 6.6.5 Fixed establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 6.6.6 Usual place of residence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 6.6.7 Address on record. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 6.6.8 Address of delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Definitions relating to Computation of Turnover, Tax, etc. . . . . . . . . . . . . . . . 178 6.7.1 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 6.7.2 Aggregate turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 6.7.3 Turnover in a State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 6.7.4 Output tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 6.7.5 Input tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 xix

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6.8 6.9 6.10

6.11 6.12 6.13

6.14

6.7.6 Input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 6.7.7 Market value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 6.7.8 Tax period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Definitions relating to Returns, Invoice, Documents, Records, etc. . . . . . . . . . 183 Definitions relating to Tax, Cess, Acts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Definitions relating to Assessment, Audit, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 186 6.10.1 Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 6.10.2 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Definitions relating to Professionals and Practitioners. . . . . . . . . . . . . . . . . . . 187 Definitions relating to GST Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 Definitions relating to State, Territory, Government, etc. . . . . . . . . . . . . . . . . . 189 6.13.1 Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 6.13.2 Local authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 6.13.3 State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 6.13.4 Union Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 6.13.5 India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

Chapter B-7 Supply – meaning, time and valuation. . . . . . . . . . . . . . . . . . . . . . . . . 193 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 7.1 Meaning of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 7.1.1 Meaning of the term “supply” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 7.1.2 Whether an activity is “supply of goods” or supply of service” -Matters listed in Schedule II. . . . . . . . . . . . . . . . . . . . . . . 196 7.1.3 Activities or transactions which shall be treated neither as supply of goods nor as supply of services - Schedule III. . . . . . . . . 198 7.1.4 Powers of the government in respect of supply. . . . . . . . . . . . . . . . 199 7.1.5 Composite or mixed supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 7.1.6 Meaning of the term “consideration”. . . . . . . . . . . . . . . . . . . . . . . . 201 7.1.7 Whether supply by an individual, who is not engaged in business, also falls within the definition?. . . . . . . . . . . . . . . . . . . . . 202 7.1.8 Whether “supply” includes supply without the profit motive, such as, sale of scrap by transport corporation to reduce space?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 7.1.9 Whether the term “supply” includes stock transfer within the entity?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 Whether stock transfer (of goods) within the same entity 7.1.10 will be taxable as “goods” or as “service”?. . . . . . . . . . . . . . . . . . . 203 7.1.11 Can “recipient of supply” be treated as “supplier?. . . . . . . . . . . . . . 204 7.1.12 What is “continuous supply”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 7.1.13 What is “outward supply” and “inward supply”?. . . . . . . . . . . . . . . 205 xx

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7.2

7.3

7.4

7.5

Time of supply of goods – when taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 7.2.1 Time of supply of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 7.2.2 Time of supply of vouchers, by whatever named called . . . . . . . . . 208 7.2.3 Supply relating to interest, late fee or penalty . . . . . . . . . . . . . . . . . 209 7.2.4 What are the provisions where time of supply could not be determined in accordance with earlier provisions? . . . . . . . . . . . . . 209 Time of supply of services – when taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 7.3.1 Time of supply in case of services. . . . . . . . . . . . . . . . . . . . . . . . . . 209 7.3.2 Time of supply of services subject to reverse charge. . . . . . . . . . . . 210 7.3.3 What is the time of supply of vouchers, by whatever named called?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 7.3.4 Is there any special provision in relation to the “associated enterprises”?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 7.3.5 Supply relating to interest, late fee or penalty . . . . . . . . . . . . . . . . . 211 7.3.6 What are the provisions where time of supply could not be determined in accordance with earlier provisions? . . . . . . . . . . . . . 211 Change in rates of tax – Goods or Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 7.4.1 Time of supply of goods and/or services in case of change in effective rate of tax (CERT) of supply of goods and /or services. . . . 212 Value of supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 7.5.1 Value of taxable supply for levy of GST? . . . . . . . . . . . . . . . . . . . . 213 7.5.2 When are two persons stated to be related to each other? . . . . . . . . 213 7.5.3 Inclusion of amounts while determining the transaction value . . . . 214 7.5.4 Exclusion of discounts while determining transaction value. . . . . . 214 7.5.5 When is a person required to refer the Valuation Rules?. . . . . . . . . 215 7.5.6 Value of supply where supply is for a consideration not wholly in money – Rule 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 7.5.7 Value of supply taking place between related persons or the distinct persons (inter-unit supply) – Rule 2. . . . . . . . . . . . . . . . . . . 216 Value of supply made or received through an agent – Rule 3 . . . . . 217 7.5.8 7.5.9 Manner of valuation prescribed in Rules 4 & 5. . . . . . . . . . . . . . . . 217 7.5.10 Manner of valuation in specified activities – Rule 6 . . . . . . . . . . . . 218 7.5.11 Value of supply of services in case of pure agent – Rule 7 . . . . . . . 220 7.5.12 Exchange rate of currency, other than INR – Rule 8. . . . . . . . . . . . 221

Chapter B-8 Concept of IGST - Inter-state supply, local supply, and imports. . . . . 223 8.1 Present indirect tax structure – Inter-state transactions. . . . . . . . . . . . . . . . . . . 223 8.1.1 Features of Central Sales Tax Act, 1956 (CST Act). . . . . . . . . . . . . 224 8.1.2 Tax on Import of goods into India . . . . . . . . . . . . . . . . . . . . . . . . . . 225 8.1.3 Tax on import of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 8.2 IGST model for inter-state transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 xxi

GST Guide with Ready Reckoner

8.2.1 8.2.2 8.2.3

Meaning of the term “IGST” and its need. . . . . . . . . . . . . . . . . . . . 225 Features of the “IGST” mechanism. . . . . . . . . . . . . . . . . . . . . . . . . 226 Supply of goods or services in the course of inter-state trade or commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 8.2.4 Supply of goods or services within the state . . . . . . . . . . . . . . . . . . 228 8.2.5 Supplies in territorial water [Sec 9 of the IGST Act]. . . . . . . . . . . . 229 Illustration – Computation of inter-state GST (IGST). . . . . . . . . . . 229 8.2.6 8.3 Determination of place of supply (POS) of Goods and situs . . . . . . . . . . . . . . 230 8.3.1 Supply of goods other than supply of goods imported into, or exported from India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 8.3.2 Supply of goods imported into, or exported from India [Section 11]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 8.4 Determination of place of supply (POS) of services and situs . . . . . . . . . . . . . 235 8.4.1 Supply of services where the location of supplier of service and the location of the recipient of service (both) are in India. . . . . 235 8.4.2 Supply of services where location of supplier or location of the recipient is outside India [Section 13] . . . . . . . . . . . . . . . . . . . . 239 8.5 Taxation of import of goods and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 8.5.1 Import of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 8.5.2 Import of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 8.5.3 High seas sale of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 8.6 Transfers of goods/services to branch/agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 247 8.7 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 Chapter B-9 Goods v. services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 9.1 Why distinction is required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 9.2 Meaning of the term “goods” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 9.3 Meaning of the term “services”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 9.4 Intangible goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 9.5 Matters specified in Schedule II – Goods (or) Service. . . . . . . . . . . . . . . . . . . 254 Chapter B-10 Incidence of tax, Rates of GST, Exemptions and Zero rated supply. . 257 10.1 Levy and collection of GST (Incidence of Tax) . . . . . . . . . . . . . . . . . . . . . . . . 257 10.1.1 Levy of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 10.1.2 Levy of compensation cess. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 10.1.3 Collection of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 10.2 Rates of GST in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 10.3 RNR –Meaning, Determination and Globally. . . . . . . . . . . . . . . . . . . . . . . . . . 261 10.3.1 Meaning of Revenue Neutral Rate (RNR). . . . . . . . . . . . . . . . . . . . 261 10.3.2 Determination of RNR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 10.3.3 Factors for determination of RNR . . . . . . . . . . . . . . . . . . . . . . . . . . 262 10.3.4 Success of GST – Depends upon ideal RNR. . . . . . . . . . . . . . . . . . 263 xxii

Table of contents

10.3.5 GST or VAT rate globally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 10.4 Exemptions and exempt supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 10.4.1 Power to grant exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 10.4.2 Meaning of exempted supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 10.4.3 Meaning of non-taxable supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 10.5 Non-taxable persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 Who is a taxable person? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 10.5.1 10.5.2 Agriculturist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 10.6 Zero rated supply and export of goods and services. . . . . . . . . . . . . . . . . . . . . 267 10.6.1 Meaning of zero-rated supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 10.6.2 Eligibility of input tax credit or refund on zero-rated supply [Sec 16 of the IGST Act] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 10.6.3 Export of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 10.6.4 Export of services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268 10.6.5 Deemed export. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 10.7 Threshold limit (Basic exemption) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 10.7.1 Exemption limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 10.7.2 When the threshold limit is not applicable?. . . . . . . . . . . . . . . . . . . 270 10.8 Calculation of output tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 10.8.1 Meaning of output tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 10.8.2 Liability of the principal and agent. . . . . . . . . . . . . . . . . . . . . . . . . . 271 10.8.3 Steps for computation of output tax. . . . . . . . . . . . . . . . . . . . . . . . . 272 10.9 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272 Chapter B-11 Input tax credit and input service distributor. . . . . . . . . . . . . . . . . . . . 273 11.1 Meaning of input tax credit (ITC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 11.2 Meanings of capital goods, input and input service . . . . . . . . . . . . . . . . . . . . . 276 11.2.1 Meaning of “capital goods” – [Section 2(19)]. . . . . . . . . . . . . . . . . 276 11.2.2 Meaning of “input” – [Section 2(59)]. . . . . . . . . . . . . . . . . . . . . . . . 276 11.2.3 Meaning of “input service” – [Section 2(60)] . . . . . . . . . . . . . . . . . 276 11.3 ITC during the transition period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 11.4 Conditions & restrictions in claiming of input tax credit (ITC) [Sec 16/17]. . . . 276 Section 16(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 11.4.1 Conditions for claiming ITC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 11.4.2 Manner of claiming ITC [Section 16(1)]. . . . . . . . . . . . . . . . . . . . . 279 11.4.3 Overall time limit for claiming ITC [Section 16(4)] . . . . . . . . . . . . 279 Restrictions in claiming ITC [Section 17]. . . . . . . . . . . . . . . . . . . . 280 11.4.4 11.4.5 Banking Co., Financial Institutions and NBFC. . . . . . . . . . . . . . . . 286 11.4.6 Recovery of ITC wrongly taken. . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 11.5 Non-creditable goods or services [Sec 17(5)]. . . . . . . . . . . . . . . . . . . . . . . . . . 287 11.6 ITC in special circumstances [Sec 18] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 xxiii

GST Guide with Ready Reckoner

11.6.1

Eligible for ITC on stock to a taxable person, who has applied for registration mandatorily for the first time . . . . . . . . . . . 290 11.6.2 Eligible for ITC on stock to a taxable person, who has applied for registration voluntarily under sec 25(3)?. . . . . . . . . . . . 291 11.6.3 If a taxable person ceases to pay tax under the composition levy and pays tax under the regular scheme, whether he would be entitled for ITC on stock?. . . . . . . . . . . . . . . . . . . . . . . . . 291 11.6.4 Where an exempt supply becomes taxable supply, whether the person would be entitled for the ITC on stock?. . . . . . . . . . . . . 292 11.6.5 Manner prescribed for claiming ITC in Para 11.6.1 to 11.6.4 above [Rule 5(1) of the ITC Rules] . . . . . . . . . . . . . . . . . . . . . . . . . 293 11.6.6 What would happen to the ITC where there is a change in the constitution of a registered taxable person?. . . . . . . . . . . . . . . . 293 11.6.7 What would happen to the ITC if the outward taxable supplies subsequently become exempt absolutely?. . . . . . . . . . . . . 294 11.6.8 What would happen to the ITC where the taxable person switches over from regular scheme to composition scheme?. . . . . . 295 11.6.9 What would happen to the ITC where the registration is cancelled under sec 29? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 11.6.10 Supply of capital goods on which ITC has been claimed earlier. . . 296 11.7 Goods transferred for job-work [Sec 19]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296 11.8 Utilization of credit [Section 49(5)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 11.9 Input service distributor (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298 11.9.1 Who is input service distributor?. . . . . . . . . . . . . . . . . . . . . . . . . . . 298 11.9.2 Whether ISD requires registration under GST and file return? . . . . 298 11.9.3 Conditions/restrictions and procedure for distribution of credit [Section 20(2) read with Rule 4 of the Draft ITC Rules]. . . . 298 11.9.4 Manner of distribution of credit [Section 20(1) read with Rule 4 of the Draft ITC Rules]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 11.9.5 Manner of recovery of credit excess distributed . . . . . . . . . . . . . . . 303 11.10 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 Chapter B-12 Composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 12.1 Scope and features of the composition levy . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 12.1.1 Who can opt for the composition levy?. . . . . . . . . . . . . . . . . . . . . . 305 12.1.2 Who cannot opt for the composition levy?. . . . . . . . . . . . . . . . . . . . 306 Rate of composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 12.1.3 12.2 Conditions and restrictions under the composition levy. . . . . . . . . . . . . . . . . . 307 12.2.1 Conditions and restrictions Specified in the GST Act . . . . . . . . . . . 307 12.2.2 Conditions and restrictions specified in the Draft Composition Rules [Rule 3]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 xxiv

Table of contents

12.3 Procedure to opt for the composition levy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 12.3.1 Procedure to opt for composition levy. . . . . . . . . . . . . . . . . . . . . . . 308 12.4 Input tax credit on switch over to composition levy. . . . . . . . . . . . . . . . . . . . . 310 12.4.1 Reversal of input tax credit where the taxable person switches over from regular method to composition levy. . . . . . . . . 310 12.4.2 Eligibility of the input tax credit where a taxable person, who was paying tax under the composition levy, starts paying tax under the regular method . . . . . . . . . . . . . . . . . . . . . . . . 311 12.5 Validity of the composition levy [Rule 4]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312 12.6 Cancellation of permission or registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 Chapter B-13 Job work – special provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 13.1 Who is “job-worker” and “principal”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 13.1.1 Meaning of ‘job work’ and ‘job worker’. . . . . . . . . . . . . . . . . . . . . 315 13.1.2 Whether the term ‘job work’ includes ‘works contract’. . . . . . . . . . 316 13.1.3 Meaning of principal for the purposes of these provisions . . . . . . . 316 13.1.4 Treatment of job work as ‘service’. . . . . . . . . . . . . . . . . . . . . . . . . . 316 13.2 Privileges available to the principal and restrictions. . . . . . . . . . . . . . . . . . . . . 317 13.2.1 Input tax credit on inputs and capital goods sent for job work [Sec 19]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 13.2.2 Special procedure for removal of goods under sec 143. . . . . . . . . . 317 13.2.3 Supply of goods by the principal from the place of job worker. . . . 319 13.2.4 Manner of dispatch and return prescribed in Rule 10 of Draft ITC Rules:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 13.2.5 Supply of waste or scrap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 13.3 Job-worker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 13.3.1 Whether a job-worker is required to obtain registration?. . . . . . . . . 320 13.3.2 Whether goods, directly supplied from the job-worker’s premises, will be included in the aggregate turnover of job worker?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 Chapter B-14 E-commerce, TCS & supply of online data– special provisions. . . . . 321 14.1 E-commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 14.1.1 Meaning of ‘e-commerce’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 14.1.2 Omission of the term ‘Aggregator’ in the GST Act. . . . . . . . . . . . . 322 14.1.3 Activities of the e-commerce operator [ECO]. . . . . . . . . . . . . . . . . 322 14.1.4 Threshold limit for registration - Not applicable to ECO. . . . . . . . . 323 When the ECO itself be deemed as supplier . . . . . . . . . . . . . . . . . . 323 14.1.5 14.2 Procedure for registration or cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324 14.2.1 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324 14.2.2 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324 14.3 Collection of tax (TCS) by e-commerce operators. . . . . . . . . . . . . . . . . . . . . . 324 xxv

GST Guide with Ready Reckoner

14.3.1 14.3.2 14.3.3 14.3.4

Time of collection of TCS and its value. . . . . . . . . . . . . . . . . . . . . . 324 Rate of TCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325 Other obligations of the e-commerce operators. . . . . . . . . . . . . . . . 325 Claim of credit for the amount of TCS deposited by the ECO by the concerned supplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326 14.3.5 Whether the statement filed by the ECO be verified with the outward supplies of the actual supplier and what would happen in case of mismatch? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 14.3.6 Powers of the proper officer to issue notice upon the ECO. . . . . . . 328 14.3.7 Whether there could be any other penalties on ECO?. . . . . . . . . . . 328 14.4 Special provision for payment of tax by a supplier of online information and database access or retrieval services (OIDAR) located outside India to specified person in the taxable territory. . . . . . . . . . . . . . . . . . 329 14.4.1 Applicability of the provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 14.4.2 Meaning of “online information and database access or retrieval services�. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 14.4.3 Role of intermediary who arranges the services. . . . . . . . . . . . . . . . 329 14.4.4 Registration and payment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 Chapter B-15 Registration, Amendment and Cancellation . . . . . . . . . . . . . . . . . . . . 331 15.1 Need for registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 15.1.1 Why do I require registration?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 15.2 Types of registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332 15.3 Mandatory registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332 15.3.1 Who is liable for registration mandatorily under GST?. . . . . . . . . . 332 15.3.2 Time limit for taking registration [Section 25(1)] . . . . . . . . . . . . . . 333 15.3.3 Who is not liable to take registration? . . . . . . . . . . . . . . . . . . . . . . . 334 15.3.4 How to calculate aggregate turnover? . . . . . . . . . . . . . . . . . . . . . . . 334 15.3.5 When is the threshold limit not applicable?. . . . . . . . . . . . . . . . . . . 335 15.3.6 Whether registration is required in each state/UT from where the person having same PAN is operating?. . . . . . . . . . . . . . 336 15.3.7 Whether the person can obtain separate registration for multiple business verticals in a state/UT? . . . . . . . . . . . . . . . . . . . . 336 15.4 Existing registered persons-transitional provisions. . . . . . . . . . . . . . . . . . . . . . 337 15.4.1 Liability for registration for existing registered persons? . . . . . . . . 337 15.4.2 Points/Issues regarding migration . . . . . . . . . . . . . . . . . . . . . . . . . . 338 Information and documents required to enroll with GST. . . . . . . . . 340 15.4.3 15.4.4 What will be the procedure of migration of registration to GST? . . . 340 15.5 Voluntary registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 15.6 Registration by department (Suo-moto registration). . . . . . . . . . . . . . . . . . . . . 343 15.7 Input service distributor (ISD). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 xxvi

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15.8 Casual taxable person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 15.9 Non-resident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 15.10 Unique Identity Number (UID) by UN Bodies etc. . . . . . . . . . . . . . . . . . . . . . 346 15.11 Unique Identity Number (UID) for government organization . . . . . . . . . . . . . 347 15.12 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 15.12.1 Job Worker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 15.12.2 SEZ Developer/SEZ Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 15.12.3 Supply from Territorial Waters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 15.12.4 Grant of registration to a person supplying online information and data base access or retrieval (OIDAR) services from a place outside India to a non-taxable online recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 15.12.5 Grant of registration to persons required to deduct tax at source (TDS) or to collect tax at source (TCS) . . . . . . . . . . . . . . . . 348 15.13 Procedure for registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 15.13.1 Mandatory contents on the registration form. . . . . . . . . . . . . . . . . . 348 15.13.2 Documents required for registration. . . . . . . . . . . . . . . . . . . . . . . . . 348 15.13.3 What is the procedure for registration (other than nonresident, OIDAR services under sec 14-IGST Act and person required to deduct TDS or collect TCS)?. . . . . . . . . . . . . . . 350 15.13.4 Whether all places of businesses are to be declared at the time of registration?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 15.13.5 Whether separate enrolment is required with Central and State authorities under GST?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 15.13.6 Whether small dealers or dealers having no IT infrastructure have any system for facilitation? . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 15.14 Effective date of Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 15.15 Consequences of not applying for registration . . . . . . . . . . . . . . . . . . . . . . . . . 355 15.16 Format of registration number (GSTIN). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 15.17 Amendment of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 15.17.1 Circumstances for amendment of registration. . . . . . . . . . . . . . . . . 356 15.17.2 Procedure for amendment of registration. . . . . . . . . . . . . . . . . . . . . 357 15.18 Cancellation of registration and revocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 358 15.18.1 Circumstances for cancellation of registration. . . . . . . . . . . . . . . . . 358 15.18.2 Procedure for cancellation of registration . . . . . . . . . . . . . . . . . . . . 359 15.18.3 Revocation of the cancellation order . . . . . . . . . . . . . . . . . . . . . . . . 361 15.19 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 15.20 Forms as per Revised Draft GST Registration Rules . . . . . . . . . . . . . . . . . . . . 364 Annexure: Documentation/Information for migration. . . . . . . . . . . . . . . . . . . . . . . . . 367

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Chapter B-16 Returns under the GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 16.1 Purpose of returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 16.2 Persons responsible for filing returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 16.2.1 Whether there shall be separate returns for SGST, CGST, etc?. . . . 374 16.2.2 Who are responsible for filing the returns? . . . . . . . . . . . . . . . . . . . 374 16.3 Types of returns or reports and periodicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 16.4 Person-wise returns and periodicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 16.5 Other features of returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 16.6 Returns process flow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 16.7 Returns for outward supplies [GSTR–1]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 16.7.1 Persons liable to furnish GSTR-1. . . . . . . . . . . . . . . . . . . . . . . . . . . 378 16.7.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 16.7.3 Field structures of various tables in Form [GSTR-1]. . . . . . . . . . . . 380 16.7.4 Return structure for export and deemed export supply . . . . . . . . . . 380 16.7.5 Credit/debit notes [Section 34]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 16.7.6 Advances received against a supply to be made in future [Section 12 & 13]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 16.7.7 Can the taxable person submit the GSTR-1 details before the due date?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 16.7.8 Whether value for each transaction will be fed? What shall be the value if there is no consideration?. . . . . . . . . . . . . . . . . . . . . 381 16.7.9 Rectification of return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 16.7.10 Information availability to Recipients . . . . . . . . . . . . . . . . . . . . . . . 381 16.7.11 Corrections by Recipients & Acceptance. . . . . . . . . . . . . . . . . . . . . 381 16.8 Returns for inward supplies [GSTR–2]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 16.8.1 Process flow of form GSTR-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 16.8.2 Persons liable to furnish GSTR-2. . . . . . . . . . . . . . . . . . . . . . . . . . . 382 16.8.3 Components of form GSTR-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382 16.8.4 Corrections by Recipients & Acceptance. . . . . . . . . . . . . . . . . . . . . 383 16.8.5 Rectification of return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 16.8.6 Field Structures of various tables in form GSTR-2. . . . . . . . . . . . . 384 16.9 Monthly return [GSTR – 3]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 16.9.1 Persons liable to furnish GSTR-3. . . . . . . . . . . . . . . . . . . . . . . . . . . 384 16.9.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 16.9.3 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387 16.10 Quarterly return by composition taxpayers [GSTR–4]. . . . . . . . . . . . . . . . . . . 388 16.10.1 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388 16.10.2 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388 16.11 Non-resident foreign taxpayer [GSTR–5]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 16.11.1 Meaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 16.11.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 xxviii

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16.11.3 Due date and form of return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 16.11.4 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390 16.12 ISD Return [GSTR–6]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 16.12.1 Meaning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 16.12.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 16.12.3 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 16.13 TDS Return [GSTR – 7]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392 16.13.1 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392 16.13.2 Return submission or TDS certificate. . . . . . . . . . . . . . . . . . . . . . . . 392 16.13.3 Whether TDS certificates are to be uploaded?. . . . . . . . . . . . . . . . . 393 16.13.4 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 16.14 Return by e-commerce operator [GSTR–8] . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 16.14.1 Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 16.14.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 16.14.3 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 16.15 Inward supplies details by persons having UIN [GSTR–11] . . . . . . . . . . . . . . 395 16.15.1 Return submission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 16.15.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 16.16 Annual return [GSTR–9]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395 16.16.1 Which registered person needs to submit annual return?. . . . . . . . . 395 16.16.2 Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 16.17 Annual return for composition taxpayers [GSTR–9A]. . . . . . . . . . . . . . . . . . . 397 16.18 Acknowledgement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398 16.19 ITC (input tax credit) eligibility & matching . . . . . . . . . . . . . . . . . . . . . . . . . . 398 16.19.1 Provisional eligibility of ITC [Section 41]. . . . . . . . . . . . . . . . . . . . 398 16.19.2 Matching of ITC [Section 42] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398 16.19.3 Illustration [Section 42] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 16.19.4 Matching, reversal and reclaim of reduction in output tax liability [Section 43]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 16.19.5 Matching process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 16.20 Revision of return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402 16.21 Non-filers, late filers & short filers of returns. . . . . . . . . . . . . . . . . . . . . . . . . . 403 16.21.1 Non-filers & late return filers [Section 46]. . . . . . . . . . . . . . . . . . . . 403 16.21.2 Short filers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 16.22 First return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 16.23 Final return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 16.24 Late fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 16.25 Extension of filing dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 16.26 Methods of uploading the returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 16.26.1 How the returns can be uploaded?. . . . . . . . . . . . . . . . . . . . . . . . . . 406

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16.26.2

Whether scanned copies of invoices are to be uploaded along with returns?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 16.27 Signing of returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406 16.28 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 16.29 Field structure of tables in Form GSTR-01 and GSTR-02. . . . . . . . . . . . . . . . 409 Chapter B-17 Payment of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 17.1 Broad features. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 17.2 Nature of taxes to be paid under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 17.3 Who is liable for payment of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416 17.4 Methods of payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416 17.5 Modes of payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 17.6 Payment of GST - Other points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420 17.6.1 Sequence of discharge of dues [Section 49(8)] . . . . . . . . . . . . . . . . 420 17.6.2 Is pre-registration of credit card necessary in the GSTN portal for the GST payment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 17.6.3 Payment of tax in installments [Section 80]. . . . . . . . . . . . . . . . . . . 421 17.6.4 Identification number for each transaction [Rule 4]. . . . . . . . . . . . . 421 17.6.5 Date of deposit of the tax dues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 17.6.6 Can payment of Over the Counter (OTC) exceed INR 10,000/-?. . . 422 17.6.7 Whether mandate form needs to be generated for payment by way of NEFT/RTGS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 17.7 Role of the banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422 17.7.1 What is role of banks in the GST regime?. . . . . . . . . . . . . . . . . . . . 422 17.7.2 What is an E-FPB?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 17.8 Basic features of challans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 17.8.1 Who can generate challans?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 17.8.2 Process of generation of challans. . . . . . . . . . . . . . . . . . . . . . . . . . . 424 17.8.3 Challan identification number (CIN) and its relevance . . . . . . . . . . 424 17.8.4 What would happen if payment is made but CIN is not generated?. . 425 17.9 Tax wrongly deposited – IGST v CGST/SGST. . . . . . . . . . . . . . . . . . . . . . . . . 425 17.9.1 From inter-state supply to intra-state supply . . . . . . . . . . . . . . . . . . 425 17.9.2 From intra-state supply to inter-state supply . . . . . . . . . . . . . . . . . . 425 17.10 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 17.11 Draft GST payment formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427 Chapter B-18 Tax deduction at source. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 Tax deduction at source (TDS) [Section 51]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 18.1 Who is required to deduct TDS?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 18.2 Rate of TDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 18.3 When to deduct TDS? Is there any basic exemption?. . . . . . . . . . . . . . . . . . . . 430 18.4 Which goods or services are covered? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 xxx

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18.5 Obligations or responsibilities of the deductor. . . . . . . . . . . . . . . . . . . . . . . . . 430 18.6 Procedure for TDS registration or cancellation. . . . . . . . . . . . . . . . . . . . . . . . . 431 18.6.1 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 18.6.2 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431 18.7 Amendment of TDS Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 18.7.1 Circumstances for amendment of registration. . . . . . . . . . . . . . . . . 432 Procedure for amendment of registration. . . . . . . . . . . . . . . . . . . . . 432 18.7.2 18.8 How will the amount of TDS be utilized by the supplier? . . . . . . . . . . . . . . . . 433 18.9 What would happen if there is excess or erroneous deduction?. . . . . . . . . . . . 433 18.10 Penalties on deductor for various defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 18.11 Transitional provisions in respect of TDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 Chapter B-19 Refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 19.1 Circumstances resulting in refund to taxpayer . . . . . . . . . . . . . . . . . . . . . . . . . 435 19.1.1 Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 19.1.2 Refund of unutilized input tax credit. . . . . . . . . . . . . . . . . . . . . . . . 436 19.1.3 Refund related to export of goods or services . . . . . . . . . . . . . . . . . 436 19.1.4 Refund related to SEZ developer/SEZ unit . . . . . . . . . . . . . . . . . . . 437 19.1.5 Refund of IGST paid on supply of goods to outbound tourist. . . . . 437 19.1.6 Refund to United Nation Organisations, embassies, diplomats, and other persons notified under sec 55. . . . . . . . . . . . . 437 19.2 Time limit for filing of refund application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 19.2.1 Time limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 19.2.2 Meaning of the term “relevant date” . . . . . . . . . . . . . . . . . . . . . . . . 438 19.3 Procedure for claiming refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439 19.3.1 Documents to be submitted for claiming refund . . . . . . . . . . . . . . . 439 19.3.2 Refund related to input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 442 19.3.3 Tax wrongly deposited – IGST v CGST/SGST. . . . . . . . . . . . . . . . 442 19.4 Disposal of refund application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 19.4.1 Acknowledgement of refund claim application. . . . . . . . . . . . . . . . 442 19.4.2 Provisional refund to exporter of goods or services. . . . . . . . . . . . . 443 19.4.3 Disposal of refund related to zero-rated supply of goods and/ or services [Rule 1(4)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443 19.4.4 Disposal of refund related to casual or non-resident taxable persons [Sec 54(13)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 19.4.5 Refund to United Nation Organisations, embassies, diplomats, and other persons notified under sec 55. . . . . . . . . . . . . 444 19.4.6 Time limit for disposal of refund claim. . . . . . . . . . . . . . . . . . . . . . 445 19.4.7 Order sanctioning refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 19.4.8 Circumstances when amount of refund shall be credited to the Consumer Welfare Fund and administration of the Fund. . . . . . 446 xxxi

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19.5 Withholding of refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 19.6 Interest on delayed refund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447 19.7 FAQs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447 19.8 Draft GST refund formats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 Chapter B-20 Invoice, accounts and records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 20.1 Tax invoice and its contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 What is the tax invoice?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 20.1.1 20.1.2 Tax invoice v. bill of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 20.1.3 Contents of tax invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 20.1.4 Indication of amount of tax on the tax invoice [Section 33] . . . . . . 451 20.1.5 Time of issuance of tax invoice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 20.1.6 Time and manner of issue of revised invoice. . . . . . . . . . . . . . . . . . 453 20.1.7 Contents of the revised invoice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454 20.1.8 Issuance of invoice in case of reverse charge [Sec 31(3)(f), (g)]. . . 455 20.1.9 Whether issuance of tax invoice is mandatory even for petty amount? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455 20.1.10 Manner of issuance of tax invoice. . . . . . . . . . . . . . . . . . . . . . . . . . 455 20.2 Bill of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 20.2.1 Who is required to issue bill of supply and under what circumstances?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 20.2.2 Contents of bill of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 20.2.3 Whether issuance of bill of supply is mandatory even for petty amount?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 20.3 Receipt voucher in case of advance collection. . . . . . . . . . . . . . . . . . . . . . . . . 457 20.4 Delivery Challan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458 20.5 Credit and debit notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 20.5.1 Circumstances when a debit note or credit note is issued . . . . . . . . 459 20.5.2 Time limit of declaration of credit/debit note in the return [Section 34(2), (4)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461 20.5.3 Contents of a debit or credit note. . . . . . . . . . . . . . . . . . . . . . . . . . . 461 20.6 Tax invoice in case of input service distributor (ISD). . . . . . . . . . . . . . . . . . . . 462 20.7 Tax invoice in case of banks, financial institution & NBFC. . . . . . . . . . . . . . . 463 20.8 Tax invoice in case of goods transport agency (GTA) . . . . . . . . . . . . . . . . . . . 463 20.9 Tax invoice in case of passenger transportation service. . . . . . . . . . . . . . . . . . 463 20.10 Invoice in case of Reverse Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464 20.11 Prohibition of unauthorised collection of tax . . . . . . . . . . . . . . . . . . . . . . . . . . 464 20.12 Accounts and records - maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464 20.12.1 Nature of accounts, records and documents to be maintained. . . . . 464 20.12.2 Where to keep and/or maintain accounts and records . . . . . . . . . . . 469 20.12.3 How to maintain accounts and records. . . . . . . . . . . . . . . . . . . . . . . 469 xxxii

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20.12.4 Obligations of registered persons towards the Proper Officer. . . . . 470 20.13 Generation and maintenance of electronic records. . . . . . . . . . . . . . . . . . . . . . 470 20.14 Accounts and records by custodian of goods . . . . . . . . . . . . . . . . . . . . . . . . . . 471 20.14.1 Owner or operator of warehouse or godown or transporter. . . . . . . 471 20.14.2 Records by a person having custody over goods [Rule 1(18)]. . . . . 472 20.15 Audit of accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472 20.16 Accounts and records - retention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 Chapter B-21 Assessment, audit & determination of tax. . . . . . . . . . . . . . . . . . . . . . 475 21.1 Self-assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 21.2 Provisional assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 21.3 Scrutiny of returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478 21.4 Assessment of non-filers of returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 21.5 Assessment of unregistered persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 21.6 Summary assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480 21.7 Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 21.8 Determination of tax short/not paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 21.8.1 Specific provisions for determination of tax. . . . . . . . . . . . . . . . . . . 483 21.8.2 General provisions for determination of tax [Section 75] . . . . . . . . 485 21.9 Special Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 Chapter B-22 Collection of tax and Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 22.1 Tax collected but not paid to the government. . . . . . . . . . . . . . . . . . . . . . . . . . 489 22.2 Tax wrongfully collected and paid to government . . . . . . . . . . . . . . . . . . . . . . 490 22.3 Recovery proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 22.3.1 Initiation of recovery proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 490 22.3.2 Modes of recovery of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 22.4 Payment of tax and other amount in instalments. . . . . . . . . . . . . . . . . . . . . . . . 492 22.5 Transfer of property to be void in certain cases . . . . . . . . . . . . . . . . . . . . . . . . 493 22.6 Tax to be first charge on property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 22.7 Provisional attachment in certain cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 22.8 Continuation and validation of certain recovery proceedings. . . . . . . . . . . . . . 494 Chapter B-23 Inspection, search & survey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 23.1 Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 23.1.1 The appropriate authority to make the inspection . . . . . . . . . . . . . . 495 23.1.2 Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 Powers of the officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 23.1.3 23.1.4 No authority to collect cheques at the time of survey . . . . . . . . . . . 496 23.1.5 Reason to believe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 23.2 Access to business premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497 23.2.1 The appropriate authority to access to business premises . . . . . . . . 497 xxxiii

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23.3

23.4 23.5 23.6

23.7 23.8 23.9

23.2.2 Powers of the officers and circumstances. . . . . . . . . . . . . . . . . . . . . 497 23.2.3 Obligations and duties of person in charge of business premises . . 498 Search and seizure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 23.3.1 The appropriate authority to authorize search & seizure. . . . . . . . . 498 23.3.2 Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 23.3.3 Period for retention of documents or books. . . . . . . . . . . . . . . . . . . 499 If seizure of goods is impractical. . . . . . . . . . . . . . . . . . . . . . . . . . . 499 23.3.4 23.3.5 Powers of the proper officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 23.3.6 Rights of the person-To take copies of documents seized. . . . . . . . 499 23.3.7 Release of goods on provisional basis. . . . . . . . . . . . . . . . . . . . . . . 500 23.3.8 Return of goods where no notice is served. . . . . . . . . . . . . . . . . . . . 500 23.3.9 Disposal of goods in specified circumstances . . . . . . . . . . . . . . . . . 500 23.3.10 Making of inventory of the seized goods. . . . . . . . . . . . . . . . . . . . . 500 23.3.11 Applicability of the Code of Criminal Procedure. . . . . . . . . . . . . . . 500 23.3.12 Validity of documents seized during illegal search . . . . . . . . . . . . . 500 Inspection of goods in movement & validation. . . . . . . . . . . . . . . . . . . . . . . . . 501 Powers to summon to produce documents/things. . . . . . . . . . . . . . . . . . . . . . . 501 Powers to arrest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 23.6.1 Power of arrest– Circumstances and quantum of punishment. . . . . 502 23.6.2 Appearance before the magistrate within 24 hours . . . . . . . . . . . . . 503 23.6.3 Applicability of the provisions of the Code of Criminal Procedure . 503 Officers of other Departments to assist proper officer. . . . . . . . . . . . . . . . . . . . 503 Powers to make sample purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504 Applicability of CGST provisions to IGST Act . . . . . . . . . . . . . . . . . . . . . . . . 504

Chapter B-24 Inspection of goods in movement and e-way bill . . . . . . . . . . . . . . . . 505 24.1 Inspection of goods in movement (Sec 68 of the GST Act) . . . . . . . . . . . . . . . 505 24.2 E-way bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 24.2.1 Person responsible for furnishing of information and generation of e-way bill [Rule 1(1) of Draft e-way bill Rules] . . . . 505 24.2.2 Value of consignment for mandatory generation of e-way bill . . . . 506 24.2.3 Mode of conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506 24.2.4 How to furnish of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 24.2.5 Whether e-way bill is required for exempted goods. . . . . . . . . . . . . 507 24.2.6 Manner of generation of e-way bill [Rule 1]. . . . . . . . . . . . . . . . . . 507 24.2.7 Generation and acceptance of details in e-way bill . . . . . . . . . . . . . 507 Obligations of person-in-charge of a conveyance . . . . . . . . . . . . . . 508 24.2.8 24.2.9 Validity period of e-way bill [Rule 1(7)] . . . . . . . . . . . . . . . . . . . . . 509 24.2.10 Cancellation of e-way bill [Rule 1(6)]. . . . . . . . . . . . . . . . . . . . . . . 510 24.2.11 Verification of documents and conveyances [Rule 3] . . . . . . . . . . . 510 24.2.12 Inspection and verification of goods [Rule 4] . . . . . . . . . . . . . . . . . 510 xxxiv

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24.2.13

Facility for uploading information regarding detention of vehicle [Rule 5] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 24.2.14 Other provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 24.3 Confiscation of goods and/or conveyances and fine. . . . . . . . . . . . . . . . . . . . . 511 24.3.1 Detention, seizure and release of goods and conveyances in transit [Sec 129 of the GST Act] . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 Circumstances when goods and/or conveyances can be 24.3.2 confiscated [Sec 130 of the GST Act]. . . . . . . . . . . . . . . . . . . . . . . . 512 24.3.3 Is there any penalty in addition to confiscation of goods?. . . . . . . . 512 24.3.4 Can confiscation be avoided by paying any fine or compounding amount?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 Chapter B-25 Penalties and prosecution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 25.1 Penalties under the GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 25.1.1 Defaults and amount of penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . 515 25.1.2 General disciplines related to penalty [Sec 126] . . . . . . . . . . . . . . . 517 25.1.3 Power to impose penalty in certain cases [Sec 127]. . . . . . . . . . . . . 518 25.1.4 Power to waive penalty or fee or both [Sec 128]. . . . . . . . . . . . . . . 518 25.2 Offences under the GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518 25.2.1 Offences and the punishment/fine . . . . . . . . . . . . . . . . . . . . . . . . . . 518 25.2.2 Cognizance of offences [Sec 134] . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Chapter B-26 Appeal, advance ruling and information returns. . . . . . . . . . . . . . . . . 521 26.1 Appeals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521 26.2 Advance ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524 26.2.1 Nature and scope of the Advance Ruling Authority. . . . . . . . . . . . . 524 26.2.2 Questions to be referred to the Advance Ruling Authority . . . . . . . 524 26.2.3 Application to the Advance Ruling Authority . . . . . . . . . . . . . . . . . 525 26.2.4 To whom Ruling Authority is binding. . . . . . . . . . . . . . . . . . . . . . . 525 26.2.5 Time limit of filing and disposal of appeal by the applicant or the GST Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 26.3 Information returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 26.4 Drawal of samples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 26.5 Taking assistance from an expert. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 26.6 GST compliance rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 26.7 Publication of information about the persons. . . . . . . . . . . . . . . . . . . . . . . . . . 527 26.8 Anti-profiteering measure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528 Chapter B-27 Transitional provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 27.1 Existing taxpayers- registration on the appointed day under the Central and the State Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 27.1.1 Liability for registration of existing registered persons in GST. . . . 529 xxxv

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27.1.2 Format of GST Registration Number. . . . . . . . . . . . . . . . . . . . . . . . 530 27.1.3 Points/Issues regarding migration . . . . . . . . . . . . . . . . . . . . . . . . . . 530 27.1.4 Information and documents required to enroll with GST. . . . . . . . . 532 27.1.5 What will be the procedure of migration of registration to GST?. . 532 27.1.6 FAQ Released by CBEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534 27.2 Eligibility of unutilized/unavailed input tax credit. . . . . . . . . . . . . . . . . . . . . . 540 PART A - Central GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 27.2A.1 Carried over amount of Cenvat in the returns on the appointed day– Section 140(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 27.2A.2 Unavailed Cenvat on capital goods on the appointed day– Section 140(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 27.2A.3 Unavailed Cenvat on inputs held in stock on the appointed day– Section 140(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543 27.2A.4 Unavailed/Unclaimed CENVAT on inputs held in stock on the appointed day– Section 140(4). . . . . . . . . . . . . . . . . . . . . . . . . . 546 27.2A.5 Inputs/Input services received after the appointed day (In transit) – Section 140(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 27.2A.6 Paying tax at fixed rate/amount under the existing law and paying GST under regular scheme– Section 140(6). . . . . . . . . . . . . 549 27.2A.7 Distribution of Cenvat by input service distributor (ISD) – Section 140(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 27.2A.8 Transfer of unutilized credit by taxable person having centralized registration – Section 140(8). . . . . . . . . . . . . . . . . . . . . 552 27.2A.9 Availing Cenvat Credit in certain cases - Section 140(9). . . . . . . . . 553 PART B − State GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 27.2B.1 Carried over amount of input tax credit in the returns on the appointed day – Section 140(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 27.2B.2 Unavailed VAT on capital goods on the appointed day – Section 140(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556 27.2B.3 Unavailed VAT on inputs held in stock on the appointed day – Section 140(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 27.2B.4 Unavailed/Unclaimed ITC on inputs held in stock on the appointed day – Section 140(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 27.2B.5 Inputs received after the appointed day (In transit) – Section 140(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 27.2B.6 Paying tax under composition scheme on appointed day and paying GST under regular scheme – Section 140(6). . . . . . . . . . . . 561 27.3 Output Tax, Revision of Returns and Return of Goods. . . . . . . . . . . . . . . . . . . 563 PART A − Central GST Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 27.3A.1 Return of goods in GST regime - Section 142(1). . . . . . . . . . . . . . . 563

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27.3A.2 Revision of price – Supplementary invoice or debit/credit note raised in GST– Section 142(2). . . . . . . . . . . . . . . . . . . . . . . . . 563 27.3A.3 Treatment of the amount recovered or refunded pursuant to revision of returns– Section 142(9) . . . . . . . . . . . . . . . . . . . . . . . . . 564 27.3A.4 Treatment of long term construction/works contracts Section 142(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 27.3A.5 Taxability of supply of goods or services – Section 142(11). . . . . . 565 27.3A.6 Goods sent on approval basis are returned or rejected, on or after appointed day – Section 142(12). . . . . . . . . . . . . . . . . . . . . . . 565 PART B − State GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 27.3B.1 Return of taxable goods in GST regime, which were also taxable in existing law – Section 142(1) . . . . . . . . . . . . . . . . . . . . . 566 27.3B.2 Revision of price – Supplementary invoice or debit/credit note raised in GST – Section 142(2) . . . . . . . . . . . . . . . . . . . . . . . . 567 27.3B.3 Treatment of amount recovered or refunded pursuant to revision of returns – Section 142(8). . . . . . . . . . . . . . . . . . . . . . . . . 567 27.3B.4 Treatment of long term construction/works contract – Section 142(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568 27.3B.5 Taxability of supply of goods or services – Section 142(10). . . . . . 568 27.3B.5.1 Supply of goods – VAT leviable . . . . . . . . . . . . . . . . . . . 568 27.3B.5.2 Supply of services – Service tax leviable . . . . . . . . . . . . 568 27.3B.5.3 Supply of goods and services after the appointed day. . . 569 27.3B.6 Goods sent on approval basis are returned or rejected, on or after appointed day – Section 142(11). . . . . . . . . . . . . . . . . . . . . . . 569 27.4 Job work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 PART A − Central GST Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 27.4A.1 Removal of inputs for job work before the appointed day and return of goods after that day − Section 141(1). . . . . . . . . . . . . 570 27.4A.2 Removal of semi-finished goods for job work before the appointed day and return of goods after that day – Section 141(2). . . 571 27.4A.3 Removal of finished goods to carry certain processes before the appointed day and return of goods after that day − Section 141(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 PART B − State GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573 27.4B.1 Dispatch of inputs for job work before the appointed day and return of goods after that day − Section 141(1). . . . . . . . . . . . . 573 27.4B.2 Dispatch of semi-finished goods for job work before appointed day and return of goods after that day − Section 141(2). . . 573 27.4B.3 Dispatch of finished goods to carry certain processes before the appointed day and return of goods after that day − Section 141(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574 xxxvii

GST Guide with Ready Reckoner

27.5 Refund Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 PART A − Central GST Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 27.5A.1 Disposal of refund claims filed before/on/after the appointed day – Section 142(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 27.5A.2 Disposal of refund claims in respect of export – Section 142(4). . . 575 27.5A.3 Disposal of refund claims in respect of services not provided – Section 142(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 PART B − State GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 27.5B.1 Disposal of refund claims filed before/on/after the appointed day – Section 142(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 27.5B.2 Disposal of refund claims in respect of export – Section 142(4). . . 577 27.6 Assessment, adjudication, Appeal, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 PART A − Central GST Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 27.6A.1 Disposal of claims of Cenvat credit filed through appeal, revisions, review, etc. under the existing law– Section 142(6)(a). . 577 27.6A.2 Disposal of recovery of Cenvat credit filed through appeal, revisions, review, etc. under the existing law − Section 142(6)(b). . . 578 27.6A.3 Finalization of proceedings relating to output duty or tax liability initiated before the appointed day – Section 142(7). . . . . . 578 27.6A.4 Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings – Section 142(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578 PART B − State GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579 27.6B.1 Disposal of claims of input tax credit filed through appeal, revisions, review, etc. under the existing law – Section 142(5)(a). . 579 27.6B.2 Disposal of recovery of input tax filed through appeal, revisions, review, etc. under the existing law – Section 142(5)(b). . 579 27.6B.3 Finalization of proceedings relating to output tax liability initiated before the appointed day – Section 142(6). . . . . . . . . . . . . 580 27.6B.4 Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings – Section 142(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 27.7 Deduction of tax at source (TDS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 27.8 Import of services made on or after the appointed day – Section 21 of IGST ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 27.9 To Conclude. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 27.10 Authors’ observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584 Chapter B-28 GST Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 28.1 What is GST Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 28.2 Mandate of GST Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 xxxviii

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28.3 Functions of GST Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588 28.4 Services by GST Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589 28.5 Managed service provider (MSP) for GSTN. . . . . . . . . . . . . . . . . . . . . . . . . . . 589 28.6 Functions and role of stake-holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 28.7 Taxpayers and GSTN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 28.8 Government authorities and GSTN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 28.9 Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592 28.9.1 Concept of GST eco-system. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592 28.9.2 Whether information filed on the GST common portal will remain confidential & secure? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592 Chapter B-29 Industry – impact, expectations and transition. . . . . . . . . . . . . . . . . . . 593 29.1 India’s GST Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594 29.2 Impact – generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594 29.3 Impact on various sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 29.3.1 Agriculture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 29.3.2 Traders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598 29.3.3 Manufacturers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 29.3.4 Works contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 29.3.5 Leasing companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 29.3.6 Intangible goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 29.3.7 Exempted units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604 29.3.8 Power sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604 29.3.9 Telecommunication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605 29.3.10 Alcohol for human consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . 605 29.3.11 Petroleum and petroleum products. . . . . . . . . . . . . . . . . . . . . . . . . . 606 29.3.12 International trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606 29.3.13 Service providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 29.3.14 Event managers and hotels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608 29.3.15 Land and real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608 29.4 Expectations from GST in general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610 29.5 Transition issues for the industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 29.6 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 Chapter B-30 GST in other countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615 30.1 GST in Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615 30.2 GST/HST in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 30.3 GST in Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619 30.4 Indirect taxes in UK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619

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PART C LEGISLATION I. GST ACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621-1000 1.

Amended/Inserted Articles by the Constitution (101st Amendment) Act, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623 2.

The Central Goods and Services Tax Act, 2017 (CGST Act). . . . . . . . . . . . . . 633 3.

The Integrated Goods and Services Tax Act, 2017 (IGST Act). . . . . . . . . . . . . 785 4.

The Union Territory Goods and Services Tax Act, 2017 (UGST Act) . . . . . . . 811 5.

The Goods and Services Tax (Compensation to States) Act, 2017. . . . . . . . . . 833 6.

The State Goods and Services Tax Act (Rajasthan SGST Act). . . . . . . . . . . . . 849 II. REVISED DRAFT GST RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001-1096 1.

Registration Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003 2.

Return Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1015 3.

Determination of value of supply Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1029 4.

Payment of taxes Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1035 5.

Tax Invoice, Credit and Debit Notes Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . 1039 6.

Electronic Way Bill Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047 7.

Transitional Provisions Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1053 8.

Input Tax Credit Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1057 9.

Composition Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1069 10. Refund Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1073 11. Assessment and Audit Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1083 12. Accounts and Records Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1087 13. Advance Ruling Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1091 14. Appeals and Revision Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1093 III. DRAFT GST FORMS & FORMATS . . . . . . . . . . . . . . . . . . . . . . . . . . 1097-1326 1.

Registration Formats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1099 2.

Invoice Format. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1169 3.

Payment Formats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1171 4.

Return Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1183 5.

Refund Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1307

xl

Part A At-A-Glance

1

GST Guide with Ready Reckoner

Chapter A-1 Chapter A-2 Chapter A-3 Chapter A-4 Chapter A-5 Chapter A-6 Chapter A-7 Chapter A-8 Chapter A-9

2

Chapter A-1

GST in India – At-a-glance ...................................................................... 3 Compliance chart with limitation periods under GST ........................... 43 GST Transition – Time limits and limitation periods ............................ 55 Non-creditable goods/services and supplies under GST ........................ 59 Returns under GST ................................................................................ 63 Penalties and offences under GST ......................................................... 67 Getting ready for smooth transition to GST – Way forward.................. 73 GST, a “One Nation One Tax”– Critical study ...................................... 85 Seamless Input Tax Credit in GST– Exceptions – Critical Study ......................................................................................... 89

Chapter A-1

GST in India – At-a-glance

Chapter A-1

GST in India – At-a-glance

With the passing of the SGST Act by several State Assemblies, based on the Model SGST Act released by the GST Council on 31 March 2017 with suitable changes, it has been observed that SGST Act is almost mirror image of the CGST Act, 2017 as enacted on 12 April 2017; as also stated by the Hon’ble Finance Minister of India in his speech. Therefore, in this chapter, sections of CGST Act and SGST Act have been referred as section of GST Act, unless separate reference of sections in CGST Act and SGST Act is otherwise required.

1.1

GST – Meaning and its scope

(1)

The term “GST” stands for “Goods and Services Tax”, and is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level.

(2)

Its main objective is to cover most of the indirect tax levies into a single tax, replacing multiple tax levies, overcoming the limitation of current indirect tax structure, and creating efficiencies in the tax administration.

(3)

GST may be defined as a tax on supply of goods and services, which is leviable at each point of sale of goods or provision of service, where the seller of the goods or provider of services may claim the credit of input tax which he has paid while purchasing the goods or procuring the services.

(4)

GST will bring in its scope all goods and services, except specified petroleum products and alcoholic liquor for human consumption, for levy of GST.

(5)

GST on the supply of following goods shall be levied with effect from such date(s) as may be notified by the government on the recommendations of the Council -

(6)



Petroleum crude,



High speed diesel,



Motor spirit (commonly known as petrol),



Natural gas, and

Aviation turbine fuel.  It extends to whole of India except Jammu and Kashmir.

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GST Guide with Ready Reckoner

1.2

Chapter A-1

Legislative Framework

(1)

The Constitution (101stAmendment) Act, 2016 has conferred concurrent taxing powers on the Union as well as the States (including Union territory with Legislature) to make laws for levying GST on every transaction of supply of goods or services or both.

(2)

Parliament has exclusive power to make laws with respect to GST where supply of goods/services takes place in the course of inter-State trade or commerce.

(3)

In accordance with Art.279A of the Constitution of India, the President has constituted the Goods and Services Tax Council (GST Council, in short) on 15th September 2016 with the following members:

(4)

(5)

(a)

The Union Finance Minister … Chairperson

(b)

The Union Minister of State in charge of Revenue or Finance … Member

(c)

The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government … Members

The GST Council shall make recommendations to the Union and the states on, inter-alia, following matters (i)

the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which maybe subsumed under GST;

(ii)

the goods and services that may be subjected to or exempted from GST;

(iii)

the date on which the GST shall be levied on petroleum crude, high speed diesel, motor sprit (commonly known as petrol), natural gas and aviation turbine fuel;

(iv)

model GST laws, principles of levy, apportionment of IGST and the principles that govern the place of supply;

(v)

the threshold limit of turnover below which the goods and services may be exempted from GST;

(vi)

the rates including floor rates with bands of GST;

Name of legislation and controlling authority

Name of the legislation

To be administered by

Scope of taxation

Central GST Act

Central Government

State GST Act, e.g., Delhi GST Act, U.P. GST Act, Haryana GST Act, Kerala GST Act, and so on

Respective State Government

Every supply of goods and/or services within the state/UT, i.e. Intrastate supplies

UT GST Act

Central Government

IGST Act

Central government

4

Inter-state supplies

Chapter A-1

(6)

GST in India – At-a-glance

There would be uniformity in various SGST Acts and the CGST Act. With the passing of State GST Acts by several state assemblies, which is based upon the Model SGST Act released by the GST Council on 31 March 2017 with suitable changes, by the State Assembly, it has been observed that SGST Act is almost mirror image of the CGST Act, 2017 as enacted on 12 April 2017; as also stated by the Hon’ble Finance Minister of India in his speech.

1.3 CGST/SGST

Taxable event and charging provisions Sec 9

IGST

Sec 5

(1)

CGST and SGST shall be levied on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption and specified petroleum products.

(2)

IGST shall be levied on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption and specified petroleum products.

(3)

GST on reverse charge basis

(4)

•

The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the CGST/SGST/IGST on which shall be paid on reverse charge basis by the recipient of such goods or services or both.

•

The GST in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient.

Specified e-commerce operators – Deemed suppliers The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on supplies of which shall be paid by the electronic commerce (e-commerce, in short) operator, if such services are supplied through it, as if he is the supplier liable for paying the tax in relation to the supply of such services.

These provisions are similar to present provisions applicable under the service tax where the aggregator, such as, Uber, Ola, etc., are, instead of the individual service provider, deemed as supplier of service.

(5)

Levy of compensation cess •

The Goods and Services Tax (Compensation to States) Act, 2017 (Compensation Cess Act, in short), provides for payment of compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of five years.

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•

Compensation cess will be levied on all inter-state and local supply of goods or services or both.

•

Cess shall be levied on the specified goods and the rates stated in Schedule to the Act, which mainly comprises pan masala, tobacco and its products, coal, specified motor cars and aerated waters.

1.4 (1)

(2)

(3)

Chapter A-1

Rates of GST, Import & Export

As per Art. 279A of the Constitution of India, the GST Council shall make recommendations to the Union and the States on (a)

goods and services that may be subjected to, or exempted from GST;

(b)

rates including floor rates with bands of GST;

(c)

any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster.

Rates of GST GST shall be levied at such rates, as may be notified by the Government on the recommendations of the Council. However, the maximum rates would be as under: •

CGST – 20%

•

SGST – 20%

IGST – 40% • Expected GST Rates – (a)

In relation to supply of goods, in the third meeting of the GST Council, it has been decided that there would be five tier rate structure for supply of goods – 5%, 12%, 18%, 28%, 40%. Further, there might be special rate for bullion. Nevertheless, there would be separate list of exempted goods.

(b)

In relation to services, there might be three-tier rates: lower-standard, standard and luxury, besides exempted services.

(4)

HSN (Harmonized System of Nomenclature) codes shall be used for classifying the goods under the GST regime and SAC (Service Accounting Codes) for services

(5)

Import of goods and services would be treated as inter-state supplies and would be subject to IGST in addition to the applicable customs duties (BCD). This IGST would be levied in lieu of CVD and SAD; and shall be available as input tax credit for further transactions.

IGST on goods imported into India shall be levied and collected in accordance with the provisions of sec 3 of the Customs Tariff Act, 1975 on

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GST in India – At-a-glance

the value as determined under the said Act at the point when duties of customs are levied on the said goods under sec 12 of the Customs Act, 1962.

(6)

Zero-rated supply •

As per sec 2(24) of the IGST Act, zero-rated supply shall have the meaning assigned to it under sec 16 of the IGST Act.

•

As per sec 16 of the IGST Act, zero rated supply” means any of the following taxable supply of goods and/or services, namely: (a)

export of goods and/or services or both; or

(b)

supply of goods and/or services or both to a SEZ developer or an SEZ unit.

1.5 1.5.1

Exemptions and exempt supplies

Power to grant exemption CGST/SGST

Sec 11

IGST

Sec 6

(1)

By way of Notification Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification.

(2)

By way of special order in exceptional cases Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.

(3)

Explanation to notification or special order already issued The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification of exemption or special order issued, insert an Explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification/order. Every such Explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

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GST Guide with Ready Reckoner

1.6

Chapter A-1

Meaning and Scope of the term “Supply”

1.6.1 Scope of supply (Section 7 & 8 of CGST Act) (1) Supply includes all forms of supply (goods and/or services) and includes agreeing to supply such as, sale, transfer, barter, exchange, license, rental, lease, or disposal.

(2) Supply should be made for a consideration; and in the course or furtherance of business. However, in case of import of services, even ‘in the course or furtherance of business’ is not required. Thus, there should be something in return which the person supplying will obtain from recipient. It is not important that what is received in return is ‘money’; it can be money’s worth.

(3) It involves delivery of goods and/or services to another person or agreement thereof. Transfer of property in goods from the supplier to recipient is not necessary.

(4) Branches of the same person have been considered as distinct persons. MultiState Entities have to take care of transfer value.

(5) Certain supplies which are even without consideration have also been included in the definition of the term “Supply”, as specified in Schedule I of CGST/SGST Act, as under: (a) Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.

For example, transfer of business asset by the partnership firm to its retiring partner in settlement of his dues. (b) Supply of goods and/or services between related persons when made in the course or furtherance of business, (c) Supply of goods or services between distinct persons as specified in section 25 (from one unit to another, both having same PAN) when made in the course or furtherance of business. (d) Supply of goods or services or both by way of gifts exceeding INR 50,000/- in value in a financial year by an employer to an employee. (e) Supply of goods by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal. (f) Supply of goods by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. (g) Import of services by a taxable person from a related person or from his other establishments outside India, in the course or furtherance of business.

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Chapter A-1

GST in India – At-a-glance

(6)

Schedule II of GST Act comprises various circumstances and situations when the activity shall be considered as supply of goods or as service.

(7)

Schedule III comprises various activities or transactions, which shall neither be considered as supply of goods nor as services.

(8)

The GST Act has also defined composite supply and mixed supply and manner of determining their tax liability.

1.6.2

Inter-State supply vs. Local Supply and Place of Supply (Section 7 to 13 of IGST Act) IGST Act formulates the principles when a supply of goods or • services or both shall be treated as inter-state supply or intra-state (local) supply.

Generally, subject to other provisions in respect of place of supply, • where “location of the supplier” and “place of supply” are in different states/UT, it is inter-state supply; and if within the same state or UT, it is local supply.

Local supply shall be subject to CGST + SGST; whereas inter-state • supply shall be subject to IGST. •

Framework of Place of Supply provisions:

Place of supply of goods

Place of supply of services

Section 10: Goods other than supply of goods imported into, or exported from India

Section 12: Services where the location of supplier of service and the location of the recipient of service is in India

Section 11: Goods imported into, or exported from India

Section 13: Services where the location of the supplier or the location of the recipient is outside India

1.6.3 Time of supply (Section 12 & 13 of CGST Act) (1) In case of supply of goods (other than taxable on reverse charge), time of supply (i.e. taxable event) shall generally be earliest of the following: (a) Date of issuance of invoice by the supplier; (b) Last date on which supplier is required to issue invoice in terms of sec 31; (c) Date of receipt of payment/ advance by supplier (earliest of date of entry in accounts books or credit date in bank).

(2) In case of supply of services (other than taxable on reverse charge), time of supply (i.e. taxable event) shall be:

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GST Guide with Ready Reckoner

(a)

(b) (3)

Chapter A-1

If the invoice issued under sec 31(2) is – (i)

Within time: Earliest of date of issuance of invoice OR Date of receipt of payment/ advance by supplier (earliest of date of entry in accounts books or credit date in bank);

(ii)

Not within time: Earliest of date of provision of service OR Date of receipt of payment/ advance by supplier (earliest of date of entry in accounts books or credit date in bank);

Other cases: date on which the recipient shows the receipt of services in his books of account.

In case of supply of goods/services on reverse charge basis, time of supply shall generally be earliest of the following: (a)

the date of the receipt of goods (not applicable in case of services);

(b)

the date on which the payment is made (earliest of credit date in the books of accounts or debit date in the bank account); or

(c)

the date immediately following 30 days in case of goods, and 60 days in case of services, from the date of issue of invoice by the supplier.

If it is not possible to determine time of supply as above, then the time of supply shall be the date of entry in books of account of the recipient of supply.

1.6.4 Value of supply (Section 15 of CGST Act) (i) Value of supply is, generally, the transaction value, i.e., the price actually paid or payable for the said supply of goods and/or services, where supplier and recipient are not related, and • (ii)

the price is the sole consideration for the supply.

• Value of supply includes the amount which has been incurred by the receiver, reimbursements, free of charge supplies, royalties/license fees as condition of sale, incidental expenses, subsidies linked to price (other than by the central/state government) late fee, interest, penalty for late payment, post supply discount subject to conditions and all taxes other than GST levies.

(iii)

Discount given after supply is permitted to be excluded if it is linked to the invoice, known at the time of supply and also, ITC credit for the same has been reversed by the recipient.

(iv)

The value of the supply of goods or services or both between distinct persons (branch with same PAN) or related persons, other than where the supply is made through an agent, shall,(a)

10

be the open market value of such supply;

Chapter A-1

GST in India – At-a-glance

(b)

if open market value is not available, it shall be the value of supply of goods or services of like kind and quality;

(c)

if value is not determinable under clause (a) or (b), it shall be the value as determined by application of rule 4 or rule 5, in that order.

However, where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of goods or services. In other words, in such cases, invoice value shall be accepted.

1.7 1.7.1

Threshold Limit (Basic Exemption)

Exemption limit (Section 22 of CGST Act)

S. No.

States

Amount of Aggregate Turnover in a Financial Year

(a)

States/UTs barring specified in Sl. No. (b) below

INR 20 lakhs

(b)

Special category states – comprising of 11 states viz. Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

INR 10 lakhs

“Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, non-taxable supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis; but excludes CGST, SGST, IGST, UTGST and Cess.

[Sec 2(6)] Moreover, exempt supplies include non-taxable supplies, i.e. alcoholic liquor for human consumption, petroleum products, etc.

Further, for the purpose of sec 22, turnover made on behalf of principals would be included in the turnover of agents. Furthermore, the supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job-worker.

1.7.2 When threshold limit is not applicable (Section 24 of CGST Act) The threshold limit is not applicable in the following cases: (i) Persons making any inter-state taxable supply; 11

GST Guide with Ready Reckoner

Chapter A-1

(ii)

Casual taxable persons making taxable supply;

(iii)

Persons who are required to pay tax under reverse charge;

(iv)

Persons required to pay tax under sec 9(5) [where tax shall be paid by the ecommerce operator];

(v)

Non-resident taxable persons making taxable supply;

(vi)

Persons who are required to deduct TDS under sec 51, whether or not separately registered under this Act;

(vii) Persons who supply goods and/or services on behalf of other taxable persons whether as an agent or otherwise; (viii) Input service distributor, whether or not separately registered under the Act; (ix)

Persons who supply goods and/or services, other than supplies made under sec 9(5), through electronic commerce operator, who is required to collect tax at source (TCS) under sec 52;

(x)

Every e-commerce operator;

(xi)

Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered person; and

(xii) Such other person or class of persons as may be notified by the government on the recommendations of the Council.

1.8

Taxable Persons & Registration

1.8.1

Taxable person [Section 2(107) of CGST Act] “Taxable person” means a person who is registered under the GST Act, or  liable to be registered under sec 22 or sec 24 of the CGST Act. 

1.8.2

Who is liable for registration mandatorily under GST [Section 22(1) of CGST Act] Every supplier shall be liable to be registered in the state or union  territory, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds INR 20 lakhs [INR10 lakhs in the Special Category States] Other persons to whom threshold limit does not apply [discussed in  earlier paras in this chapter]

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Chapter A-1

GST in India – At-a-glance

1.8.3

Who is not liable to take registration? (Section 23 of CGST Act) The person is not liable for registration if he is: (a) engaged exclusively in the business of supplying goods and/or services that are either not liable to tax (such as, specified petroleum products, alcoholic liquor for human consumption, etc.) (Or) are wholly exempt from tax under CGST Act or under IGST Act; or (b) an agriculturist to the extent of supply of produce out of cultivation of land; or (c) category of persons as notified by the government, on the recommendations of the Council.

1.8.4 Agriculturist [Section 2(7) of CGST Act] “Agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land – (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or personal supervision of any member of family.

1.8.5 Time limit for taking registration [Section 25(1)] Within 30 days from the date on which the person becomes liable.

However, a casual taxable person or a non-resident taxable person shall apply for registration at least 5 days prior to the commencement of business.

1.8.6 Voluntary Registration under GST [Section 25(3)] The person, who is not liable to obtain registration mandatorily, may register voluntarily. All provisions of GST shall be applicable after registration.

1.9

Composition Scheme [Section 10]

(1)

Small taxpayers with an aggregate turnover in a financial year up to the specified limit of INR 50 Lakhs (may be extended to INR 100 Lakhs), shall be eligible for composition levy.

(2)

Composition levy is not available to the person if: (a)

he is engaged in the supply of services other than supplies referred to in clause 6(b) of Schedule II (i.e. restaurant services serving food and non-alcoholic drinks);

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GST Guide with Ready Reckoner

(3)

Chapter A-1

(b)

he is engaged in making any supply of goods which are not leviable to tax under this Act [the phrase used in this clause is similar to the definition of non-taxable supply under sec 2(78) of the Act]. Nontaxable supplies are specified petroleum products and alcoholic liquor for human consumption, etc.;

(c)

he is engaged in making any inter-State outward supplies of goods;

(d)

he is engaged in making any supply of goods through an e-com operator required to collect TCS under sec 52; or

(e)

he is a manufacturer of notified goods.

Rate of composition levy

S.No.

Nature of Supplier

Rate of Levy (% of Aggregate Turnover) (CGST+SGST) Maximum Rate specified in Act

Rates prescribed in Rules

2% (1%+1%)

2% (1%+1%)

(i)

Manufacturer, other than manufacturers of such goods as may be notified by the government

(ii)

Suppliers making supplies in 5% (2.5%+2.5%) respect of food with service (e.g. caterers, restaurants, dhabas) referred to in clause (b) of paragraph 6 of Sch II

5% (2.5%+2.5%)

(iii)

Any other suppliers eligible for composition levy

1% (0.5%+0.5%)

1% (0.5%+0.5%)

1.10 Output Tax 1.10.1

Meaning of output tax CGST/SGST

Sec 2(81)

IGST

Sec 2(18)

“Output tax� in relation to a taxable person, means the GST chargeable under the respective GST Act on taxable supply of goods or services or both, made by the supplier or by his agent, and excludes tax payable by him on reverse charge basis.

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Chapter A-1

GST in India – At-a-glance

1.10.2 Steps for computation of output tax (1) First determine the rate of tax applicable to the goods and/or services supplied vis-à-vis their HSN (in respect of goods) and Service Accounting Codes (in respect of services); (2) Then determine the aggregate turnover under each of the following statutes for every state where having GSTIN(a) IGST (b) CGST (c) SGST (3) Then determine the aggregate turnover of taxable supplies under each statute in the following categories(a) Goods wise – Rate of tax-wise (b) Service wise – Rate of tax-wise (4) Multiply the respective turnover with the applicable rate of tax.

1.11 Input Tax 1.11.1 Input tax credit in the GST (1) Input tax credit has been defined under sec 2(62) read with sec 2(63) of the GST Law. As per the combined reading of these provisions, ITC in relation to a registered person means and includes ITC means and includes

ITC excludes

(i) CGST, SGST, IGST and UTGST; (ii) IGST charged on import of goods; (iii) Reverse charges under the CGST/SGST/ IGST/ UTGST Acts

Tax paid under composition levy under sec 10

(2)

Input tax credit – Sec 16(1) •

Every registered person shall,

•

subject to such conditions and restrictions as may be prescribed, and

•

in the manner specified in sec 49,

•

be entitled to take credit of input tax

•

charged on any supply of goods or services or both to him

•

which are used or intended to be used in the course or furtherance of his business, and

•

said amount shall be credited to electronic credit ledger of such person.

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(3)

So far as eligibility of ITC, the government has not made any distinction amongst inputs, capital goods and input services. Further, claim of input tax credit on all goods, services and capital goods is available in one go.

(4)

Summary of input tax credit in GST:

1.11.2 Restrictions in claiming ITC [Section 16 of CGST Act]

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Chapter A-1

•

GST in India – At-a-glance

In GST, taxability of sale/service will also determine the eligibility of input tax credit, which may be as under:

S. No.

Nature of Supply

Availability of Input Tax

1

Taxable supply

Yes

2

Exempt supply

No

3

Non-taxable supply

No

4

Zero rated supply

Yes

1.11.3 Non creditable goods/services/supplies [Section 17(5)] Please refer Chapter A-4 of this book.

1.11.4

Utilization of credit [Section 49(5)]

IGST Credit

CGST Credit

SGST Credit

YES: To the followings, in the stated order: • Payment of IGST, • Payment of CGST, • Payment of SGST, • Payment of UTGST.

YES: To the followings, in the stated order: • Payment of CGST, • Payment of IGST. NO: • Payment of SGST • Payment of UTGST

YES: To the followings, in the stated order: • Payment of SGST, • Payment of IGST. NO: • Payment of CGST • Payment of UTGST

1.12 Job Work [Section 19, 143 of CGST Act] (1)

As per sec 143(1), “principal” means a registered person sending taxable goods for job work. Thus, sec 143 is NOT applicable to “unregistered taxable person”

(2)

Facilities to the principal •

To send any inputs/capital goods to a job worker for job work without payment of tax,

•

To send inputs/capital goods subsequently from one job worker to another job worker without payment of tax,

•

To claim ITC on goods transferred to job worker.

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(3)

Sec 143 is optional. Principal may supply goods to job worker after charging of GST.

(4)

Sec 143 enables the principal to send taxable goods to a job worker (and also to another job-worker therefrom) without payment of tax, subject to•

Intimation, and

•

certain conditions, as may be prescribed.

(5)

If the benefit under sec 143 is availed, the principal shall be responsible and accountable for all the transactions between him and the job worker

(6)

If inputs are not received within 1 year (capital goods in 3 years), it shall be deemed as supply in the hands of the principal on the day when goods were originally sent.

1.13 Tax Invoice, Bill of Supply, Debit/Credit Notes 1.13.1

Who is required to issue tax invoice/bill of supply and under what circumstances? (Section 31 of the CGST Act)

Tax invoice •

•

Every registered taxable person shall • issue a tax invoice for supply of – o taxable goods, or o taxable services.

The expression “tax invoice” shall be deemed to include Any revised invoice issued by the supplier in respect of a supply made earlier.

o

•

Separate invoice is not required to be • issued if the value of the goods/ services supplied is less than INR 200 when recipient is unregistered and he does not require the same.

•

18

Bill of supply Instead of a tax invoice, a supply shall be issued following cases: o A registered taxable supplying non-taxable and/or services, or o

bill of in the person goods

A registered taxable paying tax under the composition scheme.

Bill of supply is not required to be issued if the value of the goods or services supplied is less than INR 200/- except when requested by the recipient.

Central/State Government may specify the categories of services in respect of which any other document issued in relation to the supply shall be deemed to be a tax invoice, subject to prescribed conditions.

Chapter A-1

GST in India – At-a-glance

1.13.2 Contents of tax invoice (Rule 1 of the Invoice Rules) Tax invoice shall be issued by the supplier containing the following details:(a) Name, address and GSTIN of the supplier; (b) A consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year; (c) Date of its issue; (d) Name, address and GSTIN/Unique ID Number, if registered, of recipient; (e) Name and address of the recipient and address of delivery, along with the name of State and its code, if such recipient is unregistered and where the taxable value of supply is INR 50,000/- or more; (f) HSN code of goods, or accounting code of services; (g) Description of goods or services; (h) Quantity in case of goods and unit or Unique Quantity Code thereof; (i) Total value of goods or services; (j) Taxable value of goods or services taking into account discount or abatement, if any; (k) Rate of tax (CGST, SGST or IGST); (l) Amount of tax charged in respect of taxable goods or services (CGST, SGST or IGST); (m) Place of supply along with the name of State, in case of a supply in the course of inter-state trade or commerce; (n) Place of delivery where the same is different from place of supply; (o) Whether the tax is payable on reverse charge; (p) The word “Revised Invoice”, as the case may be, indicated prominently, where applicable along with the date and invoice number of the original invoice; and (q) Signature or digital signature of the supplier or his authorized representative.

1.13.3 •

Circumstances when a debit note or credit note is issued (Section 34 of the CGST Act) Where a tax invoice has been issued, and o the taxable value and/or tax charged in that tax invoice is found to exceed the taxable value and/or tax payable in respect of such supply; or

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o

where the goods supplied are returned by the recipient; or

o

where goods or services or both supplied are found to be deficient,

then the taxable person, who has supplied such goods and/or services, may issue to the recipient a credit note.

•

Where a tax invoice has been issued and the taxable value and/or tax charged in that tax invoice is found to be less than the taxable value and/or tax payable in respect of such supply, then the taxable person, who has supplied such goods and/or services, may issue to the recipient a debit note.

•

Credit notes & debit notes shall contain the prescribed particulars. Otherwise, these notes may not be considered for adjustment of tax liability.

•

No credit note shall be issued if incidence of tax/interest on such supply has been passed on to any other person.

•

Debit note includes supplementary invoice.

1.14 Accounts and Records 1.14.1 (1)

20

Maintenance of Accounts and Records (Section 35 of the CGST Act) Every registered person shall keep and maintain, at his principal place of business, a true and correct account of the following: Production or manufacture of goods; • •

Inward supply of goods and/or services;

•

Outward supply of goods and/or services

•

Stock of goods;

•

Input tax credit availed;

•

Output tax payable and paid; and

•

Such other particulars as may be prescribed in this behalf.

•

The term “principal place of business” means the place of business specified as the principal place of business in the certificate of registration [Section 2(89)].

•

As per sec 2(85), the term “Place of Business” includes (a)

Place from where the business is ordinarily carried on, and includes a warehouse, a godown or place where a taxable person stores goods, and provides/receives goods/services;

(b)

Place where a taxable person maintains his books of account;

Chapter A-1

GST in India – At-a-glance

(c) • (2)

A place where a taxable person is engaged in business through an agent, by whatever name called.

Registered assesses may keep and maintain such accounts and other particulars in the electronic form in the manner as may be prescribed.

Multiple places of business: •

In case of multiple places of business, accounts relating to each place of business shall be kept at the respective places of business concerned.

•

For example, ABC has two offices in U.P.: one at NOIDA and other at Lucknow. He shall keep the accounts relating to both these places at the respective place, i.e., NOIDA and Lucknow.

(3)

Every owner or operator of warehouse or godown or any other place used for storage of goods, irrespective of whether he is a registered taxable person or not, shall maintain records of consigner, consignee and other relevant details of the goods as may be prescribed

(4)

The Commissioner has been empowered to notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified.

(5)

Relaxation by the Commissioner: If any class of taxable persons is not in a position to keep and maintain accounts in accordance with the provisions of this section, the commissioner may permit such class of taxable persons to maintain the accounts in such manner as may be prescribed.

(6)

Except when goods are lost, stolen, destroyed, written off or disposed of by way of gift or free samples, if the registered taxable person fails to account for the goods and/or services in his books of account, the proper officer shall determine the amount of tax payable on the goods and/or services that are not accounted for, as if such goods and/or services had been supplied by such person and in this regard, the provisions of sec 73 or 74, as the case may be, shall apply, mutatis mutandis, for determination of such tax.

1.14.2 •

•

Retention of Accounts and Records (Section 36 of the CGST Act) Every assessee shall retain the prescribed books of accounts and other records until the expiry of 72 months (6 years) from the due date of filing of Annual Return for the year pertaining to such accounts and records.

In case an appeal or revision or any other proceeding is pending before any Appellate Authority or Revisional Authority or Tribunal or Court or is under investigation for an offence under Chapter XIX, then the assessee shall retain the books of account and other records pertaining to the subject matter of such

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appeal or revision or proceeding or investigationfor a period of one year after final disposal of such appeal or revision or proceeding or investigation, or for the period specified records under sec 36(1), whichever is later.

1.15 Returns under the GST (Chapter IX of the CGST Act) 1.15.1 Types of returns or reports and periodicity Please refer Chapter A-5 of this book.

1.15.2 Other features of the Returns Return shall be filed for each GSTIN; • •

If a person has more than one TIN in one state, he shall file multiple returns;

•

Filing of return

•

o

The filing of return shall be only through online mode;

o

Facility of offline generation and preparation of returns shall be available but offline returns shall have to be uploaded before the due date.

Return without payment of self-assessed tax o

The return may be filed; however, such return shall be treated as an invalid return;

o

Not to be taken into consideration for matching of invoices and for inter-governmental fund settlement among states and the centre.

1.15.3

Returns process flow GSTR-1

Returns of Outward Supplies Captures the transaction level details of the outward supplies of a tax payer

Forms the basis for the statement of details of the inward supplies of all suppliers

GSTR-2 Returns of Inward Supplies

Freezing of outward and inward supplies of every tax payer  Calculation of tax liability  Payment in the Monthly Return i.e. GSTR-3 GSTR-3 Monthly Return

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Time Flow (GSTR-1/2) RECIPIENT

SUPPLIER

GSTR-1 Returns of Outward Supplies

Accept or reject modifications GSTR-1 Amended after accepted changes

Early uploading of invoices shall be allowed  Submission of return by 10th of next month

Able to see the invoices uploaded by their suppliers

GSTR-1A Inward supplies added/corrected/del eted by recipient made available to be filed on or before 17th of the next month

Final GSTR-2 Submission on or before 15th of the next month

Available for amendment after 10th of next month

Final GSTR-4 Submission on or before 18th of month next to quarter

Part A-GSTR-2A/GSTR-4A Inward Supplies made available on the basis of GSTR-1 after 10th of next month

Addition/correction/dele tion of invoices -From 11th to 15th of the next month -From 11th to 18th of month next to quarter (composition)

1.15.4 Matching process • ITC claim matching ITC claim matching after submission of GSTR-3 GST-ITC-1A: Mismatches of current tax period

GST-ITC-1A: Mismatches of earlier tax period

GST-ITC-1A: Duplicate Claims of ITC

ITC claim in GSTR-2 > Output tax in GSTR-1

Invoices/Debit Notes accepted w/o amendment in GSTR2A/GSTR-2 by Recipient + Valid Return by Supplier

Rectification by Recipient/ Supplier

Addition to Current Month Output tax Liability of GSTR-3

No Yes

ITC Claim < = Output Tax paid

No

Yes

ITC matching

Addition to Next Month Output tax Liability of GSTR-3

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Output Tax Liability Reduction Matching

Output Tax Liability Reduction matching after submission of GSTR-3 GST-ITC-1A: Mismatches of current tax period Liability Reduction claim> Admitted by Recipient Credit Notes Accepted w/o amendment in GSTR-2A/GSTR-1 by Recipient + Valid Return by Recipient

GST-ITC-1A: Mismatches of earlier tax period

Rectification

by Recipient/ Supplier

No No

Yes Reduction claim < = ITC admitted on such Credit Note by Recipient + Valid Return by Recipient

GST-ITC-1A: Duplicate Claims of Liability reduction

Addition to Current Month Output tax Liability of GSTR-3

Yes Matching

Addition to Next Month Output tax Liability of GSTR-3

1.16 Payment of Tax (Section 49 of the CGST Act) 1.16.1 Broad features Electronic online payment process – Paperless, and no use of manually • prepared challan; GSTN - Single point interface for challan generation; • •

Anytime, anywhere mode of payment of tax;

•

Faster remittance of tax revenue to the government account;

•

Speedy accounting and reporting;

•

Electronic reconciliation of all receipts;

•

Ease of payment - Four modes including Net Banking, Credit Card (CC)/Debit Card (DC), NEFT/RTGS and Over the Counter (OTC);

•

Common challan form with auto-population features;

•

Use of single challan and single payment instrument;

•

Common set of authorized banks;

•

Payment through any bank;

•

Common accounting codes.

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1.16.2 Payments to be made in the GST Central GST (CGST) • •

State GST (SGST);

•

Integrated GST (IGST);

•

Tax deducted at source (TDS);

•

Tax collected at source (TCS);

•

Interest, penalty, fees and any other payment.

1.16.3 Persons are liable to pay GST Supplier of goods/service including those paying tax under composition; • •

Imports and other specified/notified supplies  the liability may be casted on the recipient under the reverse charge mechanism unless assessed under Customs Law;

•

Third person (say, in the case of e-commerce operator responsible for TCS or government department responsible for TDS).

1.16.4

Modes of payment of GST Modes of Payment

Mode I Internet Banking including Credit/Debit Card through Auth. Banks

Mode II Over the Counter (pay upto INR 10,000) per challan per tax period subject to exceptions in cash/cheque/DD

Mode III RTGS/ NEFT

Payment Acceptance by Dept. officers in enforcement cases ONLY

1.17 Tax Deduction at Source (TDS) (Section 51) 1.17.1 Persons may be required to deduct TDS (a) A department or establishment of the Central or State Government, or (b) Local authority, or (c) Governmental agencies, or (d) Such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council.

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1.17.2

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Rates of TDS

S.N.

Act

Rate of TDS (on the payment made or credited to supplier)

(i)

CGST

1%

(ii)

SGST

1%

(iii)

IGST

2%

1.17.3 When to deduct TDS The deductor is required to deduct TDS if the total value of such supply under a contract exceeds INR 2.5 lakhs. “Value of supply” means amount indicated in the invoice excluding tax.

TDS is required to be deducted on all taxable goods and/or services.

1.17.4 Obligations of deductor of TDS (a) Every deductor is liable for registration under the GST Law. Further, threshold limit shall not apply to the deductor of TDS. (b) He shall pay the TDS deducted to the government by the 10th day of the month succeeding the month in which TDS was deducted by debiting the electronic cash ledger maintained; and the electronic tax liability register shall be credited accordingly. (c) He shall issue TDS certificate in Form GSTR-7A, to the deductee within 5 days of crediting the amount so deducted to the Government, mentioning therein – the contract value, • •

rate of deduction,

•

amount deducted,

•

amount paid to the appropriate government, and

•

such particulars as may be prescribed in this behalf.

(d)

He shall submit monthly return of TDS in Form GSTR 7 return by the 10th day of the month succeeding the month in which TDS was deducted, electronically on the Common Portal either directly or through Facilitation Centre.

(e)

Details of tax deducted at source by the deductor shall be made available to the deductee in Part C of Form GSTR-2A electronically and the said deductee may include the same in Form GSTR-2.

(f)

Deductor is not required to submit Annual Return in Form GSTR 8.

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1.18 Tax Collection at Source (TCS)(Section 52) 1.18.1 Time of collection of TCS and its value Every electronic commerce operator (ECO), not being an agent, shall collect • an amount calculated at the specified percentage of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator.

“Net value of taxable supplies” shall mean • Aggregate value of taxable supplies of goods or services made during any month, other than services notified under sec 9(5), by all registered taxable persons through the ECO (−) Aggregate value of taxable supplies returned to the suppliers during the said month.

TCS would not be collected where notification is issued under sec 9(5). For example, suppose aggregator is notified under sec 9(5), then it would not collect TCS. TCS shall not be applicable where goods are supplied by the ECO on its own • account.

1.18.2

Rates of TCS

S.N.

Act

Rate of TDS (of the net value of taxable supplies)

(i)

CGST

1%

(ii)

CGST

1%

(iii)

IGST

2%

1.18.3 Obligations of collector of TCS (a) TCS shall be paid within 10 days from the end of the month in which the collection is made; (b) ECO shall furnish a statement of outward supplies of goods/services (including returns thereof), electronically, giving the details of the amounts collected during the calendar month within 10 days from the end of the month in which the collection was made; (c) The statement shall contain details of amounts collected, supplier-wise in respect of all supplies effected through the website/url of the ECO during the calendar month. (d) Form and manner of said statement shall be prescribed in the GST Rules.

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(e)

Chapter A-1

ECO shall furnish an annual statement, electronically, containing the details of outward supplies of goods or services or both effected through it.

1.18.4 Matching of TCS with supplies by the supplier (a) Amount so remitted by the ECO shall be treated as if it is amount of tax paid by the concerned supplier and shall reflect in the supplier’s electronic cash ledger.

The expression ‘concerned supplier’ means the supplier of goods/services making supplies through the ECO. (b) Concerned supplier shall claim credit of the amount collected and reflected in the statement of the ECO furnished, in the manner prescribed. (c) Details of the supplies furnished by the e-commerce operator would be compared with the corresponding outward supplies reflected by the concerned supplier in his valid monthly return. If the details do not match, discrepancy shall be communicated to both, the e-commerce operator and the concerned supplier. (d) After communication, if discrepancy is not rectified by the supplier in his valid return or the ECO in his statement for the month in which discrepancy is communicated, the same shall be added to the output tax liability of concerned supplier where the value of outward supplies furnished by the ECO is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically.

1.19 Supplier of online information and database access or retrieval services located outside India to specified person in the taxable territory (OIDAR) (Section 14 of IGST Act) 1.19.1 Applicability of the provisions Sec 14 of the IGST Act fasten the liability to pay tax upon the supplier of service located in a non-taxable territory supplying online information and database access or retrieval services to non-taxable online recipient. Thus, the provisions have three essentials: (i) Supplier of service is located in a non-taxable territory; (ii) Supplier is supplying online information and database access or retrieval services; and (iii) Service is received by the non-taxable online recipient.

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1.19.2 Meaning of “online information and database access or retrieval services” (OIDAR) OIDAR means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services, such as,(a) Advertising on the internet; (b) Providing cloud services; (c) Provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet; (d) Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network; (e) Online supplies of digital content (movies, television shows, music, etc.); (f) Digital data storage; and (g) Online gaming.

1.19.3 Role of intermediary who arranges the services Where the supplier of service is located in a non-taxable territory, and • •

provision of such service is arranged or facilitated by an intermediary located in the non-taxable territory, then

•

such intermediary shall be deemed to be supplying such services to the nontaxable online recipient.

•

However, if the intermediary satisfies all the following conditions, he shall not be deemed as supplier of service: (a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory; (b)

the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-assessee online recipient and the supplier of such services;

(c)

the intermediary involved in the supply does not authorise delivery;

(d)

the general terms and conditions of the supply are set by the service provider; and not by the intermediary.

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1.19.4 Registration and payment of tax For the purpose of payment of IGST, the supplier of the said services shall • take a single registration under a Simplified Registration Scheme, as may be prescribed by submitting an application for registration, duly signed, in Form GST REG-09A. Any person located in taxable territory, representing such supplier for any • purpose in the taxable territory, shall take a registration and pay IGST on behalf of the supplier.

Where the supplier does not have a physical presence in the taxable territory • or does not have a representative in the said territory, such supplier may appoint a person in the taxable territory for the purpose of paying IGST; and such person shall be liable to pay tax.

1.20 Refund (Section 54 & 55 of the CGST Act) 1.20.1 Circumstances Under the GST, export and supply to SEZ developer/unit have been • considered as zero-rated supplies. However, the inputs and input services shall be purchased only after payment of GST. Therefore, refund arises to the exporters/SEZ developers/units due to tax paid by them ono inputs and input services exported as such; or o inputs or input services used in the goods and/or services exported out of India.

Refund of balance in electronic cash ledger as defined under sec 49(6).

• •

Refund of unutilized input tax credit, subject to restrictions provided under sec 54(3) of the GST Act.

•

Where the taxpayer is a manufacturer and its inputs/input services are taxable at a higher rate of tax as compared to finished goods/services.

•

Payment of pre-deposit amount as a condition for entertainment of appeal, which is ultimately allowed in the favour of the taxpayer: thus, resulting in refund of the pre-deposit amount.

•

Refund of tax paid on inward supplies to embassies, diplomats, etc. notified under sec 55.

•

Payment of tax wrongly as IGST in lieu of (CGST+SGST); or vice-a-versa subject to prescribed conditions. [Section 19 of the IGST Act and sec 77 of the GST Act].

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•

Refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued or where a refund voucher has been issued.

•

The IGST paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded in the prescribed manner.

1.20.2 Time limit As per sec 54 of the GST Act, an application for refund of tax and/or interest • shall be made to the proper officer of IGST/CGST/SGST within 2 years from the relevant date in a prescribed form.

However, for the persons specified under sec 54(2), i.e. United Nation Organisations, embassies, etc., the period shall be 6 months from the last day of the quarter in which such supply was received.

Claim for refund of the balance in electronic cash ledger as defined under sec • 49(6), can be made in the monthly GST returns in prescribed manner.

The relevant date is critical to determine time within which the refund claim • has to be filed. If the refund claim is filed after the relevant date, the claim would be rejected at the threshold; and there is no provision in the Act to condone the delay in filing of refund claim.

• Ιn case of export of goods, application for refund shall be filed only after the export manifest or an export report, as the case may be, in respect of such goods is delivered under sec 41 of the Customs Act 1962.

In respect of supplies to a SEZ unit/developer, the application for refund • shall be filed by the supplier of goods after such goods have been admitted in full in the SEZ for authorized operations, as endorsed by the specified officer of the Zone; In respect of supplies to a SEZ unit/developer, the application for refund • shall be filed by the supplier of services along with such evidence regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone.

• Ιn respect of supplies regarded as deemed exports, the application shall be filed by the recipient of deemed export supplies.

1.20.3 Procedure for claiming refund Applicant shall file an application in Form GST RFD-1, electronically, • through the Common Portal either directly or from a Facilitation Centre.

Refund application has to be supported by prescribed documents evidencing • facts that the refund is due to the applicant.

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•

Chapter A-1

Claim for refund relating to balance in the electronic cash ledger in terms of sec 49(6) may be made through the return for the relevant tax period in Form GSTR-3, Form GSTR-4 or Form GSTR-7.

1.21 Assessment and Audit 1.21.1 Meaning of assessment and scope As per sec 2(11) of the CGST Act, the term “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.

1.21.1.1 Self-assessment (Section 59 of the CGST Act) A registered taxable person shall undertake self-assessment of the taxes payable and furnish a return for each tax period as specified in sec 39, which deals with returns.

Determination of tax liability is to be undertaken by the tax payer himself and stated in the return to be filed by him.

1.21.1.2 Re-assessment The term re-assessment has not been defined under the Act. In general, power to reopen the assessment should be exercised on the basis of materials in assessment record and not on the basis of mere change of opinion.

Assessment cannot be reopened on the basis of materials already considered at the time of original assessment.

Mere change of opinion is not a reasonable ground for reassessment. Change of opinion would arise only in a case where reassessment is made on the same set of facts and with the same materials on record. If fresh materials are brought on record or if there was something to show that the dealer had concealed some material from the assessing officer, then the application of mind to new facts or materials by the assessing officer cannot be said to be mere change of opinion.

1.21.1.3 Provisional assessment (Section 60 of the CGST Act) Provisional assessment can be invoked by a taxable person by making a request/application to the proper officer; and such request maybe made only under the following two circumstances(i) He is unable to determine the value of goods and/or services, or (ii) He is uncertain about the rate of tax applicable.

1.21.1.4 Summary assessment (Section 64 of the CGST Act) Summary assessment is generally used in a tax legislation to denote ‘fast track assessment’ based on return filed by the assessee.

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•

The proper officer must have sufficient ground or reason to believe that any delay in assessment will adversely impact the interest of revenue.

•

The proper officer must have evidence in his possession that the person has incurred, or is likely to incur, a liability to pay tax under this Act.

1.21.1.5 Best judgment assessment As per section 62, the proper officer may apply best of his judgment where a • registered taxable person fails to file his return, which may pertain to any of the following category o Return for the tax period in case of a normal taxable person, o Return in case of a person opting for composition, o Final return at the time of cancellation of registration.

As per section 63, the proper officer may also apply best of his judgment for • the relevant tax periods and issue an assessment order where o a taxable person fails to obtain registration even though liable to do so, or o whose registration has been cancelled under section 29 but who was liable to pay tax.

1.21.2 Audit (Section 65 of the CGST Act) As per sec 2(13) of the GST Act, the term “audit” means • o examination of records, returns and other documents maintained or furnished by the registered person under this Act or rules made thereunder or under any other law for the time being in force, o to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and o to assess his compliance with the provisions of this Act or rules.

The Commissioner of CGST/SGST or any officer authorized by him, by way • of general or special order may undertake audit of the business transactions at o the place of business of the registered person, or o the Department’s office.

Intimation of audit will be issued to the taxable person at least 15 days in • advance.

The audit shall be completed within a period of 3 months from the date of • commencement of audit; or under certain conditions, the extended period, which may be a further period not exceeding 6 months.

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•

Chapter A-1

During the course of audit, the authorized officer may require the registered person,

•

(i)

to afford him the necessary facility to verify the books of account or other documents as he may require and which may be available at such place, and

(ii)

to furnish such information as he may require and render assistance for timely completion of the audit.

The proper officer may initiate proceeding for determination of tax under sec 73 or 74, levy of interest and/or penalty if the audit conducted reveals any evidence of o tax not paid or short paid, or o

input tax credit wrongly availed or utilised, or

o

amount erroneously refunded.

1.21.3

Specific provisions for determination of tax

S.No. (1)

(2)

Section 73

Section 74

(3)

(4)

1

Main Reason for service of show cause notice (SCN)

Tax default other than fraud or any willful-misstatement or suppression of facts to evade tax

Tax default due to fraud or any willful-misstatement or suppression of facts to evade tax

2

Circumstances/ Defaults

Sec 73(1):  Any tax has not been paid or short paid, or  any tax has been erroneously refunded, or  where input tax credit has been wrongly availed or utilized (hereinafter stated as “tax default”)

Sec 74(1):  Any tax has not been paid or short paid, or  any tax has been erroneously refunded, or  where input tax credit has been wrongly availed or utilized (hereinafter stated as “tax default”)

3

Time Limit for issuance of SCN

Sec 73(2): At least 3 months prior to the time limit specified in sec 73 (10) for issuance of order

Sec 74(2): At least 6 months prior to the time limit specified in sec 74(10) for issuance of order

4

Service a statement

Sec 73(3),(4) and Sec 74(3),(4): Where SCN has been issued for any period, the PO may serve statement of tax default for other periods provided grounds are same as stated in the SCN

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S.No. (1)

(2)

Section 73

Section 74

(3)

(4)

5

Issuance of order after determination

Sec 73(9): After considering the representation, PO shall determine the amount of tax, interest and penalty, which shall be equivalent to 10% of tax or INR 10,000/-, whichever is higher

Sec 74(9): After considering the representation, PO shall determine the amount of tax, interest and penalty.

6

Time limit for issuance of order

Sec 73(10): 3 years from the due date for filing of annual return for the financial year to which the tax not/short paid or ITC wrongly availed or utilised relates to, or within 3 years from the date of erroneous refund.

Sec 74(10): 5 years from the due date for filing of annual return for the financial year to which the tax not/short paid or ITC wrongly availed or utilised relates to, or within 5 years from the date of erroneous refund.

1.21.4 Special Audit (Section 66 of the CGST Act) Special audit can be ordered in writing by any officer not below the rank of • Assistant Commissioner, (with the prior approval of the Commissioner), if such officer is of the view that o the value has not been correctly declared, or o the credit availed is not within normal limits.

The officer not below the rank of Assistant Commissioner, who has an • adverse opinion or suspicion on the above aspects, after commencement and before completion of any scrutiny, enquiry, investigation or any other proceedings under the Act (i.e., at any stage of proceedings), may direct a registered person to get his books of accounts audited. The provisions are applicable notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force.

Direction for special audit shall be given after prior approval of the • Commissioner.

Audit shall be conducted by • o the Chartered Accountant, or o the Cost Accountant.

•

The Auditor shall submit his report within 90 days (extendable to further 90 days).

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1.22 1.22.1

E-way bill

Person responsible for furnishing of information and generation of e-way bill [Rule 1(1) of Draft e-way bill Rules]

S. Nature of person who causes Purpose of movement Whether mandatory N. movement of goods if value exceeds specified amount 1

Registered person (either as supplier or recipient)*

2

Unregistered person* (i) Recipient (registered) is ascertained at the time of commencement of movement of goods (ii) Other cases

(i) In relation to a supply (ii) For reasons other than supply (iii) Due to inward supply from an unregistered person

Mandatory

Mandatory

Optional*

* Notes: • Where goods are supplied by an unregistered supplier to a recipient who is registered, the movement shall be said to be caused by such recipient if the recipient is known at the time of commencement of movement of goods. Thus, where recipient, who is registered, is known, it is mandatory to generate e-way bill either by the registered recipient or the unregistered person.

• If e-way bill is not generated and goods are handed over to the transporter; information shall be furnished by the person causing movement of goods, and eway bill shall be generated by the transporter.

1.22.2 Value of consignment for mandatory generation of e-way bill Provisions in respect of e-way bills are applicable where value of • consignment exceeds INR 50,000/-. [Rule 1 of Draft e-way bill Rules] Further, the law has not made any distinction between taxable and exempted • goods.

1.22.3 Mode of conveyance Own conveyance of the person causing movement of goods, or • A hired conveyance, or • Transporter.

• Whereas, as per sec 2(34) of the GST Act, the term “conveyance” includes a vessel, an aircraft and a vehicle.

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1.22.4

GST in India â&#x20AC;&#x201C; At-a-glance

Manner of generation of e-way bill [Rule 1]

Person causing movement of goods

When to Generation of efurnish way bill by the information person causing movement

Person as stated in Para 22.1 above

Before commencement of movement

Furnish information in Part A and Part B of Form GST INS-01, electronically, on common portal; & Generate waybill in Form GST INS-01

Furnishing of information by the person and generation of eway bill by the transporter Furnishing of information by registered person in Part A of GST INS-01 and information relating to the transporter in Part B of said Form; and Transporter to generate way bill in Form GST INS-01.

It is mandatory for the transporter to carry e-way bill with the conveyance.

1.22.5 How to furnish of information Information shall be furnished electronically, on the common portal.

1.22.6

Generation and acceptance of details in e-way bill Step 1

Rule 1(1): Furnish information in Part A and B of Form GST INS-01 and generate eway in Form GST INS-01.

Step 2 Rule 1(2): Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made available to the supplier, the recipient and the transporter on the common portal.

Step 3 Rule 1(8): Details of e-way bill generated shall be made available to the recipient, if registered, on the common portal, who shall communicate his acceptance or rejection of the consignment covered by the e-way bill.

Rule 1(9): Where the recipient does not communicate his acceptance or rejection within 72 hours of the details being made available to him on the common portal, it shall be deemed that he has accepted the said details.

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1.23 Advance ruling (Section 95 of the CGST Act) (1)

As per sec 95 of the CGST Act, â&#x20AC;&#x2DC;advance rulingâ&#x20AC;&#x2122; means a written decision provided by the authority to an applicant on matters or on questions as enumerated in sec 97(2) or sec 100(1) of the Law.

(2)

The question on which the advance ruling is sought shall be in respect of (a)

Classification of any goods and/or services;

(b)

Applicability of a notification issued under provisions of the Act having a bearing on the rate of tax;

(c)

Principles to be adopted for the purposes of determination of value of the goods and/or services;

(d)

Admissibility of input tax credit of tax paid or deemed to have been paid;

(e)

Determination of the liability to pay tax on any goods and/or services under the Act;

(f)

Whether applicant is required to be registered under the Act;

(g)

Whether any particular thing done by the applicant with respect to any goods and/or services amounts to or results in a supply of goods and/or services, within the meaning of that term.

(3)

Application in Form GST ARA-1 shall be accompanied by a fee of INR 5,000/-.

(4)

Advance Ruling Authority will be located in every state.

(5)

Authority for advance ruling shall comprise of one member CGST and one member SGST. They shall be appointed by the central and state government respectively. Their qualification and eligibility condition for appointment shall be prescribed in the GST Rules.

(6)

Appeal in Form GST ARA-2 may be filed against the order by the applicant or CGST/SGST officer; filing fee is INR 10,000/-.

(7)

Advance ruling shall be binding only on the applicant and on the jurisdictional tax authority of the applicant. Therefore, it is limited to the person who has applied for an advance ruling.

(8)

Advance ruling shall be binding till the period when the law, facts or circumstances supporting the original advance ruling have changed.

1.24 Appeals (Chapter XVIII of the CGST Act) (1)

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Any person aggrieved by any order or decision passed against him has the right to appeal. However, as per sec 120, some decisions/orders are not appealable.

Chapter A-1

(2)

GST in India â&#x20AC;&#x201C; At-a-glance

Appellate levels in the CGST Act

Appeal level

Appropriate appellate authority

Orders passed by

1st

First Appellate Authority

Adjudicating Authority

2nd

Appellate Tribunal

First Appellate Authority

3rd

High Court

Appellate Tribunal

4th

Supreme Court

High Court

(3) S. N.

Time limit of filing and disposal of appeal Nature of appeal

Time limit

Form

A

Appeal to the First Appellate Authority

(i)

Appeal by the aggrieved person- Sec 107(1)

3 months from the date of communication of the decision or order (Condonation - 1 month)

GSTAPL-01

(ii)

Acknowledgment of filing of appeal

-

GSTAPL-02

(iii)

Appeal/Application by the GST officer as per direction of the Commissioner - Sec 107(2),(3)

6 months from the date of communication of the decision or order (Condonation - 1 month)

GSTAPL-03

(iv)

Order clearly indicating final amount of demand confirmed

-

GSTAPL-04

B

Appeal to the Appellate Tribunal

(i)

Appeal by the aggrieved person - Sec 112(1)

3 months from the date of communication of the decision or order

GSTAPL-05

(ii)

Acknowledgment of filing of appeal

Within 7 days of filing of appeal

GSTAPL-02

(iii)

Appeal/Application by the GST Officer as per direction of the Commissioner - Sec 112(3), (4)

6 months from the date of communication of the decision or order

GSTAPL-07

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GST Guide with Ready Reckoner

S. N.

Chapter A-1

Nature of appeal

Time limit

(iv)

Submission of a memorandum of cross objection by other party Sec 112(5)

Within 45 days of the receipt of notice

GSTAPL-06

(v)

Disposal of appeal by the Appellate Tribunal - Sec 113(4)

One year from the date of filing of appeal, wherever possible

-

(vi)

Issue of statement indicating final amount of demand confirmed by jurisdictional officer

-

C

Appeal to the High Court - 180 days from the date of receipt Sec 117(2) of order

Form

GSTAPL-04

GSTAPL-08

(4)

The Appellate Tribunal may, in its discretion, refuse to admit any such appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined by such order, does not exceed INR 50,000/-. [Section 112(2)]

(5)

Filing and restoration fee before the Appellate Tribunal: The fees for filing and restoration of appeal shall be INR 1000/- for every INR 1 Lakh of tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined in the order appealed against, subject to maximum of INR 25,000/-. [Rule 3(5) of the Draft GST Appeal and Revision Rules]

(6)

Deposit of amount before filing of appeal (Stay Amount) As per sec 107(6) of the GST Act, no appeal shall be filed, unless the appellant has paidâ&#x20AC;&#x201C; (a)

in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and

(b)

a sum equal to 10% of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed.

1.25 Information returns (Section 150 of the CGST Act) 1.25.1 Who is required to file information return?

Following persons may be required to furnish information return, within such time, in such form and manner, to such authority or agency as may be prescribed -

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Chapter A-1

GST in India – At-a-glance

•

Taxable person,

•

Local authority or other public body or association,

•

Department of VAT or central/state excise duty or customs duty,

•

Income tax authority,

•

Banking company,

•

State Electricity Board or electricity distribution Co.,

•

Registrar or the sub-Registrar appointed under sec 6 of the Registration Act, 1908,

•

Registrar under the Companies Act, 2013,

•

Registering authority under the Motor Vehicles Act, 1988,

•

Collector of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013,

•

Recognised stock exchange,

•

A depository referred in the Depositories Act, 1996,

•

An officer of the Reserve Bank of India,

•

G.S.T. network,

•

The person to whom UIN has been granted under sec 23(8),

•

Any other person as may be specified.

1.25.2 What type of information may be asked in the return?

Information may relate to details of payment of tax, • •

details of transaction of goods or services,

•

transactions related to a bank account,

•

consumption of electricity,

•

transaction of purchase, sale or exchange of goods or property or right or interest in a property.

1.25.3 Penalty for non-furnishing of information return INR 100/- for each day of the period during which the failure to furnish such return continues maximum upto INR 5,000/-.

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