Meaning of GST, VAT Vs. GST, Direct Tax, Indirect Tax, Types of GST, Input Tax, ITC Set off, Rate Slabs of GST, Export, Import etc.

1. Goods and Services Tax
Kaushal Kalp – Udayan Care Vocational Training Center
By Arun Chauhan (Tally Faculty)

2. INTRODUCTION TO TAX
It is the income of the government which is collected either directly or
indirectly source. We can say that a tax is a financial charge imposed
by State and Central Government of India. The main taxes that the
Central Government imposes are income tax, customs duties, central
excise, CGST, central sales tax, and service tax. The taxes that the
State Government imposes are stamp duty, SGST, state excise, land
revenue, and entertainment tax.

3. TAX
Direct Tax
Income Tax
RTO Tax
Municipal
Taxes
House Tax etc.
Indirect Tax
GST
VAT
CST
Excise
Service Tax
etc.

4. VALUE ADDED TAX (VAT)
VAT is the replacement of the Sales Tax structure. It is the tax paid by
the manufacturers, producers, retailers or any other dealer who add
value to the goods and that is ultimately passed on to the consumer.
It is one of the major source of revenue to the state. The VAT system
was introduced in India by replacing the General Sales Tax laws of
each state.

5. INTRODUCTION TO GST
GST basically an indirect tax that brings most of the taxes imposed
on most goods and services, on manufacture, sale and consumption
of goods and services, under a single domain at the national level. In
the present system, taxes are levied separately on goods and
services. The GST is a consolidated tax based on a uniform rate of tax
fixed for both goods and services and it is payable at the final point
of consumption. At each stage of sale or purchase in the supply
chain, this tax is collected on value-added goods and services,
through a tax credit mechanism.

6. VAT VS. GST
VAT and GST are both indirect tax whose burden shifts to final
consumer. Both VAT and GST will charge on the value of sale or
supply of goods. But still, there are many differences between the
VAT and GST. Some of the difference are as follows:

7. 1. VALUATION OF GOODS
VAT
For Calculating VAT, Both
Excise duty and VAT will add
in market price and on same
gross value goods was sold to
customer. Excise duty and
VAT was gone in the pocket of
Govt. and rest in the pocket of
business person.
Suppose Market Value of any goods
is Rs. 12,000 and excise duty is Rs.
2000 and VAT is Rs. 3000. Then
value which will be taken from
GST
In case of GST, All taxes
removed, only GST will charge on
Goods & add in the value of
Goods.
Suppose market value of goods
is Rs. 12,000 and GST is 12%
Then Rs. 12000 + Rs. 1440 (12%
of 12,000) = Total Rs. 13,440.

8. 2. VAT IS CHARGED ON SALE OF
GOODS WHILE GST IS CHARGED ON
GOODS & SERVICES.
VAT is charged on Sale of goods immediately up on preparation of
Sale Invoice or Immediately when goods are moved for sale. GST is
charged on goods and services at the end stage of distribution of
goods. Many indirect taxes including VAT are being eliminated and
merging with GST.

9. 3. PARTITION OF TAX BETWEEN
STATE AND CENTRAL
VAT
In VAT, only state govt. has right
to get its whole share for welfare
of state’s public but in GST,
Entire amount of GST will be
collected into two parts for every
sale from same state.
GST
CGST – Automatically deposit in
Central Govt. account.
SGST – Automatically deposit in
State Govt. account.
IGST – Whole GST will be deposit
into IGST account which is
central govt. account.

10. 4. TAXATION ON PROVIDED
SERVICE
Before GST, we had VAT and service tax which was taken separately
as VAT is for goods and service tax is for service while GST is for both
goods as well as services. For the services, GST rate may be 12% and
18% and 28% which are mentioned on the nature of services.

11. 5. INPUT CREDIT
VAT
In VAT, dealer has right to
deposit on his net VAT liability
by deducting Input VAT on goods
purchased from Output VAT on
goods sold. So, input credit was
in advance.
GST
Now, in GST, first Deposit GST on
Service Provided, He already paid
GST on Goods purchase, System
of GST portal will calculate the
Input Credit which is used for
payment of next GST liability.

12. EXPECTED BENEFITS OF GST
• Reduce retail price for most goods. Enhance GDP.
• Reduce inflation in the long term.
• Create more jobs. E-commerce to get a boost by increasing market
penetration.
• Increase indirect tax collection from a wider base.
• Shift emphasis from indirect tax to direct tax collection in the long
term.
• Increase in Foreign Direct Investment and improvement in
international investor confidence.

13. TAXES TO BE SUBSUMED UNDER
GST
GST
STATE GST
CENTRAL
GST
• Central Excise Duty
• Additional Excise Duty
• Service Tax
• Countervailing Duty (CVD)
• Additional Duty of Customs
(ADC)
• Surcharge, Education and
Secondary/ Higher Secondary
Cess
• VAT/Sales Tax
• Purchase Tax
• Entertainment Tax
• Luxury Tax
• Lottery Tax
• State Surcharge & Cesses
leviable on the above as of now

14. TAX INVOICE VS. RETAIL INVOICE
When a registered taxable person
supplies taxable goods or
services, a tax invoice is issued.
The invoice should mention the
GSTIN Registration Number of
the seller and the word “TAX
INVOICE” on the face of the
invoice. An Unregistered dealer
however cannot issue tax invoice.
The ITC (Input Tax Credit) can be
claimed by the purchasing dealer
on the basis of this TAX Invoice.
It’s Sales Invoice Format
prescribed by the S.T.D. (Sales
Tax Dept.), used for exempted
sales & Sales made to an
unregistered Dealers only is
termed as Retail Invoice. It can’t
be used for claiming Input Tax
Credit.

15. DEALER
Registered Dealer
Who is registered either under
voluntary registration or
Compulsory Registration under
the GST Act. Such dealer can
issue Tax Invoice and also claim
the tax paid on purchases made
from other registered dealer as
ITC.
Un-registered Dealer
Dealers who are not registered
under the GST Act are called as
Unregistered Dealers (URD). Such
dealers cannot issue tax invoice.
They can neither charge tax nor
claim ITC.

16. GST CODE (GST IDENTIFICATION NUMBER –
GSTIN)

17. STATE CODES
State Codes State Codes State Codes
Jammu And Kashmir 01 Nagaland 13 Daman and Diu 25
Himachal Pradesh 02 Manipur 14 Dadar and Nagar
Haveli
26
Punjab 03 Mizoram 15 Maharashtra 27
Chandigarh 04 Tripura 16 Andhra Pradesh 28
Uttarakhand 05 Meghalaya 17 Karnataka 29
Haryana 06 Assam 18 Goa 30
Delhi 07 West Bengal 19 Lakshadweep 31
Rajasthan 08 Jharkhand 20 Kerala 32
UP 09 Orrissa 21 Tamil Nadu 33
Bihar 10 Chattisgarh 22 Puducherry 34
Sikkim 11 MP 23 Andaman and
Nicobar
35
Arunachal Pradesh 12 Gujarat 24

18. Sl. No. Aggregate Turnover in
the Preceding Financial
Year
Applicability of HSN Applicability of
SAC
1. Up to Rs. 1.5 Crore* Not Mandatory Not Mandatory
2. Rs. 1.5 Crore to Rs. 5
Crore
2 Digit HSN Code Mandatory
3. Above Rs. 5 Crore 4 Digit HSN Code Mandatory
4. Import & Export Dealer Mandatory 8 Digit HSN
Code
Mandatory

19. GST RATES

20. Rates Commodity/Services
0% Milk, Butter Milk, Curd, Cereals, Natural Honey, Flour, Besan, Puffed Rice, Papad, Bread,
Prasad, etc.
0.25% Semi-precious Stones-cut & Polished
1.50% Diamond Job Work
5% Face Masks, Namkeen/Bhujiya, Coffee, Tea, Kerosene, Coal, Cream, Skimmed Milk Powder,
Branded Paneer, Frozen Vegetables, Processed Spices, Pizza Bread, Rusk, Life Jackets (Under
INR 1000), Footwear (Under INR 1000), Construction services applicable to the solar power
plants, etc.
12% Dry Fruits in Packaged Form, Ayurvedic Medicines (Branded), Butter, Cheese, Ghee, Fruits
And Vegetables Juices, Tooth Powder, Coloring Books, Picture Books, Feature Phones,
Umbrella, Sewing Machine, Milk Beverages, Bio-Gas, Medicinal Grade Hydrogen Peroxide,
man made apparel (Highlighted Goods Above INR 1000).
18% Handwash Sanitizer, Preserved Vegetables, Tissues, Envelopes, Tampons, Note Books,
Cornflakes, Pastries and Cakes etc.
28% Automobiles, Motorcycles, Molasses, Chocolate Not Containing Cocoa, Aerated Water,
Dishwater, ATM, Vending Machines etc.
28%
(With
Luxury and De-Merits Goods, Caffeinated Beverages + 12% Cess.

21. ITEMS EXEMPTED FROM GST
Alcohol, Tobacco, Petroleum products are completely exempted.

22. TYPES OF GST
GST
Intra State
Supply
(within state)
CGST
(Central Tax)
SGST/UTGST
(State/Union
Territory Tax)
Inter State
Supply
(outside of
state)
IGST
(Integrated Tax)

23. For Example: - Suppose Krishna Traders, a dealer in Uttar Pradesh sold goods to Balaji
Ltd. in Uttar Pradesh Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9%
and SGST rate of 9%, in such case the dealer collects Rs. 1800 and Rs. 900 will go to the
central government and Rs. 900 will go to the Uttar Pradesh government.
In the books of Krishna Traders Entry would be…..
Balaji Ltd. Dr. 11,800
To Local Sales 10,000
To CGST on Sale @9% 900
To SGST on Sale @9% 900
(Being Goods Sold on Credit to Balaji Ltd.)
Now, if Balaji Ltd. (Uttar Pradesh) sold goods to Shri Krishna Enterprise (Delhi) worth Rs.
1,00,000. In such case the dealer has to charge Rs. 18000 as IGST. This IGST will go to
the Central Government of India.
In the books of Balaji Ltd. Entry would be……
Shri Krishna Enterprise Dr. 1,18,000
To Inter State Sale 1,00,000
To IGST on Sale @18% 18,000
(Being Goods Sold on Credit to Shri Krishna Enterprise)

24. INPUT TAX CREDIT (ITC)
One of the fundamental feature of GST is the seamless flow of Input
Credit across the chain (from the manufacturing of goods till it is
consumed) and across the country.

27. GST RETURN
A return is a document containing details of all income/sales and /or
expense/purchase which a taxpayer (every GSTIN) is required to file
with the tax administrative authorities. This is used by tax authorities
to calculate net tax liability.

28. WHO SHOULD FILE GST RETURNS?
In the GST regime, any regular business having more than Rs. 5 Crore
as annual aggregate turnover has to file two monthly returns and one
annual return. This amounts to 26 returns in a year.
The numbers of GSTR fillings vary for quarterly GSTR-1 filers under
QRMP scheme. The number of GSTR filings online for them is 9 in a
year, including the GSTR-3B and annual return.
There are separate returns required to be filed by special cases such
as composition dealers whose number of GSTR filings is 5 in a year.

29. Return Frequency & Due Date Description
GSTR-1
Monthly
(11th* of the next month)
Quarterly
(13th of the month succeeding the
quarter)
Details of outward supplies of taxable goods and/or
services affected.
GSTR-3B
Monthly
(20th of the next month)
Quarterly
(22nd or 24th of the month next to the
quarter)
It is monthly self-declaration to be filed, for furnishing
summarized details of all outward supplies made, ITC
claimed. The sales and ITC details must be reconciled with
GSTR-1 and GSTR-2B every tax period before filing GSTR-
3B.
(Monthly – Aggregate turnover in the previous financial
year more than Rs. 5 Crore)
(Quarterly – Taxpayers with aggregate turnover equal to
or below Rs. 5 Crore)
CMP-08
Quarterly
(18thof the month succeeding the
quarter)
Statement –cum-challan to make a tax payment by a
taxpayer registered under the composition scheme under
section 10 of the CGST Act (Supplier of goods) and CGST
(Rate) notification no. 02/2019 dated 7th March 2020
(Supplier of services)
GSTR-4
Annually
Return for a taxpayer registered under the composition
scheme under section 10 of the CGST Act (Supplier of

30. GSTR-5
Monthly
(20th of the next month)
Return for non-resident foreign taxable person.
GSTR-6
Monthly
(13th of the next month)
Return for an input service distributor to distribute the eligible
input tax credit to its branches.
GSTR-7
Monthly
(10th of the next month)
Return for government authorities deducting tax at source (TDS)
GSTR-8
Monthly
(10th of the next month)
Details of supplies effected through e-commerce operators and
the amount of tax collected at source by them.
GSTR-9
Annually
(31st December of next
financial year)
It is required to be filed by all taxpayers registered under GST. It
contains the details of all outward supplies made, inward supplies
received during the relevant financial year under different tax
heads i.e., CGST, SGST & IGST. It is a consolidation of all the
monthly or quarterly returns (GSTR-1, GSTR-2A, GSTR-3B).
GSTR-9C
Annually
(31st December of next
financial year)
Certified reconciliation statement to be filed by all taxpayers
whose turnover exceeds Rs. 2 Crore.

31. COMPULSORY REGISTRATION
REQUIREMENT IN GST
New Limits – For Sale of Goods
Aggregate Turnover Registration Required Applicability
Exceeds Rs. 40 Lakh Yes – For Normal Category
States
From 1st April 2019
Exceeds Rs. 20 Lakh Yes – For Special Category
States
Arunachal Pradesh, Manipur,
Meghalaya, Mizoram,
Nagaland, Puducherry,
Sikkim, Telangana, Tripura
and Uttarakhand
From 1st April 2019

32. QUARTERLY RETURN FILING AND
MONTHLY PAYMENT OF TAXES (QRMP)
SCHEME UNDER GST
The Central Board of Indirect Taxes & Customs (CBIC) introduced
Quarterly Return Filing and Monthly Payment of Taxes (QRMP) scheme
under Goods and Services Tax (GST) to help small taxpayers whose
turnover is less than Rs. 5 Crores. The QRMP scheme allows the
taxpayers to file GSTR-3B on a quarterly basis and pay tax every
month.

33. GST COMPOSITION SCHEME
Composition scheme has been formulated for small businessmen
being supplier of goods and supplier of restaurant services. Under
the scheme, person with annual turnover up to Rs. 1.5 crore (Rs. 75
lakhs in States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura and Uttarakhand) needs to pay tax equal to
1% to 5% on his turnover and needs to file his returns annually with
quarterly payment from FY 2019-20.
The following people cannot opt for the scheme:-
 Manufacturer of ice cream, pan masala, or tobacco, inter-state supplies
 A casual taxable person or a non-resident taxable person
 Businesses which supply goods through an e-commerce operator.

34. • Composition scheme has been made available for suppliers of services (to
those who are not eligible for the presently available Composition Scheme)
with a tax rate of 6% (3% CGST +3% SGST) having an annual turnover in the
preceding FY up to Rs. 50 lakhs. They would be liable to file one Annual
Return with quarterly payment of taxes. This has been made effective from
01.04.2019.
• Taxpayers under Composition scheme have been allowed to pay ‘self-
assessed tax’ on a quarterly basis till 18th of the month succeeding such 23
| 58 quarter and furnish a return till 30th April for the previous financial
year.
• A taxpayer who wants to opt for Composition Scheme for a financial year or
during the middle of a financial year has to inform the government about his
choice by filing FORM GST CMP-02.
• The GST Council in its 36th meeting held on 27.07.2019 decided that the
last date for filing of intimation, in FORM GST CMP-02, for availing the
option of payment of tax under notification No. 2/2019-Central Tax (Rate)
dated 07.03.2019 (by exclusive supplier of services), be extended from
31.07.2019 to 30.09.2019.
• The last date for furnishing statement containing the details of the self-
assessed tax in FORM GST CMP-08 for the quarter April, 2019 to June, 2019
(by taxpayers under composition scheme), has been extended from
31.07.2019 to 31.08.2019.

35. HOW SHOULD A COMPOSITION DEALER
RAISE BILL?
A composition dealer cannot issue a tax invoice. This is because a
composition dealer cannot charge tax from their customers. They
need to pay tax out of their own pocket. Hence, the dealer has to
issue a bill of supply. The dealer should also mention “Composition
taxable person, not eligible to collect tax on Supplies” at the top of
the Bill of Supply.
Note: A dealer is required to pay tax in a quarterly statement CMP-08
by 18th of the month after the end of the quarter.

36. THE REGISTERED PERSON WHO PART OF
THE FOLLOWING ACTIVITIES NEEDS TO
FILE A GST RETURN:
Sale
Purchase
Output Goods
and Services Tax
(On Sales)
Input Tax Credit
with GST Paid on
the purchase.

37. HOW TO FILE GST RETURN ONLINE?
From manufacturers and suppliers to dealers and consumers, all
taxpayers have to file their tax returns with the GST department every
year. Under the new GST Regime, filing tax returns has become
automated. GST returns can be filed online using the software or apps
provided by Goods and Service Tax Network (GSTN) which will auto-
populate the details on each GSTR forms.

38. STEPS TO FILE GST RETURNS
ONLINE
Step 1: Login http://www.gst.gov.in/
Step 2 : A 15 – Digit GSTIN will be issued based on your state code
and PAN numbers.
Step 3 : Upload invoices on the GST portal or the software. An invoice
reference number will be issued against each invoice.
Step 4 : After uploading invoices, outward return, inward return, and
cumulative monthly return have to be filed online. If there are any
errors. You have the option to correct it and refile the return.
Step 5 : File the outward supply returns in GSTR-1 form through the
information section the information section at the GST Common
Portal (GSTN) on or before 10th of the following month.

39. Step 6 : - Details of outward supplies furnished by the supplier will
be made available in GSTR-2A to the recipient.
Step 7 : - Recipient has to verify, validate, and modify the details of
outward supplies, and also file details of credit or debit notes.
Step 8 : - Recipient has to furnish the details of inward supplies of
taxable goods and services in GSTR-2 form.
Step 9 : - The supplier can either accept or reject the modifications of
the details of inward supplies made available by the recipient in
GSTR-1A.

40. TRACKING THE STATUS USING THE
‘RETURN FILING OPTION’
Step 1 : Use your credentials to log in to the online GST portal at
https://www.gst.gov.in/
Step 2 : Click on the ‘Services’ tab from the top menu.
Step 3 : Navigate to ‘Track Return Status’ under the ‘Returns’ option.
Step 4 : Select the ‘Return Filing Period’ option.
Step 5 : In the next page, select the financial year and the return filing
period from the respective drop-down boxes.
Step 6 : Click on the ‘Search’ button and the status of the GST Return will
be displayed on your screen.

41. PENALTY FOR LATE FILING OF GST
RETURNS
A penalty will be levied on the taxpayer in case he/she fails to file the
returns on time. This penalty is called the late fee. AS per the GST
Law, the late fee is Rs. 100 for each day for each Central Goods and
Services Tax (CGST) and State Goods and Services Tax (SGST). Thus,
the total fine amount will be Rs. 200 per day. However, this rate is
subject to changes which will be announced through notifications.
The maximum amount of fine that can be levied is Rs. 5,000.
Integrated GST or IGST does not attract any late fee in case the return
filing is delayed. The taxpayer will also be required to pay an interest
at the rate of 18% p.a. in addition to the late fee. This interest has to
be calculated by the taxpayer on the amount of tax that is to be paid.
The time period will be calculated from the day following the filing
deadline till the date when the actual payment is made.

42. E-WAY BILL
E-Way bill or Electronic-way bill is a document introduced under the
GST regime that needs to be generated before transporting or
shipping goods worth more than INR 50,000 within state or inter-
state. E-Way bill is generated on ewaybillgst.gov.in. alternatively,
Eway bill can also be generated or cancelled through SMS, Android
App and by site-to-site integration through API.
When a eway bill is generated, a unique Eway Bill Number (EBN) is
allocated and is available to the supplier, recipient, and the
transporter. The physical copy of e-way bill must be present with the
transporter or the person in charge of the conveyance and should
include information such as goods, recipient, consignor and
transporter. The e-way bill was rolled out nation wide on 1st April
2018.

43. WHO SHOULD GENERATE E-WAY
BILL?
• Registered Person – E-Way bill must be generated when there is a
movement of goods of more than Rs. 50,000 in value to or from a
registered person.
• Unregistered Person – Unregistered persons are also required to
generate e-way bill. However, where is a supply is made by an
unregistered person to a registered person, the receiver will have to
ensure all the compliances are met as if they were the supplier.
• Transporter – Transporter carrying goods by road, air, rail, etc. also
need to generate E-Way Bill if the supplier has not generated an e-
way bill.

44. VALIDITY OF E-WAY BILL
Type of conveyance Distance
Validity of
EWB
Other than over
dimensional cargo
Less than 100 Kms 1 Day
For every additional 100 Kms or part
thereof
Additional 1
Day
For Over dimensional cargo Less than 20 Kms 1 Day
For every additional 20 Kms or part
thereof
Additional 1
Day

45. THANKS !