Edition 4, GSTIndAS Self Learning Booklet

#Self_Learning
GSTIndAS
GSTIndAS
This is not just the collection of good
thoughts on the subject GSTIndAS, but
also an effort to start with a new of way
of learning and we call it Self Learning.
JUNE 2017 EDITION 4 PAGES 1-55
INSIGHTS:
 WHY SELF-LEARNING?
 GST OVERALL UNDERSTANDING.
 UNIFYING THE DIVERSITY: INDIA A PREFERRED
LOCATION NOW?
 INPUT TAX CREDIT UNDER GST
 IND AS -12 & 33
 TIME OF SUPPLY UNDER GST
We thank you all for the overwhelming response for this initiative, we invite people to submit their views, knowledge and paper for our
monthly editions, to know more kindly contact +91 9555666317 or mail your articles at Gyapycontent@gmail.com

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Acknowledgement
First edition of the booklet was issued just after the launch of the group
GSTIndAS.
This issue being the 4th booklet in the series which is entirely made
through efforts made by people around and with us;
In designing and editing the booklet, a special thank is to be made to Mr.
Sharad Dixit for his excellent contribution in designing the cover and the
structure of booklets.
All beautiful work does start from the scratch and to bring it in perfect
shape much efforts are required, here we extend our heartfelt thanks to
Ms. Nandini Taneja for her selfless service and editing the entire
worksheet.
Every strong building depends on how strong the pillars are. One such
strong pillar of our team is CA Diwakar Jha. We are thankful to him for
selflessly supporting and participating in the efforts.
Any product would be wasteful if it doesn‘t reach the person for which it
is designed in particular, for this reason a thank is to be made to Mr.
Prateek Mohan Sharma & Mr. Yash Chaturvedi for assisting in this
role
A special thank is to be made to those who have come forward for
sharing their EXCELLENT knowledge for this initiative:
 Sharad Dixit
 Kanika Garg
 Abhay Tulsian, CA
 Mohit Gupta
 Himanshu Nathani, CA
 Kajal Juneja
 Nihalchand Jain, CA
And last but not the least, the person who is assisting us by not just his
active contribution but also through his guidance being CA Vineet
Singhal.
HIMANSHU RASTOGI, CA

ABOUT GSTIndAS
This country in which we live has given many brilliant minds for which
we don't even need to give any introduction.
We all know that in today's era, everything is linked with money &
education industry is no more an exception.
Coaching institutes, training institutes etc. are not only spoon feeding
monotonic knowledge but also forcing a rigid way of thinking which retards
development creating the atmosphere of fear WHICH NEEDS A CHANGE.
Here comes the role of our ancient scholars, the 'Eklavya' who set a great
example of self-learning, overcoming every difficulty coming on his way of
learning with a desire of becoming an expert in archery, and he did it.
That is what we want to do with this GSTIndAS; a new start to the
beginning that was made by our ancient tutors, start reading the content
and the knowledge is all yours.
We call this concept as Self Learning and this booklet is a part of that
motive.
Our aim is to develop a system where students become tutor and simply
teach to learn. However this is possible once a student is out of the stage
of his childhood.
Thank you,
With Regards
HIMANSHU RASTOGI, CA
Founder –GSTIndAS
A Self-Learning, Speaking Platform under GYAPY

OUTLINE
Self-Learning: A key enabler ……………………………..………………..…………………..6
Snapshot of Goods and Service Tax …………………….………………..………………….. 10
• Meaning of GST
• Fundamentals of GST
• Concept of supply, time and value of Supply
• Valuation of Supply including open market value concept
• Place of supplies
• Composition Levy Scheme
• Registration
• Return Under GST
• Invoicing
Unifying the diversity: India a preferred location now?………………..………………...26
ITC under GST.................................................................................................. 32
IndAS -12 on Income Taxes ............................................................................... 37
IndAS – 33 on Earnings per share ...................................................................... 40
Time of Supply under GST .............................................................................. ...45
Write for us, know more ................................................................................. ...55

Image Gallery
Important Message:
" Law cannot stand still, it must change with the
changing social concepts and values.
If the law fails to respond to the needs of the
changing society, the neither it will stifle the
growth of the society and chock its progress or if
the society is vigorous enough, it will castaway
the law which stands in the way of its growth.
Law must, therefore, constantly be on the move
adapting itself to the fast changing society and
lag behind."
P N Bhagwati [Former Chief Justice of India]

SELF-LEARNING:
A KEY ENABLER
Team GSTIndAS
(Imparted by: Sharad, Nandini & Himanshu)
Self-learning is something which is the key enabler to develop our understanding. It
is the process through which new information comes out of the pool of data.
It allows us to tackle problems through our very own capabilities. In that sense, we
can use our knowledge by better analyzing the things by formulating our own
techniques, methods, and tools. We know that Self-Help is the greatest help.
And the Self-guided learning is the greatest way to be educated and sharpening our
skills.
Nowadays, we may found many resources, books, eBooks, and custom essay
writing companies which are available to help the self-learners.
We at GSTIndAS reversing the pattern of how we learn new things, we are moving
back towards traditional methods (i.e., Self Learning) of learning alongside using
the positives of modern learning techniques. Because, we believe that learning by
traditional methods and techniques helps us to retain things forever.
THE IMPORTANCE OF SELF-LEARNING
We are highlighting three benefits of self-learning to help you better understand its
relevance:
1. UNDERSTANDING
The benefit of learning on its own is that one can explore different ways of thinking,
and can go through difficult concepts on its own without help. It is true that if you
do R&D on something by self, you will have best understanding of that thing. You
may need to add on something but you surely need not to start from scratch.
2. ANALYTICAL SKILLS
Self-learning skill develops the analytical skills, which every organisation
irrespective of industry requires MUST. So, analysing things differently is a must,
which can only be done by Self-guided help.

3. CONFIDENCE
“Teaching may be fine for some things, but no tutor can go to school with a child, no
tutor can go into the exam room with the child. Self-learning guides students to be
independent.”
In addition, tutors can only teach a child how they solve a problem, which could
result in confusion if the student tries to answer the problem differently.
When you choose to go with self-learning, you better know yourself and which will
boost moral to tackle the adventures.
4. PREPARING FOR THE FUTURE
―Self-learning ability is a necessity in every field. Whether one is a Student/
graduate/ professional/ businessman, it is expected from them to figure out a lot
on their own. It empowers oneself to become fearless when encountering challenges.
Self-learning helps students develop the confidence they need to tackle challenging
problems and obstacles in the future.
 Schools such as Harvard, IITs, and IIMs focus on self-learning by putting
their scholars to a real practical situation. So, at the end, they can very well
understand the potential problems which may hit the business environment.
HOW SELF-LEARNING CAN BE APPLIED:
1. GET INTERESTED
Identify hot topic which need to be learnt and develop interest in the subject. You
can‟t learn what you do not want to learn. Emotion is an important part of the
learning process. If you are highly interested you find it a bit easier and vice-versa.
If you have moderate interest in a subject, give yourself a chance because
sometimes your interest gives you edge over others.
2. TRY TO UNDERSTAND BASIC THINGS
The first time you study them, don‘t expect to understand things. Trust that things
will get clearer as your brain comes to grip with new information. Learning does
not take place according to a schedule laid down by a curriculum. Some
things are easier to learn than others. Some things just take longer to click in. Keep
working at it, and you will gradually find that things that seemed difficult at first,
will become a cake-walk later.

3. TRY TO COVER THE SAME GROUND FROM DIFFERENT ANGLES
With the help of patterns, things get to map on brain. Brain is struggling to form
patterns to cope with new input from your learning activities. Sometimes, no matter
how long you focus on one subject, your brain is not going to pick it up. If you are
stuck, move on. With this technique, rather than creating pressure on brain, you
actually utilizing more of your capacity.
Then cover the same general information from a different source, a different book,
or a podcast, or an online lecture or a video or consulting with some expert.
The broader your base, the easier it is to learn. Just as the “rich gets richer”, the
more you know, the more you can learn.
4. ANYTIME IS LEARNING TIME
There is no time when you cannot learn. Learning is a never ending process. Take
full advantage of the Internet and various mobile apps rather than old-fashioned
books and magazines because you find bit easier to use those tools which you are
used to.
Learn when you got ―empty spaces‖ in your daily routine work. Example of empty
spaces are travelling, waiting for someone, bored from work etc.
Put the enthusiasm of learning in your heart you find you are already doing what
you are supposed to do.
5. BE A MULTIMEDIA LEARNER
I hope everyone have watched the movie named ‗the 3 idiots‘. In this movie, there is
a dialog “Jaha jaha se gyan mile loot lo, har taraf gyan bat rha hai”. In this sense,
the more varied your learning content, and the more varied the ways in which you
learn, the clearer the picture will become.
Different learning activities suit different people, at different times of the day. Vary
your activities in order to keep your interest level up. This will renew your batteries.
6. JOIN LEARNING COMMUNITIES
When you do things on your own, you find it bit monotonous and simultaneously
you need more efforts & your area somehow becomes limited. Join a learning
community where you meet new people, got to know new ideas and you completely

transform. There are also various communities on the web/ social platforms such
as Facebook, Whatsapp, Gyapy groups, etc., where members share their knowledge
and experiences. Search for the communities that suit your interests and learning
style. You will find encouragement, advice from fellow learners, as well as from
experts.
In these communities, you can measure your progress against your own goals, or
compare your experience with that of other learners. You can even teach and help
others, which is a great way to learn.
“Alone we can do so little, together we can do so much!” – Helen Keller
Never has it been easier nor more exciting to be a self-learner. Let constant
learning be a major part of your life-style. The rewards will be in terms of
self-growth, new horizon of thinking and better learning experience.
"The education that does not help the common
mass of people to equip themselves for the
struggle for life, which does not bring out strength
of character, a spirit of philanthropy and the
courage of a lion – is it worth name?..The end of
all education, all training should be man making.‖
~Swami Vivekananda

SNAPSHOT OF GOODS AND SERVICE TAX
KANIKA GARG
NEW DELHI
KANIKAYKC@GMAIL.COM
MEANING OF GST
GST is a destination based indirect tax that will be levied on supply of goods and
services, which is set to subsume the various indirect taxes currently levied by the
Central and States.
FUNDAMENTALS OF GST
The proposed GST is a destination based indirect tax that will be levied on supply of
goods and services, which is set to subsume to various indirect taxes currently
levied by the Central and States. Taxes subsumed are as follows:-
Central Taxes State Taxes
 Central excise duty.
 Additional excise Duties
 Excise Duty under the Medicinal
and toilet Preparations (Excise
Duties) Act, 1955
 Additional Duties of Excise (Goods
of special Importance)
 Additional Duties of excise (Textiles
and Textile Products)
 Service Tax
 Additional Custom Duty (CVD)
 Special Additional Duty of Customs
(SAD)
 Central surcharge and cesses
(relating to supply of goods and
services)
 Value-added tax
 Central sales tax (levied by the
Centre and collected by states)
 Entry tax (All forms)
 Purchase tax
 Luxury tax
 Taxes on lottery, betting and
gambling
 State cesses and surcharges
 Entertainment tax ( other than the
tax levied by the local bodies)
 Taxes on advertisement
EXCLUSIONS FROM GST:
 Basic Custom Duty
 Tax on Petroleum Products- Petroleum crude, High Speed diesel, Motor
Spirit, Natural Gases, Aviation Turbine fuel‘s on supply of these petroleum
products shall be levied with effects from such dates as may be notified by
the government on the recommendations of the council.
 Electricity & Power.

 Real estate ( Land and supply of building after completion)-Stamp duty
 Alcohol for human consumption.
IMPORTANT POINTS TO BE NOTED:-
1. No registration will be made without PAN.
2. Only sales related details have to be uploaded by 10th of next month.
Purchases will be auto populated subject to correction. One return for SGST,
CGST or IGST.
3. One person dealer will be assessed by one authority only either by state
authorities or by central authorities.
4. Health and education Industry are out of purview of GST.
5. ITC will not be available for construction of building for self-use or renting.
6. If a building is sold after availing completion certificate, no GST will be
applicable.
7. In case of inter-state B2C transaction more than Rs. 50000/- full address of
buyer has to be mentioned.
8. In case of inter-state transactions for Rs. 50000/- or more E-way bill has to
be obtained.
9. For turnover up to Rs. 1.50 cr. two digits HSN Code is sufficient, above that 4
digit and after another slab of 8 digits or so.
10. TDS will be deducted @ 1 percent of value of supply in case of certain
customers like Government agencies etc.
11. Hotel Industry will get ITC on furniture, air-conditioner, equipment etc. but
not on building.
12. GST is Destination based Taxation system.
13. Status of GST in Jammu and Kashmir: J&K will pass an Act in state
assembly to adopt CGST and SGST Laws.
14. Tax Invoice (as per format prescribed) has to be issued in case of advance
payment is received, from the customers, even if material is not issued.
15. In case advance refunded, then refund voucher (as per format prescribed) to
be issued to all customers.
16. Alternate return in summary form in Form GSTR-3B for first 2 months.
17. A summary return form in GSTR-3B will required to be filed on self-
declaration basis for first 2 month i.e. July and August by 20th day of next
month. i.e., for the month of July, a summary return needs to be filed
by 20th august after paying appropriate taxes, and for the month of August,
the same needs to file by 20th September.
Concept of supply and Time value of Supply
Section 7(1)(a):- All forms of Supply of goods and services or both such as
sale, transfer, barter, exchange, license, rental, lease or disposal, made or

agreed to be made for a consideration by a person in course or furtherance of
business.
Section 7(1)(b):- Supply includes:-Import of services for a consideration
whether or not in the course or furtherance of business.
Section 7(1)(c):- Supply includes:- Supply without consideration –Deemed
Supply–Schedule I .
Section 7(1)(d):- Supply includes:- The activities to be treated as supply of
goods or supply of services-Schedule II.
SCOPE OF SUPPLY: Schedule I -Deemed Supply
“ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT
CONSIDERATION”:-
1. Permanent transfer or disposal of business assets where ITC has been
availed on such assets.
2. Supply of goods or services or both between related persons or between
distinct persons as specified in S. 25(4), when made in the course or
furtherance of business. For example, any goods transferred from One Office
to another Office in different State, shall be liable for IGST.
However, gifts not exceeding Rs. 50,000 in value in a FY by an employer to an
employee shall not be treated as supply of goods or services.
3. Supply of goods by: Principal to his agent- Where agent undertakes to
supply such goods on behalf of the principal; or Agent to his principal -
Where the agent undertakes to receive such goods on behalf of the principal.
4. Import of services by a taxable person from a related person or from any of
his other establishments outside India, in the course or furtherance of
business.
SCOPE OF SUPPLY: Schedule II
“ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF
SERVICES”:-
1. Transfer
a) any transfer of the title in goods is a supply of goods,
b) any transfer of right in goods or of undivided share in goods without the
transfer of title thereof, is a supply of services,
c) any transfer of title in goods under an agreement which stipulates that
property in goods shall pass at a future date upon payment of full
consideration as agreed, is a supply of goods.

2. Land and Building
a) any lease, tenancy, easement, license to occupy land is a supply of services;
b) any lease or letting out of the building including a commercial, industrial or
residential complex for business or commerce, either wholly or partly, is a
supply of services.
3. Treatment or process
Any treatment or process which is applied to another person‘s goods is a
supply of services.
4. Transfer of business assets
a) where assets of a business are transferred/ disposed of so as no longer to
form part of those assets, whether or not for a consideration, such transfer
or disposal is a supply of goods,
b) where, goods held or used for the purposes of the business are put to any
private use or for any purpose other than business, whether or not for a
consideration, the usage or making available of such goods is a supply of
services,
c) where any person ceases to be a taxable person, any assets of the
business carried on by him shall be deemed to be supplied by him in the
course or furtherance of his business immediately before he ceases to be a
taxable person, unless-
i. the business is transferred as a going concern to another person, or
ii. the business is carried on by a personal representative who is
deemed to be a taxable person
5. Supply of services: The following shall be treated as supply of service,
namely:
a) renting of immovable property,
b) construction of a complex, building, civil structure or a part thereof,
including a complex or building intended for sale to a buyer, wholly or
partly, except where the entire consideration has been received after
issuance of completion certificate, where required, by the competent
authority or after its first occupation, whichever is earlier,
c) temporary transfer or permitting the use or enjoyment of any intellectual
property right,
6. Composite Supply: The following composite supplies shall be treated as a
supply of services, namely:

a) works contract [S. 2(119)],
relating to immovable property
b) supply, by way of or as part of any service or, of goods, being food or any
other article for human consumption or any drink (other than
alcoholic liquor for human consumption), where such supply or service
is for cash, deferred payment or other valuable consideration. --
Restaurant Services
EXCLUSION FROM SUPPLY SECTION 7(2):-
The following activities shall be neither treated as a supply of goods nor a supply of
services:
a) activities or transactions specified in Schedule III; or
b) such activities or transactions undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities,
as may be notified by the Government on the recommendations of the Council.
SCOPE OF SUPPLY:- Schedule III
SECTION 7(2) ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED
NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES:-
1. Services by an employee to the employer in the course of or in relation to
his employment.
2. Services by any Court or Tribunal established under any law for the time
being in force.
3. (a) the functions performed by the Members of Parliament, Members of
State Legislature, Members of Panchayats, Members of Municipalities and
Members of other local authorities;
(b) the duties performed by person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or
(c) the duties performed by person as a Chairperson or a Member or a
director in a body established by the Central Government or a State
Government or local authority and who is not deemed as an employee before
the commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation
of the deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of
building.
6. Actionable claims, other than lottery, betting and gambling.

TIME AND VALUE OF SUPPLY:-
The time of supply fixes the point when the liability to charge GST arises. It also
indicates when a supply is deemed to have been made. The CGST Act provides
separate time of supply for goods and services.
Section 12(2):- Time of Supply of Goods
 Earliest of the following dates:-
 Date of issue of invoice
 Date of receipt of payment
 Last date for issue of invoice
 In GST, advance payment received against supply of goods are made
taxable.
Time of Supply of Services U/S 13(2)
TIME OF SUPPLY OF GOODS IN CASE OF REVERSE CHARGE U/S
12(3):-
 Earliest of the following dates:
 Date of receipt of goods
 Date of payment(Earlier of date of entry in accounts of the recipient or
debit in his bank a/c)
 Date immediately following 30 days from date of invoice
 Where it is not possible to determine the time of supply as above, the time of
supply shall be the date of entry in the books of account of recipient.
TIME OF SUPPLY OF SERVICES IN CASE OF REVERSE CHARGE
U/S 12(3)
 Earliest of the following dates:
 Date of payment (Earlier of date of entry in accounts of the recipient or
debit in his bank a/c).
If invoice is issued within 30
days (45 days in case of
banking company)
If invoice is not issued within
30 days (45 days in case of
banking company)
If both case don’t apply
Date of Issue of Invoice or
payment whichever is
earlier.
Date of completion of service
or payment whichever is
earlier.
Date on which recipient
shows in his books of
accounts.

 Date immediately following 60 days from date of invoice (Should be 90
days).
 Date of entry in books of account of recipient in above 2 cases do not
apply.
 In case of associated enterprises (supplier located outside India) date of entry
in books of account of recipient or date of payment, whichever is earlier.
Q1. Suppose, part advance payment is made or invoice issued is for part
payment, whether the time of supply will cover the full supply?
Ans: No, the supply shall be deemed to have been made to the extent it is covered
by the invoice or the part payment.
Q2. What is the time of supply applicable with regard to addition in the value
by way of interest, late fee or penalty or any delayed payment of consideration
from Customer?
Ans: The time of supply with regard to an addition in value on account of interest,
late fee or penalty or delayed consideration shall be the date on which the supplier
received such additional consideration.
VALUATION OF SUPPLY (INCLUSIONS):-
 As per section 15(1) The value of a supply of goods and services shall be the
transaction value, where the supplier and the recipient of the supply are
not related and the price is the sole consideration for the supply
 Transaction value shall include:-
 As per section 15(2)(a) Taxes and duties levied under statute other than
(CGST/SGST/UTGST or GST Compensation Act)
 As per section 15(2)(b) Any amount incurred by recipient i.e, supplier is
liable to pay in relation to supply but which has incurred by recipient of
the supply and not includes in price actually paid for the
goods/services. E.g. Demurrage charges paid by the purchaser on
behalf of supplier Freight/insurance paid by the purchaser in case of
CIF supply.
 As per section 15(2)(c) Incidental expenses.
 As per section 15(2)(d) Interest on delayed payment of supply.
 As per section 15(2)(e) Subsidies directly linked to supplies.

VALUATION OF SUPPLY (EXCLUSIONS):-
Transaction value shall not include:
 The value of supply shall not include discount given before or at time of
supply if it has been duly recorded in the invoice or
 Discount given after supply shall not be a part of value of supply if Such
discount is established in terms of an agreement entered into at or before
the time of such supply and specifically linked to relevant invoices and
input tax credit as is attributable to the discount on the basis of document
issued by the supplier has been reversed by recipient.
 In case of Related persons or if transaction either wholly or in part is not in
money terms or transaction value is not reliable then VALUATIONS RULES
shall be followed.
 As per Rule 1 open market value concept shall be followed.
 “open market value” of a supply means the full value in money, excluding
the integrated tax, central tax, State tax, Union territory tax and the cess
payable by a person in a transaction, where the supplier and the recipient of
the supply are not related and price is the sole consideration, to obtain such
supply at the same time when the supply being valued is made.
LOCATION OF RECIPIENT OF SERVICES:-
 As per section 2(70), Location of recipient of services means:-
a. Where a supply is received at a place of business for which the
registration has been obtained, the location of such place of business,
b. where a supply is received at a place other than the place of business for
which registration has been obtained (a fixed establishment elsewhere), the
location of such fixed establishment,
c. where a supply is received at more than one establishment, whether the place
of business or fixed establishment, the location of the establishment most
directly concerned with the receipt of the supply, and
d. in absence of such places, the location of the usual place of residence of the
recipient.

INTER-STATE SUPPLY:-
 As per section 7(1):-Subject to provisions of section 10, supply of goods
where the location of the suppliers and the place of supply are in-Two different
state, Two different Union territories, A State and a Union territory, Shall be
treated as a supply of goods in the course of inter State trade or commerce.
 As per section 7(2):- Supply of goods imported in to the territory of India, till
they cross the customs frontiers of India, shall be treated to be a supply of
goods in the course of inter-State trade or commerce.
 As per section 7(3):- Subject to the provisions of section 12, supply of
services, where the location of the supplier and the place of supply are in- two
different States, two different Union territories, or a State and a Union
territory, Shall be treated as a supply of services in the course of inter-State
trade or commerce.
 As per section 7(4):- Supply of services imported in to the territory of India
shall be treated to be a supply of services in the course of inter-State trade or
commerce.
 As per section 7(5):- Supply of goods or services- when the supplier is located
in India and the place of supply is outside India, to or by a Special Economic
Zone developer, or In the taxable territory, not being an intra-State supply,
Shall be treated to be a supply of goods or services in the course of inter-State
trade or commerce.
PLACE OF SUPPLY CHAPTER V OF IGST ACT:-
When the location of supplier and the place of supply are in two different States,
then it will be inter-State supply and IGST applies. When they are in the same
State, then it will be intra-State supply and CGST/SGST applies. Place of supply is
not a phrase to be understood in common parlance. It is a legal term and meaning
assigned to it in law must be followed. GST is understood as a destination based
consumption tax but there is no provision that declares this fact, Such provisions
are contained in Chapter-V-IGST. The end result of these provisions will determine
that the consuming State will get taxes in its exchequer.
COMPOSITION LEVY:-
Notwithstanding anything to the contrary contained in the Act but subject to
section 9(3) and 9(4), a registered person, whose aggregate turnover in the
preceding financial year did not exceed Rs.50 lacs (75 Lacsas per meeting of
GST council held on 11.6.2017), may opt to pay, in lieu of the tax payable by
him, an amount calculated at such rate as may be prescribed, but not exceeding-

(a) 1%+ 1% = 2% of the turnover in State or turnover in Union territory in case of
a manufacturer,
(b) 2.5%+ 2.5% = 5% of the turnover in State or turnover in Union territory in
case of persons engaged in making supplies referred to in clause (b) of paragraph
6 of Schedule II i.e. Restaurant Services, and
(c) 0.5%+ 0.5% = 1% of the turnover in State or turnover in Union territory in
case of other suppliers say Traders.
COMPOSITION SCHEME NOT AVAILABLE:-
(a) who is engaged in the supply of services other than supplies referred to in
clause (b) of paragraph 6 of Schedule II i.e. Restaurant services,
(b) who is engaged in making any supply of goods which are not leviable to tax
under this Act,
(c) who is engaged in making any inter-State outward supplies of goods, or
(d) who is engaged in making any supply of goods through an electronic
commerce operator who is required to collect tax at source under section 52, or
(e) who is a manufacturer of such goods as may be notified on the
recommendation of the Council.
First Proviso to Section 10(2):-
 Where more than one registered persons are having the same PAN,
 the registered person shall not be eligible to opt for the scheme unless all
such registered persons opt to pay tax under composition scheme.
Section10(3):-OPTION LAPSE IF TURNOVER EXCEEDS 50 LACS (PROPOSED 75
Lacs)
 The option availed of by a registered person shall lapse with effect from the
day on which his aggregate turnover during a financial year exceeds the limit
of Rs. 50 lacs (PROPOSED 75 Lacs).
Section 10(4):-NO COLLECTION OF TAX, NO ITC:-
 A taxable person who opted for composition scheme shall not collect any
tax from the recipient on supplies made by him nor shall he be entitled to
any input tax credit.

NEGATIVE LIST OF COMPOSITION SCHEME:-
 Only 3 products have been added in negative list of Composition Scheme,
which means for following 3 products composition scheme will not be
available.
• Ice Cream
• Pan Masala
• Tobacco
CONDITIONS TO AVAIL COMPOSITION SCHEME RULE 3(1):-
a) He is neither a casual taxable person nor a non-resident taxable person,
b) The goods held in stock by him on the appointed day have not been
purchased in the course of inter-State trade or commerce or imported from a
place outside India or received from his branch situated outside the State or
from his agent or principal outside the State, where the option is exercised by
migrated registrants,
c) The goods held in stock by him have not been purchased from an
unregistered person and where purchased, he pays the tax under reverse
charge,
d) He shall pay tax under section 9(3) and (4) [Reverse Charge] on inward supply
of goods or services or both received from un-registered persons,
e) He was not engaged in the manufacture of goods as notified by Government,
during the preceding financial year,
f) He shall mention the words ―composition taxable person, not eligible to collect
tax on supplies‖ at the top of the bill of supply issued by him, and
g) He shall mention the words ―composition taxable person‖ on every notice or
signboard displayed at a prominent place at his principal place of business and
at every additional place or places of business.
REGISTRATION:-
A) Person liable to be registered under the GST Act
The section 22 specifies that the registration is required to be obtained by the
person when the aggregate turnover in a financial year of taxable supply of goods or
services exceeds Rs.20 Lakhs. However, the said limit of Rs. 20 Lakhs is reduced to
Rs.10 Lakhs if the person is located in Special Category States i.e. North Eastern.

B) Exclusion from Taxable Person
The Section 23 of the GST Act specifies that the following persons shall not be
considered as a taxable person.
(a) Agriculturist for the purpose of agriculture
(b) Persons engaged in business of exclusively supplying goods and services not
liable to tax.
C) Compulsory registration
The section 24 of the GST Act requires the person to obtain registration on
compulsory basis under the following instances:
(i) Persons making any inter-State taxable supply;
(ii) Casual taxable persons making taxable supply;
(iii) Persons who are required to pay tax under reverse charge;
(iv) Person who are required to pay tax under sub-section (5) of section 9;
(v) Non-resident taxable persons making taxable supply;
(vi) Persons who are required to deduct tax under section 51, whether or not
separately registered this act.
(vii) Persons who make taxable supply of goods or services or both on behalf of
other taxable persons whether as an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) Persons who supply goods or services or both, other than supplies specified
under sub-section (5) of section 9, through such electronic commerce operator who
is required to collect tax at source under section 52;
(x) Every electronic 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.
RETURN UNDER GST
1. Every registered person is required to file a return for the prescribed period.
Also in the case where there is no business activity in a prescribed period i.e.
nil return.

2. UN agencies etc. will have unique GST ID and will file return for the month (in
simpler form) during which they make purchases. They would not be required
to file regular return. They would submit their purchase statements (without
purchase invoices) as per the periodicity prescribed for claim of refund.
3. Government entities / PSUs , etc. not dealing in GST supplies or persons
exclusively dealing in exempted / Nil rated / non –GST goods or services would
neither be required to obtain registration nor required to file returns under the
GST law. However, State tax authorities may assign Departmental ID to such
government departments/ PSUs / other persons. They will ask the suppliers to
quote the Department ID in the supply invoices for all inter-State purchases
being made to them. Such supplies will be at par with B2C supplies and will be
governed by relevant provisions relating to B 2C supplies.
PERIODICITY OF RETURN FILING:-
S.No Return/ Ledger Details of Return Time limit
1. GSTR 1 Outward supplies made by the
taxpayer (other than
compounding and ISD)
10th of the next month
2. GSTR 2 Inward supplies received by
supplier (other than
3. GSTR 3 Monthly return (other than
4. GSTR 4 Quarterly return for
compounding taxpayer
18th of the month next
to quarter
5. GSTR 5 Periodic return for Non
Resident Foreign taxpayer
20th of next month or
within 7 days after the
expiry of registration.
6. GSTR 6 Return for ISD 13th of the next month
7. GSTR 7 Return for TDS 10th of the next month
8. GSTR 8 Details of supplies effected from
e-commerce
9 GSTR 9 Annual Return 31st December of next
financial year
10 GSTR 10 Final Return
( For those whose registration
has been cancelled )
Within 3 months of
date of cancellation OR
cancellation order,
whichever is earlier.

 Penalty Provisions for non-submission of GST returns: Rs. 100/- per day but
subject to max. Rs.5000/- in each acts.
 Penalty Provisions for non-submission of Annual Return is INR 100 per day
subject to the maximum of 0.25% of Annual Turnover.
REVISION OF RETURN:
There would be no revision of returns. All unreported invoices of previous tax period
would be reflected in the return for the month in which they are proposed to be
included. The interest, if applicable will be auto populated All under-reported
invoice and ITC revision will have to be corrected using credit/debit note and such
credit / debit note would be reflected in the return for the month in which such
adjustment is carried out . The credit/debit note will have provision to record
original invoice, date etc. to enable the system to link the same with the original
invoice as also to calculate the interest, if applicable. Its format will be like the
invoice.
ALL ABOUT INVOICE UNDER GST
 In the GST regime, based on GST Invoice Rules (Rule 5), 2016 issued by
the Central Government, two types of invoices (in triplicate) will be issued:
1. Tax invoice: When a registered taxable person supplies taxable goods or
services, a tax invoice is issued. Based on the rules regarding details required
in a tax invoice.
2. Bill of supply: Tax invoice is generally issued to charge the tax and pass on
the credit. In GST there are some instances where the supplier is not allowed
to charge any tax and hence a Tax invoice can‘t be issued instead another
document called Bill of Supply is issued.
 Cases where a registered supplier needs to issue bill of supply:
 Supply of exempted goods or services
 Supplier is paying tax under composition scheme
 Time limit for issue of tax invoice for supply of goods
 Normal case
 Continuous supply of services
11 GSTR 11 Person having UIN and
claiming refund
28th of the month
following the month in
which statement is
filed.

A. SUPPLY OF GOODS IN NORMAL CASE
A registered taxable person who supplies taxable goods has to issue an issue a tax
invoice showing the description, quantity and value of goods, the tax charged
thereon and such other particulars as may be prescribed:
(a) Where supply involves the movement of goods:
 On or before the removal of goods for supply to the buyer from the location of
supplier.
 For e.g., Dealer A in Delhi is dealing in TV sets. He has to make delivery of 5
TVs to Dealer B in Mumbai. Here supply involves movement of goods. In
such case the invoice will be issued on or before the date of dispatch of
consignment.
(b) Where supply does not involve movement of goods:
 On or before date of delivery of goods to the recipient.
 For e.g., ABC Ltd purchases an escalator, for its office building. The supplier
agrees to assemble and install it at office premises. Here, since the supply does
not require movement of the generator set, the invoice must be issued at the
time when the escalator is made available to ABC Ltd.
(c) Where there is supply of Service:
 Before or after the provisions of services but within a period prescribed. [i.e.
30 days in normal cases and 45 days in case of Banking/ financial
institutions ]
B. IN CASE OF CONTINUOUS SUPPLY OF GOODS
Where successive statements of accounts or successive payments are involved, the
invoice shall be issued before or at the time each such statement is issued or, as
the case may be, each such payment is received.
TIME LIMIT FOR ISSUE OF CREDIT NOTE AND DEBIT NOTE
 In case of CREDIT NOTE, the date of filing relevant annual return OR
September month following the end of the year in which supply is made,
whichever is earlier.
 In case of DEBIT NOTE, due date of return for the month during which such
debit note has been issued.
CONTENTS OF INVOICES:
Total value of supply of goods or services or both, taxable value of supply of goods
or services or both taking into account discount or abatement, if any, rate of tax,
amount of tax charged in respect of taxable goods or services, place of supply along

with the name of State, in case of a supply in the course of inter-State, Address of
delivery where the same is different from the place of supply, Whether the tax is
payable on reverse charge basis, and Signature or digital signature of the supplier
or his authorized representative.

UNIFYING THE DIVERSITY: IMPACT OF GST
Is India a Preferred Location Now for Investment?
ABHAY TULSIAN, CA
TAMIL NADU
ABHAYTULSIAN@GMAIL.COM
PRELUDE:
THE MERCURY IS INTENSIFYING for the Indian economic barometer. Year of 2016
has been one such era of various historical economic development. The passing of
GST bill and demonetization were two such big events in the domestic front which
have paved way for the most tectonic tax reforms in India giving an end to corruption
and parallel economy in India.
The ambitious goods and services tax (GST) may be a reality soon and
implementation on 1 July, 2017 seems possible with the passing of the GST laws in
the Lok Sabha on 29 March 2017. GST subsuming majority of the indirect taxes in
India would de-shackle the existing complex indirect tax structure and build up a
unified structure. By amalgamating a large number of Central and State taxes into a
single tax, it would mitigate cascading or double taxation in a major way and pave
the way for a common national market.
GST is not just a change in the tax regime, but a transformation in the way of
doing business in India. Industry having very limited time to implement the
changes, introduction of GST will necessitate a review and change of tax positions,
the supply chain, enterprise resource planning (ERP) systems, business processes
and accounting.
This article, is an earnest effort to achieve an understanding of the impact that GST
will have on key sectors of the Indian economy and ripple effect of the same on
ultimate customers. Keeping in mind the far – reaching implication of the changes
which GST would bring in, it would be worth inspecting whether India would be a
preferred location for investment or not.
IMPACT ON MANUFACTURING SECTOR:
Multiple indirect tax legislations have led to significant compliance and
administrative costs, classification and valuation disputes and generally impaired the
ease of doing business in this sector. Further being a very competitive industry,
trimming down the cost of production and creating value addition for customers
remains a challenge for all. To add to their challenges, companies also get no tax
credit for indirect taxes such as luxury tax, Octori, Entry tax, CST. Input tax credit
(ITC) under GST is likely to bring considerable benefits of cost reductions by
way of liberalized tax credit.

Classification disputes are a root cause for litigation under both central excise and
VAT. The same is on account of the existence of varying rates of excise duty and VAT
on different products, as well as several exemptions provided under excise and VAT
legislations. Introduction of GST on the principles of a simplified rate structure and
minimization of exemptions will significantly reduce disputes regarding classification.
State-border checkpoints negatively impact the overall production and logistics time
account for roughly 60% of a truck‘s transit time. GST regime would coalesce the
Indian market and promote the smooth flow of goods. Although border check
post- raj may not be done away with, reduced compliance at these check posts will
shrink transport plights.
GST may lead to the current area-based exemptions becoming irrelevant. As
the CGST Act is silent on this, fate of these area-based exemptions is a matter of
concern. In a situation where such exemptions are discontinued, entities who had
enrolled to avail this incentive would be at a loss.
Impact on working capital may be noteworthy since stock transfers are not subject to
tax under the current regime. Under the GST regime, stock transfers are subject
to tax. Though GST paid would be available as credit, utilization of the GST paid
would happen only after the final supply resulting in cash flow blockages.
Unlike the current regime where credit of excise duty paid on specified petroleum
products is available, the same will now add to the cost of production on account of
elimination of petroleum products under the new GST regime.
Warehouse re-engineering/ Supply chain restructuring may be required leading to
greater cost benefits and optimizing business efficiency. For example: Currently
warehousing choices are often based on arbitrage between VAT rates in different
States/ between applicable VAT and CST rates. With the advent of GST, it is
expected that such warehousing and logistics decision would be based on
economic efficiency such as costs and locational advantages vis-a-vis key
customers.
IMPACT ON SERVICE SECTOR:
Service Sector contributes appreciably to the export and sizable employment.
Activities such as Information technology services, transport, storage and
communication, financing, insurance, business services, community, social and
personal services, hotel and restaurants, etc. fall under the service sector.
Currently Service tax is applicable at the rate of 15% on services but it is expected
that under GST regime services will be charged at a higher rate of tax of 18%
making the services costlier.
GST Law has made an effort to address the historic argument of complicated indirect
taxation on IT Software. Definition of service includes intangible property and the
definition of ‗goods‘ excludes intangibles. This would put to rest the historic dual
treatment of software and other intangibles (various types of digital downloads,

licenses, trade mark etc.). However, uncertainty still continues if such definition of
‗service‘ shall include standardized software products supplied on a tangible medium.
Most of the companies under this sector are registered only with Service Tax and all
billing and accounting tasks are carried out from a centralized location. Under the
GST regime, service providers would now be required to obtain registration for
all the states that they have customers in. This will lead to 111 points of taxation
which means IT companies providing services all over India will have to seek
registration in as many as 37 jurisdictions that will include 29 states, seven union
territories and the Centre.
In case of companies operating in the finance sector, Interest is covered under
Negative list of services and 10% of interest on Finance Lease/Hire purchase is
taxable. There is lack of clarity on applicability of GST on interest/financing activity.
Under the current regime, actionable claim is specifically excluded from the definition
of service and is not liable to service tax. Further, the definition of goods excludes
securities and no VAT is payable. In the model GST Law, the definition of goods
specifically covers actionable claims. Taxability of the same would have an
adverse impact since actionable claims may be subjected to Tax under GST.
Model GST law lacks clarity on continuity of the exemptions to Export Oriented
Units. However, as far as SEZ are concerned, they are to be treated on par with the
exports.
IMPACT ON AGRICULTURE SECTOR:
Agricultural sector accounts for 16% of Indian Gross Domestic Product (GDP). GST
would have an impact on many sections of the people in agriculture sector.
Agricultural products, being perishable in nature, requires an improved supply chain
mechanism with minimal transportation time taken for inter-state transportation.
GST is likely to address this concern since it would make this supply chain efficient.
An efficient supply chain would safeguard farmers/retailers from wastage and
increased cost.
Transactions such as trading in oilseeds, pulses and cereals are currently outside the
ambit of taxation under the current regime of indirect taxation. The poultry and
livestock industry is also outside the ambit of indirect tax coverage and products of
the industry, such as feed, feed additives, eggs, etc. have generally been exempt from
excise duty as well as the state level VAT taxes. Since GST would broaden the tax
base, these products would now be brought under the tax net.
Currently, there is no tax on procurement of milk from farmers. Generally, 2% VAT is
levied on sale of milk powder to a company. With the implementation of GST, the tax
may vary from 12% or 18% resulting in increase in prices of milk and milk products.
Scheme for promotion of National Agricultural Market (NAM) has been introduced by
the Ministry. The scheme envisages networking of selected markets to a common
electronic platform across the country to provide farmers and traders with access to
opportunities for purchase/ sale of agro-commodities at best prices. The
implementation of GST is inevitably linked to successful implementation of

NAM as it aims at unified tax structure of goods and services which would eventually
include agricultural produce.
IMPACT ON REAL-ESTATE SECTOR / WORKS CONTRACTORS:
The real estate sector is estimated to account for about five per cent of India‘s GDP
and is considered the second-largest employer in the country. This sector has been
subjected to wide-ranging litigation and unscientific reasoning by the tax authorities.
Construction activities would be regarded as works contract and they would be
treated as Services under the GST regime. Currently, many works contractors are not
eligible to take credit of the excise duty paid on the materials used for execution of
works contract. Under GST, builders/works contractors would be allowed to
take credit of all their procurements of goods and services except for few
restrictions, which would reduce the costs substantially.
Several construction contracts which are exempt under the current regime are likely
to be brought under the tax net with the implementation of GST. Further, contracts
executed post the advent of GST regime would be taxable under GST even
though they were entered under the old regime. Pricing decision of such contract will
have to be evaluated after factoring the GST impact on such contracts.
The valuation issues are likely to be mitigated, since the contract is treated as supply
of services. One may need to assess the impact on tax rates in case services are taxed
at higher rates. The expected rate of GST on works contract is 18%. Abatement/
compositions are likely to be done away with.
At present the land is kept outside the ambit of GST, however the same is likely
to be brought into the GST ambit at future date as may be recommended by the GST
Council.
Transfer of capital equipment‘s from one site to another is common phenomenon in
construction. Such transfer would be liable to tax under GST in case such transfer is
from one state to another.
Concept of Centralized registration is done away with under the GST regime.
This will result in higher cost burden to the works contractors since most of the
contractors pay service tax on centralized basis.
IMPACT ON E-COMMERCE SECTOR:
The E-commerce sector is in a galloping stage today and growth in this sector has
been phenomenal. The major advantage would be larger credit pool under GST than
the current regime which may offset the higher rate of tax under GST. Under GST,
output tax on e-Commerce sector would be higher when compared to the
current service tax rate.
Presently, e-commerce companies discharge the service tax liability through a
centralized registration, however the model GST law doesn‘t envisage a concept of

centralized registration which would in turn result in higher compliance cost. The law
of tax collection at source by e-commerce companies could result in significant
compliance burden along with cash flow issues for the vendors listed on the
marketplaces.
Under the current regime, e-commerce operator is liable to pay service tax only in
case where service is provided under the brand of the operator. However, under GST,
irrespective of the fact that the service is provided under the own brand (Redbus,
Make my trip) or under the brand of the operator (Uber or Ola), the operator shall
have to remit the applicable GST. This will lead to broadening of the horizons of levy
of tax on the e-commerce operators. Further, GST may mitigate the present issues
more particularly the tax credit issues across the border avoiding tax
cascading.
The vendors who supply goods/services to the e-commerce operators would have to
be mandatorily registered under GST which would add to their cost of compliance.
For startups whose turnover is not expected to be beyond the standard threshold,
maintaining the standard threshold would have provided some relief. The proposed
mandatory registration is not line with the concept of ―Ease of Doing Business‖ in
India.
IMPACT ON CONSUMERS:
Most of the goods (for e.g. beauty products, consumer electronics, non-luxury
automobiles) are currently subjected to higher indirect taxes as they attract an excise
duty of 12.5% and a VAT of 12.5% to 15% varying from State to State. Further, till
the time the product reaches the end customer there are plentiful cascading of taxes
leads to an effective indirect tax rate 25% to 30% in the hands of the end customer.
Standard rate of GST being 18%, there would be a substantial saving in the overall
indirect tax cost borne by the customers. This reduction in indirect tax cost would
lead to reduction in production cost giving a room for reducing prices and benefiting
end-users.
On the other hand, for some other goods (for e.g. textiles, edible oil, and low value
footwear) the rate of excise duty is nil whereas VAT in most States is 5%. Thus, the
overall tax cost for these kind of goods comes to 8-9%. If these goods are taxed
at the standard rate of 18% then there would be significant increase in cost
for the end customers. Even if these goods are kept at the lower GST rate of 12%
there would be an increase in cost for the end customers.
Further, introduction of the Anti-Profiteering clauses into the law for the first time
would bring down the cost to the end consumers. However the anti-profiteering
clauses lacks clarity on the manner of calculation of the benefits to be passed on to
the consumers.

FOOD FOR THOUGHT:
The introduction of GST is likely to perk up the tax collections and boost India‘s
economic development. Financial gains will be all pervasive if stake holders rightly
understand the intricacies of the law and take timely steps to upgrade their software
and systems. Moreover, GST has the potential to transform not only the tax system in
the country but also the way we organize and do the business and thereby it will
provide a new impetus to Indian industry and inclusive growth. Thus, let us all hope
that the most awaited & biggest economic reform in the history of Independent India
brings ―ACHE DIN‖ for wide range of stakeholders and makes India a preferred
location for investment.

INPUT TAX CREDIT UNDER GST
MOHIT GUPTA
NEW DELHI
MOHIT.GUPTA363@GMAIL.COM
INTRODUCTION
GST or Goods and Services Tax is a domestic trade tax that will be levied in the form
of a value added tax on all goods and services.
In harmony with current tax practices followed throughout the world, concept of
„consumption based taxation‟ would usher in GST in India. Simultaneously, more
than dozen major taxes under present indirect taxation like Central Excise, Service
Tax, and VAT etc. would be subsumed and usher in a tax system of seamless flow of
tax credits.
ITC (INPUT TAX CREDIT)
 Input Tax Credit basically refers to a mechanism in which input tax paid on
input supply of goods/services are allowed set off against the output tax
liability of a person. This input tax credit in relation to any period means
setting off the amount of input tax by a registered dealer against the amount of
his output tax.
 As already discussed above, GST in tax on consumption of goods and services
on a value added basis i.e. it is a value added tax. The essence of VAT is in
providing set-off for the tax paid earlier, and this is given effect through the
concept of input tax credit.
 Problem of cascading effect in present regime is one of the main reason of
introduction of GST in India. GST is being introduced to provide seamless
credit of input tax throughout the supply chain of goods/services.
INPUT TAX CREDIT - GST ACT
 Section 2(62) of Central GST Act, 2017 provides the definition of term ‗Input
Tax‘ as:
(62) “input tax” in relation to a registered person, means the central tax, State tax,
integrated tax or Union territory tax charged on any supply of goods/services made to
him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;

(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the
Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the
respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the
Union Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
 From the above definition it can be seen that the term ‗input tax‘ includes all
taxes on every kind of taxable supply for a registered person.
BASIC CREDIT STRUCTURE IN GST
 India would have a Dual GST structure in which both Centre and State would
levy tax on the goods and services. On Intra-state supply of goods/services
CGST and SGST would be levied while on Inter-state supply and imports, IGST
would be levied.
 Credit Utilization chain under GST would be as follows:
 CGST credit can be utilized only against CGST liability.
 SGST/UTGST credit can be utilized only against SGST/UTGST liability.
 IGST model permits cross-utilization of credit of IGST, CGST &
SGST/UTGST for paying IGST.
 IGST credit can be utilized for payment of IGST, CGST and SGST/UTGST
in sequence by a person for supplies made by him.
PROVISIONS UNDER GST FOR ITC
Section 16 provides for the provisions of manner of taking input tax credit. It
provides that every registered person will be entitled to take credit of input tax
admissible to him and the said amount shall be credited to the electronic credit
ledger of such person i.e. no unregistered person can take credit of input tax.
Further, concept of ISD or Input Service Distributor have been incorporated in GST
Law. An ISD would be able to distribute the credit in the prescribed manner.
RESTRICTIONS/CONDITIONS FOR AVAILMENT
 A registered taxable person shall be eligible to claim ITC if the following
conditions are satisfied:-
a. He is in possession of a tax invoice issued by a registered supplier and other
prescribed document.
b. He has received the goods or services or both.

c. Subject to the provisions of Section 41 (provisional acceptance), the tax
charged in respect of such supply has been actually paid to the
Government.
d. He has furnished the return under section 39 (monthly consolidated
return).
 In case goods have been received in lots or installments, the credit shall be
admissible on the receipt of last lot or installment.
 Further, the payment for input service shall be made within 180 days from the
date of invoice, failing which input credit claimed earlier shall be added to the
output tax liability along with Interest.
 No credit shall be allowed for the tax paid in case the same has been claimed as
depreciation under section 32 of Income Tax Act, 1961.
 No ITC shall be allowed in respect of an invoice issued after the furnishing of
annual return or return under section 39 for the month of September following
the end of financial year whichever is earlier.
 Credit cannot be availed after the expiry of one year from the date of issue of
invoice e.g. Last day to avail input credit for F.Y. 2017-18 would be 20th October,
2018.
EXCLUSION FROM INPUT TAX
 Input tax credit shall not be available in the following cases: -
 Motor vehicles used otherwise than for:-
– Transportation of passengers, or
– Transportation of goods, or
– Imparting training on motor driving skills
– Further supply of such vehicles
 Following Goods/Services :-
– Membership of a club, health or fitness center
– Travel benefits extended to employees
 Following Goods/Services unless used for further supply of same category:-
– Services In Relation To Food & Beverages.
– Outdoor Catering
– Beauty Treatment, Health Services, Cosmetic or Plastic Surgery etc.
– Life/Health Insurance [Also if obligatory]
– Rent-a-cab [Also if obligatory]
 Works contract services
– Resulting in construction of immovable property,
– other than plant & machinery
– Except when used for further supply of same

 Goods/services received
– For construction of immovable property, other than
– plant & machinery
– On his own account
– Even if used for business
 Goods/services on which tax paid u/s 10
 Goods/services by a non-resident taxable person except imports
 Used for personal consumption
 Lost, stolen, destroyed, written off, disposed off by gift or free samples
 Tax paid in case of fraud, seized goods.
APPORTIONMENT OF CREDIT
 Where the goods/services are used by the registered person for business
purpose as well as for other purposes, the amount of credit shall be available
only to the extent of business purpose.
 Further, where the goods/services are used for making taxable supplies
(including zero-rated supplies) as well as for exempt supplies, the credit shall
be available only related to the taxable supplies. The value of exempt supply
shall be calculated in prescribed manner and shall include supplies under
reverse charge basis, transactions in securities and sale of land.
 A banking company or a financial institution including NBFCs, engaged in
supplying services by way of accepting deposits and loans etc. shall have the
option to either comply with above provision or to avail 50% of the eligible
input tax credit. This option once exercised shall not be withdrawn during the
remaining financial year. Further the restriction of 50% shall not apply to the
tax paid on supplies made by registered person having same PAN.
JOB WORK
 In case inputs have to be sent for job work, the principal shall be allowed input
tax credit on inputs sent to a job-worker subject to prescribed conditions.
Principal shall be entitled to take input tax credit of inputs even if the inputs
are directly sent to a job worker for job-work without being first brought to
place of business of principal. However, if the inputs sent for job-work are not
received back by the principal after completion of job-work within a period of 1
year, tax would be levied on such supply.

 In case of capital goods, time limit is 3 years.
SPECIAL CASES OF AVAILMENT
 The registered taxable person who has applied for registration within 30 days
from the date he becomes liable to pay tax or obtains voluntary registration,
shall be eligible to claim ITC for the inputs lying in stock and inputs contained
in semi-finished or finished goods held in stock on the date preceding the date
on which he was liable to pay tax.
 Any person who ceases to opt for composition levy under section 10 shall be
eligible to claim ITC in respect of goods/inputs lying in his stock on the day
immediately preceding the day he is opts for the normal scheme in respect of
payment of tax.
 Similarly, ITC shall be available in respect of inputs of stock or semi-finished or
finished goods which were exclusively used for exempt supplies later becoming
taxable.
 Credit cannot be availed after the expiry of one year from the date of issue of
invoice
 In case of sale of business via Merger, Demerger, Amalgamation, Lease or
transfer of business, the transferee shall be eligible to avail unutilized credit
(including input services & capital goods).
CONCLUSION
All stake holders need to get ready for the GST. The impact of GST will be
tremendous; laws will be simplified and if the stake holders take timely steps to
upgrade their software and systems; the financial gains will be all pervasive. The
completely seamless credit flow under GST would be very helpful for the Indian
industry and would help in reducing the price for the ultimate consumers by
minimizing the distortions under the indirect tax system of India. Benefits of GST are
critically dependent on a neutral and rational design of the GST. GST would be a
landmark initiative which would kick start the next generation of reforms. Therefore,
based on the material available in the public domain, we should start preparing
ourselves for GST.

IND-AS 12: INCOME TAXES
HIMANSHU NATHANI, CA
NEW DELHI
HIMANSHU.NATHANI @GMAIL.COM
INTRODUCTION:
 This IndAS deals with treatment of Income tax in financial statement.
 This IndAS doesn‘t deals with Corporate Dividend (CDT) Tax or Marginal
Alternate Tax (MAT).
Old Standard: AS 22, Accounting for Taxes on Income.
OBJECTIVE OF IND-AS
The objective of the standard is to prescribe the treatment for income taxes. It
prescribes the rule of, How to account for the current and future tax consequences of
future recovery of the carrying amount of assets & liabilities. This standard requires
an entity to account for the tax consequences of transactions and after events.
 Tax Expense = Current Tax + Deferred tax (other than related to equity).
 Deferred tax = Tax on Temporary difference (No Concept of Permanent
difference).
CARVE-OUT:
 Deferred tax is on Balance Sheet approach (whereas, AS-22 was on Income
Statement Approach).
 It can be recognized if it is probable that it will be recovered. Checking
probability is a matter of judgment. (No need of VCCE- Virtual Certainty with
Convincing Evidence or Reasonable certainty.)
 Rate of tax is to be applied should be expected rate not fixed rate.
 MAT and Tax Holiday concepts are not in IndAS – 12. [As per AS-22, we have to
deal with tax holiday by not creating deferred tax asset or liability for the period
it can be set-off during tax holiday] but as per IndAS-12, we will continue to
create DAT/DTL in case of tax holiday or MAT entry.
 Disclosure are more comprehensive, not as it should be for specific items
creating DTA/DTL.
 Deferred tax is tax on temporary difference, there is no concept of permanent
difference in IndAS-12.

CALCULATION OF DTA/DTL:-
 Identify Carrying Amount of Assets/Liabilities.
 Identify Tax Base of such Assets/Liabilities.
 Calculate Temporary Difference of such Assets/Liabilities.
 Book DTA/DTL based ON EXPECTED RATE OF TAX
 Temporary Difference = Temporary difference are difference between
Accounting Income and Taxable Income. (Carrying Amount – Tax
Base.)
 Carrying Amount: Book Value of Assets/Liability in Balance Sheet.
 Tax Base: Value of assets/liabilities as per Income Tax.
DTA = Deductible Temporary Difference, Due to current year, future deduction.
(e.g. – As per companies act Depreciation is 20% but as per IT act it is 15 %, so
the book value of such asset will be less than tax base.)
Book Value XXX
(-) Tax Base XXX
Temporary Difference (XXX) {Negative}
Book DTA
DTL = Taxable Temporary Difference, Due to current year, future income will
increase.
(e.g. - As per companies act Depreciation is 15% but as per IT act it is 20 %, so
the book value of such asset will be more than tax base.)
Book Value XXX
(-) Tax Base XXX
Temporary Difference XXX {Positive}
Book DTL
Example:
Building Purchased on 01/04/2013 for ₹ 5 Lacs. Depreciation rate: As per
companies act - 10%, As per Income Tax - 15%.
Expected Tax Rate: Year 1 – 30%, Year 2 – 33%.
Calculate DTA/DTL for year 1&2.

Solution: Year 1:
Building Book Value 450,000
Tax Base 425,000
(25,000 X 30%) – 0 = 7,500 (T/f to P&L) DTL
Year 2:
Building Book Value 405,000
Tax Base 361,250
(43,750 X 33%) – 7,500 = 6,938 (T/f to P&L)
DTL

IND-AS 33: EARNING PER SHARE
KAJAL JUNEJA
NEW DELHI
KAJALJUNEJA25@YAHOO.IN
OBJECTIVE
To prescribe principles for the determination and presentation of earnings per share,
so as to improve performance comparisons between different entities in the same
reporting period and between different reporting periods for the same entity.
SCOPE
 To companies that have issued ordinary shares to which Indian Accounting
Standards (Ind ASs) notified under the Companies Act apply.
 An entity that discloses earnings per share shall calculate and disclose
earnings per share in accordance with this Standard.
 When an entity presents both consolidated financial statements and separate
financial statements prepared in accordance with Ind AS, the disclosures
required by this Standard shall be presented both in the consolidated financial
statements and separate financial statements.
DEFINITION
 Anti-dilution is an increase in earnings per share or a reduction in loss per
share resulting from the assumption that convertible instruments are
converted, that options or warrants are exercised, or that ordinary shares are
issued upon the satisfaction of specified conditions.
 Dilution is a reduction in earnings per share or an increase in loss per share
resulting from the assumption that convertible instruments are converted, that
options or warrants are exercised, or that ordinary shares are issued upon the
satisfaction of specified conditions.
MEASUREMENT
BASIC EARNINGS PER SHARE
 An entity shall calculate basic earnings per share attributable to ordinary
equity holders of the entity and, if presented, profit or loss from continuing
operations attributable to those equity holders.
 Basic earnings per share shall be calculated by dividing profit or loss
attributable to ordinary equity holders of the entity (numerator) by the

weighted average number of ordinary shares outstanding (denominator)
during the period.
EARNINGS:-
Adjusted for
 After tax amount of preference dividend.
 Difference arising on the settlement of preference shares.
 Income/expense debited or credited to securities premium/other reserves that
was otherwise required to be recognised in profit & loss in accordance with Ind
As.
WEIGHTED AVERAGE NUMBER OF SHARES:-
 No. Of ordinary share outstanding at the beginning of period.
 Adjusted by no. Of outstanding shares bought back or issued.
 Multiplied by time weighting factor.
 Adjusted for events (other than the conversion of potential ordinary shares),
that have changed the number of ordinary shares outstanding without a
corresponding change in resources. (e.g., share split , reverse share split(share
consolidation) , bonus element in rights issue to existing shareholders)
DILUTED EARNINGS PER SHARE
 An entity shall calculate diluted earnings per share attributable to ordinary
equity holders of the entity and, if presented, profit or loss from continuing
operations attributable to those equity holders.
 Diluted earnings per share shall be calculated by dividing profit or loss
attributable to ordinary equity holders of the entity (numerator) by the
weighted average number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares (denominator) during the period.
EARNINGS:-
Adjust the earnings calculated for the purpose of Basic EPS by the tax effect of
 Interest/dividends related to dilutive potential ordinary shares.
 Any other changes in income or expense that would result from the conversion
of the dilutive potential ordinary shares.
WEIGHTED AVERAGE NUMBER OF SHARES:-
 The weighted average number of ordinary shares as calculated for BEPS plus
additional ordinary shares that would be issued on the conversion or exercise
of potential ordinary shares.

 The potential ordinary shares shall be deemed to have been converted into
ordinary shares at the beginning of the period or, if later, the date of the issue
of the potential ordinary shares.
 If conversion/exercise options lapse during the period, the number of shares
would be pro-rated for the part of the year that the potential common shares
were outstanding, i.e. they are included in the calculation of diluted earnings
per share only for the portion of the period during which they are outstanding.
 The dilutive weighted average common shares are calculated independently for
each period presented (interim vs annual).
 Potential ordinary shares shall be treated as dilutive when, and only when,
their conversion to ordinary shares would decrease earnings per share or
increase loss per share from continuing operations.
RETROSPECTIVE ADJUSTMENT
 If the number of ordinary or potential ordinary shares outstanding increases
as a result of a capitalisation, bonus issue or share split, or decreases
as a result of a reverse share split, the calculation of basic and diluted
earnings per share for all periods presented shall be adjusted retrospectively.
 If these changes occur after the reporting period but before the financial
statements are approved for issue, the per share calculations for those and
any prior period financial statements presented shall be based on the new
number of shares.
DISCLOSURE
If EPS is presented, the following disclosures are required:
 the amounts used as the numerators in calculating basic and diluted earnings
per share, and a reconciliation of those amounts to profit or loss attributable to
the entity for the period.
 the weighted average number of ordinary shares used as the denominator in
calculating basic and diluted earnings per share, and a reconciliation of these
denominators to each other.
 instruments (including contingently issuable shares) that could potentially
dilute basic earnings per share in the future, but were not included in the
calculation of diluted earnings per share because they are antidilutive for the
period(s) presented.
 A description of those ordinary share transactions or potential ordinary share
transactions that occur after the reporting period and that would have changed
significantly the number of ordinary shares or potential ordinary shares
outstanding at the end of the period if those transactions had occurred before
the end of the reporting period.
Example include:

 An issue of shares for cash
 Redemption of ordinary shares outstanding
 Issue of options, warrants, or convertible instruments.
MAJOR DIFFERENCES BETWEEN IND AS AND INDIAN GAAP
SN Particulars Ind AS Indian GAAP
1 Continuing and
Discontinuing
Operations
Ind AS 33 requires
presentation of basic and
diluted EPS from continuing
and discontinued operations
separately.
AS 20 does not require any such
disclosure.
2 Adjustments
against
Reserves
Under Ind AS these amounts
will be recorded in the profit
& loss a/c impacting EPS.
There are several amounts that
are currently directly adjusted
against the reserves (e.g.,
redemption premium on
preference shares and
debentures), resulting into no
impact on EPS.
3 Convertible
Instruments
Convertible Instruments are
considered for the
calculation of BEPS by
considering them equity
instruments from their
inception, i.e. prior to their
conversion.
These instruments are
considered for calculation of
Dilutive EPS and not Basic EPS.
4 Additional
Disclosures
Disclosure is required that
could potentially dilute basic
EPS in future.
No such additional disclosures
required.
IND AS CARVE OUTS
S.No. Particulars IAS 33 Ind AS 33
1 Where the
information
related to EPS
is to be
disclosed.
IAS 33 provides where both
Consolidated FS and
separate FS are presented,
EPS related information to
be disclosed in CFS only.
Ind AS 33 requires EPS related
information to be disclosed both
in CFS and SFS, wherever
applicable.
2 Applicability of
the standard
The separate or individual
or consolidated FS of an
entity :
- whose ordinary or
potential ordinary shares
are traded,
- that files, or is in the
process of filing its FS with
a Securities Regulator.
This has been deleted in Ind AS
33 as the applicability or
exemption to Ind AS is governed
by the Companies Act and the
Rules made thereunder.

3 Adjustment to
securities
premium or
other reserves
No such requirement in
IAS 33.
In Ind AS 33 a para has been
inserted, ―Where any item of
income or expense which is
otherwise required to be
recognised in profit or loss in
accordance with Indian
Accounting Standards is debited
or credited to securities premium
account/other reserves, the
amount in respect thereof shall
be deducted from profit or loss
from continuing operations for
the purpose of calculating basic
earnings per share‖

TIME OF SUPPLY UNDER GST
NIHALCHAND JAIN, CA
MAHARASHTRA
CANIHALJAIN1993@GMAIL.COM
WHAT DO WE UNDERSTAND BY THE PHRASE “TIME OF SUPPLY?”
Generally, time of supply means the time when we become liable to pay duty / tax to
the government. Hence, it is this moment when we become debtors in the books of
government. This is the moment when we commit, that we are liable to pay
something to the government but how much to pay, may or may not be decided yet.
Hence, it gains tremendous importance from all practical aspects because incorrect
determination of such time definitely has a financial impact.
As per GST law, ―Time of supply shall have the meaning as assigned to it in Sec 12 &
Sec 13‖
WHY HAS THE LAW INSERTED TWO SECTIONS FOR DEFINING TIME
OF SUPPLY?
 As per sec 7, supply includes both goods as well as services.
 At present, goods and services are covered under different statutes. The nature
of goods as well as services is different from each other. GST would merge
almost all major prevailing indirect taxes dealing with goods as well as services.
Post GST there would be only one tax. Hence, in light of the above discussion,
it is better to keep separate sections. It makes the law more relevant as a
person dealing in goods may / may not provide services, so it is not required
for such dealer to compulsorily know about the timing of supplies with respect
to services.
 The two sections which deal with the time of supply are as follows:
Sec 12 - Time of supply of goods
Sec 13 - Time of supply of services
WHAT MAKES IT IMPORTANT TO DETERMINE “TIME OF SUPPLY"
CORRECTLY?
 The liability to pay CGST / SGST on the supplies shall arise at the time of
supply as stated in Sec 12(1) & Sec 13(1).
 Monetary impact - A wrong derivation of timing will result into excess cash
outflow in form of interest, penalties. Such excess outflow will not even be
adjustable.

 Non - monetary impact - A qualitative impact of wrong determination of timing
can have an impact on your relations with customers. With the introduction of
matching concept under GST, customer will get credit only when you make
payment of tax to the account of appropriate government. The GST law has
introduced the concept of compliance ratings wherein every registered person
would be allotted ratings based on the compliance of the act.
SEC 12 - TIME OF SUPPLY OF GOODS
We will now try to understand the time of supply with respect to goods
 Sec 12(1):
The liability to pay tax on goods shall arise at the time of supply, as determined in
accordance with the provisions of this section.
 Sec 12(2):
The time of supply of goods shall be the EARLIER of the following dates, namely, -
(a) The date of issue of invoice by the supplier or the last date on which he is
required, under sub-section (1) of section 31, to issue the invoice with respect to the
supply or
(b) The date on which the supplier receives the payment with respect to the supply.
Explanation 2. - For the purpose of CLAUSE (B), ―the date on which the supplier
receives the payment‖ shall be
1. The date on which the payment is entered in his books of accounts or
2. The date on which the payment is credited to his bank account, whichever is
earlier.
PROVIDED that where the supplier of taxable goods receives an amount up to one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess shall, at the option of the said supplier, be the
date of issue of invoice.
Explanation 1.- For the purposes of clauses (a) and (b), the ―supply‖ shall be deemed
to have been made to the extent it is covered by the invoice or, as the case may be,
the payment.
Analysis -
The use of word EARLIER is justified because in case of clause (a), it will either be
date of issue of invoice or last date as per sec 31(1). The earlier of this date would be
compared with date of payment.

FOR QUICK REFERENCING:
EARLIER OF: EARLIEST OF:
A. EARLIER OF:
 DATE OF ISSUE OF INVOICE
 LAST DATE ON WHICH HE IS
REQUIRED TO ISSUE
INVOICE U/S 31(1)
 DATE OF ISSUE OF INVOICE
 LAST DATE ON WHICH HE IS
REQUIRED TO ISSUE INVOICE U/S
31(1)(REGARDING ISSUE OF INVOICE)
 DATE ON WHICH THE PAYMENT IS
ENTERED IN HIS BOOKS
 DATE ON WHICH THE PAYMENT IS
CREDITED TO HIS BANK
ACCOUNT(REGARDING PAYMENT)
B. DATE ON WHICH THE SUPPLIER
RECEIVES THE PAYMENT
 DATE ON WHICH THE
PAYMENT IS ENTERED IN
HIS BOOKS
 DATE ON WHICH THE
PAYMENT IS CREDITED TO
HIS BANK ACCOUNT
Illustration 1:
Invoice is issued for Rs. 5,000 on June 22, 2016 by the supplier. Further, the Date
on which payment is entered in books of accounts of the supplier is June 30, 2016
and Date on which payment is credited to the bank account is June 28, 2016 Due
date of issue of invoice under section 31 is July 1,2016.
Solution: The time of supply in this case would be the EARLIEST of
PARTICULARS PARTICULARS PARTICULARS PARTICULARS
Date of issue of
invoice
June 22, 2016
Last date on which
he is required to
issue invoice u/s
31
July 1, 2016
Date on which
supplier receives
the payment
Date on which payment is
entered into books of
accounts
June 30, 2016
Date on which the payment
is credited to his bank
account
June 28, 2016
TIME OF SUPPLY June 22, 2016
We now see an illustration of the provided clause
In continuation to the above illustration if due to an escalation in price after the
issuance of invoice, the recipient pays scenario 1: Rs. 5,500/- and scenario 2: Rs.

8,000/-. Date of issue of invoice pertaining to Rs. 500/- and Rs. 3,000/- is July 3,
2016.
Solution:
Determination of Rs. 500 and Rs. 3,000
Sr. No. Amount paid (Rs) Amount billed (Rs) Excess amount (Rs)
1. 5,500 5,000 500
2. 8,000 5,000 3,000
Scenario 1:
The supplier of taxable goods has received an amount of Rs. 500 in excess of the
amount indicated in the tax invoice, the time of supply to the extent of such excess
shall, at the option of the said supplier, be the date of issue of invoice.
Part A: The supplier chooses to exercise the option available
As per the clause, the time of supply shall be date of issue of invoice i.e. date of issue
of original invoice i.e. June 22, 2016
Part B: The supplier chooses to not to exercise the option available
Since the supplier has not decided not to exercise the available option, in order to
decide the time of supply we need to follow the provisions of Sec 12. In this case, the
time of supply would be the EARLIEST of:
Date of issue of invoice July 3, 2016
Last date on which he
is required to issue
invoice u/s 31
July 1, 2016
Date on which supplier
receives the payment
accounts
June 30, 2016
Date on which the
payment is credited to his
bank account
June 28, 2016
Scenario 2:
The supplier of taxable goods has received an amount of Rs. 3,000 in excess of the
amount indicated in the tax invoice. Hence, this option of treating the time of supply
to the extent of such excess is not available with the supplier. Therefore, he has to
compulsorily follow Sec 12. In this case, the time of supply would be the EARLIEST
of:

Date of issue of
invoice
July 3, 2016
Last date on which he
is required to issue
invoice u/s 31
July 1, 2016
Date on which
supplier receives the
payment
Date on which payment
is entered into books of
accounts
June 30, 2016
Date on which the
payment is credited to
his bank account
June 28, 2016
 Sec 12(3):
In case of supplies in respect of which tax is paid or liable to be paid on reverse
charge basis, the time of supply shall be the EARLIEST of the following dates,
namely: —
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient or
the date on which the payment is debited in his bank account, whichever is
earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or
any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a)
or clause (b) or clause (c), the time of supply shall be the date of entry in the books
of account of the recipient of supply.
EARLIEST OF: EARLIEST OF:
1. DATE OF RECEIPT OF GOODS
2. DATE OF PAYMENT AS ENTERED
IN THE BOOKS OF ACCOUNT OF
RECIPIENT
3. DATE ON WHICH PAYMENT IS
DEBITED IN THE BANK ACCOUNT
4. DATE IMMEDIATELY FOLLOWING
30 DAYS FROM THE DATE OF
ISSUE OF INVOICE
1. DATE OF RECEIPT OF GOODS
2. EARLIER OF:
 DATE OF PAYMENT AS
ENTERED IN THE BOOKS OF
ACCOUNT OF RECIPIENT
 DATE ON WHICH PAYMENT
IS DEBITED IN THE BANK
ACCOUNT
3. DATE IMMEDIATELY FOLLOWING

30 DAYS FROM THE DATE OF
ISSUE OF INVOICE
 Sec 12(4):
In case of supply of vouchers, by whatever name called, by a supplier, the time of
supply shall be-
(a) The date of issue of voucher, if the supply is identifiable at that point; or
(b) The date of redemption of voucher, in all other cases;
For Example -
Suppose the famous hair art studio Jawed Habib issues a voucher for haircut worth
Rs. 1,000. In this case we all know the supply the hair art studio will provide against
the voucher. Hence the supply is identifiable, covered in case (a).
On the other hand, if Flipkart issues a voucher worth Rs. 1,000, we do not know the
nature of supply Flipkart may have to provide to the voucher holder. Hence covered
in case (b).
 Sec 12(5):
In case it is NOT POSSIBLE to determine the time of supply under the provisions of
sub-section (2), (3) OR (4) the TIME of supply shall
(a) in a case where a periodical RETURN has to be FILED, be the DATE on which
such return is to be FILED, or
(b) in ANY OTHER CASE, be the date on which the CGST/SGST is PAID.
 Sec 12(6):
The time of supply to the extent it relates to an addition in the value of supply by way
of interest, late fee or penalty for delayed payment of any consideration shall be the
date on which the supplier receives such addition in value.
Illustration 2:
Mr. A and Mr. B enter into contract that Mr. A will supply goods to Mr. B worth Rs.
1,000. Mr. B will pay value of goods and tax thereon within 30 days from the date of
receipt of goods. If Mr. B fails to make payment within 30 days, Mr. B will be liable to
pay simple interest @ 20% from 31st day till the date of actual payment.
Scenario 1: Mr. B makes the payment along with tax on 29th day
Scenario 2: Mr. B makes the payment along with tax, interest on 62nd day.
Applying sub-section (6) of sec 12,

Scenario 1:
Since Mr. B has made payment within the allowed timeframe, no interest would be
charged on Mr. B and hence this sub-section is not attracted.
Scenario 2:
Since Mr. B has breached the time limit for payment as per contract, he will be
charged simple interest @ 20% from 31st day to 62nd day i.e. till the date of actual
payment. In this case, Mr. A receives something more in form of interest. This is
received because of supplies made. Hence the law makers have included this as value
of supply. The time of supply with respect to this extra receipt is the date on which
supplier actually receives such interest. Hence it is taxable on actual receipt basis.
In our scenario, it would be taxable on the 62nd day.
SEC 13 - TIME OF SUPPLY OF SERVICES
We will now try to understand what will be the time of supply in respect of services
 Sec 13(1): The liability to pay tax on services shall arise at the time of supply, as
determined in accordance with the provisions of this section.
 Sec 13(2): The time of supply of services shall be the earliest of the following
dates, namely:
(a) the date of issue of invoice by the supplier, if the invoice is issued within
the period prescribed under sub-section (2) of section 31 or the date of receipt
of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period
prescribed under sub-section (2) of section 31 or
the date of receipt of payment, whichever is earlier; or
(c) the date on which the recipient shows the receipt of services in his books
of account, in a case where the provisions of clause (a) or clause (b) do not
apply:
Provided that where the supplier of taxable service receives an amount up to one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess amount shall, at the option of the said supplier,
be the date of issue of invoice relating to such excess amount.
Explanation: For the purposes of clauses (a) and (b)

(i) The supply shall be deemed to have been made to the extent it is covered by the
invoice or, as the case may be, the payment;
(ii) ―The date of receipt of payment‖ shall be the date on which the payment is entered
in the books of account of the supplier or the date on which the payment is credited
to his bank account, whichever is earlier.
INVOICE ISSUED TIMELY INVOICE NOT ISSUED TIMELY
EARLIER OF:
1. Date of issue of
invoice
2. Date of Payment
(i) Date on which the
payment is entered
in the books of
account of the
supplier
(ii) Date on which
the payment is
credited to his bank
account.
EARLIER OF:
1. Date of issue
of invoice
2. Date on which
the payment is
entered in the
books of account
of the supplier
3. Date on which
the payment is
credited to his
bank account.
EARLIER OF:
1. Date of provision
of service
2. Date of Payment
(i) Date on which the
payment is entered in
the books of account
of the supplier
(ii) Date on which the
his bank account.
EARLIER OF:
1. Date of
Provision of
service
2. Date on which
the payment is
entered in the
books of account
of the supplier
3. Date on which
the payment is
credited to his
bank account.
Illustration 1:
Invoice is issued for Rs. 5,000 on June 22, 2016 by the supplier. Further, the Date
on which payment is entered in books of accounts of the supplier is June 30, 2016
and Date on which payment is credited to the bank account is June 28, 2016 Due
date of issue of invoice under section 31 is July 1, 2016. Date of provision of service
is June 1, 2016.
Scenario 1 - Invoice is issued timely
The time of supply would be:
PARTICULARS PARTICULARS PARTICULARS
Date of issue of invoice July 3, 2016
Date on which payment
is entered into books of
accounts
June 30, 2016
Date on which the
his bank account
June 28, 2016
TIME OF SUPPLY July 3, 2016

Scenario 2 - Invoice is not issued timely
The time of supply would be:
PARTICULARS PARTICULARS PARTICULARS
Date of provision of service June 1, 2016
accounts
June 30, 2016
Date on which the
payment is credited to his
bank account
June 28, 2016
 Sec 13(3):
In case of supplies in respect of which tax is paid or liable to be paid on REVERSE
CHARGE BASIS, the time of supply shall be the earlier of the following dates,
namely:
(a) the date of payment as entered in the books of account of the recipient or the
date on which the payment is debited in his bank account, whichever is earlier;
or
(b) the date immediately following sixty days from the date of issue of invoice or
any other document, by whatever name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a)
or clause (b), the time of supply shall be the date of entry in the books of account of
the recipient of supply:
EARLIER OF EARLIEST OF:
1. Date of payment as entered in the
books of account of the recipient
2. Date on which the payment is debited
in his bank account.
3. Date immediately following sixty days
from the date of issue of invoice.
1. Earlier of
 Date of payment as entered in
the books of account of the
recipient
 Date on which the payment is
debited in his bank account.
2. Date immediately following sixty
days from the date of issue of
invoice
Provided further that in case of supply by associated enterprises, where the
supplier of service is located outside India, the time of supply shall be

1. the date of entry in the books of account of the recipient of supply or
2. the date of payment, whichever is earlier.
As per Sec 2(12) of the bill as presented in Lok Sabha, “associated enterprises”
shall have the same meaning as assigned to it in section 92A of the Income-tax Act,
1961.
 Sec 13(4): In case of supply of vouchers by a supplier, the time of supply shall
be––
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
(For example – Refer Sec 12(4))
 Sec 13(5):
Where it is not possible to determine the time of supply under the provisions of sub-
section (2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such
return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
 Sec 13(6):
The time of supply to the extent it relates to an addition in the value of supply by way
of interest, late fee or penalty for delayed payment of any consideration shall be the
date on which the supplier receives such addition in value.
CONCLUSION:
At present, various statutes determine different time of supplies with respect to goods
and services. There are further complexities to determine time of supply in case of
goods. In the GST regime, such complexities would be done away with as many
existing concepts like production, manufacture, etc. would become redundant.
Numerous case laws will no longer prevail. There will be introduction of new concepts
like matching concept, compliance ratings, etc. in the field of Indirect taxes. The
introduction of matching concept will ensure that ―WE‖ i.e. both the supplier and
recipient are declaring the same outflow and same inflow in the same / subsequent
periods.

Edition 4, GSTIndAS Self Learning Booklet

Edition 4, GSTIndAS Self Learning Booklet

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Edition 4, GSTIndAS Self Learning Booklet