Knowing GST by CA Namrata Bansal http://www.snandassociates.com/resource/home.aspx

1. CA NAMRATA bansaL
BY
UNDERSTANDING
THE GST

2. • Goods & service tax (GST) is a consumption based tax levied on sale,
manufacture and consumption of goods & services at a national level
• GST is levied at the time of supply of goods & services
• GST will comprise of :
• (i) Central GST levied by Centre on intra state supply
• (ii) State GST, levied by State on intra state supply
• (iii) Integrated GST, levied by Central Government on inter state supply
• GST would apply to all goods & services except Alcohol for human
consumption
• GST on petroleum crude, high speed diesel, motor spirit (petrol) natural gas
& aviation turbine fuel would be applicable from date recommended by GST
Council
• Tobacco & tobacco products would be subject to GST in addition with
Central Excise Duty levied by center.
What is GST

3. Taxes to be subsumed under GST
Central Taxes to Subsumed
 Central Excise duty (CENVAT)
 Additional duties of excise
 Excise duty levied under Medicinal
& Toiletries Preparation Act
 Additional duties of customs (CVD
& SAD)
 Service Tax
 Surcharges & Cess
State Taxes to subsumed
 State VAT / Sales Tax
 Central Sales Tax
 Purchase Tax
 Entertainment Tax (not levied by
the local bodies)
 Luxury Tax
 Entry Tax ( All forms)
 Taxes on lottery,betting & gambling
 Surcharges & Cess

4. Multi-tiered system
RATE INDICATIVE ITEMS
0% 50% of the consumer price basket, including food grains
5% Mass consumption items like spices and mustard oil
12% Processed foods
18% Soaps, oil, toothpaste, refrigerator, Smartphone
28% White goods, cars
28% +
CESS
Luxury cars, pan masala, tobacco, aerated drinks

5. CGST ACT & IGST ACT
• CGST (Central Goods and Service Tax) shall be levied on every INTRA
STATE supplies of goods & services at rates not exceeding 20% or as
may be notified by central government.
• Composition scheme can be availed under CGST ACT.
• IGST (Integrated Goods and Service Tax) shall be levied in every INTER
STATE supply of goods & services at rates not exceeding 40% or as
may be notified by central government
• Integrated tax on imported goods shall be levied & collected as per
Customs Tariff Act, 1975.
• Additional tax will be levied on Inter-state supply of goods, not
exceeding 1% , to be collected by Central Government for a period
of 2 years and will be assigned to the States from where the supply
originates.

6. Composition scheme
• Composition scheme can be opted by any registered person whose
aggregate turnover in preceding Financial Year does not exceed Rs. 50 Lakh,
at the rates specified below:
(i) 2% of turnover for manufacturer (1% CGST+1% SGST)
(ii) 5% of turnover for person engaged in making supply as per Schedule
II (2.5% CGST+2.5%SGST)
(iii) 1 % of turnover for other supplier (0.5%CGST+0.5%SGST)
• The person opting for composition scheme shall comply with following
conditions:
(a) he is not a casual or a non resident taxable person
(b) he can not enter into credit chain
(c) he shall mention words “composition taxable person, not eligible to
collect tax on supplies” at the top of Bill Of Supply issued by him

7. Present Scenario (Intra-State Trade of Goods)
Manufacturer Wholesaler Retailer Consumer
State Tax = 1185.8
( 980+98+107.8)
VAT = 980
VAT = 1078
ITC = ( 980)
98
VAT = 1185.8
ITC = (1078)
107.8
Excise = 840
Tax Invoice (A)
Cost = 5000
Profit = 2000
Value = 7000
Excise 12% = 840
Total Value = 7840
VAT @ 12.5 = 980
8820
Tax Invoice (B)
Cost = 7840
Profit 10% = 784
Value = 8624
VAT @ 12.5% = 1078
9702
Tax Invoice (C)
Cost = 8624
Profit 10% = 862.4
Value = 9486.4
VAT @ 12.5% = 1185.8
Final Price = 10672.2
Central Tax =
840

8. GST Scenario (Intra-State Trade of Goods)
Manufacturer Wholesaler Retailer Consumer
State Tax = 1016.4
( 840+84+92.4)
SGST = 840
SGST = 924
ITC = ( 840)
84
SGST = 1016.4
ITC= (924)
92.4
CGST = 840
CGST = 924
ITC = (840)
84
Tax Invoice (A)
Cost = 5000
Profit = 2000
Value = 7000
CGST @12% = 840
SGST @12% = 840
8680
Tax Invoice (B)
Cost = 7000
Profit 10% = 700
Value =7700
CGST @12% = 924
SGST @12% = 924
9584
Tax Invoice (C)
Cost = 7700
Profit 10% = 770
Value = 8470
CGST @12% = 1016.4
SGST @ 12% = 1016.4
Final Price =10502.8
Central Tax = 1016.4
( 840+84+92.4)
CGST = 1016.4
ITC = (924)
92.4

9. Present Scenario (Inter-State Trade of Goods)
State Tax (Y) = 1073.8
( 889 + 184.8)
VAT = 700
CST = 123.2
ITC = (123.2)
0
VAT = 889
Excise = 600
Tax Invoice (A)
Value = 5000
Excise @12% = 600
Value = 5600
VAT 12.5% = 700
6300
Tax Invoice (B)
Cost = 5600
Profit 10% = 560
Value = 6160
CST @2% = 123.2
6283.2
Tax Invoice (C)
Cost *** = 6468
Profit 10% = 646.8
Value = 7115
VAT 12.5%= 889
Final Price 8004
Central Tax = 600
Entry
Tax =
184.8
Manufacturer (State X) Wholesaler (State X) Retailer (State Y) Consumer
State Tax (X) =
576.8
(700-123.2)

10. GST Scenario (Inter-State Trade of Goods)
10
State Tax (Y) = 733.26
( 366.52 + 366.74**)
SGST = 600
SGST = 733.26
IGST = ( 366.74)
366.52
CGST = 600
IGST = 1100=
CGST = (600)
SGST = (600)
REFUND = (100)
Tax Invoice (A)
Value = 5000
CGST (12% ) = 600
SGST (12%) = 600
6200
Tax Invoice (B)
Cost = 5000
Profit 10% = 500
Value = 5500
IGST(20%) = 1100
Add. Tax(1%) = 55
6105
Tax Invoice (C)
Cost = 5555
Profit 10%= 555.5
Value = 6110.5
CGST (12%)= 733.26
SGST (12%) = 733.26
Final Price 7577.02
Central Tax = 733.26
( 600 + 500* -
366.74**)
Add. Tax
= 55
Manufacturer (State X) Wholesaler (State X) Retailer (State Y) Consumer
State Tax (X) = 155
( 600 - 500* + 55)
CGST = 733.26
IGST = (733.26)
0

11. Comparison (Trade of Goods)
Sr. No. Particular Intra-State Inter-State
Present GST Present GST
1. Initial Value 8820.00 8680.00 6300.00 6200.00
2. Centre’s Tax 840.00 1016.40 600.00 733.26
3. State (X)’s Tax 1185.8 1016.4 576.8 155.00
4. State (Y)’s Tax - - 1073.80 733.26
5. State’s Total 1185.8 1016.40 1650.60 888.26
6. Total Tax paid to Govt. 2025.8 2032.80 2250.6 1621.52
7. Non-Vatable Tax borne by
Business
840.0 0.00 784.80 55.00
8. Final value paid by
Consumer
10672.2 10502.80 8004 7577.02

12. Input Tax Credit
• ITC is available in respect of taxes paid on any supply of goods or services
used or intended to be used in the course or furtherance of business (i.e.
for business purposes) by a taxable person subject to four conditions:
(a) possession of invoice;
(b) receipt of goods or services;
(c) tax actually paid by supplier to government;
(d) furnishing of return
• Proportionate credits allowed in case inputs, inputs services and capital
goods are partly used for business and partly for non-business purposes
• Proportionate credits allowed in case inputs, inputs services and capital
goods are used for taxable including zero rated and exempt (including non-
taxable) supplies
• ITC cannot be availed after filing of return for the month of September of
next Financial Year or filing of Annual Return
• ITC available only on provisional basis for a period of two months until
payment of tax and filing of valid return by the supplier

13. Input Tax Credit
• Matching of supplier’s and recipient’s invoice details
(a) ITC to be confirmed only after matching of such information
(b) ITC to be reversed in case of mis-match and non- payment of consideration
by recipient
• Input Service Distributor mechanism for distribution of ITC of input services
• Unutilized input tax credit on sale, merger, de-merger, amalgamation or change in
ownership of business shall be transferred to the electronic credit ledger of
transferee
• Setoff of IGST, CGST & SGST will be as follows in the below mentioned
chronological order only
CREDIT OF TO BE ADJUSTED WITH
IGST IGST, CGST ,SGST
CGST CGST, IGST
SGST SGST,IGST

14. REGISTRATION
• PAN based Registration is required to be obtained for each State from where
taxable supplies are being made
• The taxpayer will be allotted a State wise PAN based 15 digit Goods and/or
Services Taxpayer unique Identification Number (GSTIN).
• A person having multiple business verticals in a State may obtain separate
registration for each business vertical
• Every person who is registered or who holds a license under an earlier law
or whose turnover in a year exceeds the threshold is liable to be registered
• A person, though not liable to be registered, may take voluntary registration
• Certain suppliers liable for registration without threshold
• Registration to be given by both Central and State Tax Authorities on a
common e-application
• Deemed registration after three common working days from date of
application unless objected to
• Self –serviced Amendments except for certain core fields .

15. PAYMENT
• System of electronic cash ledger and electronic ITC ledger
• Tax can be deposited by internet banking, NEFT / RTGS, debit/credit card and
Over The Counter
• Date of credit to the Govt. account in the authorized bank is the date of
payment for credit in electronic cash ledger
• Payment of Tax is made by way of the debit in the electronic cash or credit
ledger
• Electronic cash ledger shall be credited by amount deposited through challan
generated on common portal & credit ledger shall be credited by every claim
of Input Tax Credit
• Provision for TDS on certain entities
• E-Commerce Operators, facilitating supplies by other suppliers, to collect Tax
at source (TCS), at the time of supply, out of payments to be made to such
suppliers

16. Return
GST Taxpayer @ Normal Rates
GSTR 1 Outward Supply 10th of Next Month
GSTR 2 Inward Supply 15th of Next Month
GSTR 3 Monthly Return 20th of Next Month
GSTR 9 Annual Return 31st Dec of Next FY
GST Taxpayer @ Compounding Rates
GSTR 4 Quarterly Return 18th of Next Month to Quarter
GSTR 9A Annual Return 31st Dec of Next FY
GST Taxpayer @ Others
GSTR 5 Periodic Return by Non-
Resident Foreign Taxpayer
Last Day of Registration
GSTR 6 Return for ISD 13th of Next Month
GSTR7 Return for TDS 10th of Next Month

17. Transition
• Migration of existing taxpayers to GST
• Amount of CENVAT Credit carried forward in a return to be allowed as
ITC
• Unavailed CENVAT credit on Capital Goods is allowed
• Pending Refund Claims pertaining to prior period would be disposed
off as per earlier law and any amount eventually accruing shall be
paid in cash
• Credit on Stock is allowed if valid proof is there, where no documents
are there 40% credit is allowed in case of supply of goods within 6
months subject to conditions.
• Switching from regular to Composition scheme.
• If revision of return results in any amount recoverable, same shall be
recovered as arrear of tax under GST , however if revision results in
any amount refundable , the person shall be refunded in cash.

18. GST –The Conclusion
• The target date for introduction of GST is 1st JULY2017.
• Introduction of this transformational tax reform is expected to
broaden the tax base, increase tax compliance and reduce
economic distortions caused by inter-State variations in taxes.
• GST will boost economic activity and will benefit everyone.
• It will streamline the tax administration , avoid harassment of
the business and result in higher revenue collection for the
Centre and States.
• Compliance costs for the industry will go down.
• Last but not the least , it will create more jobs.
• In sum , it would be a win-win situation for everyone i.e.
taxpayers , governments , consumers , etc.