The document provides an overview of the key features and provisions of the proposed Indian Goods and Services Tax (GST) model law, including details about the tax structure, rates, implementation timeline, and rules around chargeability, time and place of supply, and transition. It is intended to help readers understand and digest the key aspects of the new indirect tax regime in a simplified manner.

1. DEMYSTIFYING
GOODS & SERVICES
TAX
CA Mudit Goyal
December 2016
1

2. DEMYSTIFYING
GOODS & SERVICES
TAX
CA Mudit Goyal
© CA Mudit Goyal
Printing and Publishing Rights reserved with the Author
No part of this publication may be reproduced in any manner
whatsoever or translated in any other language without
permission in writing from the author.
Disclaimer
This reference material on GST has been prepared basis the information
currently available in public domain. GST in India is in drafting stage and
the provisions of final law may or may not be the same
All reasonable care has been taken in preparing this reference manual. We
accept no responsibility for any error it may contain, whether caused by
negligence, or otherwise for any loss, however caused or sustained by the
person relying on it.
This document is not an offer, invitation or solicitation of any kind and is
meant for reference purpose only.

3. Ever since the Modi Government took over in 2014, GST has been
regularly featuring in top bulletins of all news channels. The
Government cleared a major milestone when it was able to have the
Constitution amended paving way for a nationalised GST.
With GST expected to come live on April 1, 2017, people from all
comers of the society have also started taking keen interest in
understanding the key provisions of the GST Law. Every small
development in this direction is being watched very carefully as
everybody understands the significance of this most important
indirect tax reform of 21st century.
In the present scenario, multiple taxes are being imposed on the same
transaction. Thus, the consumer bears the burnt of multiplicity of
taxes, which adds not only to the cost but also to the complications
involved in tax compliances, return filing and difficulties in claiming
input tax credits due to involvement of multiple tax authorities.
GST is an attempt to overcome this multiplicity of taxes. It is
expected to create a common market across the country with no
differentiation in tax rates and clearly demarcated distinction between
goods and services
Here, an effort has been made to provide an overview and key
highlights of Model GST Law for easy digest.
I would like to place on record my deep appreciation to my partners,
current and ex-colleagues, who have given valuable inputs for
preparation of this reference manual.
I am sure that this reference manual will be of great help to the
reader.
CA Mudit Goyal
Preface

4. DEMYSTIFYING
GOODS & SERVICES
TAX
CA Mudit Goyal

5. Contents
1 Introduction to GST
2 GST Model Law
3 Business Processes
4 Broad Impact of GST
& GST Roadmap
5

6. DEMYSTIFYING
GOODS & SERVICES
TAX

8.  Destination based Taxation
 Apply to all stages of value chain – primary,
secondary and tertiary including retail
 Apply to all supplies of goods or services (as against
manufacture, sale or provision of service) made for a
consideration except –
 Exempted goods or services – common list for
CGST & SGST
 Goods or services outside the purview of GST
 Transactions below threshold limits
 Dual GST having two concurrent components
 Central GST levied and collected by Centre
 State GST levied and collected by States
 Integrated GST (a sum of CGST and SGST) to
be levied on inter-state supplies
Features
Features of Proposed Indian GST
Page 6

9. Primary
Producers
Distributors
Resellers
Service
Providers
Covers all stages of economic value chain
Primary
Producers
Manufacturers
Service
Providers
Service
Resellers
Real Estate/
Petroleum/
Alcohol
India Proposed GST Framework –
Simplified
Page 7
Simplified GST Framework

10. To be Subsumed
 Excise Duty
 Countervailing Duty in
lieu of Excise Duty
 Special Additional Duty
of Customs
 Service tax
 CST
 Surcharges & Cesses
(relating to supply of
goods & services)
 R&D Cess (still a
question)
Not to be subsumed
 VAT
 Entry tax
 Luxury tax /
Entertainment tax
 State Cesses &
surcharges (relating to
supply of goods &
services)
 Basic Customs Duty
 Excise duty on
tobacco
 Stamp Duties
 Taxes on lands and
buildings
 Taxes on
consumption or sale
of electricity
 Taxes on professions,
trades, callings and
employments
 Taxes on sale of
Alcoholic liquor for
human consumption
Taxes under GST regime
Page 8

11. Particulars Rates
Exempted goods and services Nil
Precious Metals Rate yet to be published
Lower Rate 5%
Lower Standard Rate 12%
Higher Standard Rate 18%
Items consumed by middle &
higher class of society
28%
Cess on Luxury Items Rate yet to be published
* Notes:
1. The rates given are combined CGST + SGST rates
2. States may have a band in case of SGST
GST Rates Slabs decided by GST
Council
Page 9

12. 2015 2015 2016 2017
Passage of GST
Constitutional
Amendment
Bill (CAB) in
lower House
-6 May
CAB presented
in Upper House
& referred to
Select Committee
-12 May
Business
Processes for
registration,
payments,
refunds and
returns in
public domain
- October
Industry
stakeholder
feedback on
business process
– November
CAB presented
in Winter
session, passage
unsuccessful –
lack of political
consensus
– December
Chief Economic
Advisor’s (CEA)
report on rates
tabled
-4 December
GST Model law
released in
public domain
-June
Passage of CAB
– September
Formation of
GST Council
- September
GST
Registrations
- November
Revised GST
Model law
released
- November
Passage of GST
laws
–January
Readiness of
GST Network
(GSTN)
GST
implementation
April/July 2017
GST Implementation Timeline
Page 10

14. Central GST
Act
30+ State GST
Acts
GST States
Compensation
Act
Integrated GST
Act
GST
Rules
GST
Notifications
GST
Circulars
GST Law Landscape
Page 12

15. GST - Chargeability
There is a supply of
Goods or Services
Whether Supplied by
Taxable person or
Recipient liable under
reverse charge
Determine classification
and rate of GST
applicable
Time of Supply of Goods
or Services - to
determine when GST
becomes liable to be
paid
Location of supplier and
place of supply - to
determine whether a
supply is inter-state or
intra-state
Determine value of
Goods or Services on
which tax is payable and
the rate applicable
thereon
Page 13

16. Charge on
⁻ Supply of goods and/or services for a considerationfor a consideration by a taxable
person
Goods means
⁻ Every kind of moveable property including actionable claims
⁻ Excludes money and securities
Services means
⁻ Anything other than goods and includes transactions in money
⁻ Excludes money and securities
Supply includes
⁻ Sale, transfer, barter, exchange, license, rental, lease or disposal
for a consideration in the course or furtherance of business
⁻ Importation of service, for aa considerationconsideration and whether or notwhether or not
in the course of furtherance of businessin the course of furtherance of business
⁻ Supply made or agreed to be made withoutwithout considerationconsideration as
specified in Schedule I:
⁻ Permanent supply/disposal of business assets where ITC was
taken
⁻ Self-supplies , transactions between related persons
⁻ Transaction between a principal and agent
⁻ Import of service by taxable person from related person
GST Model law - Charge
Page 14

17. ⁻ The following transactions shall be deemed to be a supply:deemed to be a supply:
⁻ Transaction between a principal and agent
⁻ Following transactions not to be anot to be a supplysupply as per Schedule III:
⁻ Services by employee to employer in course of
employment
⁻ Services by courts, foreign diplomatic missions
⁻ Funeral, burial, crematorium or mortuary including
transportation of the deceased
⁻ composite supply comprising two or more supplies, shall be
treated as a supply of the principal supply
⁻ mixed supply comprising two or more supplies shall be treated
as supply of that particular supply which attracts the highest rate
of tax
⁻ Certain supply of goods deemed to be service and vice versa
vide Schedule II, such as
⁻ Design development, implementation of IT Software
deemed to be service
⁻ Transfer of goods involved in works contract deemed to
be services
⁻ Sale of food in restaurants deemed as service
⁻ Sale of goods by unincorporated association to members
is deemed sale of goods
GST Model law - Charge
Page 15

18. Forward Charge
Earlier of
• Date of issue of
invoice
• Last date by which
invoice is required
to be issued
• Receipt of payment
Reverse Charge
Earlier of
• Date of receipt of
goods (NA for
services)
• Date of payment
• Date immediately
following 30 days
(60 days for services)
from the date of issue
of invoice by supplier
Time of Supply – Goods/Services
• Date of issue of voucher if supply
identifiable at that point
• Else date of redemption of voucher
Vouchers
Page 16

19. Place of Supply – Goods
Particulars Place of Supply
Movement of goods
Involved
 Location of goods at the time at
which the movement of goods
terminates for delivery
Goods are delivered
by supplier to a
recipient or any
other person, on the
direction of a third
person
 Principal place of business of the
person receiving the goods
No movement of
goods Involved
 Location of such goods at the time of
the delivery to the recipient
Goods are assembled
or installed at site
 Place of such installation or assembly
Where the goods are
supplied on board a
conveyance
 Place of supply is location at which
such goods are taken on board
Where supply of
goods cannot be
determined basis
above rules
 Law made by the Parliament in
accordance with the
recommendation of the GST Council
Page 17

20. Place of Supply – Services
Particulars Place of Supply
General Rule
 To a registered person, location of
such person
 To any other person, location of the
recipient where the address is on
record and location of supplier of
services in other cases
In relation of
immovable property
 Location of such property
Restaurant, catering,
personal grooming,
fitness etc.
 Location where the services are
performed
Services provided on
board a conveyance
 Location of the first scheduled point
of departure
Admission to a
events or
amusement park and
ancillary services
 Place where the event is actually
held
 Where the park or such other place
is actually situated
Specific provisions for telecommunication / DTH services and
Advertisement services provided to Government & Local
authority
Page 18

21. Place of Supply – Services
Particulars Place of Supply
Transportation
Services
 location from where the passenger
embarks on the conveyance
Banking & other
financial services
 Location of the recipient of the
services on the record, location of
recipient
 Otherwise, location of supplier
Training and
performance
appraisal services
 location where performed
Insurance Services
 location of the recipient of services
on record
Transportation of
goods, including mail
and courier
 location at which goods are handed
over
General rule applicable in case of the above services when
services are provided to a registered person
Page 19

22. - Value shall be ‘transaction value’ where supplier and
recipient are unrelated & price is the sole consideration
- Transaction value shall include:
- Any amount paid by recipient instead of supplier
- Taxes and duties other than GST
- Incidental costs/ expenses (such as commission,
packing, royalties etc.)
- interest or late fee or penalty for delayed payment
- Subsidies directly linked to the supply excluding
subsidies provided by Government
- Discount allowed as deduction only if
- Given before or at the time of supply and recorded
in the invoice
- Post sales discounts
- was pre agreed before supply
- can be linked to relevant invoices
- input tax credit has been reversed by the
recipient
GST Model law – Valuation
Page 20

23. • Related party transaction where
price not influenced by relationship
• Goods transferred from one place
of business to another
• Principal to an agent or vice versa
Rule 3 :
Transaction
value accepted
• Goods / services of like kind, quality
and supplied at the same time
• Adjustment by proper officer
Rule 4 : Value
by comparison
• Cost + charges for design or brand +
profit and general expenses
Rule 5 :
Computed
value method
• Value determined using reasonable
means
Rule 6 :
Residual
method
• in case the officer has reason to
doubt value declared
• To be determined based on the
information/ documents available
Rule 7 :
Rejection of
Declared Value
GST Model law – Valuation
Page 21

24. GST Model law – Composition
scheme
Minimum tax rates:-
For Manufacturer – 2.5%
For Others – 1%
A registered ‘person’ having turnover
less than fifty lacs in the preceding
financial year can opt ‘Composition
Levy Scheme.’
• Supplier of Services
• Deals in non-taxable goods
• Effects Inter-state supply of goods
• Manufacturer of such goods as notified on
recommendation of council
• Supply of goods through e-commerce
Not eligible
for
composition
scheme
* Notes:
1. Necessary to opt for this scheme for all businesses on same PAN
2. Person can neither collect taxes from the recipient nor is entitled
to take Input tax credit
Taxpayer required to file quarterly return in GSTR-4
Page 22

25. Input Credit
Pool
Inputs
Input Service
Capital
Goods
Input Tax Credit
Page 23

26. Input Tax Credit
Greater
Credit
availability
 Credit on all expenses in course of business
unless specified in negative list
 No credit reversal due to stock transfers or
CST sales
Conditions
 Should have taxpaying document (Invoice,
Debit Note, Suppl. invoice etc.)
 Goods / Service should have been received
by the person
 Tax has been paid by the supplier
 Valid return is furnished
 Goods received in lots or instalments, only
upon receipt of the last lot
Negative list
for input tax
credit
 Motor vehicles
 Outdoor catering, health and beauty
related services, club membership, LTA etc.
services
 Rent a cab, life and health insurance except
where Government notifies them as eligible
services
 Works contract services
 Tax paid to composition dealer
 Goods lost, stolen, destroyed, written off by
way of gift or free samples
Page 24

27. Taxes paid on inputs are available as credit against the
output tax liability of each transaction
Input
CGST
Output
CGST
Output
IGST
Input
SGST
Output
SGST
Output
IGST
Input
IGST
Output
IGST
Output
SGST
Output
CGST
Proposed GST Credit Mechanism
Page 25
Compensation
cess
Compensation
cess

28. Input
VAT/
Entry tax
Credit
Input
SGST
Credit
Input
Central
Excise or
Service tax
Credit
Input
CGST
Credit
Transition of Credit
Page 26

29. Transitional Provisions
Migration of existing
assesses
 All assesses required to complete
enrolment on GST portal before the
appointed date
 As per current schedule, enrolment
open till January 2017
Input tax credit
 Unavailed cenvat credit / ITC on capital
goods allowed to be taken
 Credit of eligible duties and VAT on
inputs held in stock on transition stage
where person becomes taxable under
GST
Movement of goods
 No tax payable where goods returned
within 6 months of the appointed date
 Buyer to pay duty where goods
returned after 6 months
Revision of prices
 Any increase in price deemed to be
supply under GST
 Any decrease in price eligible for
adjustment against GST payable
Pending Refund,
Assessment and
Appeals
 Pending refund claims to be disposed
in cash
 Any credit allowed in proceedings to
be refunded in cash
 Any liability finalized to be recovered
without allowance of adjusting credit
Page 27

31.  State wise PAN based 15 digit GSTIN
 Upto 35 business verticals be registered in a state
 Options of ISD, casual dealers & voluntary
registration
 Small dealer’s exempted, composition tax scheme
available
 100% digitization
 Migration of existing registrants by the system
 Electronically generated Challan from GSTN
 Anytime hassle free online payment of taxes
 No payment by debit to export scrips
 Mechanism prescribed for online rectification
 Online reconciliation
 Various payment options including Internet
banking, Over the counter through authorized
bank & NEFT / RTGS from any bank
Registration
Payment
Registration / Payment
Page 29

32.  Recommends various instances of refund.
 Electronic refund claim
 Suggested refund on account of year end or
volume based incentives
 Minimum requirement of manual documents
 Easy refund mechanism
 In case of inverted duty structure, cash refund
may be granted after due verification.
 Common E-return for CGST, SGST, IGST
 Nil return for no activity
 Invalid return in case filed without payment of tax
 Separate return for outward supplies, inward
supplies, monthly & annual return.
 Separate return for each registration, ISD, Tax
Deductors.
 Submission of invoice level details.
Refunds
Returns
Refunds / Returns
Page 30

33. Return For To be filed by
GSTR 1 Outward supplies (sale,
stock transfer, export)
10 of next month
GSTR 2 Inward supplies (purchases,
import)
15th of next month
GSTR 3 Monthly return 20th of next month
GSTR 4 Composition scheme
return
18th of next quarter
GSTR 5 Non residents taxpayers 20th of next month
GSTR 6 ISD 13th of next month
GSTR 7 Tax deducted at source 10th of next month
GSTR 8 E- commerce operator 10th of next month
GSTR 9 Annual return 31st December of next FY
GSTR 10 Final return Later of 3 month from:-
date of cancellation
Or
date of cancellation order
GSTR 11 UIN holder 28th of next month
ITC ledger Continuous
Cash ledger Continuous
Liability ledger Continuous
Returns under GST Regime
Page 31

34. Accounts to be maintained at principal place of business:-
⁻ Account of Production or manufacture of Goods
⁻ Inward & Outward Supply of goods and/or services
⁻ Stock of Goods
⁻ Input Tax credit availed
⁻ Output Tax payable and paid
⁻ Others which may be prescribed
In case of one or more place of business, the accounts
relating to each place of business shall be kept at the place
of business concerned.
Provision to maintain accounts in electronic form ~
Manner to be prescribed
In case turnover exceeds a specified limit, taxable person
has to get its books audited and submit report.
Accounts & Records
Period of Retention of accounts specified as sixty months
from last date of filing annual return.
Page 32

36. Broad Impact of GST
Intra-state
procurement
of services
Local
procurement
of goods
Inter-State
procurement
of goods
Inter-state
procurement
of services
Import of
goods
Import
of
services
BCD, CVD, SAD
BCD, IGST
Service tax
RCM)
IGST (RCM)
Excise Duty , VAT
CGST, SGST
Service Tax,
CGST,
SGST
IGST
Excise Duty, CST, Entry
tax
Service
Tax
IGST
Creditable taxes
Non Creditable taxes
Sometimes Creditable
Page 34

37. Manufacture & Distribution
Implication
 No concept of excise, levy
of GST on “supply” of
goods
 Make Vs Buy
 IGST on inter-state stock
transfer and supply
 Concept of 4A Valuation
and MRP under Excise
except under Legal
Metrology Act
 Concept of deemed
manufacture / Schedule
III
 Job work exemption
 Factory compliances
New concepts Redundant concepts
 Destination principle
 National market
 IGST on stock transfers
 New POS Rules
 State-wise
depots/commissaries/st
ores
 Multiple Check posts
A national market may lead to consolidation of warehouses
and change the whole supply chain scenario of India
Page 35

38.  IGST credits on intra-
company stock transfers
 Higher rates
 Existing balance of credits
– carry forward of
balances under GST
regime
 companies may be forced
to pass on the benefits
derived from GST
 Cascading due to
multiple indirect tax
regime
 Inverted duty structure
 Removal of credit
blockage
 Double taxation
 Composition and
abatement schemes
New concepts Redundant concepts
Cash flow, pricing & technology
Implication
 GSTIN numbers to be
incorporated at State level
 Change in master data of
Vendors, Customers &
Materials
 Pricing procedure for sales
& purchase
 Reconciliation of purchase
data of ERP & GSTN
 Unit wise registration
for excise
 Old tax codes and
condition types for taxes
 Old purchase & sales
registers
Page 36

39. GST Roadmap
IT  Identify IT touchpoints to be impacted upon
roll out of GST
 Installation of ERP patch and updating
database / customization
 IT Testing
Tax  Tax & Working Capital Impact Study
 Complete Transaction mapping &
restructuring
 Revalidation of tax positions / transitional
provisions
 Compliance
Vendor
Management
 Identify non compliant vendors
 Vendor pricing renegotiations
 Vendor trainings
 Unorganized Vendor Compliance Support
Legal  Redrafting standard contracts for being GST
compliant & efficient
 Spillover customer and vendor contracts –
necessary actions
39

40. CA Mudit Goyal
+91 99103 56999
muditgoyal@sixace.in
www.GSTConnect.in
Mudit is a member of the Institute of
Chartered Accountants of India with
over 5 years of core indirect tax
experience.
During his career with Big 4
Accountancy firms Deloitte & EY, he has
advised various multinational and
Indian companies on complying with the
Indian indirect tax laws in an efficient
and effective manner.
He has also been extensively involved in
undertaking buy side and sell side due
diligence.
With GST round the corner, Mudit has
been assisting various companies
understand the impact of GST on their
business and plan for the transition.
He is also in the process of launching a
website GSTConnect.in. This site is
intended to be a full fledged knowledge
portal for GST.
40