In this you will find a detailed introduction about GST and its conceptual aspects.
1. What is GST.
2. benefit of GST.
3. Importance for different class of people.
4. Registration requiremnets.
5. Supply
6. Place of supply.
7. Value of supply.
8. Time of supply.
9. Returns
2. Introduction of GST
GST = Goods and Service tax
It is an indirect tax on :-
• Goods
• Services
Few products are not in ambit of GST. These are Alcoholic beverage, petroleum
products, real estate and electricity.
Misconception/myths:-
• Single tax
• Single tax rate
3. Importance to:-
Students
Chartered Accountants/ lawyers
Industry
Fresher
Others (Knowledge about economy)
Benefits:-
Various indirect taxes subsumed (Except Basic Custom duty)
GST council said that cess will also subsumed.
Transparency
Same rate of tax in whole country
Possibility of reduction in tax evasion
GDP increase by 1-2 %
Reduce Cascading effect
4. Coverage of the law
The law covers entire India, including Jammu and Kashmir. In the present regime,
service tax was not extended to Jammu and Kashmir.
GST is tax on goods and service with value addition at each stage.
It is destination based consumption tax. SGST will go to consumption state. There will be
loss to producing state. So, central govt. will compensate to state govt. for first few years.
Three type of Taxes
SGST
CGST
IGST
Intra-state supply SGST + CGST
Interstate supply IGST = (SGST + CGST)
Import Basic Custom duty + IGST
There will be three rates of tax
Merit rate - Essential Commodity 10-12 %
Standard rate - Major coverage 17-18 %
Demerit rate - Applicable on Sin goods (Luxury) 40%
6. Registration
Any person having aggregate turnover of Rs 9 lakh (Rs 4 lakh for person carrying out
business in the north-east states including Sikkim) across all locations in India will need
to obtain registration in the States from where they make a supply.
In addition, the following persons would be required to obtain GST registration
irrespective of turnover:
person making inter-state supply
casual taxable persons
person required to pay tax under reverse charge
persons making supply on behalf of other registered taxable persons, whether as agent or
otherwise
input service distributors
persons making supply (except of branded services) through an e-commerce operator
e-commerce operator
aggregator supplying services under his brand name
non-resident taxable persons
Every supplier shall take registration in each state from where he makes taxable supply of
goods and/or services.
7. Supply
Supply is taxable event under GST. It includes:-
i) Sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be
made for consideration in the course of business or furtherance of business.
ii) Import of service (No other conditions to be met)
iii) Schedule I, Schedule II.
iv) Supply of any branded service by an aggregator under a brand name or trade name
owned by him.
v) Transactions between principal and agents are deemed to be supplies
Exclude:- Supply of goods to a job worker would not be treated as supply
8. Time of Supply
Time of supply = When liability to pay CGST/SGST arise
Time of supply of goods is the earliest of:
• date of removal/ making available goods by the supplier
• date of issue of invoice
• date of receipt of payment by the supplier
• date on which the recipient shows the receipt of goods in his books of accounts.
Time of supply of services is the earliest of:
• date of issue of invoice or date of receipt of payment, if invoice is issued within prescribed period
• date of completion of service or date of receipt of payment, if invoice not issued within the
prescribed period
• date on which recipient shows the receipt of services in his books of accounts, where above
provision does not apply
Time of supply under reverse charge is the earliest of:
• date of receipt of supply;
• date of payment;
• date of receipt of invoice; or
• date of debit in the books of accounts.
In addition to the above, there are provisions to determine the date of supply in case of continuous
supply of goods/ services and when there is change in effective rate of tax.
9. Value of Taxable supply
Normally:- Transaction value (Price actually paid or payable for said supply of
goods/services) where supplier and recipient are not related and price is sole
consideration.
Transaction value include:-
i) Amount that supplier is liable to pay but incurred by recipient.
ii) Value of goods/services supplied directly or indirectly by recipient free of charge
or at reduced price.
iii) Royalty and licence fees that recipient of supply must have to pay.
iv) Any taxes, duty, fee, charges levied under any statue except CGST/SGST/IGST
v) Incidental expenses. (e.g. Commission, packing, any other charges )
vi) Subsidies provided in any form or manner, linked to the supply
vii)Reimbursable expenditure
viii)discount or incentive that may be allowed after the supply has been effected
10. Place of Supply
The place of supply of goods is the place where the goods are delivered, except in
few cases.
The place of supply of services to a registered person, is the location of such
registered person. For services provided to an unregistered person, it is the address
of recipient, and if it is not available, the location of the supplier of services. There
are various exceptions provided to these principles, such as services pertaining to
immovable property, training and appraisal, admission to the events and
organisation of events, transportation, telecom, financial services etc.
11. Input Tax Credit
Input tax credit shall be credited to input credit ledger.
The GST law provides for credit of GST paid on all the inputs, capital goods and
services, barring some exceptions. The exceptions include the services received
and used by employees and also vehicles (except when they are used for
specified purposes), supplies received for execution of works contract for
construction of immovable property (except plant & machinery) etc. Supplies
used for personal consumption are also ineligible for credit.
100% credit on Capital goods.
Procedural requirement for claiming credit:-
Possession of tax invoice
Goods/service has been received
Tax charged is actually paid to the credit of appropriate government
Furnished the return
Contd. Input Tax Credit…
12. The time limit for claim of credit is one year from the date of the invoice. However, no
credit pertaining to a financial year is allowed to be claimed post filing of the return for
September of the next financial year, or the filing of the annual return for the year to
which the credit pertains, whichever is earlier.
The concept of input service distributor is continued in the GST as well. However, credits
of GST paid on inputs or capital goods cannot be distributed.
Input tax credit can be utilised as follows
Credit of SGST can be used for payment of SGST and IGST
Credit of CGST can be used for payment of CGST and IGST
Credit of IGST can be used for payment of IGST, CGST and SGST
…Contd. Input Tax Credit
13. Returns
Assesse Period Time limit
Registered taxable person
(except mentioned below)
Monthly 20 days from end of month
Composition scheme Quarterly 18 days from end of quarter
Required to deduct TDS Monthly 10 days from end of month
Input service distributor Monthly 13 days from end of month
Every taxable person (except few category) shall file annual return on or before 31st
December following the end of financial year.
The taxpayers having turnover exceeding the prescribed limit will also be required to get
their accounts audited by a Chartered Accountant or a Cost Accountant, and submit a
copy of the audited annual accounts with the annual return. In addition, they would also
be required to submit a reconciliation statement, reconciling the value of supplies
declared in the return
