The document discusses the key concepts and provisions of the Goods and Services Tax (GST) in India, specifically covering topics such as the definition of supply, types of supplies, and the levy structure under the CGST Act of 2017. It also elaborates on inter-unit transactions, the treatment of services, and various exceptions under GST law. Additionally, it explains the reverse charge mechanism and different tax rates applicable to various goods and services.

1. Puneet Agrawal
Partner, ALA Legal
Certificate Course on GST
20th April, 2018
1

2. TOPICS COVERED
 Supply
 Levy
 Composition Scheme
2

3. SUPPLY
3

4. LEVY OF GST
• Levy of CGST/ SGST/ IGST is on supply of goods and/or services in
the course of inter-state and intrastate trade and commerce. That is the
taxable event in GST is ‘supply of goods and/ or services’.
• S. 2(52): “goods’’: “every kind of movable property other than money
and securities but includes actionable claim, growing crops, grass and
things attached to or forming part of the land which are agreed to be
severed before supply or under a contract of supply”
• S. 2 (102) “services’’: “anything other than goods, money and
securities but includes activities relating to the use of money or its
conversion by cash or by any other mode, from one form, currency or
denomination, to another form, currency or denomination for which a
separate consideration is charged”4

5. SCOPE OF SUPPLY (S. 7 CGST ACT, 2017)
Supply(Section7)
All forms of supply of
goods and/or services ,
like:
Sale, Transfer Barter,
Exchange, Lease, etc.
For a consideration
Import of services for a
consideration
Whether or not in the
course of business
Schedule I
Made or agreed to be
made, even without a
consideration
Schedule II
Activities to be treated as
supply of goods or services.
Government may
specify by notification
Transactions to be treated
as supply of goods or
services.
NOT SUPPLY
(S. 7(2))
•Activities under
SCHEDULE III
•Activities of CG/ SG/
LA – as notified
5
In the course or
furtherance of
business

6. DEFINITION OF WORDS/PHRASES USED IN
SECTION 7
…MADE OR AGREED TO BE MADE FOR A CONSIDERATION
6
Consideration is defined under Section 2(21) of the CGST Act, 2017:
“(a) any payment made or to be made, whether in money or otherwise, in respect of, in
response to, or for the inducement of, the supply of goods or services or both, whether by
the recipient or by any other person but shall not include any subsidy given by the Central
Government or a State Government;
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient or by any
other person but shall not include any subsidy given by the Central Government or a State
Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not
be considered as payment made for such supply unless the supplier applies such deposit as
consideration for the said supply;”

7. “(17) “business” includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the
course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local
authority in which they are engaged as public authorities;”
7
CONTD…
IN COURSE OF FURTHERANCE OF BUSINESS

8. IMPORT OF SERVICE
Import of Service – For a Consideration
In the Course or Furtherance of
Business
NOT In the Course or Furtherance of
Business

9. SUPPLY WITHOUT CONSIDERATION
(SCHEDULE I OF CGST ACT)
1. Permanent transfer/disposal of business assets where ITC has been availed on such
assets.
2. Supply between related persons or between distinct persons as specified in Section
25 when made in the course or furtherance of business.
Provided that gifts upto fifty thousand rupees in value in a financial year by an
employer to an employee shall not be treated as supply of goods or services or
both.
3. Supply of goods:-
a. by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or
b. by an agent to his principal where the agent undertakes to receive such goods
on behalf of the principal.
4. Importation of service by taxable person from a related person or from any of his
other establishments outside India, in the course or furtherance of business.
9

10. CONCEPT BEHIND INTER-UNIT
TRANSACTIONS
• GST – Consumption based tax.
• Tax moves where the goods/ services move.
• The intent is to attribute the revenue to the state where the
goods/ services are consumed.
• GST is leviable on supply of goods or service made for a
consideration. Section 7(1)(a) provides for inclusion of all
forms of supply of goods/ services made for a consideration
in the course or furtherance of business.
• Thus, in order to move the tax with the goods and/or
services in inter-unit transactions (even if made without
consideration), Entry 2 of Schedule-I is inserted.

11. LEVY OF GST ON INTER-UNIT
TRANSACTION
Supply of
Goods/
Services
Made for a
consideration
Made without
a consideration
Schedule I –
CGST Act, 2017
Distinct/ Related Persons – In
course or furtherance of business
Import of services by a taxable
person from related person/ any
of his establishments outside
India – in the course of business.

12. TAX TREATMENT
Prior
to GST
Regime
Central Sales Tax Act (Section 6A) - In case of transfer of goods
claimed otherwise than by way of sale
Finance Act, 1994 (Service Tax Law) - No concept of self service.
Central Excise – Taxing event is manufacture and collection is
made by central government. In this case, Central Govt. shared
the revenue with the state where mfg. activity is being carried
out.
In GST
Regime
Goods, including capital goods, when transferred to distinct/
related person, even when made without consideration is
treated as supply, and is thus leviable to GST.
Services, when supplied to distinct/ related person, even when
made without consideration is treated as supply, and is thus
leviable to GST.

13. CASE STUDY OF INTER-UNIT GOODS
TRANSFER
Mumbai
Head
Office
Delhi
Branch
Office
Kolkata
Branch
Office
Chennai
Branch
Office
Laptops transferred
from H.O to B.O.s
with loading of
additional softwares by
the H.O.
Transfer of
Laptops
Capitalized
Laptops
Non-
Capitalized
Laptops

14. INTER-UNIT SERVICES IN GST
• There could be 3 aspects for discussion of Inter-unit
services amongst the branches of the same company.
– Provision of services by one office of the company to the
office of another state, i.e. between distinct persons,
– Provision of service by the EMPLOYEES of one branch
office to another branch office of the company,
– Common input services received by the Corporate
office/ Head Office or any other regional office.

15. COMMON SERVICES
• Cross-charge can be done only where Head Office
provides a service to another office/branches.
• On the other hand, Credit is to be distributed through
ISD where the Head Office procures certain services
which are for common utilization of all/ some of its
branches across the country. The bills for such
expenses would be raised on the Head Office.
• The credit on such invoices is to be distributed
amongst the respective offices through an ISD.

16. TAX TREATMENT OF COMMON SERVICES
• In order to comply with GST Law – apparent option to Cross-charge
exists.
• Issues with Cross-charge:
– Valuation
– Charging of other services
• Therefore, distribution of credit of common services through ISD is rather
advisable.

17. SUPPLY OF SERVICES
(SCHEDULE II OF CGST ACT)
• Transfer of right to use goods or of undivided share in goods, without
the transfer of title
• Lease, tenancy, easement, license to occupy land
• Lease or letting out of building for business of commerce either wholly
or partly
• Treatment or process, applied to another’s goods (Job work)
• Goods meant for business purposes put to private use or made available
for any use other than business use whether or not for a consideration
• Renting of immovable property
• Construction of complex, building, civil structure or part thereof
intended for sale to buyer, wholly or partly – except where entire
consideration is received after issuance of completion certificate or
before first occupation whichever is earlier – (Works contract –
Composite Supply)
17

18. CONTD…
• Temporary transfer or permitting to use any Intellectual property
rights – Copyright, trademark and patent
• Development, design, programming, customization, upgradation
of information technology software
• Agreeing to do or refrain, tolerate an act.
• Supply of goods, being food or any other article for human
consumption and or any drink (other than alcoholic liquor for
human consumption) as part of service or in any other manner
whatsoever. – (Restaurant)
18

19. SUPPLY OF GOODS
(SCHEDULE II OF CGST ACT)
• Transfer of title in goods
• Transfer of title in goods – when it shall pass at a future date upon
payment of full consideration as agreed
• Transfer or disposal of business assets
• Business assets transferred by a person who ceases to be taxable person,
except –
– When business transferred as going concern
– When business carried by personal representative who is a deemed
taxable person
• Goods supplied by any unincorporated association or body of persons to
a member for consideration.
19

20. • Activities or transactions falling under Schedule III to be treated neither as
supply of goods nor a supply of services:
– Services rendered by an employee in course of his
employment.
– Services rendered by a Court or Tribunal.
– Services rendered by any person performing his duties and
functions in the capacity of the office held by him under the
Constitution.
– Services by a foreign diplomatic mission located in India.
– Services of funeral, burial, crematorium or mortuary
– Sale of land and, subject to clause (b) of paragraph 5 of
Schedule II, sale of building.
– Actionable claims, other than lottery, betting and gambling.
NEITHER SUPPLY OF GOODS NOR SUPPLY OF
SERVICES (SCHEDULE III OF CGST ACT)
20

21. Supply
Intra-state supply
(S. 8 IGST Act)
Location of Supplier and
Place of Supply in the
same state/ UT
Of
Goods
Of
services
•Does not include:
> supply to or by SEZ developer/ unit
> import until cross custom frontier
> supplies to tourist
Inter-state supply
(S. 7 IGST Act)
Location of Supplier and
Place of Supply NOT in
the same state/ UT
Of
Goods
Of
services
Includes:
> Import of Goods/Service
> If supplier in India, PoS outside India
> Supply to/ by SEZ dev/ unit
> Not an intra-state supply
21

22. COMPOSITE SUPPLY – DEFINITION – S.2(30)
22
Supply Made by a taxable person
consisting of two or more taxable supplies – of goods and/or
services
Which are naturally bundled and supplied in conjunction with
each other in the ordinary course of business
One of which is a principal supply
Illustrations
• Where goods are packed and transported with insurance, the supply of goods, packing
materials, transport and insurance is a composite supply and supply of goods is a
principal supply;
• If a single contract is entered into for supply and erection of machinery.
• If under a single contract, laptop and support for laptop services are provided.

23. LEVY OF GST
Section 8 of the CGST Act, 2017. The tax liability on
a composite or a mixed supply shall be determined in
the following manner, namely:—
(a) a composite supply comprising two or more
supplies, one of which is a principal supply, shall be
treated as a supply of such principal supply; and
(b) a mixed supply comprising two or more supplies
shall be treated as a supply of that particular supply
which attracts the highest rate of tax.
23

24. INDICATORS OF BUNDLED SERVICE
(NOT DETERMINATIVE)
Source: www. gst.council.gov.in/e-version fliers
• There is a single price or the customer pays the same
amount, no matter how much package the customers
actually receive use
• The elements are normally advertised as a package
• The different elements are not available separately
• The different elements are integral to one overall supply.
If one or more is removed, the nature of the supply
would be affected.

25. POINTS FOR CONSIDERATION
How to determine if the supply is naturally
bundled and supplied in conjunction with each
other?
Where the supply is naturally bundled and in
conjunction with each other but separate
consideration is charged for each supply. Would
that amount to Composite supply
How to determine principal supply?

26. FEW CASE STUDIES
• Situation 1: ABC gives his car for repair in a garage for servicing. The air filter was
replaced by the Garage. The replacement of air filter or any defected part of a motor
vehicle is not in conjunction with servicing. It can be supplied separately. How would
this transaction be treated?
• Situation 2: XYZ orders a book from Amazon and Amazon separately charges for
the delivery of the book. Even though separate consideration for delivery is charged,
the supply of books and delivery of the goods are naturally bundled and in
conjunction with each other. Would these be considered as composite supply and
transport charges would be exempt?
• Situation 3: XYZ went to a mobile repair center to get the screen changed of his
mobile phone. The Repair Center charged separately for the part and for the service.
Would the above transaction be considered a composite supply as they are naturally
bundled and supplied in conjunction with each other?
• Situation 4: ABC is involved in the printing of pamphlets and invitation cards. How
would the principal supply be determined in these cases?

27. CLASSIFICATION OF GOODS AND
SERVICES
Restaurants
providing packed
food
•Entry 6 (b) of Schedule II of CGST provides that supply of foods or article for
human consumption or any non alcoholic drink is a composite supply which shall
be treated as supply of service.
•A Restaurants on supply of sweet charging the rate applicable on sweet but
treats the food supplied in restaurant as services.
Photocopy Machine
•ABC given a photocopy machine to XYZ company along with the operation and
maintenance of the machine including toner and papers on monthly fixed rental
and per copy charges.
•Whether it would be considered as composite supply and what would be the
principal supply?
Principal supply: means the supply of goods or services which constitutes the
predominant element of a composite supply and to which any other supply
forming part of that composite supply is ancillary

28. MIXED SUPPLY – S. 2(74)
28
Supply - consisting of two or more individual supplies – of
goods and/or services
Made in conjunction with each other by a taxable
person
For a single price
Which is not a composite supply
Illustration
A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of
these items can be supplied separately and is not dependent on any other. It shall not be a
mixed supply if these items are supplied separately;

29. LEVY OF GST
Section 8 of the CGST Act, 2017. The tax liability on
a composite or a mixed supply shall be determined in
the following manner, namely:—
(a) a composite supply comprising two or more
supplies, one of which is a principal supply, shall be
treated as a supply of such principal supply; and
(b) a mixed supply comprising two or more supplies
shall be treated as a supply of that particular supply
which attracts the highest rate of tax.
29

30. LEVY
30

31. ONE NATION ONE TAX????
GST Laws
in India
IGST Act Parliament
CGST Act Parliament
UTGST Act Parliament
SGST Act
Each state, Delhi
& Puducherry
(31 Acts)
31

32. TAXING POWERS AS PER THE AMENDED
CONSTITUTION OF INDIA
Centre
Inter-state
A. 246A r/w A.
269A r/w IGST
Act, 2017
Import
A. 286 r/w
IGST Act, 2017
Export
A. 286 r/w
IGST Act, 2017
Outside the
State
A. 286 r/w
IGST Act, 2017
Centre & State Intra-State Supply
A. 246A r/w CGST
& SGST Acts.
32

33. LEVY
• Intra-State Supply:
(CGST + SGST) or (CGST + UTGST)
• Inter-State Supply:
IGST
• Import:
BCD + IGST
• Export:
IGST but Zero Rated
33

34. LEVY OF CGST
(SECTION 9 OF CGST ACT)
Payable by
EVERY taxable person (person registered or liable to be registered under the act – S.2(107)).
Levy of
CGST (Central Goods and
Services Tax) – On Intra-
state ‘supply’ (Under
Section 9 of CGST Act)
Levied on
Value determined under
Section 15 of the CGST
Act, 2017 (and the relevant
valuation rules)
Levied at
The rate specified by the
government. Rate slabs:
• 0.125%
• 1.50%
• 2.50%
• 6.00%
• 9.00%
• 18.00%
Not Leviable On
Alcoholic liquor for human consumption
Leviable upon Notification
Petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel
34

35. LEVY UNDER GST
GST Leviable on
Supply of
Goods
Notification
1/2017-CT(R)
6 Schedules of
different tax
rates
Services
Notification
11/2017-CT(R)
Majorly 4 rate
slabs
Additionally,
abatements are
also applicable, for
both goods and
services
35

36. Reverse Charge Mechanism (RCM) – Such
category supply of goods and/ or services, where
tax is payable by the recipient of goods and/ or
services, instead of by the supplier, as in the normal
course of levy of GST.
LEVY OF GST ON ‘REVERSE CHARGE’
BASIS
36

37. RCM under Section 9,
CGST
Supply from Notified Suppliers
under Sec. 9(3)
Notified Goods
[Notification 4/2017 –
CT(R)]
Cashew Nuts, Bidi
wrapper leaves,
Tobacco leaves, Silk
yarn, Supply of lottery.
Notified Services
[Notification 13/2017 –
CT(R)]
Enumerated in
next slide
Supply from unregistered
person under Sec. 9(4)
Deferred from 13th
October till 30th June
2018.
CONTD…
37

38. NOTIFIED SERVICES [S. 9(3)]
• Services on which GST is leviable on basis of RCM have been notified via Notifications
13/2017 Central Tax (Rate), Notification 33/2017-Central Tax (Rate) , Notification
3/2018-Central Tax (Rate)
• The following is the list of notified services
– Goods Transport Agency (GTA) [an option of forward and reverse charge, both]
– Legal Services
– Arbitral Tribunal
– Sponsorship Service
– Director Fees
– Certain Services by the Government
– Renting of immovable property to person registered under GST by the Government
– Insurance Agent
– Copyright
– Recovery agent services to a banking company or a financial institution or NBFC
– Services by the members of Overseeing Committee to RBI
38

39. SUPPLY OF GOODS OR SERVICE
BY UNREGISTERED PERSON TO REGISTERED
PERSON
• Supply of goods or service by unregistered person to registered person –
GST is payable by recipient of goods or service – Section 9(4)
• Exemption Limit: Where supply by any or all unregistered person does not exceeds
by `5,000/- in a day – GST is not payable under reverse charge. (Notification 8/2018
CT(R))
If exceeds by `5,000/- in a day – Tax is to be paid on all supplies.
[For eg. total supplies from unregistered person in a day is `9,000 – Then GST is to be
paid under RCM on `9,000, and not only on excess of `4,000/-]
• Supply of Exempt goods or Service by Unregistered Person: If goods or
service supplied by unregistered person is exempt under GST - Registered
person is not required to pay GST under reverse charge.
39

40. Via the following notifications, the payment of tax
under RCM for supplies from an unregistered
person to a registered person is deferred till 30th
June 2018:
– Notification No.8/2017 -Central Tax (Rate), dated the
28th June, 2017,
– Notification No.38/2017- Central Tax (Rate), dated
the 13th October, 2017 and
– Notification 10/2018 – Central Tax (Rate) dated 23rd
March 2018
CONTD…
40

41. SUPPLY RECEIVED IN OTHER STATE – WHERE RECIPIENT IS
NOT REGISTERED
[BY EMPLOYEES ON TRAVEL]
• Location of Unregistered Supplier & Place of Supply are in Same State - Where
Recipient is not registered:
– Where Location of Unregistered Supplier & Place of Supply are in same State :
CGST + SGST is leviable of that particular State.
– Thus, in such case if Recipient is unregistered that particular State
• Would be considered as supply of goods or service by unregistered person to
unregistered person in that State
• No Tax is to be paid by Recipient under Reverse Charge
For example:
Renting of immovable property service is received from unregistered person:
• If recipient is not registered in that particular State – no GST under RCM.
• If recipient is registered in that state – CGST+SGST to be paid under RCM.
41

42. EXAMPLES
Recipient is registered in Delhi and receiving services from an unregistered person located in other
State (e.g. Haryana) & Recipient is unregistered in that particular State (Haryana in this example).
Nature of Supply Place of Supply Levy
Liability
under RCM
Renting of Residential Dwelling for
use as residence
Where the immovable property
is located
Exempted -
Renting of Immovable Property
Where the immovable property
is located
CGST+SGST No
Hotel Where the Hotel is located CGST+SGST No
Food Where Food Served CGST+SGST No
Car Parking Charges
Location of immovable
property
CGST+SGST No
Vehicle repair Services (Not Parts) Location of the recipient IGST Yes
Staff Welfare (Assuming Snacks
Expenses)
Where Food Served CGST+SGST No
Toll Tax - Exempt No
42

43. EXAMPLES
Recipient is registered in Delhi and receiving services from an unregistered
person located in Delhi.
Nature of Supply Place of Supply Levy
Liability
under RCM
Renting of Residential Dwelling for use
as residence
Where the immovable property is
located
Exempted -
Renting of Immovable Property
Where the immovable property is
located
CGST+SGST Yes
Hotel Where the Hotel is located CGST+SGST Yes
Food Where Food Served CGST+SGST Yes
Car Parking Charges Location of immovable property CGST+SGST Yes
Vehicle repair Services (Not Parts) Location of the recipient CGST+SGST Yes
Staff Welfare (Assuming Snacks
Expenses)
Where Food Served CGST+SGST Yes
Toll Tax - Exempt No
43

44. LEVY – E-COMMERCE OPERATOR S. 9(5)
• Government notification w.r.t. categories of services for intra-state supplies by the e-
commerce operator – IF SUCH SERVICES ARE SUPPLIED THROUGH IT – the E-
Commerce operator is deemed to be the supplier for the purpose of tax payment for such
supply.
• In case no physical presence of e-commerce operator in taxable territory – representative
person liable to pay tax under GST
• Neither physical presence, nor representative in taxable territory – e-commerce operator
appoints a person for the purpose of payment of tax.
• Notification 17/2017 – CT(R) and Notification 23/2017 – CT(R) has notified services by way
of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; services
by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes; services by way of house-
keeping, such as plumbing, carpentering etc,
44

45. EXEMPTION FROM TAX
• The government, on recommendations of the council has the power to
exempt GENERALLY from levy of taxes:
– Wholly or in part
– Absolutely or subject to conditions
• The government, on recommendations of the council has the power to
exempt BY SPECIAL ORDER from levy of taxes, under circumstances
of exceptional nature (to be stated in the order).
• In any exemption notification/ order – the government may insert a
clarification in form of an ‘explanation’ at any time within 1 year of
such exemption notification/ order and such explanation inserted shall
have retrospective effect, as if it has always been a part of that exemption
notification/ order at the first place.
• Where an absolute exemption, for whole or part of duty has been granted
for some supply, the registered person shall not collect tax in excess of
the effective rate on such supply. 45

46. EXEMPT SUPPLY
(SECTION 2(47))
Anysupplyofgoodsand/or
services
Attracts NIL rate
i.e. Services under
Notification 12/2017-CT(R)
EXEMPT from tax
i.e. goods under
Notification 2/2017-CT(R)
Non taxable supply
[defined u/s 2(78)]
Like Petroleum, alcohol for
human consumption
46

47. REGARDING EXEMPT SUPPLIES
• Aggregate turnover includes the value of exempt supplies.
• A person engaged exclusively in the business of supply of exempt
goods/ services only is not liable to take registration under GST.
(S. 23) However, this is subject to compulsary registration under
S. 24.
• Where inputs used for effecting taxable and exempt supplies, ITC
is not available for effecting exempt supplies.
• No e-way bill required for the movement of exempt goods.
47

48. LEVY OF GST
(SGST/ UTGST ACT)
Levy of TAX
UTGST/ SGST – On
Intra-state supply
(Section 7 of UTGST,
Levy section of respective
State GST Acts)
Levied on VALUE
Value determined under
Section 15 of the CGST
Act, 2017 (and the
relevant valuation rules)
Levied at RATE
The rate specified by the
government. Rate slabs:
• 0.125%
• 1.5%
• 2.5%
• 6%
• 9%
• 18%
Not Leviable On
Alcoholic liquor for human consumption
Leviable upon Notification
Petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel
Payable by
EVERY taxable person (person registered or liable to be registered under the act – S.2(107)).
48

49. RCM under Section 7(3)
and 7(4) , UTGST Act
Supply from Notified Suppliers
under Sec. 7(3)
Notified Goods
(Notification 4/2017 –
UTT(R)
Cashew Nuts, Bidi
wrapper leaves,
Tobacco leaves, Silk
yarn, Supply of lottery.
Notified Services
(Notification 13/2017 –
UTT(R))
As enumerated
before
Supply from unregistered
person under Sec. 7(4)
CONTD…
49

50. LEVY – E-COMMERCE OPERATOR S. 5(5)
• Government notification w.r.t. categories of services for intra-state supplies by the e-
commerce operator – IF SUCH SERVICES ARE SUPPLIED THROUGH IT – the E-
Commerce operator is deemed to be the supplier for the purpose of tax payment for such
supply.
• In case no physical presence of e-commerce operator in taxable territory – representative
person liable to pay tax under GST
• Neither physical presence, nor representative in taxable territory – e-commerce operator
appoints a person for the purpose of payment of tax.
• Notification 17/2017 – UTT(R) and Notification 23/2017 – UTT(R) has notified services by
way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle;
services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or
other commercial places meant for residential or lodging purposes; services by way of house-
keeping, such as plumbing, carpentering etc,
50

51. LEVY OF IGST
(SECTION 5, IGST ACT)
Payable by
EVERY taxable person under GST.
Levy of TAX
IGST (Integrated Goods and
Services Tax)– On Inter-state
supply (Under Section 5 of
IGST Act)
IGST on IMPORTED GOODS
– shall be levied and collected
in accordance with S. 3 of the
Customs Tariff Act, 1975
Levied on VALUE
Value determined under
Section 15 of the CGST Act,
2017 (and the relevant
valuation rules)
For the purpose of import –
valuation under Customs Act.
Levied at RATE
The rate specified by the
government. Rate slabs:
[IGST]
• 0.25%
• 3%
• 5%
• 12%
• 18%
• 28%
Not Leviable On
Alcoholic liquor for human consumption
Leviable upon Notification
Petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel
Levied at THE POINT
When duties of Customs are levied on the said
goods under section 12 of the Customs Act, 1962.
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52. RCM under Section 5(3)
and 5(4) , IGST Act
Supply from Notified Suppliers
under Sec. 5(3)
Notified Goods
(Notification 4/2017 –
IT(R)
Cashew Nuts, Bidi
wrapper leaves,
Tobacco leaves, Silk
yarn, Supply of lottery.
Notified Services
(Notification 10/2017 –
IT(R))
As enumerated
before
Supply from unregistered
person under Sec. 5(4)
CONTD…
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53. LEVY – E-COMMERCE OPERATOR S. 5(5)
• Government notification w.r.t. categories of services for inter-state supplies by the e-
commerce operator – IF SUCH SERVICES ARE SUPPLIED THROUGH IT – the E-
Commerce operator is deemed to be the supplier for the purpose of tax payment for such
supply.
• In case no physical presence of e-commerce operator in taxable territory – representative
person liable to pay tax under GST
• Neither physical presence, nor representative in taxable territory – e-commerce operator
appoints a person for the purpose of payment of tax.
• Notification 14/2017 – IT(R) and Notification 23/2017 – IT(R) has notified services by way
of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; services
by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes; services by way of house-
keeping, such as plumbing, carpentering etc,
53

54. COMPOSITION LEVY
54

55. PURPOSE
• It is a welcome scheme for small tax-payers/ businesses
due to the following reasons:
– Limited Compliance: Under the composition
scheme, the taxpayer is required to furnish quarterly
return only.
– Limited Tax Liability: Another benefit of getting
registered under the composition scheme is that the
tax rate for such taxpayer is nominal under the GST
Law.
55

56. COMPOSITION LEVY (S. 10):
APPLICABILITY & RESTRICTIONS
• Person Aggregate Turnover not exceeding Rs. 1 Crore may opt for this scheme.
[Rs. 75 Lakh in special category states – as notified in N. 8/2017-CT]
• Restrictions under Section 10(2):
– Shall not provide any service (except restaurants)
– Shall not engage in supplies not leviable to tax.
– Shall not provide any inter-state outward supply of goods (can receive)
– No outward supply through e-commerce operator
– Not a manufacturer of goods as notified (ice-cream, pan masala, tobacco and
tobacco substitutes)
• Composition dealer cannot collect tax, and cannot claim ITC.
• The person registered as composition dealer shall pay tax under RCM (for supply
from both, notified as well as unregistered persons. Though payment of tax on RCM
basis for supply from unregistered is deferred till 30th June 2018)
• He shall display “composition taxable person” on every notice/ signboard displayed
at his principal place of business.
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57. AGGREGATE TURNOVER: SECTION 2(6)
All
taxable
Supplies
All
exempt
supplies
Exports
of
Goods/
Services
Interstate
supply of
persons
having
same PAN
Aggregate
Turnover
Exclusions:
• Value of inward supplies on which
tax is payable by a person on
reverse charge basis
• CGST, SGST, UTGST, IGST,
Compensation Cess
To be
computed on
all-India basis
If a person under
Composition levy
makes an inter-
state supply/
export – outside
composition levy
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58. RATE OF COMPOSITION LEVY
S.No. Category of Registered Persons Rate of Tax
1.
Manufacturers, other than manufacturers of
such goods as may be notified by the
Government
1 % of the turnover in the State or
Union territory
2.
Suppliers making supplies referred to in clause
(b) of paragraph 6 of Schedule II
5% of the turnover in the State or
Union territory
3.
Any other supplier eligible for composition
levy under section 10 and the provisions of
this Chapter
1 % of the turnover of taxable
supplies (i.e. not exempt supply of
goods) of goods in the State or
Union territory
58

59. OTHER RESTRICTIONS - REGISTRATION
• Covered under Rule 3 of the CGST Rules, 2017.
• Registration under GST law is compulsory for opting for the
Composition scheme.
• A person applying for fresh registration under Rule 8 of the CGST
Rules, 2017 may opt for the scheme by providing necessary information
under part B of FORM GST REG-01.
• Any registered person who wants to opt for composition levy has to
file an electronic intimation in the FORM GST CMP-02 prior to the
commencement of financial year for which the option to pay tax under
composition levy is exercised and also has to a furnish a statement in
FORM GST ITC-03 in accordance with the sub rule (4) of Rule 44 of
CGST Rules, 2017, within 90 days from the commencement of the
relevant financial year.
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60. LIST OF TAXABLE PERSONS INELIGIBLE
FOR THE SCHEME (RESTRICTIONS…)
i. A casual taxable person i.e. a person who occasionally undertakes supplies in a State
or Union Territory where he has no fixed place of business.
ii. A non-resident Taxable person i.e. a person who occasionally undertakes supplies but
has no fixed place of business or residence in India.
iii. A supplier of services except a person engaged in supply of restaurant service.
iv. A person engaged in providing inter-state supply of goods.
v. A person engaged in supply of non-taxable goods i.e. goods which are not taxable
under GST law
vi. A person engaged in supply of goods through an Electronic Commerce Operator
(ECO) who is required to collect Tax at source under section 52 of the CGST Act.
vii. 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 registration under the Composition Scheme has been taken.
viii. The goods held in stock by him have not been purchased from an unregistered
supplier and where purchased, he pays the tax under the reverse charge mechanism.
ix. A person engaged in manufacturing of goods notified under sec 10 (2) (e) of the
CGST Act either in the year 2016-17 or later.
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61. BILL OF SUPPLY (RESTRICTIONS…)
• A taxable person opting for the scheme has to
issue bill of supply as he is not eligible to issue
taxable invoice under GST.
• He has to mention the words “composition
taxable person, not eligible to collect tax on
supplies” at the top of every bill of supply issued
by him. (Rule 5(1)(f))
61

62. VALIDITY OF COMPOSITION LEVY
• Section 10(3) CGST Act, 2017; Rule 4, 6 of CGST Rules,
2017
• Effective from the beginning of the FY when the intimation
is filed.
• Remains valid so long as he satisfies the conditions of a
composition dealer.
• Such registration shall lapse the day on which the aggregate
turnover during the FY exceeds the specified limit.
• For withdrawal from the scheme, the person is required to
file an application under FORM GST CMP-04.
62

63. THANK YOU
CONTACT US:
PUNEET AGRAWAL
ADVOCATE
+91-9891898911
puneet@alalegal.in
WEBSITE: www.alalegal.in
BLOG: www.gstlawindia.com
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