CHAPTER -1(Day – 1)

CONTENT
 BASIC CONCEPT OF INDIRECT TAX & GST
 DEFINATION OF GST
 COMPONENT OF GST
 TAXES SUBSUMED & NOT SUBSUMED IN GST
 COMMON RATE OF GST WITH EXAMPLE OF GOODS
 CASCADING EFFECT IN GST.
 CONCEPT OF IMPORT & EXPORT & INPUT TAX CREDIT.
 CONCEPT RELATING TO GST COUNCIL
 QUESTIONS
CONCEPT OF INDIRECT TAX
Indirect Tax is a tax of which incidence and impact fall two different persons. Tax is paid by one
person and borne by another. It is generally levied on goods & servicer, expenditure, consumption,
import, export etc. Indirect tax also known as consumption Tax.
FEATURES:
1) It is regressive in nature. [it imposes same effect on richer & poor class]
2) Tax on Goods & Services. [it is generally levied on Goods or services or both for example
GST, custom duty etc.]
3) Shifting of burden. [The person who pays the tax can recover the same from another person
and ultimately the burden of GST falls on consumers]
4) Inflationary in Nature: [It causes increase in price of the product & services]
5) Wider Tax Base: [It has wider tax base than Direct Tax. It generates more Revenue Than DT]
6) Large source of Revenue: [It earns more than 50% of total Revenue of Central & State
Government.]
CONCEPT OF GST
1) GST stand for “Goods & Services Tax”.
2) It is an Indirect Tax.
3) GST is levied on supply on Goods & Services or both.
4) GST is paid by supplier but borne by Recipient
5) GST is applicable all over India including Jammu & Kashmir.
6) One Nation One Tax. [To consolidate all indirect Taxes into a single tax]
7) Taxable event of GST is supply.
TYPES OF TRADE:
There are three types of Trade on which GST are implemented by GST council. Such as
i) INTRA STATE TRADE (within the State)
ii) INTER STATE TRADE (Outside the State)
iii) INTERNATIONAL TRADE (Outside the Country)
ADVANTAGES OF GST:
a) To avoid cascading effect in Taxation except Import.
b) To avoid the difficulties for maintaining different types of Taxes with their different rules,
i.e. removal of multiple Tax.
c) One nation one tax.
d) Transparency of revenue distribution between central and state.
e) The GST will create a single unified Indian market to make the economic stronger.
f) Lower cost of production.
DEMERIT OF GST:
a) Much more compliance [that is 25 Returns, TDS, TCS, RCM etc.]
b) Higher rate of Tax.
c) Destination based tax is initially hazardous to many state.
d) Basic exemption limit is 40/20 lacks.
e) ITC available only on basis of GSTR – 2B not on actual basis.
COMPONENT OF GST:
The components of GST are:
a) C-GST:-GST levied by the Central Govt.is known as Central GST or C-GST, it is collected by
Central govt. full form is (Central Goods and services Tax)
b) S-GST:- GST levied by the State Govt. is known as State GST or S-GST, it is collected by State
Govt. Full form is (State Goods and services Tax)
c) I-GST:-GST collected by the both center and the state on inter-state supply of goods is
known as Integrated GST or I-GST, it is collected by Central Govt. Full form is (Integrated
Goods and services Tax).
d) UTGST stands for Union Territory Goods and Service Tax. The following are the Union
Territories where UTGST is applicable.
 Chandigarh
 Lakshadweep
 Daman & Diu and Dadra and Nagar Haveli.
 Andaman & Nicobar Island
 Laddakh
Delhi, J&K, Pondicherry are also Union Territory but they have separate legislative assembly. So in
this union territories SGST is applicable.
TAX SUBMUED IN GST:
The following Central & State Taxes subsumed in GST, which are
CENTRAL TAXES STATE TAXES

THE FOLLOWING TAXED NOT SUBSUMED

 1) Basic custom duty and cenvat duties on Import of Goods into India.
2) Road and Passenger Tax.
3) Stamp duty
4) Property Tax.
5) Electricity Duty.
6) Entertainment Tax (by Local Authority)
7) Toll Tax.
COMMON RATES OF GST
The common Rates of GST are 5%, 12%, 18%, 28%, & 0%. The various types of goods under
different GST rates are given below.
a. Exempted Goods: Milk, Sugar& Jiggery, Meat, Fish, Lives Animals, Grains, Seeds, and
Vegetables etc.
b. Rate 5% : Coal, Indian sweets, Edible oil, Newspaper Print, Tea, Coffee, Footwear up
to Rs.
Rs 1000.
c. Rate 12% : Butter, Cell phone, Lottery, Drinking water bottle, Jewellery Box, Jam, Jelly,
Packaged dry Food, Mobile, Exercise Book, Apparel above Rs 1000.All computer parts,
Ghee, Nuts,
Etc.
d. Rate 18% : Hair oil, Tooth Paste, Shampoo, Camera, Washing Machine, outdoor
Catering, IT
Services etc.
e. Rate 28% :Luxury Car, Tobacco, Pan masala, cigarette, Cement etc.
f. Nil Rated :Grains, Salt, Jaggery, etc.
g. 0% GST : jute, fresh fish chicken, eggs, butter milk, curd, natural honey,
fresh fruits ,
Flour, Bread, Bindi etc
NOTES:
1) Maximum Rate of GST can be 40% [20% CGST +20% SGST]
2) Currently no product is liable to 40% GST.
3) The rate of GST is case of Gold, Silver, Platinum, jewellery, and imitation jewellery is 3%.
4) In case of rough Diamond, precious stone or pearl the rate is 0.25%.
5) Standard rate of GST in most of the world is in between 15% - 20%.
6) In GST Regime still there are few products on which VAT & Excise duty still chargeable. The
following are the products,
a. Crude Petroleum.
b. High speed diesel.
c. Natural Gas.
d. Aviation Turbine Fuel.
e. Alcoholic liquor for human consumption
7) France was the First country to introduce GST system in 1954.
8)India adapted Canadian duel model of GST.
9)GST launched in India as on 1st July 2017.
10)Assam is the first state in India which accept GST.
CASCADING EFFECT
Tax charge on Tax amount is called cascading effect. Cascading effect has been eliminated because
several taxes have been subsumed of which of which credit was previously not available. Credit of
several levies like luxury tax or entertainment tax was not allowed and these taxes were causing tax
cascading. On introduction of GST these taxes shall be subsumed in GST.
CHARGABILITY OF GST
EXAMPLE (intra state supply)
1. Mr. Radhamadhav a manufacturer bought certain goods for Rs. 200000 and incurred
expenses of Rs. 20000. These goods were sold for Rs. 250000. CGST and SGST rate is 9%
each. Calculate the sale price/ INVOICE PRICED. Assume both seller & purchaser are in
West Bengal.
PARTICULARS AMOUNTS(RS)
Cost of goods purchase 200000
Add: Expenses Incurred relating to purchase 20000
: Profit ( balancing Figure)[Assume] 30000
SALE PRICE BEFORE GST CHARGE/TAXABLE VALUE 250000
Add: SGST @ 9% on 250000 22500
CGST @ 9% on 250000 22500
Total sales price/ INVOICE PRICE 295000

IMPORT & EXPORT:

IMPORT In case of Import of goods, apart from custom duty IGST is applicable. Import shall
be treated as Interstate Supply & liable to IGST. Hence on Import basic custom duty and IGST shall
be applicable. Input tax credit shall be available of IGST so paid. No Input Tax credit is available on
Basic Custom duty.
EXPORT Export is treated as Interstate supply. It is treated as Zero Rated Supply. A) In case of
Export Exporter can remove goods by signing a Bond(LUT) without payment GST.or B) pay IGST
while removing the goods and later on after Export he can claim for Refund.
Hence practically Exporter is not liable to pay GST. It is to be noted input services and Capital Goods
used for Export goods shall be eligible for ITC.
INPUT TAX CREDIT(ITC)
It means at the time of paying tax on output to the Govt. you can reduce the Tax which you
have already paid as input from output. When you sold goods you charge Output GST and received
this Tax including Sale value recorded in Invoice. Again when you purchase goods you have to pay
Input GST which supplier charge to you through Invoice. After that if totals Output GST> Total Input
GST Then you are liable to Pay the difference as Tax. And it total input> total output Tax, balance
will carry forward to next month.
EXAMPLE:
Let Total Output GST for the month of April 2021 is Rs 17500 and total Input GST for the same
month is Rs 9700. Then TAX PAYABLE = Total Output Tax – Total Input Tax.
= (17500 – 9700) = Rs 7800
Similarly If total output for the month of April 2021 is Rs 17500 and total Input for the month of
April 2021is Rs 18000 then Carry forward Input is [Total Input – Total Output] = (18000 -17500) = Rs
500 will carry forward in next month. No tax payable.
i) If Total output GST is > Total Input GST then Tax Payable is output GST – Input GST After
adjustment of Input GST.
ii) But When Input GST > output GST then no tax payable. The balance of input GST will is
carry forward in the next month.

GST COUNCIL:
a) Article 279 in the constitution of India makes provision for constitution of GST Council.
b) This council comprises – Union Finance Minister (Chairman), Minister of State & State
Finance/ Tax minister.
c) GST council may exempt any class of person, or Goods from GST
d) Half of members shall be the quorum of GST council.
e) Decision shall be taken by GST council with ¾th majority.
f) Central Govt. shall have 1/3rd vote in GST council and all state Govt. together shall have 2/3rd
Vote.

Answer the following questions

a) FILL IN THE BLANK
1. GST is a Tax on -------------- of --------------- and --------------------------.
2. GST Extend to -------------------------------------------------------------------.
3. Full form of SGST ---------------------------------------------------------------.
4. CGST is collected by -------------------------------------------------------------.
5. Full form of IGST ------------------------------------------------------------------.
6. IGST is collected by ----------------------------------------------------------------.
7. Intra state supply = ----------------- + ------------------ is applicable.
8. If IGST rate is 18% then CGST rate is -------------- and SGST rate is -------------.
9. Full form of ITC is ----------------------------------------------------------

b) Mr.” A” of Mumbai supplies goods of Rs 100000 to MR. “B” of Nagpur. GST 18%. Calculate
the following
 Total price charge by MR. A
 Amount of GST
 GST is payable by

c) Mr. C of Kolkata supplied Goods of Rs. 200000 to Mr. D of Chennai. IGST rate is 12%.
 Calculate the following
 Total price charge by MR. C
 Amount of GST.
 GST is payable by

d) In case of Import the following GST is Applicable

a) CGST
b) SGST
c) IGST
d) UTGST
e) In case of Export the Rate of GST is
a) 18%
b) 12%
c) 0%
d) None of the above
f) Name two taxes which are not subsumed with GST

g) The maximum Rate of GST is

a) 28%
b) 35%
c) 40%
d) 18%