Subject:- Goods and Service Tax (Notes)

Module 1:-
Basis of Taxation:-
Tax:- Meaning
Types
Difference between Direct & Indirect taxes Brief History of Indirect
taxation in India
Structure of Indian Taxation
Tax
Meaning:-
Tax is a amount levied and collected by Government on an individual or an
organization based on their income to collect revenue for public work and
infrastructure.

Definition:-
According to “Adam Smith” “Tax Means A tax is a contribute from citizens
for the support of state”
Cambridge University:-
“Money that you have to pay to the Government from what you earm or
when you buy things”.
Types of Taxes:-
1) Direct Tax
2) Indirect Tax
Direct Tax:-
It is a type of tax lived on in dividuals or entities directly by the
government based on their incomes.
Example:- Income tax, Corporate Tax, Capital Gain Tax, Property taxes stt,
Example for direct taxes.

Income Tax:- It is imposed on the profits and Incomes earned during the year.
Corporate Tax:- It is a tax imposed on profits eared by the company.
Capita Gain Tax:- It is a tax imposed on profits arises from the sale of a capital
asset.
Property Tax:- It is a tax imposed on movable and Immovable property like
land, Building, Cars & Intangible assets like License, Patents.
Gift Tax:- It is a tax charged on the receipts of gifts it is applicable only gifts value
exceeds Rs 50000/-
Security Transaction Tax (STT):- It is levied on price of Share, Stock and
Securities Traded in Stock exchange.
 Indirect Tax:-
It is tax and passed on the another individual or Entity.
Taxpayers pay the indirect tax to the Government Via intermediaries and
there they are indirectly paid to the Government.
CBIC Central Board of Indirect Taxes collection and administration of
indirect taxes.
Generally it is lived on supplier or manufacture then it passed it to final
consumer through wholesaler or retailers.
Examples:- Excise Duty, custom duty, Stamp Duty, Entertainment Tax, and GST
are examples for indirect taxes.

Excise Duty:- It is tax levied on producing and sale of petroleum, Liquor, Alcohol,
Tobacco, and
Custom Duty:- It is tax levied on importing and exporting of goods. It includes.
1) Basic custom Duty
2) Additional custom Duty
3) Special Additional Duty
This Tax is depending on types of goods and the country of origin.
Stamp Duty:- It is a tax imposed on the sale of Property/Property ownership by
the state Government.
Entertainment Tax:- It also known as ‘amusement tax’ and it lived on any from
commercial entertainment such as movie tickets, exhibitions, sport events,
amusement parks, music festival and culture events etc.,.
GST-Goods and Service tax:- It is an indirect tax imposed on supplies of goods
and service.
It is a multi-stage destination orientated tax imposed on every value
addition replacing various multiple indirect taxes like Vat, Sales tax, Services tax
Etc.,
Difference Between Direct & Indirect Taxes

Basis Direct Taxes Indirect Taxes

Meaning It is tax levied directly on It is a tax levied indirectly on
income and profits consumption
Examples Income tax corporate tax, Gift Custom duty, Excise duty,
Tax, capital Gains Tax GST, Stamp duty &
Entertainment Tax
Way of Direct tax directly paid by the Indirect tax indirectly paid
Payments tax payer by the Government by the customers to the
Government
Tax burden It falls on who earns income It passed on to the end
or who possess the assets. consumer on supply chain.
 Tax Type It is calculated on slab rate of It is calculated as percentage
Income on price of the Goods and
Service
Filling of Return Filling of Return is Must Filling of Return is not
under direct taxes. mandatory for consumer.
Tax import It is visible as tax payers feels It is less visible as ax payer
tax burden may not be aware of tax
amount as it is included in
price of the Goods/Service.
Scope It has narrow scope since It has broader scope since
only one tax payer is liable to every member of supply
pay of tax. chain is subjects to tax.
Rate of tax It is different for tax payer It is same for everyone.
based on income or Profits.
Transferability It is non transferable It is transferable
of tax.
Tax collection Collection of Direct taxes is Collection of Indirect Tax is
difficult as it involves easy as it included in price of
different process. the goods and service.
Nature of the This is a progressive type of This is regressive type of tax.
Tax tax.

Brief History of Indirect Taxation in India.

In India in 1944, Indirect taxes were introduced to product against British

made goods some new indirect tax were introduced by the Indian Government
after Indian’s independence, but now the GST has replaced many indirect taxes.
With the advent of Industrial Revolution in the early 1800S European
market were inundated with machine made material with clothing Arabic being
the most prominent. The British came up to choosing India as their new market.
As the British introduced machine made problem for them as their product were
costlier than Indian products. This made them to come up with idea of imposing
a tax known India. This made the price of manufactured in to come at par with
Indian goods and as increased heavy losses.
After India got Independence in 1947 funds was a major problem for the
Government. As a result Excise Duty was not abolished but an additional tax
known as ‘custom duty’ was impose on imported goods to provide protection
various sectors.
Gradually taxes were levied on consumer goods as well. The State
Government started collecting Sales tax, road tax, and Liquor taxes, will up to the
sales tax Municipal bodies introduce ochre because they bad to increase their
resource.
 This situation stood at this-The central and state Governments levied taxes
on production and sales and addition of tax at every stage of production
increased the consumer tax burden, more ever, the tax rates were quite high.
As tax on tax means cascading effect on taxation, high rate of taxes many
type of indirect taxes business couldn’t claim tax relief or credit for the taxes they
had already paid while buying Materials As a result they ended up paying more
taxes as a result they faced a working capital shortage.
For removing the corroding effect of indirect taxes, GST was (Goods and
Service Tax) was launched in the country on July 1 2017.
GST created a unified taxation system by merging ever 17 taxes in to a
single structure.
GST

State Taxes Merged Central Taxes Merged

into GST Into GST

Purchase Tax Central Excise Duty

Octroi And Entry Tax Central Sales Tax
Luxury Tax Service Tax
Entertainment Tax Central Less & Surcharges
Tax on Lottery Additional Duties of Exchange
VAT Additional duties & custom
State Less & Surcharges
Taxes on Gambling

The GST System has brought many benefits like Seamless flow of credit,
Boast to export income in reserve, eliminated cascading effect subsumed a
majority of indirect taxes, increased in consumption, reduction in cost of goods
increase logistics efficiency and the biggest advantage to achieved the ideology
of one Nation one tax.
Knowing the history of indirect tax to India is Essential in Understanding
how the current taxation system came to be.
 Structure of Indian Taxation.
The tax system in India is broadly classified into two types of taxes direct
and indirect taxes.
In India that direct and indirect taxes are levied by the central Government
and the State Governments Some Minor taxes are Also levied by the local
authorities such as Municipality and the local Government.
The Central Government levies Income tax. Corporate tax, Excise Duty,
state duty and custom duty.
The State Government levies taxes on agriculture income, Land Revenue,
Toll tax, Gift Tax, Wealth tax, Education entertainment Tax, Etc.,
Local governing bodies and municipal corporations levy property tax and
professional tax
Following image reflex the Indian Taxation System
Tax

Direct Tax Indirect Tax

Income Tax GST

Corporate Tax Excise Duty
Capital Gain Tax Custom Duty
Property Tax Stamp Duty
Gift Tax Entertainment Tax
Security Transaction Tax

(Explained in types of taxes)

 Module 2
Goods and Service Tax:-
Introduction to GST
Constitutional Framework
Orientation to CGST, SGST & IGST
Meaning & Scope of Supply
Types of Supply
Exemption from GST
GST:-
Introduction:- It is a unified tax system that re-placed multiple indirect taxes
levied and collected by both the central and state Government.
It is imposed on supply of goods and service and multi-stage destination
orientated tax on every value addition.
GST come into force from 1 July 2017. 1st July is celebrated as GST day and
it implemented after 101 amendments to the constitution of India by the
Government of India.
GST is received by the state in which the gods are concerned but not by a
state in which such gods are manufactured.
Meaning:- It is a an gods and services sold domestically for consumption.
It is a value added tax levied on most goods & service sold for domestic
consumption.
Definition:- According to the central Goods and Service Tax Act 2017. “GST is a
tax on Goods and Service with value addition at each comprehensive and
continuances chain of set of benefits from the producers or services provides
point up to the retailer’s level where only the final consumer should bear the tax.
It is a compressive indirect tax system that was introduced in Indian on 1st
July 2017, replacing a complex system of multiple indirect taxes levied by the
central and state Governments.
Constitutional Framework of GST in India.
GST Framework in India is geared by several laws, regulations,
notifications rules, and authority or councils.
Therefore in the matter of taxation both union and the state Government
framework even the legislation on areas of taxation.
Following are the some of the constitutional framework working for GST
those are.
1. GST Act
2. GST council
3. GST Slab Rate
4. ITC
5. GSTIN
 6. GSTN
7. Threshold limit
8. Composition Scheme
9. E-Way Bill
10. GST returns
11. GST Audits
12. HSN Code
1. GST Act:- The Main legal framework for GST in India includes the following
data.
a) CGST Act:- Central Goods & Service Tax
b) IGST Act:- Integrate Goods & Service Tax
c) SGST Act:- State Goods & Service Tax
d) UTGST Act:- United Territory Goods & Service Tax
CGST Act:- “Governs the Central portion of GST and it is applicable to the
supply of Goods and service within a state or union territory.
IGST Act:- It is governs and regulates the interstate supply of Goods &
Service. This tax is shared between central and State Government.
SGST Act:- Each State and Union territory has is own SGST Act Which
Governs the State Portion of GST.
UTGST Act:- It is Similar to the SGST Act but applies to Union territory of
Chandigarh, Ladakh, Daman & Diu, Dadra and Nagar Haveli, Andaman & Nicobar
island where there is no separate legislation.
2. GST Council:- It is a constitutional body and joint foremen of control and state
Government for state Government for Making recommendations to the union and
state Government and service Tax.
It comprise with finance ministers of control state Government and Union
territory.
3. GST Slab Rates:- The GST rate list comprises 5 Stars namely 0%, 5%, 12%,
18% and 28% GST counsels has assigned each goods and services to one of these
5 tax slab.
0% is for Essential Commodities.
5% is for Household necessities
12% is for Basic necessities
18% is for Standard Goods
28% is for luxury goods
4. ITC (Input Tax Credit):- It refers to the tax already paid by a person at the
time of purchase of goods or service and which is available as duration from tax
payable.
5. GSTIN:- It is a 15 digit alpha numerical numbers allocated to registered person
who involves in supply of goods and Services through which only his business
entity identifies.
For Eg:- B S channabasappa & Son’s GSTIN is 29AADFB0361L1ZH
6. GSTN (Goods and Service Tax Network):- It is a backbone system of GST, it
manages the GST registration filling to return issuance of GSTIN etc.,
7. Threshold Limit:- It refers to the maximum limit of aggregate turnover in
financial year beyond which a person is required to get registration under GST.
For Business Operating in must state the threshold limit for GST
registration is annual over of the Rs 40 Lakh (for supply of goods) and Rs 20
Lakh (for supply of Services).
8. Composition Scheme:- This Scheme is opted by any tax payer whose turnover
is less then Rs 1.50 Crore.
It is offered to small business through which they two benefits reduce
paper and Compliance and lower tax liability.
9. E-Way Bill (Electronic Way Bill):- It is a legal documents used for the
movement of goods from one place to another.
It is required if government values is more than 50,000/-
10. GST Returns:- It is a decrement that will contain all the details of sales,
purchase, tax on sales (Output tax) and tax paid on purchase (Input tax).
11. GST Audit:- It is a systematic examination of books of accounts undertaken
by the tax payers which involves total sales, purchase.
12. HSN No (Harmonized System of Nomenclature):- It is4,6,8 digit uniform
code, used for the systematic classification of goods all over the world.
Eg:- Milk HSN code is 04011010. 1st 2 digit defines chapter, next 4 digit headings
and last 2 digit defines subheadings.
Orientation to CGST, SGST & IGST
GST law introduce just one tax with there components CGST, SGST & IGST
When the supply of goods and service happens within a state also called
intra State, transaction, then both the CGST and SGST will be collected.
Where as if the supply of goods or Services happens between the states
also called inter-state transactions, then only IGST will be collected.
IGST will be shared of SGST are governed by the respective states SGST are
governed by the respective states SGST Act 2017.
Levy and collection of SGST are governed by the respective states Act 2017.
Levy collection of CGST are governed by the central Government through
CGST Act 2017.
 Module 3
Supply
Introduction:-
Supply is very important event in GST low as the levy and collection of tax
is GST based on the happening of supply and it is taxable event under GST.
Therefore supply will hold the greatest significance and shall be on important
event in determining the taxability of all transaction.
Meaning:-
Supply of Goods and service is the taxable event to charge GST and it
includes sale disposal, Transfer, exchange, License, Barter rental made or agreed
to be made for a consideration by a person in the course of business.
Dictionary meaning of Above terms.
Sale:- Transferring of Property for consideration.
Transfer:- Passing of goods.
License:- Permission granted by corporate to exercise certain privileges.
Rental:- Periodical Payment for the use of another property.
Disposal:- To pass or into the control of Someone else.
Batter:- Exchange of one commodity for another without use of money.
Scope of Supply/Elements/Prerequisites/Essentials or conditions for
Supply
In order to constitute a supply the following elements are required to be
satisfied.
1. Supply should be made for a consideration.
2. Supply should be made on only goods or service or both.
3. Supply should be made in the course of business.
4. Supply should be made by a taxable person.
5. Supply should be made within taxable territory.
6. Supply should be taxable supply.
Scope of Supply:-
1. Supply made on gods or service or Both:- Supply considerate as a supply
when it is made n goods or service or both.
2. Supply made for consideration:- Supply of goods or service must be
made for consideration under CGST Act 2017 it can be in money or kind.
Any subsidy by Government deposit given in respect of the supply
shall not be considered as a supply.
Batter of goods or service constitute a supply of goods or service.
3. Supply in the course of Business:- GST is essentially tax only on
commercial transactional. Hence only those supplies that are in the course
of business qualify as a supply under GST.
 4. Supply made by a taxable person:- A Supply to attract GST Should be
made by a taxable person Taxable Person is a person who is registered
under GST Even unregistered person who is liable to be registered a
person not liable to be registered but has taken voluntary registration and
got himself registered also a taxable person.
5. Supply Should be made within taxable territory:- For a supply to attract
GST the Supply must be in Whole of India. Inter-State and Intra State
Supply is treated as a supply. Inter State supply is where location of the
suppliers and place of supply are to different states or union territory. Intra
State supply is where the location and place of Supply are is the same state
or union territory.
6. Supply Should be made with taxable supply:- For a supply to attract GST
the supply must be taxable It means supply which is livable to tax under
GST.
Other Then above condition, other transactions comes under the scope of
supply, Those are.
1. Self Supplies (Inter State) i.e., Stock transfers considered as a supply.
2. Transfer of little/possession (Hire purchase) also termed a supply.
3. Supply made for promoting of Business is termed as a supply.
4. At dealer permanently transfer on Ac from his stock to his personal use at
his residence in termed as a supply.
5. Services as club or association to its members will be treated as a supply.
6. Transfer of right to use of goods shall be treated as a supply of services.
7. Work contracts, catering scope services will be traced as supply of goods.
8. Supply of software (Development, Designing Programming, atomization,
adaption up-gradation, implementation of information shall be treated as
supply.
9. Import of service without consideration treated as a supply under Schedule
1.
10. Taxable, exempted supplies Inter State, Intra State, Supplies, composite &
mixes supplies, Zero rated supplies are also treated as a supply.
Types of Supply
Under GST supply of goods and / service can be classified on the basis of
taxability nature and Jurisdiction of supply. These are further classified into
different types.
 Types of
Supply

Based on Based on Based on

Taxability Nature Jurisdiction

1. Composite Supply
Taxable Non-Taxable
2. Mixed Supply
Supply Supply

1. Intra State Supply

1. Regular Taxable Supply 1. Exempted Supply 2. Inter State Supply
2. Nil Rated Supply 2. No GST Supply
3. Zero rated Supply
Taxable Supply:-
There refer to supply of goods and service that are taxable under GST.
Registered tax payers can claim refunds on tax paid during purchase.
Under taxable supply following type of supplies are there.
1. Regular taxable supply:- Wherever supply of goods or service which attract a
GST rate greater than 0% (i.e., 5%, 12%, 18%, and 28% of GST) within India is
called as a regular taxable supply.
2. Nil rated supplies:- Whenever supply of goods and service which attract 0%
of GST by default such supplies are know as nil rated supplies.
Input tax cannot be claimed on such supplies it includes grains salt, Jiggery,
milk, card etc.
This supply includes items which are used for everyday purchase.
3. Zero rated supplies:- Supply of Goods or service to a SEZ (Special Economic
Zone) or demand exports, Which attract 0% GST, even through the same would
attract a GST greater than 0% (i.e., 5%, 12%, 18%, & 28%) when sold within
India such supplies are deemed as zero rated supplies.
Non Taxable Supplies:- Supply of goods or service or both which is not taxed
under GST Act.
1. Exempted Supplies:- Exempted supplies are goods and services which are not
subject to tax even through they are under GST law.
Tax payer can’t claim input tax credit on exchange supplies.
Eg:- Vegetables. Fruits, Breads, fish, Meats etc.,
2. Non GST Supplies:- Supplies which don’t come under the scope of GSt or
supplies which are taxed under other low i.e., custom and excise low.