INDIRECT TAXES

Charge of GST
Levy and collection of GST in India

Extent and commencement Levy and collection of Composition Levy

of CGST Act/ UTGST Act/ CGST/IGST
SGST Act/IGST Act
➥ Relevant Definitions
Sr No. Name Definitions
1 Exempt Supply ‣ supply of any goods or services or both
‣ attracting nil rate of tax or which may be wholly exempt from tax
‣ and includes non-taxable supply

2 Aggregate T/o All Taxable Supplies [Excluding goods purchased on RCM basis]
+ Exempt Supplies [Do include non-taxable supplies too]
+ Exports of goods or services or both
+ Inter-State supplies of persons having the same Permanent Account
- CGST/SGST/UTGST/ITGST
- Cess
- Int. on discount on deposits, loans & advances
Aggregate T/o

3 Reverse Charge ‣ Liability to pay Tax

‣ By the recipient of supply of G/S or both
‣ Instead of supplier
 Intra-State Supply Inter-State Supply
When the location of supplier and When the location of supplier and
the place of supply of G/S are in the the place of supply of G/s are in the
same State/UT different States/UT

» Non-Taxable Supplies:
1 Petroleum Crude
2 High Speed Diesel
3 Petrol
4 Natural Gas
5 Aviation Turbine Fuel
 Sec 9: LEVY & COLLECTION OF CGST & IGST
Section Particulars
9(1) The Central Goods and Services Tax (CGST) will be charged on all intra-state supplies
of goods or services, except for alcoholic beverages intended for human
consumption. The value of the tax will be determined based on Section 15 and
cannot exceed 20%, as recommended by the Council and notified by the government.
The taxable person must pay the CGST in the prescribed manner.

9(2) The government will impose a main tax on petroleum crude, high speed diesel,
petrol, natural gas, and aviation turbine fuel based on recommendations from the
Council. The tax will start on a date determined by the government's notification. In
other words, tax is not levied on them currently.

9(3) RCM [Specified categories of supply of G/S or both]

9(4) RCM [Specified Registered Persons receiving supply from Unreg. Person]

9(5) The Government can specify categories of services for which an electronic commerce
operator must pay the tax on intra-State supplies, based on the Council's
recommendations. The operator will be liable for paying the tax as if they were the
supplier of those services and will be subject to all the provisions of the Act.
- If E-Co operator doesn't have a physical presence in a taxable territory, any person
representing them in that territory is responsible for paying taxes.
- If E-Co operator doesn't have a physical presence and a representative in a taxable
territory, they must appoint someone in that territory to pay taxes on their behalf.
 Reverse Charge Mechanism [RCM]

Tax will be paid on RCM basis, in following cases:

➢ Supply of G/S or both notified by the Govt.
➢ Unregistered suppliers supplying certain goods or services to specific registered
persons recommended by the GST Council and notified by the Government.
 Goods and services notified under reverse charge mechanism u/s 9(3)
A. Goods - Peeled Cashewnuts
- Bidi Leaves
- Tobacco Leaves
- Raw Cotton (when supplied by an agriculturist to any registered person)
- Supply of Lottery (when supplied by State Government, Union Territory or any local authority to lottery
- distributor or selling agent)
- Silk Yarn (when supplied by manufacturer of silk yarn to any registered person)
- Old & Used Vehicles
- Seized and confiscated goods
- Waste & Scrap
How to remember?
"Crazy Bats Take Raw Silk, Old Seized Waste."
· Crazy: Cashewnuts
· Bats: Bidi Leaves
· Take: Tobacco Leaves
· Raw: Raw Cotton
· Silk: Silk Yarn
· Old: Old & Used Vehicles
· Seized: Seized and confiscated goods
· Waste: Waste & Scrap
· Remember "Lottery" Separately

B Services CLICK HERE

 Electronic Commerce Operator (ECO) is any person who owns/operates/manages an electronic platform
for supply of goods or services or both.

ECO's electronic portal displays products and services, which may or may not be supplied by ECO itself. If a consumer
orders a product or service, the actual supplier provides it, and ECO collects payment from the consumer, deducts
commission, and pays the remaining amount to the supplier.

This is the list of services supplied through ECO, by Govt:

⁃ Transportation of Passengers by:
· Radio-Taxi
· Motorcar
· Maxi-Cab
· Motorcycle etc
Classification of Goods Classification of Services
Section Name
5 Construction Services
6 Distributive Trade Services; Accommodation,
Food and Beverage Service; Transport Services;
Gas and Electricity Distribution Services
7 Financial and related services; real estate
services; and rental and leasing services
8 Business and Production Services
9 Community, social and personal services and
other miscellaneous services
 GST Rates (in percentages)
Goods Services
STGST UTGST ITGST STGST UTGST ITGST
0.125 0.25 0.75 1.5
1.5 3 2.5 5
2.5 ➟ 5 3.75 ➟ 7.5
6 12 6 12
9 18 9 18
14 28 14 28
 Aggregate Turnover Turnover in State/UT
"Aggregate Turnover" shall include turnover earned before It means the aggregate value of:
being liable for registration too. All taxable supplies [Excluding RCM]
E.g.: Mr. X becomes liable for registration on 01-06-2022 as + Exempt Supplies [Include Non-Taxable supplies too]
his T/o on that date was Rs. 40 Lakhs. + Export of G/S
T/o for the remaining year i.e. 02-06-2022 to 31-03-2023 + Inter-State Supplies [With same PAN]
was Rs 1.5 Crores. - CGST/SGST/ITGST/UTGST
∴ Aggregate T/o = 40L + 1.5 Crores - Cess
= 1.9 Crores - Int. on discount on deposits, loans & advances
Aggregate T/o

But it doesn't include the value of exempt supply of While calculating the T/o in State/UT in the year in which
services provided by way of extending deposits, loans or hebecame liable to register, we must exclude the T/o
advances is so for as the consideration is represented by threshold limits.
way of interest or discount. E.g.: Mrs. Y's T/o as on 25-05-2022 was Rs. 40 Lakhs and
therefore he became liable to register. Her T/o from 26-05-
2022 to 31-03-2023 was Rs. 70 Lakhs.
∴ Aggregate T/o = 40L + 70L = Rs 1.1 Crore
∴ T/o in State/UT = Rs 70 L

↓ ↓
Aggregate T/o of Reg. Person is considered to T/o in State/UT of Reg. Person is considered to
check the eligibility to opt Composition Scheme pay tax under Composition Scheme
 Section 10 - Composition Levy
Section Particulars
10(1) Registered Person can opt for Composition Levy if his Aggregate T/o doesn't exceed:
⇒ Upto In which State?
➥ Rs 75 Lakhs Manipur
Mizoram
Tripura
Special
Nagaland
Category
Arunachal Pradesh
States
Meghalaya
Sikkim
Uttarakhand
➥ Rs 1.5 Crores All other States/UTs

Category of Suppliers Eligible CGST SGST Total Basis for Calculation

i) Manufacturers 0.50% 0.50% 1% Turnover in State/UT [Taxable + Exempt + Nil Rate]
Turnover of taxable Supply of Only taxable supply
ii) Trading 0.50% 0.50% 1%
G/S in State/UT of G/S
iii) Catering & Restaurant Services 2.50% 2.50% 5% Turnover in State/UT [Taxable + Exempt + Nil Rate]
Proviso to Above mention category may supply services of value upto:
10(1) a) 10% of T/o in State/UT in previous F.Y. ; or
b) Rs 5,00,000
w.e.higher
10(2) Conditions to be eligible for Sec 10(1) -
» Doesn't provide any services other than catering and restaurant services [Subject to Proviso to 10(1)]
» Not engaged in supply of G/S outside the ambit of this Act
» Doesn't make inter-state supply of G/S
» Can't make any supply through E-Commerce Operator
» Neither a CTP nor NRTP
» Not a manufacturer of notified goods by Indian Govt.
[∵ Notified Goods = Ice Cream/ Tobacco/ Pan Masala/ Aerated Waters]
 Section Particulars
10(2A) This section is Pre-dominantly for Service providers but they have to satisfy both of the following conidtions:
1) T/o not exceeding Rs. 50 lakhs
2) Person is not eligible for composition scheme under 10(1)/(2)

Eligibility:
» Not engaged in supply of G/S outside the ambit of this Act
» Doesn't make inter-state supply of G/S
» Can't make any supply through E-Commerce Operator
» Neither a CTP or NRTP
» Not a manufacturer of notified goods by Indian Govt.
[∵ Notified Goods = Ice Cream/ Tobacco/ Pan Masala/ Aerated Waters]
Category of Suppliers Eligible CGST SGST Total Basis for Calculation
Person ineligible u/s 10(1)/(2) but T/o of taxable Supply of G/s
i) 0.50% 0.50% 1% [Taxable + Exempt + Nil Rate]
eligible for 10(2A) in State/UT
Section Particulars
If a registered person's total T/o in a financial year goes beyond the limit of Rs 50L/75L/1.5 Cr, the
10(3)
option they chose in either of those subsections will lapse
10(4) Person opting for Composition Scheme is not allowed to collect tax from recipients
If the proper officer suspects that a taxpayer paid tax under sub-section (1) or (2A) despite being
10(5) ineligible to do so, they'll face a penalty. Additionally, they'll be liable for any other taxes due
under this Act, and sections 73 or 74 will apply to determine the penalty and tax owed.

Note: There is no restriction on composition supplier to receive inter-State inward supplies of goods or services.
 Conditions & Restrictions for Composition Levy [Rule 5]
Person opting for composition levy must comply with the following conditions:
• He was not engaged in the manufacture of goods as notified under section 10(2)(e), during the
preceding FY.
• He shall pay tax under section 9(3)/9(4) (reverse charge) on inward supply of goods or services
or both.
• He is neither a casual taxable person nor a non-resident taxable person
• He shall mention the words “composition taxable person, not eligible to collect tax on supplies”
at the top of the bill of supply issued by him; and
• He shall mention the words “composition taxable person” on every notice or signboard
displayed at a prominent place at his principal place of business and at every additional place
or places of business.
• Further, where the goods Held in stock by him are liable to be taxed under reverse charge
under section 9(4), the tax thereon has been paid under reverse charge under section 9(4).

Intimation of opting for composition levy [Rules 3 & 4]

(i) Intimation by person applying for registration:
➢ If an unregistered person applies for registration, they can choose to pay tax under composition levy in
Form GST REG-01. This will be treated as a notice to pay tax under composition levy, but only after
registration is granted. The option will be effective from the date of registration.

(ii) Intimation by a registered person:

➢ A registered person choosing to pay tax via composition levy must file an intimation on the GST
Common Portal [www.gst.gov.in] before the start of the relevant financial year.
Questions Answers:

1) Mr. A, a cloth manufacturer, is an unregistered person in Delhi. On 1st May, 2022, his turnover was Rs 40L and hence he became
liable to be registered and got himself registered on 25th May, 2022. As on 1st December, 2022, his T/o was
a) Rs 1 Crores; b) Rs 1.4 Crores. Hence, Mr. A believes that as his T/o is less than Rs 1.5 Crores, he is eligible to opt Composition
Scheme.Determine whether his contention is true or not in both cases.

Ans: a) T/o = Rs 1 Crores b) T/o = Rs 1.4 Crores

Here, his Aggregate T/o is Here, his Aggregate T/o is

= Rs 40 L + Rs 1 Cr = Rs 40 L + Rs 1.4 Crs
= Rs 1.4 Crs = Rs 1.8 Crs
∴ He is eligible to opt Composition Scheme, as his ∴ He is not eligible to opt composition scheme as his Aggregate
Aggregate T/o is less than Rs 1.5 Crores. T/o is more than Rs 1.5 crores.

2) Chanchal started providing beauty and grooming services and inaugurated “Care & Care Beauty Centre” in Janak Puri, Delhi on
1st April, 2022. She opted to pay tax under section 10(2A) of the CGST Act, 2017 in the said financial year. The aggregate turnover
of Care & Care Beauty Centre for the quarter ending 30th June, 2022 was ₹20 lakhs. Further, for the half year ending 30th
September, 2022, the turnover reached ₹50 lakhs. Care & Care Beauty Centre recorded a rapid growth and the turnover reached
₹70 lakh by the end of October, 2022. Determine the total tax liability of Care & Care Beauty Centre by the end of October, 2022.

Care & Care Beauty Centre wishes to opt for composition scheme under section 10(1) from the next financial year. You are
required to advise it whether it can do so.

Note: Rate of GST applicable on such services is 18%.

Ans: Cumulative Turnover for the
Period Tax rate Tax Liablity
Turnover Period
Since the turnover did not exceed ₹20
1st Quarter 20L 20L lakhs, there's no need to obtain -
registration. Hence, no tax is to be paid.
2nd Quarter 50L 30L 6% 1,80,000
October, 2022 70L 20L 18% 3,60,000
TOTAL 5,40,000
 3) Mr. X is an Car seller who also gave after sale services. His turnover in preceding F.Y. was Rs 1.23
Crores out of which the turnover from after sale services was Rs 14 Lakhs. He wishes to opt
Composition Scheme in this current F.Y. Is his decision viable?
Ans: We will determine whether he is eligible for composition scheme u/s 10(1) :

As he is providing goods and services both;

∴ Value of services, Mr. X can provide
a) 10% of Rs 1.23 Crores = Rs 12,30,000
b) Rs 5,00,000
➝ w.e.h = Rs 12,30,000

Mr. X is allowed to do supply of services with value upto Rs 12,30,000 only but as he has supplied
services worth Rs 14,00,000, he becomes ineligible to opt composition scheme u/s 10(1).

We need to check whether Mr. X is eligible to opt composition scheme u/s 10(2A)
➝ Max T/o to opt composition scheme u/s 10(2A) = Rs 50,00,000
➝ Mr. X's T/o = Rs 1.23 Crores

∴ Mr. X is not eligible to opt composition scheme under both sections i.e. 10(1)/(2A)