Indirect Taxes

By
Akash Gupta
Assistant Professor, Department of BMS, HVPS Ramniranjan Jhunjhunwala College (Autonomous)
M.Com, NET, JRF, MH-SET, PGDHE, CMA Inter
 Table of Contents
No. Chapters Page No.

1 Introduction to GST 2

2 Levy & Collection of GST 12

3 Composite & Mix Supply 16

4 Exemption under GST 19

5 Registration under GST 24

6 Time of Supply 38

7 Place of Supply 44

8 Value of Supply 51

9 Payment under GST 58

10 Documents (Debit/Credit Notes) 64

For Updates under GST: https://cbic-gst.gov.in/CGST-bill-e.html#

By Akash Gupta 1
 CHAPTER 1: INTRODUCTION TO GST

Introduction:
Power to levy (impose) any tax is derived from the Constitution of India. As per article 265
of The Constitution of India no tax shall be imposed or collected except by the authority of any
Law.
Constitution (101st amendment) Act, 2016 was enacted on 8.09.2016 for the following
significant amendments.
Article 279A of the Constitution of India empowers the president of India to Constitute Goods
and Service tax Council (GST Council) under the chairmanship of the Union Finance Minister
to recommend about (Article 279A):
● the GST rate
● Valuation and other fundamental rules
● Exemption
● Future changes
● Return
● Registration
Article 246 of Constitution: the Constitution deals with the division of power between

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What is Indirect Tax?
1. An Indirect tax is one in which the Impact and Incidence is not on the same person.
2. An Indirect tax is levied on goods or services rather than on an individual or a company.
One example of an Indirect tax is the GST, customers pay for items they purchase for their
personal use.
Difference between Direct and Indirect Tax:

Context Direct Tax Indirect Tax

1. Imposed on Income and profits All the goods and services

2. Who pays Individuals and businesses End-consumers

3. How much Depends on income and profits Same for everyone

4. Transferability Not transferable Transferable

5. Tax Evasion Possible Not possible

6. Nature Progressive Regressive

7. Collections Complex Convenient

8. Common Income tax and securities GST, excise duty, an

examples transaction tax

Background:
Goods and Service Tax (GST) GST is an indirect tax throughout India to replace taxes levied by
the Central and State Government.
The very concept of the GST was initially adopted by France and over 160 countries have adopted
and implemented GST.
It was brought in by the 101st amendment to the Constitution of India, following the passage of
the Constitution 122nd Amendment Bill.
On 1st July 2017 GST took force, having its headquarters located at Delhi.
The GST is governed by the GST council and its chairman is Union Finance Minister of India and
it is applicable to all over India including the state of Jammu and Kashmir.
According to the GST Act, the goods and services are taxed at the rate of 0%, 5%, 12%, 18% and
28% with cess on luxury goods and 3% special rate on precious metals such as gold.

By Akash Gupta 3
Goods and Services Tax:
GST means “Any tax on supply of Goods or Services or both except taxes on Supply of the
Alcoholic Liquor for human Consumption.
GST is a Broad-based Value added tax
GST is a Destination based tax
GST is technically paid by suppliers but it is actually borne by consumers.
GST is collected at multiple stage of production and distribution of goods and services in which
taxes paid on inputs are allowed as set off against taxes payable on output.
GST is a tax on the consumption of products from business sources, and not on personal or hobby
activities.
Under GST, input tax credit is provided throughout the value chain for creditable acquisition. It is
known as ‘One Country One Tax.’

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Taxes imposed Pre-GST regime:

State Value Added Tax (VAT), Central Excise Tax, Services Tax, Central Sales Tax, etc are all
replaced by the single entity called GST (Goods and Services Tax).
Value Added Tax was mainly for the taxes at State level across all states in India. Now on
introduction of GST, VAT is replaced by State GST or SGST and the State VAT department will
be simply converted to SGST Departments.
Similarly, Central Excise Tax that is the central tax for the goods and services are now replaced
with Central GST or CGST.

Types of GST Applicable:

Dual GST Model:

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Removal of Cascading Effect due to Implementation of GST:

Benefit of GST:

Powers to Tax GST: Constitutional Provisions:

Goods & Services Tax Council is a constitutional body for making recommendations to the Union
and State Government on issues related to Goods and Service Tax.

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Common Portal and GST Network
A common portal or platform is needed which could act as a clearing house and verify the claims
and inform the respective government to transfer the funds. This is possible with the help of a
strong IT infrastructure. Accordingly Government has established common GST Electronic
Portal (www.gst.gov.in), a website managed by Goods and Services Network (GSTN) for the tax
payer and common IT infrastructure for Central and States. Primarily, GSTN provides three
services to taxpayers.
(a) Facilitating Registration.
(b) Forwarding the returns to Central and States authorities.
(c) Computation and settlement IGST
(d) Matching of tax payment details with banking network.
(e) Providing analysis of taxpayers’ profile.

Definitions under GST:

Need for distinction between Goods and Services
• The taxable event under GST is supply of “Goods” and “Services”. Hence it is important to
understand the meaning of both these terms.
• Different Different rate of taxes for supply of goods and supply of services.

Goods S. 2(52)
“Goods’’ means every kind of movable property other than money and securities but includes
actionable claims, 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.
Goods include:
• Every kind of movable property
• Actionable claims
• 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.
A goods does not include: Money and Securities
Actionable Claim examples are
• Claims for arrear of rent
• Right to claim PF
• Lottery Ticket is actionable claims
• Recharge Recharge coupon which is advance advance receipt receipt of money for
providing service in future.
• Note: Only lottery, betting and gambling shall be treated as supplies under the GST regime. All
the other actionable claims shall not be supplies and therefore GST is not applicable on it.

Services S. 2(102)
“Services’’ : means 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;

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• Explanation 1: Services include transactions in money but does not include money and
securities. Meaning thereby that if transaction is done without any seprate charge/consideration no
service ;
• Explanation 2: But transaction in money 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 then it is service.
Meaning of Transaction in Money:
• Example-1: A demand draft (DD) is issued by the bank on deposit of cash. This is transaction in
money. This cannot be subject to GST. But if any commission is charged for making of such DD
then it will be considered as “conversion charge” and such charges will be liable to GST as per
explanation 2.
• Example-2: A person goes to the bank for exchange of note of Rs. 2000 into 20 nos. of notes of
Rs. 100. Bank does not charged anything for change of denomination of Rs. 2000 note into Rs.
100 notes. This can’t be considered as transaction in money because nothing is charge for
transaction in money or for its conversion and therefore not a service.

India S. 2(56)

Person S. 2(84)
“Person” includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm;
(e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether
incorporated or not, in India or outside India; (g) any corporation established by or under any
Central Act, State Act or Provincial Act or a Government company company as defined defined
in clause (45) of section section 2 of the Companies Act, 2013; (h) any body corporate incorporated
by or under the laws of a country outside India; (i) a co- operative society registered under any law
relating to co- operative societies; (j) a local authority; (k) Central Government or a State
Government; (l) society as defined under the Societies Registration Act, 1860; (m) trust; and (n)
every artificial juridical person, not falling within any of the above.

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 Business S. 2(7)

Taxable Person S. 2(107)

A 'taxable person' under GST, is a person who carries on any business at any place in India and
who is registered or required to be registered under the GST Act.

Recipient S. 2(93)
“recipient” of supply of goods or services or both“ means-
(a) where a consideration is payable for the supply of goods or services or both, the person who is
liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are
delivered delivered or made available, or to whom possession or use of the goods is given or made
available; and
(c) where no consideration is payable for the supply of a service, the person to whom the service
is rendered,
and any reference to a person to whom a supply is made shall be construed as a reference to the
recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation
to the goods or services or both supplied.

Consideration S. 2(31)
Consideration in relation to the supply of goods or services includes
• (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, whether by the recipient or by any
other person but shall not include any subsidy given by the Central Government or a State
Government;

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• (b) the monetary value of any act or forbearance, whether or not voluntary, in respect of, in
response to, or for the inducement of, the supply of goods or services, 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 the deposit as
consideration for the said supply.
Examples
• A restaurateur offered ‘free’ meals to drivers of buses carrying passengers as an inducement to
bring potential customers to his business premise. Since the meals were not given to drivers of
empty buses, there is a direct link between the act of bringing passengers to the food outlet and the
provision of the free meals. The consideration here is the free meals provided.
• An artist performing on a street does an activity without consideration even though passersby
may drop some coins in his bowl kept after feeling either rejoiced or merely out of compassion.
They are, however, under no obligation to pay any amount for listening to him nor have they
engaged him for his services. On the other hand if the same person is called to perform on payment
of an amount of money then the performance becomes an activity for consideration.

Electronic commerce operator S. 2(45)

“Electronic commerce operator” means any person who owns, operates or manages a digital or
electronic facility or platform for electronic commerce – section 2(45). Compulsory Registration
under GST. Examples of E-Commerce: Booking travel tickets or hotel accommodation; buying
online books, clothes, TV, mobiles, electronic hardware/ software; getting or sharing information
and diverse other online business transactions and customer services etc.

Supplier S. 2(105)
“supplier” in relation to any goods or services or both, shall mean the person supplying the said
goods or services or both and shall include an agent acting as such on behalf of such supplier in
relation to the goods or services services or both supplied supplied.
• Not necessarily taxable person or registered person
• Agents

Concept of Supply:
Supply (Sec. 7): Transactions will be covered under the meaning of Supply only if below
conditions are fulfilled.
Supply includes sale, transfer, exchange, barter, license, rental, lease and disposal

Any of this transactions undertaken by person in Course or Furtherance of Business

For Consideration.
Examples:
Mr. A buys a table for Rs.10,000 for his personal use and sells it off after 10 months of use to a
dealer. This is not considered as supply under CGST as this is not done by Mr A for the furtherance
of business
Mrs. B provides free coaching to neighboring students as a hobby. This is not considered as supply
as this act is not performed for a consideration.

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However, as specified in Schedule I, Schedule II & Schedule III.
Schedule I of GST Act, certain activities are considered as supply even if it is made without
consideration.
For e.g. Gifts costing ₹50,000 or more.

Example/Illustration 1:
Import of Services from Unrelated Person for
1. Personal Consumption without consideration : Yes, It's deemed as Supply
2. Business purpose with consideration: Yes, it's deemed as supply
3. Personal consumption with consideration: Yes, It's deemed as Supply
4. Business without consideration: Yes, It's deemed as Supply
Example/Illustration 2:
Import of Services from Relatives for
1. Personal Consumption without consideration : No, It's not deemed as Supply
2. Business purpose with consideration: Yes, it's deemed as Supply
3. Personal consumption with consideration: Yes, It's deemed as Supply
4. Business without consideration: Yes, It's deemed as Supply

Schedule II of GST Act, Activities considered as a supply of goods or Services.

1. Any Transfer of Title in Goods (e.g. free samples) : It's Supply of Goods.
2. Any Transfer of right in Goods without transfer of title: It's Supply of Services.
3. Transfer of title under forward contract (e.g. Hire Purchase, Installment System): It's
Supply of Goods.
4. Any Lease, Tenancy, License, to occupy land: It's Supply of Services.
5. Job Work (Cleaning, Painting, etc): It's Supply of Services.
6. Business Goods put to non business use: It's Supply of Services.

Schedule III of GST Act, Activities or transactions treated neither as the sale of goods nor sale
of services.
Example/Illustration 3:
1. Services by an employee to employer.
2. Services by Court Services
3. Services by MP, MLA, etc.
4. Services by persons holding Constitutional Post (UPSC, etc).
5. Services by Chairman, Director, Member of Government Bodies, etc.
6. Services of Funeral body
7. Sale of Land.
8. Actionable Claims.

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 CHAPTER 2: LEVY & COLLECTION OF GST

Introduction:
Section 9 of CGST Act/SGST Act and Section 5 of IGST Act are the Charging Sections for the purposes
of levy of GST.
CGST and SGST shall be levied on all intra-state supplies of goods and/or services and IGST shall be levied
on all inter-state supplies of goods and/or services respectively.
Levy and collection as per CGST Act, 2017:
U/s 9(1) of CGST Act, 2017 there shall be levied a tax – Called the Central Goods and Services
Tax(CGST);
● On all the intra-state supplies of goods or services or both, except on supply of alcoholic liquor for
human consumption;
● On the value determined u/s 15; and At such a rate (maximum 20%,) as notified by the Central
Government on recommendation of GST Council; and Collected in such a manner as may be
prescribed; It means maximum GST rate not exceeding 40% (i.e. CGST 20% and SGST 20%) on
all intra-state supplies of goods or services;
● and Shall be paid by the taxable person.
U/s 9(2) of CGST Act 2017, the CGST of following supply shall be levied with the effect from such date
as notified by the Central Government on recommendation of GST Council: Petroleum crude, High speed
diesel, Motor spirit (commonly known as petrol), Natural gas, Aviation turbine fuel.

By Akash Gupta 12
Person Liable to Pay Tax:

Example of Goods Or Services on which GST levies on RCM basis:

Goods: Cashew Nuts, Bidi Wrapper Leaves (Tendu), Supply of Lottery, etc.
Services: Legal Services to Business, Transfer of permitting use of copyright, etc.

How GST Reaches to the Hand of Government?

By Akash Gupta 13
Four Tier Rate Structure:
The Rare structure are:
1. Nil Rate (0%)
2. Lower Rate (Essential Items) (5%)
3. Standard Rate (Basic Necessities & RNR) (12/18%)
4. Higher Rate (Demerit/Luxury Items) (28%)
Special Rates 0.25%, 3% for Gems, Jewellery, etcc.

Models of GST Levy:

Illustration 1
Mr. A supplies goods of Rs. 500000 to Mr. B. GST rate applicable on such supply is 18%.
Compute: 1) Total amount charge by Mr. A in Tax Invoice. 2) Who is liable to pay GST to Government

Illustration 2
Mr. Benny, Bangalore supplies goods of Rs. 800000 to Mr. Anil, Noida. GST rate applicable on such supply
is 12%. Compute:
1) Total amount charge by Mr. Benny in Tax Invoice.
2) Who is liable to pay GST to Government
3) Classify the transaction into Inter Or Intra State Supply.

Illustration 3
Mr. Pintu supplies goods of Rs. 900000 to Mr. Bunty. GST rate applicable on such supply is 28%.
Compute:
1) Total amount charge by Mr. Pintu in Tax Invoice incase of Interstate Supply

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2) Total amount charge by Mr. Pintu in Tax Invoice incase of Intrastate Supply
3) Who is liable to pay GST to Government

Illustration 4
Mr. P (unregistered) supplies goods of Rs. 200000 to Mr. Q (registered). GST rate applicable on such supply
is 5%.
Compute: 1) GST Amount in case it's interstate supply 2) Who is liable to pay GST to Government
Illustration 5
Mr. Daniel,Mumbai supplies goods of Rs. 800000 to Mr. Grey, Pune. GST rate applicable on such supply
is 12%. Compute:
1) Total amount charge by Mr. Daniel in Tax Invoice.
2) Who is liable to pay GST to Government
3) Classify the transaction into Inter Or Intra State Supply.

Students Activity/Assignments:
Activity 1
Find out GST rates applicable to the Hospitality Industry for different Goods Or Services provided by them.
Activity 2
Find out GST rates applicable to the Banking Industry for different Goods Or Services provided by them.
Activity 3
Find out GST rates applicable to the Insurance Industry for different Goods Or Services provided by them.
Activity 4
Find out GST rates applicable to the Entertainment Industry for different Goods Or Services provided by
them.
Activity 5
Find out GST rates applicable to the Textile Industry for different Goods Or Services provided by them.
Activity 6
Find out GST rates applicable to the Travel and Tourism sector for different Goods Or Services provided
by them.

By Akash Gupta 15
 CHAPTER 3: COMPOSITE SUPPLY & MIX SUPPLY

What is composite supply under GST?

A composite supply is two or more goods or services that are only sold as a set and cannot be sold
individually.
Every composite supply has a principal supply, which is the main product or service that the buyer primarily
wants. The rest of the supply is made up of supporting elements that add value to the principal supply.
A composite supply is taxed at the GST rate of the principal supply.
Example 1: A gift-wrapped box of chocolates. Here, the chocolates are the principal supply, while the box,
gift wrapper, message card and gift wrapping service offered by the salesperson are supporting elements
that cannot be supplied individually without the chocolates. This is a composite supply, and its GST rate
will be the same as the rate for the chocolates.
Example 2: A dealer sells a brand-new vehicle along with registration, insurance, a tool kit and first aid
kit, and 4 free maintenance services. This is a composite supply, because vehicle insurance, registration and
free maintenance services cannot be supplied without the vehicle (which is the principal supply).
Note: Whenever a shopkeeper ships the contents of a composite supply, the tax rate associated with the
shipping charge will be equivalent to the tax rate of the principal supply (in case of example 1, the GST on
shipping will be equal to the GST on the box of chocolates).

What is mixed supply under GST?

A mixed supply is two or more independent products or services which are offered together as a bundle but
can also be sold separately.
In a mixed supply, the item or service with the highest GST rate is treated as the principal supply (whether
or not it is the main part of the bundle). The mixed supply is taxed at the GST rate of the principal supply.
Example: A plant nursery sells cut flowers, ornamental plants, and gardening services together as a bundle.
When they’re sold separately, the plants and flowers incur GST at a rate of 5%, and the gardening services
incur GST at a rate of 18%. When they’re offered together as a bundle, the whole bundle will incur GST at
the 18% rate.
Note: Whenever a shopkeeper ships the contents of a mixed supply, the tax rate associated with the shipping
charge will be equivalent to the tax rate applied on the bundle.

Difference between composite supply and mixed supply

At first glance, composite supplies and mixed supplies may look very similar to each other. In both cases,
we talk about supplying goods and/or services as a bundle for a single price. But then, why have our tax
authorities gone to great lengths to differentiate them? Well, let’s see why:
Difference No.1 - Principal supplies — In a composite supply, one item or service is clearly the main part
of the supply. In a mixed supply, no one part is necessarily the principal supply (though the part with the
highest GST rate is treated as principal).
Difference No.2 - Individually available supplies — In a composite supply, it wouldn’t make sense to sell
the secondary parts separately from the principal supply (for instance, the towels provided along with a
hotel room). In a mixed supply, each piece could be sold separately (for instance, a grocery bundle
containing an assortment of snacks and drinks).
Rate Applicable:
✓ Rate of Tax applicable for composite supply is rate applicable to principal supply.

By Akash Gupta 16
✓ Rate of tax applicable for mixed supply is higher amongst all items of mixed supplies.

Illustration 1
A supply is made by McDonald's, a taxable person that comprises three taxable supplies of goods
and services. The individual rates of GST are the following:

Item Code Item Rate of GST

Ab Burger 5%

Bc French Fries 5%

Cd Coke 18%

If the value of package is ₹2,000, you are required to determine the applicable rate and the total
GST payable in each of the following independent cases
1. It is a Composite supply and ltem "Ab" is the Principal Supply.
2. It is a Mixed Supply.
Illustration 2
A supply is made by a taxable person that comprises four taxable supplies of goods and services.
The individual rates of GST are the following:

Categories Rate of GST

P Goods 5%

Q Service 12%

R Goods 28%

S Service 18%
If the value of package is ₹78,000, you are required to determine the applicable rate and the total
GST payable in each of the following independent cases
1. It is a Composite supply and ltem "P" is the Principal Supply.
2. It is a Composite supply and Item "Q" is the Principal Supply.
3. It is a Composite supply and Item "R" is the Principal Supply.
4. It is a Composite supply and Item "S" is the Principal Supply.
5. It is a Mixed Supply.

Illustration 3:
A supply is made by a taxable person that comprises four taxable supplies of goods and services.
The individual rates of GST are the following:

By Akash Gupta 17
 Categories Rate of GST

L1 Goods 5%

L2 Service 12%

L3 Goods 28%

L4 Service 18%
If the value of package is ₹7,95,000, you are required to determine the applicable rate and the
total GST payable in each of the following independent cases
1. It is a Composite supply and ltem "L1" is the Principal Supply.
2. It is a Composite supply and Item "L2" is the Principal Supply.
3. It is a Composite supply and Item "L3" is the Principal Supply.
4. It is a Composite supply and Item "L4" is the Principal Supply.
5. It is a Mixed Supply.

Illustration 4
From the following transactions you are required to classify what is kind of supply (Composite
Supply/Mix Supply) and at which rate GST be payable by Mr. Arbaz Ali:
(1) Selling one package consisting of canned foods, sweets, chocolates, cakes, and dry fruits on
diwali and other festivals.
(2) Purchased Air Travel Ticket of Air India from Ahmedabad to Chennai for ₹25,000 which
includes free on board and free insurance.
(3) A Meal purchased at McD consists of Burger, French Fries, ice cream, and Coke for ₹ 750.
(4) Purchased Laptop received a box consisting of Laptop, Charger, Laptop Bag, and Guiding
Manual for ₹45,000.
(5) Selling a Kit for a born baby consisting of Baby Cloth, Johnson Soap, Oil, Lotion, and Socks for
₹580.

Students Activity/Assignment:
Activity 1
Find out 10 Composite supplies available in shops, Malls, etc.
Activity 2
Find out 10 Mix supplies available in shops, Malls, etc.

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 CHAPTER 4: EXEMPTION UNDER GST

Understand GST Exemption

After 1st July 2017, the Government of India set up some criterias upon fulfilling which businesses
and individuals have to register under GST norms.
However, certain goods and services can enjoy exemption from GST registration. Furthermore,
the supply of some goods or services attracts a nil rate of tax which in short is also known as
exempt supply under GST.
To understand the finer details of the GST exemption, it is necessary to follow the GST exemption
list.
Therefore, we present this piece to simplify the meaning of what is exempt from GST and which
services or products are exempted from registration under GST.

What is a GST exemption?

Understanding the taxability of goods and services also includes knowing whether a good or
service is exempted from GST registration. Upon knowing this, applicants can get clarity on
several other factors. Essentially, the GST exemption limit for businesses depends on their annual
aggregate turnover.
Previously, businesses with an annual turnover of up to Rs.20 lakhs did not need to register for
GST. The amount was Rs.10 lakhs for North-eastern or hilly states like Meghalaya, Sikkim,
Mizoram, Arunachal Pradesh, Nagaland, Himachal Pradesh, Manipur, Assam, Tripura,
Uttarakhand, and Jammu & Kashmir.
However, as per the GST council meeting on 10th January 2019, the values doubled for Micro,
Small, and Medium Enterprises (MSMEs) in both cases.
In addition to this, certain supplies of goods and services fall under the GST registration exemption
list. Let’s understand this better by referring to the following section.

What is an exempt supply under GST?

There are three types of supplies that can enjoy exemption under GST. They are as follows:
● Supplies taxable at 0% tax or nil tax rate.
● Whole or partial exemption of supplies under CGST or SGST.
● Supplies under Section 2(78).
Note: One cannot utilize the input tax credit applicable to these supplies.
In addition to this, one must follow the list mentioned below to understand the differences between
nil-rated, zero-rated, exempt and non-GST supplies.
Supplies Meaning
1. Nil-rated Supplies that have 0% tax rate. Example: Salt.
2. Non-GST Ones that do not come under the purview of GST law include alcohol for human
consumption.
3. Zero- Export supplies to SEZ (Special Economic Zone) developers.
rated
4. Exempt Taxable supplies that do not attract GST. Curd, fruits are among some of the
supplies.
Types of exemption in GST
Given below are the three types of exemptions in GST:

By Akash Gupta 19
Absolute: Exemptions without any conditions are an absolute exemption. For example, services
by the RBI.
Conditional: Certain conditions are applicable to some exemptions. Services by hotels, clubs, etc.,
with a statement of accommodation unit less than Rs.1000 per day, fall under a conditional
exemption.
Partial: Unregistered persons supplying goods within states (intrastate) to a registered individual
can enjoy tax exemption under reverse charge only if the aggregate value of a supply does not
exceed Rs.5000 per day.

List of GST exemption

Goods, services, supplies, businesses, and individuals must register for GST provided they fulfill
certain conditions. However, there are few exceptions to this. In the following section, you will
find a list mentioning all the items, businesses, and taxpayers who can avail of tax exemption under
the Goods and Services Tax regime.

GST exemption from registration

The following category of taxpayers need not register for GST:
● Individuals belonging to the threshold exemption limit.
● Exempt suppliers of goods and services.
● A person supplying non-GST goods and services.
● Taxpayers engaging in activities other than the supply of goods or services.
● Agriculturists.
● Ones supplying goods covered under reverse charge.

Exempted goods under GST

In the following section, you will find a list of the GST exempted goods in India:
● Fresh and dry vegetables like potatoes, onions, and other leguminous vegetables.
● Non-GST goods include fish, egg, fresh milk, etc.
● Grapes, melons, ginger, garlic, unroasted coffee beans, green tea leaves that are not
processed, and more.
● Food items that are not put into branded containers like rice, hulled cereal grains, wheat,
corn, etc.
● Components like human blood.
● Unspun jute fibres, raw silk, khadi fibre, etc.
● Hearing aid manufacturing parts, chalks, slates, handloom, etc.
Note: Certain non-GST items, once processed, will attract a GST.

Exempted services under GST

A number of services qualify for GST exemption. Here is a GST exemption list of services for
your reference:
● Agricultural services, including harvesting, packaging, warehouse, cultivation, supply,
leasing of machinery, are essentially GST exempt services. An exception to these exempted
services includes the rearing of horses.
● Public transportation services, auto-rickshaws, metered cabs, metro, etc.
● Transportation of agricultural products and goods outside of India.
● Labour supply for farms.

By Akash Gupta 20
 ● Goods transportation where the charges are less than Rs.1500.
● Services like retail packing, pre-conditioning, waxing, etc.
● Foreign diplomatic and government services.
● Healthcare and educational services like mid-day meal catering, VET clinics, paramedics,
etc. Ambulance and charity services also qualify for exemption under GST.
● Services offered by RBI, IRDAI, Central and State Government, NPS and more.
● Banking services like Basic Saving Bank Deposit (BSBD) account operable under the
Pradhan Mantri Jan-Dhan Yojana (PMJDY)

In addition to this, services related to religious ceremonies, sports organisation, tour guides, and
libraries are exempted under GST.
However, one might wonder why these goods and services enjoy exemption from GST
registration. One should know about the reasons for exemption as well.

Reasons for exemption under GST

The government decides on exempting goods from registering under GST in the following cases:
● In case the GST council recommends the exemption.
● The government might find certain exemptions from GST registration to be beneficial for
the public.
● Under exceptional or unforeseen situations, the government might grant exemption by
special order.
● Upon providing official notification, one can supply specific goods under a full exemption.
Therefore, from the points mentioned above, it is evident that several sectors can qualify for a GST
exemption provided they fulfill some prerequisites. Knowing those criterias in detail will help a
taxpayer to register under GST without any hassle.

By Akash Gupta 21
Illustration 1
From the following information given to you by Mr. Kadar, compute the Value of Taxable Service
and the Goods and Services Tax Payable for the month. All amounts given are excluding Goods
and Services Tax.
1. Commission earned on till receipts ₹1,20,000
2. Transportation charges of sugar ₹4,18,000
3. Services of transport of passengers by ropeway ₹12,000
4. Courier services ₹14,000
5. Transportation charges (Freight collected per trip was₹ 1,190) ₹84,000
6. Coaching of MBA entrance exam ₹12,000
7. Commission from acting as commission agent of consumer goods ₹16,000
8. Royalty from permanent transfer of trademark ₹54,000
9. Carried out certain process as job work which did not amount to manufacture ₹15,000
10.Commission from acting as clearing and forwarding agent ₹2,10,000
11. Commission for acting as commission agent of Agricultural produce ₹18,000
12. Toll receipts from highway of Mumbai to Pune ₹6,000
GST rate for all the supplies may be assumed to be 12%.

Illustration 2
From the following information given to you of Mr. Gupta, compute the Value of Taxable Service
and the Goods and Services Tax Payable for the month of April, 2022, all amounts given are
excluding Goods and Services Tax. GST rate may be assumed as 18%.
1. Renting of vacant land for floriculture ₹15,000
2. A building was let out to Excel Coaching Classes for providing coaching of T.Y.B.A.F. ₹18,000
3. A Ganesh Temple hall was let out for religious purpose on 10th April, 2022 ₹24,000
4. Vacant land used for animal husbandry ₹16,000
5. A vacant land was let out for Horticulture ₹20,000
6. Loan processing fees charged ₹32,000
7. Professional advice to his friend free of charge ₹28,000
8. Renting / Leasing of Agro Machinery ₹30,000
9. Transportation charges of sugar ₹48,000
10. Receipts of Educare a commercial coaching institute providing commercial coaching (no
certificate was issued on completion of the training) ₹30,000
11. Receipts of each one teach one an Industrial Training institute (ITI) affiliated to the National
Council for Vocational Training (NCVT) ₹27,000

Illustration 3
From the following information given to you by Mr. Batliwala, compute the Value of Taxable
Service and the Goods and Services Tax Payable for the month. All amounts given are excluding
Goods and Services Tax.
1. Royalty from permanent transfer of trademark ₹24,000
2. Toll receipts from highway of Mumbai to Pune ₹60,000

By Akash Gupta 22
3. Services of transport of passengers by ropeway ₹1,32,000
4. Courier services ₹1,44,000
5. Transportation charges (Freight collected per trip was₹ 1,200) ₹72,000
6. Coaching of MBA entrance exam ₹28,000
7. Commission from acting as commission agent of consumer goods ₹36,000
8. Commission earned on till receipts ₹96,000
9. Carried out certain process as job work which did not amount to manufacture ₹84,000
10.Commission from acting as clearing and forwarding agent ₹1,20,000
GST rate for all the supplies may be assumed to be 18%.

Students Activity/Assignment:
Activity 1
Briefly introduce the Banking sector and find out the different banking services which are
exempted under GST.
Activity 2
Briefly introduce the Insurance sector and find out the different insurance services exempted
under GST.
Activity 3
Briefly introduce the Hospitality Industry and find out hospitality industry services which are
exempted under GST.
Activity 4
Find out the different list of services exempted under GST.

By Akash Gupta 23
 CHAPTER 5: REGISTRATION

Registration under GST

Registration of an assessee or a ‘taxable person’ is the starting point in any tax law. It is the most
fundamental requirement of identification of the business for tax purposes and monitoring
compliance requirements.
In any tax system registration is the most fundamental requirement for identification of
taxpayers ensuring tax compliance in the economy. Registration of any business entity under the
GST Law implies obtaining a unique number from the concerned tax authorities for the purpose
of collecting tax on behalf of the government and to avail Input tax credit for the taxes on his
inward supplies. Without registration, a person can neither collect tax from his customers nor
claim any input tax credit of tax paid by him.
der GST. Once a business is successfully registered, a unique registration number is assigned to
them known as the Goods and Services Tax Identification Number (GSTIN). This is a 15-digit
number assigned by the central government after the taxpayers obtain registration. You can also
Verify GST number and to know the complete details.
Note – If you are operating from more than one state, then you will have to take separate
registration for each state you are operating from.

Need and advantages of registration

Registration will confer the following advantages to a taxpayer:
• He is legally recognized as supplier of goods or services.
• He is legally authorized to collect tax from his customers and pass on the credit of the
taxes paid on the goods or services supplied to the purchasers/ recipients.
• He can claim input tax credit of taxes paid and can utilize the same for payment of taxes
due on supply of goods or services.
• Seamless flow of Input Tax Credit from suppliers to recipients at the national level.

Who should register for GST?

● Those who exceed the Turnover limits prescribed under law.
● Those who are registered under the previous tax system. (VAT/Service Tax)
● Anyone voluntarily wants to register.
● Some other persons are prescribed under law for compulsory registration.

By Akash Gupta 24
 Normal taxpayers
Most businesses in India fall under this category.
Businesses whose turnover exceeds Rs 40 lakh in a financial year are required to register as
normal taxable people. However, the threshold limit is Rs 10 lakh if you have a business in the
north-eastern states, J&K, Himachal Pradesh, and Uttarakhand.

Aggregate Turnover Limits

Supplier of Goods only Supplier of Goods/Services or both
₹40 Lakhs & above ₹20 Lakhs & above
Except
MaNaMiTra state for Goods/Services/Both Manipur, Nagaland, Mizoram, Tripura
(₹10 Lakhs & above)
U-STAMP state for Goods/Services/Both Uttrakhand, Sikkim, Telangana, Arunachal
(₹20 Lakhs & above) Pradesh, Meghalaya, Puducheri

Aggregate turnover is defined to mean the aggregate value of all taxable supplies, exempt
supplies, export of goods or services or both and inter-State supplies made by the person having
same Permanent Account Number to be computed on the all India basis. However, Central Tax
(CGST), State Tax (SGST), Union Territory Tax (UTGST), Integrated Tax (IGST) and Cess are not to
be included in such supplies. Further, value of inward supplies on which tax is payable on reverse
charge basis is also to be excluded.
A Special Economic Zone unit or developer shall make a separate application for registration as a
business vertical distinct from its other units located outside the Special Economic Zone.

By Akash Gupta 25
 Composition registration
Businesses with an annual turnover of up to Rs 1.5 crore are eligible for registration under
composition scheme. Under this scheme, businesses have to pay a fixed amount of GST
irrespective of their actual turnover.

Who can opt for a Composition Scheme?

1. Who engaged in the supply of services other than resultant services (₹5 Lakhs or 10% of
Turnover)
2. Who makes supply of goods exempted under GST goodAct
3. Who makes interstate outward supplies of goods
4. Who makes any supplies through an E-commerce operator
5. Who is manufacturer of goods notified by GST council (Pan Masala, Tobacco, Ice cream)

By Akash Gupta 26
 Casual taxable individual
Occasional or seasonal businesses need to register their businesses under GST for this category.
Businesses need to make a deposit equal to the GST liability from the occasional operations.
The tenure for registration is 3 months. However, businesses can apply for renewal and
extensions.

Non-resident taxable individual

Individuals who reside outside India but occasionally supply goods or services as agents,
principals, or in other capacities to Indian residents are liable to file for registration under this
category.
The business owner must pay a deposit equal to the expected GST liability during the GST active
tenure. The normal tenure is 3 months. However, individuals can extend or renew the
registration if required.

By Akash Gupta 27
List of certain businesses for which GST registration is mandatory irrespective of their turnover:
● Person making any inter-State taxable supply;
● Casual taxable person making taxable supply;
● Persons who are required to pay tax under reverse charge;
● Electronic commerce operator undertaking supplies on behalf of other suppliers (liable to
discharge tax liability for supply of services as may be notified)
● Non-resident taxable person making taxable supply;
● Persons who are required to deduct tax at Source under GST;
● Persons who supply goods or services or both on behalf of other registered taxable person
whether as an agent or otherwise;
● Input service distributor;
● Every electronic commerce operator;
● Every person supplying online information and database access or retrieval services from
a place outside India to a person in India, other than a registered taxable person;
● Such other person or class of persons as may be notified by the Central Government or a
State Government on the recommendations of the Council.

FOLLOWING PERSONS ARE NOT LIABLE FOR REGISTRATION

● Any person engaged exclusively in the business of supplying goods or services or both
that are not liable to tax or wholly exempt from tax under CGST or under the Integrated
Goods and Services Tax Act
● An agriculturist, to the extent of supply of produce out of cultivation of land
● Government may, on the recommendations of the Council, by notification, specify the
category of persons who may be exempted from obtaining registration under this Act.

DEEMED REGISTRATION OR REJECTION OF APPLICATION FOR REGISTRATION AND

CANCELLATION OR REVOCATION OF REGISTRATION CERTIFICATE
Any grant of registration or Unique Identity Number under any SGST or UTGST shall be construed
as grant of registration under CGST. Similarly, any grant of registration or Unique Identity Number
under CGST shall be construed as grant of registration under SGST or UTGST, as a case may be.
Any rejection of application for registration or cancellation or revocation of registration shall be
treated likewise.

By Akash Gupta 28
TRANSFER OF BUSINESS AND REGISTRATION
A transferee, or the successor of a business on-going concern basis shall be liable to be registered
with effect from the date of such transfer or succession. In a case of transfer pursuant to sanction
of a scheme or an arrangement for amalgamation or, demerger of two or more companies by an
order of a High Court, the transferee shall be liable to be registered with effect from the date on
which the Registrar of Companies issues a certificate of incorporation giving effect to such order
of the High Court. This means that the Registration Certificate issued to a person is not
transferable to any other person.

SPECIAL PROVISIONS RELATING TO CASUAL TAXABLE PERSON AND NON-RESIDENT TAXABLE

PERSON
The Certificate of Registration issued to a casual taxable person and non-resident taxable person
shall be valid for 90 days from the effective date of registration or any earlier period as specified
in the application. An extension of period not exceeding 90 days may also be granted on sufficient
cause being shown. An advance deposit of tax shall be credited to the electronic cash ledger
equivalent to the estimated tax liability for the registration period sought.

SUO MOTU REGISTRATION BY THE DEPARTMENT

During the course of any survey, inspection, search, enquiry or any other proceeding under the
Act, it is found that a person liable to register has failed to apply for the same, proper officer may
register such person on temporary basis and issue order in FORM GST REG-12. Registration will
be effective from the date of order. Such person is required to apply for registration within 30
days from the date of such temporary order, unless he files an appeal against such order.

AMENDMENT TO REGISTRATION
There are various situations in which the Registration issued by the competent authority requires
amendment in line with real time situations. In such a case, every registered taxable person shall
inform any changes in the information furnished at the time of registration within 15 days of such
changes.
The proper officer cannot reject the request for amendment without affording a reasonable
opportunity of being heard by following the principles of natural justice.

CANCELLATION OF REGISTRATION
A registration granted can be cancelled by the proper officer either on his own or on application
of the registered person when —

● The business is discontinued, transferred fully for any reason including death of
proprietor, amalgamation with other legal entity, demerged or otherwise disposed of, or
● There is any change in the constitution of the business, or
● The taxable person is no longer liable to be registered.

Registration may be cancelled retrospectively if the proper officer so deems fit in any of the
following situations after giving the person an opportunity of being heard:

By Akash Gupta 29
 ● Registered person has contravened such provisions of the Act or Rules;
● Person paying tax under Composition Scheme has not furnished returns for 3 consecutive
tax periods;
● Any taxable person has not furnished returns for a continuous period of 6 months;
● Person who has taken voluntary registration has not commenced business within 6
months from the date of registration;
● Registration has been obtained by means of fraud, wilful misstatement or suppression of
facts.
As such, cancellation of registration shall not affect the liability of the taxable person to pay tax
and other dues under the Act for any period prior to the date of cancellation whether or not such
tax and other dues are determined before or after the date of cancellation.
Where the registration is cancelled, the registered taxable person shall pay an amount equivalent
to the credit of input tax in respect of inputs held in stock and inputs contained in semi- finished
or finished goods held in stock on the day immediately preceding the date of such cancellation
or the output tax payable on such goods, whichever is higher. The payment can be made by way
of debit in the electronic credit or electronic cash ledger.

In case of capital goods, the taxable person shall pay an amount equal to the input tax credit
taken on the said capital goods reduced by the percentage points (to be prescribed) or the tax
on the transaction value of such capital goods whichever is higher.

REVOCATION OF CANCELLATION OF REGISTRATION

Any registered taxable person, whose registration is cancelled, may apply to proper officer for
revocation of cancellation of the registration within thirty days from the date of service of the
cancellation order.

The proper officer shall not reject the application for revocation of cancellation of registration
without giving a show cause notice and without giving the person a reasonable opportunity of
being heard.

PROCEDURE FOR REGISTRATION

● Online application to be made in FORM GST REG-01 by declaring PAN, mobile number,
email address, State or UT, along with other documents duly signed and electronically
verified. Persons who are liable to deduct TDS or collect TCS shall apply in FORM GST REG-
07. Non-resident taxable person shall apply in FORM GST REG-09. A non- resident taxable
person shall be allotted a Temporary Reference Number for making an advance deposit
of estimated tax liability.
● Acknowledgement will be generated in FORM GST REG-02.
● Proper officer shall either grant registration or issue a notice in FORM GST REG-03 for any
additional information and clarification within 3 working days. Applicant should reply in
FORM GST REG-04 within 7 working days from date of receipt of notice. If applicant fails
to reply, proper officer may reject the application in FORM GST REG-05 or if he is satisfied
with the information furnished then he may grant registration within 7 working days
● Registration Certificate will be issued in FORM GST REG-06.

By Akash Gupta 30
What are the documents required for GST registration?
Take a look at the list of documents that you will need for registering your business under GST:
● Permanent Account Number (PAN) of the applicant
● Copy of the Aadhaar card
● Proof of business registration or incorporation certificate
● Identity and address proof of promoters/directors with a photograph
● Bank account statement/cancelled cheque
● Authorisation letter/board resolution for authorised signatory
● Digital signature

By Akash Gupta 31
List of Forms Available:

By Akash Gupta 32
Illustrations:
Illustration 1: Ms. Murari, Mizoram started business in June, 2022. He deals in Goods and
Services both. You are required to find out from which month she will be liable for registration
and to pay GST as per the provisions of GST Act. Given reasons.

Month/Year Purchases Sales

2022
Taxable Tax Free Taxable Tax Free

April to June 1,50,000 12,00,000 2,35,000 84,000

August 35,000 18,00,000 4,42,000 3,50,000
September 4,500 20,000 1,18,000 7,80,000
October 6,500 24,500 1,15,000 1,99,000
November 9,200 1,34,900 1,75,000 2,76,000

Illustration 2: Mr. Kalam resident of Nagaland provides you with the following information
regarding supplies made by him. Determine his eligibility for registration under relevant Goods
and Services Tax Law.
1. Service charges within the state 3,50,000
2. Intra-State Goods Taxable 12% (Exclusive of GST) ₹8,00,000
3. Export made to Singapore ₹2,00,000
4. Intra-State Goods Taxable @5% (Exclusive of GST) ₹4,00,000
5. Intra-State Services Taxable 18% (Exclusive of GST) ₹5,00,000
6. Intra-State Goods wholly exempt under GST ₹2,00,000.

Illustration 3: From the following details, you are required to determine eligibility for Registration
under GST in each scenario:

Supplier If Engaged in Aggregate

Turnover

Sona of Uttrakhand Exclusively in supply of Shoes ₹21 lakh

Exclusively in supply of Pan Masala ₹21 lakh

Exclusively in supply of Taxable ₹21 lakh

Services

In supply of both taxable goods and ₹21 lakh

services

Raju of Manipur Exclusively in supply of Toys ₹21 lakh

By Akash Gupta 33
 Exclusively in supply of Ice-cream ₹20.10 lakh

Exclusively in supply of Taxable ₹21 lakh

Services

In supply of both taxable goods and ₹21 lakh

services

Devsena of Karnataka Exclusively in supply of Paper ₹11 lakh

Exclusively in supply of Tobacco ₹11 lakh

Exclusively in supply of Taxable ₹11 lakh

Services

In supply of both taxable goods and ₹11.2 lakh

services

Katappa of Hyderabad Exclusively in supply of Alcoholic ₹41.2 lakh

Liquor for human Consumption

Rehan Bhaiya of Exclusively supplying Goods ₹62 lakh

Telangana

Kanchana of Delhi Exclusively supply of Services ₹25 lakh

Illustration 4: Ms. Vikram, Mumbai started business in April, 2022. He only deals in Goods. You
are required to find out from which month she will be liable for registration and to pay GST as
per the provisions of GST Act. Given reasons.

Month/Year Purchases Sales

2022
Taxable Tax Free Taxable Tax Free

April to June 1,90,000 1,50,000 1,35,000 64,000

August 22,00,000 35,000 3,42,000 2,70,000
September 64,000 4,500 2,18,000 8,60,000
October 86,000 6,500 2,05,000 2,99,000
November 99,000 9,200 1,85,000 11,96,000

Illustration 5: Mr. Deenanath resident of Mizoram provides you with the following information
regarding supplies made by him. Determine his eligibility for registration under relevant Goods
and Services Tax Law.
1. Service charges within the state ₹13,00,000

By Akash Gupta 34
2. Intra-State Goods Taxable 18% (Exclusive of GST) ₹30,000
3. Export made to Singapore ₹1,00,000
4. Intra-State Goods Taxable @12% (Exclusive of GST) ₹50,000
5. Intra-State Services Taxable @ 28% (Exclusive of GST) ₹4,00,000
6. Intra-State Goods wholly exempt under GST ₹3,00,000.

Illustration 6: From the following details, you are required to determine eligibility for Registration
under GST in each scenario:

Supplier If Engaged in Aggregate

Turnover

Kanhaiya of Nagaland Exclusively in supply of Shoes ₹12 lakh

Exclusively in supply of Pan Masala ₹12 lakh

Exclusively in supply of Taxable ₹25 lakh

Services

In supply of both taxable goods and ₹25 lakh

services

Jaikisan of Telangana Exclusively in supply of Toys ₹21 lakh

Exclusively in supply of Ice-cream ₹12 lakh

Exclusively in supply of Taxable ₹25 lakh

Services

In supply of both taxable goods and ₹25 lakh

services

Jeevan of Gujarat Exclusively in supply of Paper ₹11 lakh

Exclusively in supply of Tobacco ₹21 lakh

Exclusively in supply of Taxable ₹18 lakh

Services

In supply of both taxable goods and ₹21 lakh

services

Nandlaal Bhaiya of Exclusively in supply of Alcoholic ₹48 lakh

Chennai Liquor for human Consumption

By Akash Gupta 35
 Kishore of Bihar Exclusively supplying Goods ₹39.5 lakh

Kishan of Tamilnadu Exclusively supply of Services ₹20 lakh

Illustration 7: From the following details, you are required to determine eligibility for Registration
under GST in each scenario:
Supplier If Engaged in Aggregate
Turnover

Baburao of Tripura Exclusively in supply of Shoes ₹22 lakh

Exclusively in supply of Pan Masala ₹22 lakh

Exclusively in supply of Taxable ₹22 lakh

Services

In supply of both taxable goods and ₹22 lakh

services

Ranchoddas Chanchad Exclusively in supply of Toys ₹22 lakh

of Puducherry
Exclusively in supply of Ice-cream ₹22 lakh

Exclusively in supply of Taxable ₹22 lakh

Services

In supply of both taxable goods and ₹22 lakh

services

Dadasaheb of Exclusively in supply of Paper ₹12 lakh

Maharashtra
Exclusively in supply of Tobacco ₹12 lakh

Exclusively in supply of Taxable ₹12 lakh

Services

In supply of both taxable goods and ₹12 lakh

services

Babu Bhaiya of Exclusively in supply of Alcoholic ₹42 lakh

Kolhapur Liquor for human Consumption

Raja Bhaiya of Uttar Exclusively supplying Goods ₹75 lakh

Pradesh

By Akash Gupta 36
 Raju of Mumbai Exclusively supply of Services ₹45 lakh

Illustration 8: Ms. Maahi, Bihar started business in April, 2022. He only deals in Goods. You are
required to find out from which month she will be liable for registration and to pay GST as per
the provisions of GST Act. Given reasons.

Month/Year Purchases Sales

2022
Taxable Tax Free Taxable Tax Free

April to June 1,50,000 12,00,000 2,35,000 84,000

August 35,000 18,00,000 4,42,000 3,50,000
September 4,500 20,000 1,18,000 7,80,000
October 6,500 24,500 1,15,000 1,99,000
November 9,200 1,34,900 1,75,000 2,76,000

By Akash Gupta 37
 CHAPTER 6: TIME OF SUPPLY

Time of supply means the point in time when goods/services are considered supplied’. When the
seller knows the ‘time’, it helps him identify the due date for payment of taxes.

Time of Supply
In order to calculate and discharge tax liability it is important to know the date when the tax liability
arises i.e. the date on which the charging event has occurred. In GST law, it is known as Time of
Supply. GST law has provided separate provisions to determine the time of supply of goods and
time of supply of services. Sections 12, 13 & 14 of the CGST Act, 2017, deals with the provisions
related to time of supply and by virtue of section 20 of the IGST Act, 2017, these provisions are
also applicable to inter-State supplies leviable to Integrated tax.

Point of time when supplier receives the payment or date of receipt of payment
The phrase “the date on which supplier receives the payment” or “the date of receipt of payment”
means the date on which payment is entered in his books of accounts or the date on which the
payment is credited to his bank account, whichever is earlier.

Time of issue of invoice for supply

As per section 31 of the CGST Act, an invoice for supply of goods needs to be issued before or at
the time of removal of goods for supply to the recipient, where the supply involves movement of
goods. However, in other cases, an invoice needs to be issued before or at the time of delivery of
goods or while making goods available to the recipient.
Similarly an invoice for supply of services needs to be issued before or after the provision of
service but not later than thirty days from the date of provision of service.

Time of supply of goods (Default Rule)

Earliest of the following dates:
• Date of issue of invoice by the supplier. If the invoice is not issued, then the last date on which
the supplier is legally bound to issue the invoice with respect to the supply
• Date on which the supplier receives the payment
Time of supply of services (Default Rule)
Earliest of the following dates:
• Date of issue of invoice by the supplier (If the invoice is issued within the legally prescribed
period under section 31(2) of the CGST Act) or the date of receipt of payment, whichever is earlier
• Date of provision of service (If the invoice is not issued within the legally prescribed period under
section 31(2) of the CGST Act) or the date of receipt of payment, whichever is earlier
• Date on which the recipient shows the receipt of service in his books of account, in case the
aforesaid two provisions do not apply
Time of supply under reverse charge (Default Rule)
Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the
supplier. In case of reverse charge, the time of supply shall be the earliest of
(a) the date of receipt of goods
OR (b) the date of payment
OR (c) the date immediately after THIRTY days from the date of issue of invoice by the supplier
(60 days for services).

By Akash Gupta 38
If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply shall be
the date of entry in the books of account of the recipient.

Time of supply for vouchers:

In case of supply of vouchers the time of supply is-
(a) The date of issue of the voucher, if the supply can be identified at that point.
OR
(b) The date of redemption of the voucher, in all other cases.

Time of Supply in case of change in the rate of tax [u/s 13 of CGST Act]
When there is a change in the rate of tax in respect of goods or services, the time of supply
shall be determined as follows.

Situation Supply Invoice Payment TOS Applicable

completed issued Made (Time of Rate
supply)

1. Before After After Earlier of Date New rate

change change change of
invoice and date
of paymenrt
2. Before Before After Date of issue Old rate
change change change of invoice
3. Before Before Before Date of receipt Old rate
change change change of payment
4. After Before Before Earlier of Old rate
change change change Date of Invoice and
date of payment
5. After After After Date of Receipt New rate
change change change of
payment

Note: Normally the date of receipt of payment is the date of credit in the bank A/c of the
recipient of payment [suppliers] or the date of Book entry by the supplier in their books
of account.
However, in case of change in the rate of tax, the date of receipt of payment is the date of
credit in the bank A/c if such credit is after 4 working days from the date of change in
rate of tax.

By Akash Gupta 39
Summary:
Time of Supply under Forward Charge Mechanism

Earliest of For Goods For Services

(a) Date of Issue of Invoice Date of Issue of Invoice

(b) Due Date of Invoice Due Date of Invoice

(Movement of Goods- Goods Removal Date ) (Date of Actual Provision of
(No Movement of Goods- Delivery Date) Service)
(Approval Basis– Goods Acceptance Date or Only, if invoice is not issued
Date after 6 months) within 30 days from the date of
(Continuous Basis- Statement Preparation Date) provision of services
(So, 1st step is to check this.)

(c) Payment Date Payment Date

(Date of payment recorded in books of account (Date of payment recorded in
or Date on which payment credited, early of books of account or Date on
these) which payment credited, early
of these)

Illustration 1
Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The
payment was received on 31st January. The goods were supplied on 20th January.
Solution:
Time of supply is earliest of –
Date of issue of invoice – 15th January
Last date on which invoice should have been issued – 20th January.
Thus the time of supply is 15th January.

Illustration 2
Mr. X sold goods to Mr. Y worth Rs 1,00,000 an advance of Rs 50,000 is received by Mr. X on
1st January. The invoice was issued on 15th January. The payment was received on 31st January.
The goods were supplied on 20th January.
Solution:
The time of supply for the advance of Rs 50,000 will be 1st January (since the date of receipt of
advance is before the invoice is issued).
For the balance Rs 50,000, Time of supply is earliest of –
Date of issue of invoice – 15th January
Last date on which invoice should have been issued – 20th January.
Thus, the time of supply will be 15th January.

By Akash Gupta 40
Illustration 3
Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued on 20th
January and the payment for the same was received on 1st February.

Solution:
1st check if the invoice was issued within the prescribed time. The prescribed time is 30 days from
the date of supply i.e. 31st January. The invoice was issued on 20th January. This means that the
invoice was issued within a prescribed time limit.
The time of supply will be earliest of –
Date of issue of invoice – 20th January
Date of payment = 1st February
This means that the time of supply of services will be 20th January.

Illustration 4
M/s ABC Pvt. Ltd undertook service of a director (unregistered) Mr. X worth Rs. 50,000 on 15th
January. The invoice was raised on 1st February. M/s ABC Pvt Ltd made the payment on 1st May.
Solution:
The time of supply, in this case, will be earliest of –
Date of payment = 1st May
60 days from date of date of invoice – 2nd April
Thus, the time of supply of services is 2nd April.

Illustration 5
From the following information you are required to determine the Time of Supply in different
scenario, where supply involves movement of goods:
Date of Removal Invoice Goods made Receipt of Payment
available

06-11-2022 07-11-2022 08-11-2022 20-12-2022

08-11-2022 06-11-2022 09-11-2022 30-12-2022
10-12-2022 11-12-2022 11-12-2022 06-11-2022
18-12-2022 24-11-2022 11-11-2022 16-11-2022
11-12-2022 17-12-2022 07-12-2022 26-12-2022

Illustration 6
You required to determine the Time of Supply in the following independent scenario as per the
provision of CGST Act:

Sr. No. Date on which Goods are Date of Invoice Date of Receipt of
available Payment

1 13-12-2019 16-12-2019 07-11-2019

2 18-12-2019 21-12-2019 03-01-2020

By Akash Gupta 41
 3 26-12-2019 05-01-2020 24-01-2020
4 27-10-2019 17-10-2019 16-10-2019
5 19-12-2019 13-12-2019 11-12-2019
6 16-01-2019 17-01-2019 06-01-2019
7 18-02-2019 14-02-2019 13-02-2019
8 12-02-2019 20-02-2019 17-02-2019

Illustration 7
You required to determine the Time of Supply in the following independent scenario as per the
provision of CGST Act:
Sr. No. Date on which Goods are Date of Invoice Date of Receipt of
available Payment

1 13-12-2019 16-12-2019 07-11-2019

2 18-12-2019 21-12-2019 03-01-2020
3 26-12-2019 05-01-2020 24-01-2020
4 27-10-2019 17-10-2019 16-10-2019
5 19-12-2019 13-12-2019 11-12-2019
6 16-01-2019 17-01-2019 06-01-2019
7 18-02-2019 14-02-2019 13-02-2019
8 12-02-2019 20-02-2019 17-02-2019

Illustration 8
From the following information you are required to determine the Time of Supply in different
scenario, where supply involves movement of goods:
Date of Removal Invoice Goods made Receipt of
available Payment

01-11-2021 02-11-2021 03-11-2021 15-12-2021

03-11-2021 01-11-2021 04-11-2021 25-10-2021
04-12-2021 06-12-2021 06-12-2021 01-11-2021
13-11-2021 19-11-2021 07-11-2021 11-11-2021
06-12-2021 12-12-2021 02-12-2021 21-12-2021

Illustration 9
You required to determine the Time of Supply in the following independent scenario as per the
provision of CGST Act:

Sr. No. Date on which Goods are Date of Invoice Date of Receipt
available of Payment

1 12-12-2020 15-12-2020 06-11-2021

By Akash Gupta 42
 2 17-12-2020 20-12-2020 02-01-2021
3 25-12-2021 04-01-2021 23-01-2021
4 26-10-2021 16-10-2021 15-10-2021
5 18-12-2021 12-12-2021 10-12-2021
6 15-01-2021 16-01-2021 05-01-2021
7 17-02-2021 13-02-2021 12-02-2021
8 11-02-2021 19-02-2021 16-02-2021

Illustration 10
From the following information you are required to determine the Time of Supply in different
scenario, where supply involves movement of goods:
Date of Removal Invoice Goods made Receipt of Payment
available

01-10-2022 02-10-2022 03-10-2022 15-11-2022

03-10-2022 01-10-2022 04-10-2022 25-11-2022
04-11-2022 06-11-2022 06-11-2022 01-10-2022
13-10-2022 19-10-2022 07-10-2022 11-10-2022
06-11-2022 12-11-2022 02-11-2022 21-11-2022

Illustration 11
You required to determine the Time of Supply in the following independent scenario as per the
provision of CGST Act:
Sr. No. Date on which Goods are Date of Invoice Date of Receipt of
available Payment

1 12-12-2021 15-12-2021 06-11-2021

2 17-12-2021 20-12-2021 02-01-2022
3 25-12-2021 04-01-2022 23-01-2022
4 26-10-2021 16-10-2022 15-10-2022
5 18-12-2021 12-12-2022 10-12-2022
6 15-01-2022 16-01-2022 05-01-2022
7 17-02-2022 13-02-2022 12-02-2022
8 11-02-2022 19-02-2022 16-02-2022

Student Activity:
1) Find out 5 different vouchers and understand it's Time of Supply.
2) Collect 5 different GST invoices and understand when the supplier is liable to discharge
the GST liability.

By Akash Gupta 43
 CHAPTER 7: PLACE OF SUPPLY

Place of supply is required for determining the right tax to be charged on the invoice, whether
IGST or CGST/SGST will apply.

Place of Supply for Services

GST is a destination based tax, i.e., the goods/services will be taxed at the place where they are
consumed and not at the origin. So, the state where they are consumed will have the right to collect
GST.
Therefore, place of supply is crucial under GST as all the provisions of GST revolve around it.
Place of supply of goods under GST defines whether the transaction will be counted as intrastate
or interstate, and accordingly, levy of SGST, CGST & IGST will be determined.
Generally, the place of supply of services is the location of the service recipient.
In cases where the services are provided to an unregistered dealer and their location is not available
the location of the service provider will be the place of provision of service.

Place Of Supply In Different Scenario:

Place of Supply – When There is Movement of Goods: Location of Goods where terminates the
goods
Place of Supply – Goods are delivered by the seller to the buyer on the directions of a third party
:It is assumed that the third person has received the goods
Place of Supply – No Movement of Goods: Location of goods at the time of sell
Place of Supply- Goods Supplied on a Vessel/Conveyance: Location where goods loaded
Place of Supply – Goods are assembled or installed at site: Place of installation or assembly
Place of Supply – Imports and Exports: Location of the importer & Location outside India

Illustration 1- Intra-state sales Mr. Raj of Mumbai, Maharashtra sells 10 TV sets to Mr. Vijay of
Nagpur, Maharashtra
The place of supply is Nagpur in Maharashtra. Since it is the same state CGST & SGST will be
charged.

Illustration 2- Inter-State sales Mr. Raj of Mumbai, Maharashtra sells 30 TV sets to Mr. Vinod of
Bangalore, Karnataka
The place of supply is Bangalore in Karnataka. Since it is a different state IGST will be charged.

Illustration 3- Deliver to a 3rd party as per instructions Anand in Lucknow buys goods from Mr.
Raj in Mumbai (Maharashtra). The buyer requests the seller to send the goods to Nagpur
(Maharashtra)
In this case, it will be assumed that the buyer in Lucknow has received the goods & IGST will be
charged. Place of supply: Lucknow (UP) GST: IGST

By Akash Gupta 44
Illustration 4- Receiver takes the goods from the ex-factory. Mr. Raj of Mumbai, Maharashtra
gets an order of 100 TV sets from Sales Heaven Ltd. of Chennai, Tamil Nadu. Sales Heaven
mentions that it will arrange its own transportation and take TV sets from Mr. Raj ex-factory
Place of supply: Chennai, Tamil Nadu GST: IGST Although the goods are received ex-factory i.e
in Maharashtra by the recipient, the movement of the goods terminates for delivery to the recipient
only at Chennai, Tamil Nadu.
Explanation: Irrespective of whether the supplier or the recipient is actually undertaking the
movement of goods, the place of supply is the location of goods where movement of goods
terminates for delivery to the recipient which is at Chennai. Hence, IGST is applicable.

Illustration 5 – E-commerce sale Mr. Raj of Mumbai, Maharashtra orders a mobile from Amazon
to be delivered to his mother in Lucknow (UP) as a gift. M/s ABC (online seller registered in
Gujarat) processes the order and sends the mobile accordingly and Mr. Raj is billed by Amazon.
Similar to example 3, it will be assumed that the buyer in Mumbai has received the goods & IGST
will be charged. Place of supply: Mumbai, Maharashtra GST: IGST

Illustration 6- No movement of goods Sales Heaven Ltd. (Chennai) opens a new showroom in
Bangalore. It purchases a building for showroom from ABC Realtors (Bangalore) along with pre-
installed workstations
Place of supply: Bangalore GST: CGST & SGST There is no movement of goods (work stations),
so the place of supply will be the location of such goods at the time of delivery (handing over) to
the receiver.

Illustration 7- Installing goods Strong Iron & Steel Ltd. (Jharkhand) asks M/s SAAS
Constructions (West Bengal) to build a blast furnace in their Jharkhand steel plant
Place of supply: Jharkhand GST: CGST & SGST Although M/s SAAS is in West Bengal, the
goods (blast furnace) is being installed at site in Jharkhand which will be the place of supply.

By Akash Gupta 45
Note: M/s SAAS will have to be registered in Jharkhand to take up this contract. They can opt to
register as a casual taxable person which will be valid for 90 days (extendable by 90 days more,
on the basis of a reasonable cause).

Illustration 8: Goods are assembled or installed at site

Location of the supplier Location of the recipient Site of assembly/installation
(Registered office)

West Bengal Orissa Jharkhand

Jharkhand Jharkhand Jharkhand

Jharkhand Jharkhand Orissa

Jharkhand Jharkhand Tamilnadu

Jharkhand Tamilnadu Jharkhand

Solution:
Location of the Location of the Site of Place of Supply GST Leviable
supplier recipient assembly/install
(Registered ation
office)

West Bengal Orissa Jharkhand Jharkhand CGST + SGST

Jharkhand Jharkhand Jharkhand Jharkhand CGST + SGST

Jharkhand Jharkhand Orissa Orissa CGST + SGST

Jharkhand Jharkhand Tamilnadu Tamilnadu CGST + SGST

Jharkhand Tamilnadu Jharkhand Jharkhand CGST + SGST

Illustration 9- Plane Mr. Ajay is travelling from Mumbai to Delhi by air. He purchases coffee and
snacks while on the plane. The airline is registered in both Mumbai and Delhi.
Place of supply: Mumbai GST: CGST & SGST The food items were loaded into the plane at
Mumbai. So, the place of supply becomes Mumbai.

Illustration 10; Plane- Business travel Mr. Ajay is travelling from Mumbai to Chennai by air on
behalf of his company Ram Gopal and Sons (registered in Bangalore). In the plane he purchases
lunch. The airline is registered in Mumbai & Chennai.
Place of supply: Mumbai GST: CGST & SGST The food items were loaded into the plane at
Mumbai. So, the place of supply becomes Mumbai. It does not matter where the buyer is registered.
Note: In most cases CGST & SGST is charged because most airlines have a pan-India presence
and will be registered in all states.

By Akash Gupta 46
Illustration 11: Train Mr. Vinod is travelling to Mumbai via train. The train starts at Delhi and
stops at certain stations before Mumbai. Vinod boards the train at Vadodara (Gujarat) and promptly
purchases lunch on board. The lunch had been boarded in Delhi.
Place of supply: Delhi GST: CGST & UTGST The food items were loaded into the train at Delhi.
So, the place of supply becomes Delhi.
Note: CGST & SGST is charged because Indian railways has a pan-India presence and will be
registered in all states. It does not matter where the buyer is registered.

Illustration 12- Ms. Malini imports school bags from China for her shop (registered in Mumbai)

Place of supply: Mumbai

GST: IGST

Illustration 13- Ms. Anita (Kolkata) exports Indian perfumes to UK

Place of supply: UK
GST: Exempted

Special provisions have been made to determine the place of supply for the following
services:
● Services related to immovable property
● Restaurant services
● Admission to events
● Transportation of goods and passengers
● Telecom services
● Banking, Financial and Insurance services.

In case of services related to immovable property, the location of the property is the place of
provision of services.

By Akash Gupta 47
By Akash Gupta 48
Illustration 14
Mr. Anil from Delhi provides interior designing services to Mr. Ajay(Mumbai). The property is
located in Ooty (Tamil Nadu).

In this case, place of supply will be the location of the immovable property i.e. Ooty, Tamil Nadu.

Illustration 15
A registered taxpayer offers passenger transport services from Bangalore to Hampi. The
passengers do not have GST registration. What will be the place of supply in this case?

The place of supply is the place from where the departure takes place i.e. Bangalore in this case.

Illustration 16- Restaurant Raj Hotels in Mumbai, Maharashtra, provides catering services to
Polaris Ltd. (registered in Gujarat) for their annual sales event in Mumbai.
Supply of service: Catering
Place of supply: Maharashtra
GST: CGST + SGST

By Akash Gupta 49
Illustration 17- Personal GroomingAjay, a chartered accountant (Karnataka) has been advised to
take an ayurvedic treatment at Om Ayurvedic Centre in Kerala.

Supply of service: Health by Ayurvedic Centre

GST: CGST + SGST

Illustration 18- Admission to amusement parksA person in Karnataka buys admission tickets for
Nicco Park (amusement park) in Kolkata, West Bengal from the Nicco Park organizers.
Supply of service: Admission
Place of supply: West Bengal (Location of the park)
GST: CGST+SGST

Illustration 19- Events managed for registered personsYardy Event Managers (Mumbai) is hired
by Akash Electronics (Gujarat) to organize their annual sales event in Mumbai.
Supply of service: Event management
Place of supply: Gujarat (since the recipient is a registered person, location of recipient is the place
of supply)
GST: IGST

Illustration 20- Events managed for unregistered personsYardy Event Managers (Mumbai) is
hired by Ms. Malini (based in Bangalore) to manage her sister’s wedding (held in Mumbai).
Supply of service: Event management
Place of supply: Mumbai (since the recipient is unregistered person, location of event is the place
of supply)
GST: CGST+SGST

Illustration 21- Events managed outside India for registered personsYardy Event Managers
(Mumbai) is hired by Akash Electronics (Gujarat) to organize their annual business collaboration
event in Singapore.
Supply of service: Event management
Place of supply: Gujarat (since the recipient is a registered person, location of recipient is the place
of supply). Location of event is immaterial.
GST: IGST

Practice Illustrations
Illustration 1: You are required to determine Place of Supply of Goods in the following cases and
also state the Nature of Supply and the Type of Tax Leviable (CGST, SGST and IGST):

Supplier and his Location of the Recipient and Place of

Location buyer (third person) his Location delivery of
the goods

Ravi, Indore Ritu, Indore Rina, Surat Surat

Ravi, Indore Rina, Surat Ritu, Indore Indore

By Akash Gupta 50
 Ravi, Indore Rohit, Mumbai Rina, Surat Surat
Ravi, Indore Rina, Surat Ram, Surat Surat

Illustration 2: You are required to determine Place of Supply of Goods in the following cases and
also state the Nature of Supply and the Type of Tax Leviable (CGST, SGST and IGST):

Supplier and his Location of the Recipient and Place of

Location buyer (third person) his Location delivery of
the goods

Rani, Pune Rita, Bangalore Rishu, Chennai Chennai

Rani, Pune Geeta, Ahmedabad Renu, Nagpur Nagpur
Rani, Pune Seeta, Nagpur Minu, Vapi Vapi
Rani, Pune Mina, Chennai Shami, Pune Pune

By Akash Gupta 51
 CHAPTER 8: VALUE OF SUPPLY

In case of GST, tax is payable on ad-valorem basis i.e., percentage of value of the supply of goods
or services. Thus, it becomes important to know how to arrive at the value on which tax is to be
paid. Section 15 of the CGST Act prescribes the provisions for determining the value of supply of
goods and services made in different circumstances and to different persons.

Value of Supply of Goods or Services

● Value of supply means the money that a seller would want to collect the goods and services
supplied.
● Value of supply is important because GST is calculated on the value of the sale. If the value
is calculated incorrectly, then the amount of GST charged is also incorrect
● The amount collected by the seller from the buyer is the value of supply.
But where parties are related and a reasonable value may not be charged, or transaction may take
place as a barter or exchange; the GST law prescribes that the value on which GST is charged must
be its ‘transactional value’. This is the value at which unrelated parties would transact in the normal
course of business. It makes sure GST is charged and collected properly, even though the full value
may not have been paid.

Example 1: Transaction Value

An Advertising Agency provides service to his client Mohan under a contract with fees of Rs.
18,000. Mohan makes payment in 2 instalments with a gap of a month. In addition to this, agency
incurred travelling expense for the sum of Rs. 2,000 which is reimbursable by Mohan.

Hence, despite the payments were made in instalments, the price to be paid by Mohan is Rs.
20,000. And the Transaction Value of this transaction will be Rs. (18,000+2,000) = Rs.20,000.

Example 2: Payment mode

In above example 1, if Mohan makes payment of one instalment through Person X from whom,
Mohan is liable to receive money.

Still, Transaction Value of the transaction remains Rs. 20,000 only.

This is because, any direct or indirect payment made by recipient to the supplier will be part of
transaction value.

Example 3: Taxes
Mr. X purchased a car of list price Rs. 5,50,000 along with Road Tax costs Rs. 50,000. GST is
liable at applicable rate on the value of Rs. 6,00,000. This is because transaction value includes all
the taxes so incurred except taxes under GST Act.

Example 4: Free Gifts/ Volumes Incentives /Free Trips

It can be bifurcated into two categories:
Category 1 – Transactions related to the Sales.
Category 2 – Transactions unrelated to Sales.

By Akash Gupta 52
In case of Category 1, when Gold Coins are given as incentives on fulfilment of agreement then,
ITC need not be reversed as it does not partake the nature of a gift since it was related to sales

However, with respect to Category 2, when the goods are supplied without any obligation then
credit may not be availed in such a case according to section 17(5) of CGST Act.

Example 5: Incidental Expenses

Priya purchased a dress for Rs. 7,500 from a shop. She asked for a shopping bag which costs Rs.
50. While calculating GST, charges for shopping bag must be considered, i.e. Transaction Value
will be Rs. 7,550, because incidental charges related to the value of supply must be taken while
deriving at Transaction Value.

Example 6: Penalty, interest or late fees

Honda Company sold a car for Rs. 9,00,000 to Mr. Ramesh. Ramesh agreed to the terms and
conditions and as per the agreement and he was liable to pay the amount on or before 15/05/2020.
But he failed to pay and paid the amount on 25/05/2020. Due to violation, Honda Company
charged Rs. 50,000 with regard to penalty on delayed payment. Therefore, as per sec 15(2)(d),
Transaction Value will be Rs. 9,50,000 which includes penalty amount also.

Example 7: Subsidy Summary

Example 8: Discounts
Mr. P, a trader provides the following information in his invoice dated 9.11.2019.
Supply of 200 pieces of skirts of different colours at the rate of Rs. 800 per piece
Discount 10%
Here, the Net amount payable Rs. 1,44,000
In this case, the value of supply of goods shall be Rs. 1,44,000.

Example 9: Discounts
In case of discount by way of credit note.

During such cases, discount given by issuance of credit note to the dealer is under an agreement
entered at the time of supply of goods and thus such discount shall not form value of supply

By Akash Gupta 53
provided input tax credit has been reversed by such dealer to whom credit note was issued, of the
supply as is attributable to the discount on the basis of credit note issued by the supplier.

Example 10: Staggered Discounts

Offer says that Purchase on and above Rs. 5000 gets a discount of 10% of invoice value itself. As
per 15(3), such discount is excluded from Valuation of Supply.

Example 11: Periodic/ Volume Discounts

Offer says additional discounts of 1% if customer purchase above Rs. 10,000 and increases by 1%
with increase in purchase of Rs. 10,000. Since such discounts are at or before the time of supply
and not based on actual quantum hence discounts are passed through credit notes. As per 15(3),
such discount is excluded from Valuation of Supply.

Example 12: Secondary Discounts

X supplies to Mr. Y 40,000 packets of Maggi at Rs. 10. After sale, Mr. X revalue the Cost at Rs.
8.
Hence, Mr. X issues a credit note with respect to it.
Therefore, secondary discounts shall not be included in the Transaction Value.

Example 13: Buy one, Get one Free Discounts

Westside monsoon sale is going on and they announce their offer of “Buy 1, Get 1 Free” which
means if a person wants to buy 2 shirts worth of same price then that person is liable to pay the
price equal to one product only and hence such discount are excluded from Transaction Value.

When the Transaction Value is not assessable value if Supplier and Recipient are RELATED or
Price is not sole consideration or transaction is not reliable. In such cases, Valuation is to be done
on the basis of
“VALUATION RULES”

Rule No: Details

27 Value of supply when consideration is not wholly in money

28 Value of supply when made other than through an Agent

By Akash Gupta 54
29 Value of supply when made through an Agent

30 Value of Supply based on Cost

Rule 30: Determination of Value of Supply Based on Cost
Where the value of a supply of goods or services or both is not determinable by any of the
preceding rules,
the value shall be 110% of the cost of production or manufacture or cost of acquisition of such
goods or cost of provision of such services.

31 Value of Supply through Residual Method

31A Value of Supply in case of Gambling, Lottery and Horse Race

Note: Lottery run & authorised by SG means- A lottery not allowed to be sold in any state other
than the originating state.
Value of supply of actionable claim in the form of chance to win in betting, gambling or horse
racing in a race club shall be 100% of the face value of the bet or the amount paid into the
totalisator.

Example 14: Rule 27

Laxman Purchase a mobile phone having Open Market Value of Rs. 30,000 from Ram, in
exchange of his old phone. The cost of Old Phone is Rs. 3,000. Hence, Ram agreed the transaction
at Rs. 27,000.

By Akash Gupta 55
Despite of Laxman actually paying Rs. 27,000 the Transaction Value of the supply is Rs. 30,000
as stated in rule 27 of GST Act.

Example 15: Rule 28

Mr. Ram, proprietor of Sri Krishna Manufactures supplied certain goods costing Rs. 75,000/- to
its employees at Rs. 60,000/-. In such a case, as both the assessee and its employee come under
the definition of related parties under the GST Act, open market value as per Rule 28 if available
will be applicable. The open market value of the goods were Rs. 75,000/- which would constitute
to be the value of supply in such a case.

Example 16: Rule 29

Where a principal supplies groundnut to his agent and the agent is supplying groundnuts of like
kind and quality in subsequent supplies at a price of Rs.5,000 per quintal on the day of supply.
Another independent supplier is supplying groundnuts of like kind and quality to the said agent at
the price of Rs.4,550 per quintal. The value of the supply made by the principal shall be Rs.4,550
per quintal or where he exercises the option the value shall be 90% of the Rs.5,000 i.e. is Rs.4500
per quintal.

Example 17: Rule 30

ABC Ltd. manufactures table at Rs. 5,000 as further sell to PQR Ltd. The Open Market Value of
the same table is Rs. 7,000. Since the open market value is known to us hence the Value of supply
will be Rs. 7,000. Whereas, the open market value is not determinable, the value of supply will be
110% of Cost of Production. That is, Rs. 5,500 (110% * 5000) as per Rule 30 of GST Act.

Example 18: Rule 32(2)(a)

Hawaii Ltd sold 20,000 units of USD.
Conversion rate is 1 USD = Rs. 60
As per RBI Reference rate, it is USD 1 = Rs. 59

Value of Supply: Rs. (60-59) * 20,000 = Rs. 20,000.

Example 19: Rule 32(2)(a)

Beta Ltd sold 10,000 units of USD.
Conversion rate is 1 USD = Rs. 78
As per RBI Reference rate, it is USD 1 = Rs. 77

Value of Supply: Rs. (78-77) * 10,000 = Rs. 10,000.

Example 20: Rule 32(2)(a)

Nest Ltd sold 10,000 units of USD.
Conversion rate is 1 USD = Rs. 39.80
As per RBI Reference rate, it is USD 1 = Rs. 38.70

Value of Supply: Rs. (39.80-38.70) * 10,000 = Rs. 11,000.

By Akash Gupta 56
Illustration 1: M/s Daniel Enterprise sells mineral water bottles, with MRP ₹25 per bottle.
However, customers get a discount of 4 per bottle. In the month of November, 2021, M/s Daniel
Enterprise sold 4,000 bottles.
Applicable rate of GST 18%. Find the tax liability as per the provision of GST Act.

Illustration 2: Bhanupratap Traders entered into a contract with Mr. Hera Thakur for supply of
goods worth 3,00,000. It was agreed that any additional expense incurred to complete the sale will
also be included in the contract value. Mr. Heera Thakur incurred the following expenses to
complete the sale:
Expenses:
Inspection ₹9500
Freight ₹1,50,000
Testing Charges ₹62,500
Insurance Charges ₹50,000

By Akash Gupta 57
Loading Charges ₹35,400
Packaging Charges ₹80,000
Mr. Heera Thakur received a subsidy of ₹3,00,000 from the Thakur Manufacturer's Association
per transaction. Determine the Value of Taxable Supply as per the provisions of section 15 of
CGST Act.

Illustration 3: Mr. Ram sold goods to Mr. Lakshman for ₹50,000. As per the contract of sale, Mr.
Ram is required to deliver the goods in the premises of Mr. Lakshman. Mr. Ram hires a transporter
for transportation for delivery of goods. However, the freight is paid by Mr. Lakshman to the
transporter, ₹72,500. Find the transaction value of supply of goods.

Illustration 4: Delta Enterprise entered into a contract with Mr. Alpha for supply of goods worth
₹3,00,000. It was agreed that any additional expense incurred to complete the sale will also be
included in the contract value. Mr. Alpha incurred the following expenses to complete the sale:
Expenses
Inspection ₹5,000
Freight ₹10,000
Testing Charges ₹2,500
Insurance Charges ₹20,000
Loading Charges ₹41,900
Packaging Charges ₹70,000
Alpha received a subsidy of ₹50,000 from the Gama Manufacturer's Association per transaction.
Determine the Value of Taxable Supply as per the provisions of section 15 of CGST Act.

Illustration 5: Prem Traders entered into a contract with Mr. Vasu Shukla for supply of goods
worth 6,50,000. It was agreed that any additional expense incurred to complete the sale will also
be included in the contract value. Mr. Vasu Shukla incurred the following expenses to complete
the sale:
Expenses
Inspection ₹1,500
Freight ₹50,000
Testing Charges ₹2,500
Insurance Charges ₹5,000
Loading Charges ₹5,000
Packaging Charges ₹8,000
Mr. Vasu Shukla received a subsidy of ₹10,000 from the Best Manufacturer's Association per
transaction. Determine the Value of Taxable Supply as per the provisions of section 15 of CGST
Act.

Illustration 6: M/s Jeetu Enterprise makes a supply of ₹2,00,000 to Ms. Reetu. The contract
provides that Ms. Reetu will pay ₹50,000 to M/s Jeetu Enterprise and ₹1,50,000 to Ms. Neetu to
settle debt of M/s Jeetu Enterprise. Applicable rate of CGST and SGST 9% each. You are required
to determine the Value of Supply as per the provision of the GST Act.

By Akash Gupta 58
 CHAPTER 9: PAYMENT UNDER GST

What are payments to be made under GST?

Under GST the tax to be paid is mainly divided into 3 –

IGST – To be paid when interstate supply is made (paid to center)

CGST – To be paid when making supply within the state (paid to center)
SGST – To be paid when making supply within the state (paid to state)

CIRCUMSTANCES CGST SGST IGST

Goods sold from Delhi to Bombay NO NO YES
Goods sold within Bombay YES YES NO
Goods sold from Bombay to Pune YES YES NO

Apart from the above payments a dealer is required to make these payments –

● Tax Deducted at Source (TDS) – TDS is a mechanism by which tax is deducted by the
dealer before making the payment to the supplier
For example – A government agency gives a road laying contract to a builder. The contract value
is Rs 10 lakh. When the government agency makes payment to the builder TDS @ 1% (which
amounts to Rs 10,000) will be deducted and balance amount will be paid.

● Tax Collected at Source (TCS) – TCS is mainly for e-commerce aggregators. It means that
any dealer selling through e-commerce will receive payment after deduction of TCS @
2%.
This provision is currently relaxed and will not be applicable to notified by the government.

● Reverse Charge – The liability of payment of tax shifts from the supplier of goods and
services to the receiver. To know more about reverse charge check out our article 'Know
all about Reverse Charge under GST'

● Interest, Penalty, Fees and other payments

How to calculate the GST payment to be made?

Usually, the Input Tax Credit should be reduced from Outward Tax Liability to calculate the total
GST payment to be made.

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TDS/TCS will be reduced from the total GST to arrive at the net payable figure. Interest & late
fees (if any) will be added to arrive at the final amount.

Also, ITC cannot be claimed on interest and late fees. Both Interest and late fees are required to
be paid in cash. The way the calculation is to be done is different for different types of dealers –

Regular Deale:r A regular dealer is liable to pay GST on the outward supplies made and can also
claim Input Tax Credit (ITC) on the purchases made by him. The GST payable by a regular dealer
is the difference between the outward tax liability and the ITC.

Composition Dealer: The GST payment for a composition dealer is comparatively simpler. A
dealer who has opted for composition scheme has to pay a fixed percentage of GST on the total
outward supplies made. GST is to be paid based on the type of business of a composition dealer.

Who should make the payment?

These dealers are required to make GST payment –

1. A Registered dealer is required to make GST payment if GST liability exists.

2. Registered dealer required to pay tax under Reverse Charge Mechanism(RCM).
3. E-commerce operator is required to collect and pay TCS
4. Dealers required deducting TDS

When should GST payment be made?

GST payment is to be made when the GSTR 3 is filed i.e by 20th of the next month.

What are the electronic ledgers?

These ledgers are maintained electronically on the GST Portal.

How to make GST payment?

GST payment can be made in 2 ways

Payment through Credit Ledger

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The credit of ITC can be taken by dealers for GST payment. The credit can be taken only for
payment of Tax. Interest, penalty and late fees cannot be paid by utilizing ITC.

Payment through Cash Ledger

GST payment can be made online or offline. The challan has to be generated on GST Portal for
both online and offline GST payment. Where tax liability is more than Rs 10,000, it is mandatory
to pay taxes Online.

What is the penalty for non-payment or delayed payment?

If GST is short paid, unpaid or paid late interest at a rate of 18% is required to be paid by the
dealer. Also, a penalty to be paid. The penalty is higher of Rs. 10,000 or 10% of the tax short paid
or unpaid.

What is GST refund?

Usually when the GST paid is more than the GST liability a situation of claiming GST refund
arises. Under GST the process of claiming a refund is standardized to avoid confusion. The process
is online and time limits have also been set for the same.

When can the refund be claimed?

There are many cases where refund can be claimed. Here are some of them – Excess payment of
tax is made due to mistake or omission.
● Dealer Exports (including deemed export) goods/services under claim of rebate or Refund
● ITC accumulation due to output being tax exempt or nil-rated
● Refund of tax paid on purchases made by Embassies or UN bodies
● Tax Refund for International Tourists
● Finalization of provisional assessment

How to calculate GST refund?

Let’s take a simple case of excess tax payment made. Mr. B’s GST liability for the month of
September is Rs 50000. But due to mistake, Mr. B made a GST payment of Rs 5 lakh. Now Mr. B
has made an excess GST payment of Rs 4.5 lakh which can be claimed as a refund by him. The
time limit for claiming the refund is 2 years from the date of payment.

What is the time limit for claiming the refund?

The time limit for claiming a refund is 2 years from relevant date. The relevant date is different in
every case. Here are the relevant dates for some cases –
Reason for claiming GST Refund Relevant Date

Excess payment of GST Date of payment

Export or deemed export of goods or services Date of despatch/loading/passing the frontier

ITC accumulates as output is tax exempt or nil- Last date of financial year to which the credit
rated belongs

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 Finalization of provisional assessment Date on which tax is adjusted
Also if refund is paid with delay an interest of 24% p.a. is payable by the government.

How to claim GST refund?

The refund application has to be made in Form RFD 01 within 2 years from relevant date. The
form should also be certified by a Chartered Accountant.

Current GST return filing requires that every month, once GSTR-1 is filed to report Sales, one
must file GSTR-3B to report the ITC and make necessary GST Payment. Also if a refund is
required to be claimed the same can be done by filing relevant refund related forms.

Illustration 1: Miss Nitya has following balances in her Electronic Cash Ledger as on 28th
February as per GST portal.

Major Heads Minor Heads Amount (₹)

CGST Tax 40,000

Interest 1,000

Penalty 800

CGST Tax 80,000

Interest 400

Penalty 1,200

Fee 2,000

IGST Tax 45,000

Interest 200

Penalty Nil

She furnishes returns on a monthly basis. Her tax liability for the month of February for CGST
and SGST was ₹ 75,000 each. She failed to pay the tax and contacted you as legal advisor on 12th
April to advise her as to how much amount of tax or interest she is required to pay, if any, by

By Akash Gupta 62
utilizing the available balance to the maximum extent possible as per GST Laws. She wants to pay
the tax on 20th April.
Other information:
(i) Date of collection of GST was 20th February.
(ii) No other transaction after this up to 20th April.
(iii) Ignore penalty and late fee for this transaction.
(iv) No other balance is available.
You are required to advise her with reference to legal provisions with brief notes on the legal
provisions applicable.

Illustration 2:
Mr. Kalpesh, registered in state of Maharashtra, provides following details for the month of July.
a) Calculate net Tax Liability for the month of July.
Opening Balance in Electronic Credit Ledger as on 1st July
IGST - 7 3,78,000 /
CGST-7 4,72,070/-
SGST- 5,68,020/-
Transactions during the month: ₹

Sold Goods@ 28% GST to Anil in Pune 14,00,000

Sold Goods@5% GST to Asha in Nagpur 16,00,000
Sold Goods @ 12% GST to Rakesh in Surat 17,00,000
Sold Goods @ 18% GST to Meena in Chennai 23,00,000
Provided Services@ 18% GST to Vimal in Chandigarh 21,00,0000
Provided Services @ 5% GST to Bimal in Patna Provided Services@12% 18,50,000
GST to Komal in Kolkata 17,80,000
Provided Services 28%% GST to Kamal in Jalna, Maharashtra 22,00,000
Inward Supplies @ 12% GST from Akola 15,70,000
Inward Supplies @ 18% GST from Bangalore 19,40,000
Inward Supplies @ 28% GST from Ranchi 6,80,000
Inward Supplies@5% GST from Amravati 20,30,000
b) The due date for payment of tax was 20 August. However, Mr. Kalpesh made the payment on
25 August. Calculate the amount of interest payable.

Illustration 3: XYZ Ltd. being a registered person supplying taxable goods in the following
manner
Particulars ₹

Intra-State supply of goods 18,00,000

Inter-State supply of goods 13,00,000
Intra-State purchases 13,00,000
Inter-State purchases 1,50,000
Input Tax Credit (ITC) at the beginning of the relevant tax period
CGST 1,30,000
SGST 1,30,000

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 IGST 1,70,000

I) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.

ii) Inward and outward supplies are exclusive of taxes.
iii) All the conditions necessary for availing the input tax credit have been fulfilled.
Compute the net GST payable by XYZ Ltd. during the tax period. Make suitable assumptions.

By Akash Gupta 64
By Akash Gupta 65
 CHAPTER 10: DOCUMENTS UNDER GST

Time limit for issue of tax invoice for supply of Goods or Services

What is an invoice?
An invoice is a document that describes the goods and services that a company offers to a customer
and specifies the customer’s responsibility to pay for those products and services. Invoices are the
foundation of a small business’ accounting system. An invoice details how much your client owes
you when payment is due and what services you rendered.

Invoices are the business records that allow companies to get paid for their services, so invoicing
is critical for small businesses. Invoice can be defined as “a list of goods sent or services provided,
with a statement of the sum due for these; a bill.”, as per the Oxford English Dictionary.

Who uses an invoice, and what is the purpose?

For accounting, invoices are used as a source document. Invoices are primarily used for keeping
track of all the sales transactions by any business organisation with its customers.

It is issued by every business and professional to keep track of sales made and services provided.
Businesses use invoices for several reasons, such as follows:
Invoice forms the basis for requesting clients or customers to make payments on time.
1. To keep an account of the sales or supplies.
2. To track the inventory of the business.
3. Invoice can be used as historical data to predict future revenue.
4. To keep track of business income for tax purposes.

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What are the various types of an invoice?
The different types of invoices that businesses can raise on their clients or customers.

A standard invoice is the most common form of invoice used mainly by small businesses and
flexible to fit in most industries and billing cycles.
Next on the list is credit notes and debit notes. It is also known by names such as credit memo and
debit memo. Credit and debit notes are used for decreasing value and increasing values of
previously raised invoices, respectively.
Another type of invoice is the pro forma invoice. A pro forma invoice is an estimation that a
company sends to a customer before delivering services. A pro forma invoice gives the client an
estimation of the cost of the work that needs to be done. When a project is completed, pro forma
invoices need to be adjusted to represent the hours worked accurately.
A commercial invoice is a document provided by a company for products it sells to consumers
worldwide. Commercial invoices provide information about the sale that is required to calculate
customs duties for cross-border transactions.
A timesheet is an invoice used when a company or employee bills depending on the number of
hours they work and their hourly rate of pay. Contract workers who are paid hourly by their
contractor use timesheets.
There are other types of the invoice such as expense report, interim invoice, final invoice, past due
invoice, recurring invoice and e-invoice.

Ideal format and contents of an invoice

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Why is it important to raise invoices electronically?
An electronic invoice is developed using the seller’s invoicing system, an online bank, or a web-
based form. The e-invoice file may then be downloaded or directly forwarded to the buyer’s
software. Further, the invoice created electronically using invoice software can automatically form
a base for ledger creation and accounting of the buyer’s account or debtor’s account.

Issues such as manual data entry errors, gaps in accuracy checks, and software swapping can be
avoided with electronically generated invoice or e-invoicing. For this to happen, the invoice must
be in a standardized format that the buyer’s system can understand.

E-invoice is not scanned paper invoices or documents processed with optical character recognition.
Further, it cannot be in formats such as PDF, Excel or Word, all of which involve manual
intervention.

Debit/Credit Notes:
1) When does the seller issue a Debit Note?
● To create addition to existing invoice
● To increase Tax liability
● To increase the value of goods
● Also, when buyers send credit note
2) When does the seller issue a Credit Note?
● To reduce existing debtors
● To reduce Tax liability
● To reduce the value of goods
● Also, when buyers send debit note
Note: Debit/Credit Note are the supplementary invoice.

Example: Adjustment of tax using journal entry:

1) Purchase of goods ₹1,00,000 @28% GST in case of interstate.
Purchase A/c Dr. ₹1,00,000
Input GST A/c Dr. ₹28,000
To Cash A/c ₹1,28,000
2) The supplier sent the wrong invoice for transactions done above where the amount was charged
₹1,00,000 instead of ₹1,20,000.
Purchase A/c Dr. ₹20,000
Input GST A/c Dr. ₹5,600
To Cash A/c ₹25,600
Here, suppliers will issue Debit Note for increased tax & value of goods. In exchange credit note
will be issued by buyers.

Illustration 1: ITUS Co., a registered supplier under GST, provides the following information
regarding various tax invoices issued by it during the month of March 2022:
(a) Value of supply charged in an invoice was ₹2,90,000 against the actual taxable value of
₹2,70,000.

By Akash Gupta 68
(b) Tax charged in an invoice was ₹1,52,000 against the actual tax liability of ₹1,98,000 due to
wrong HSN code being chosen while issuing invoice.
(c) Value charged in an invoice was ₹72,000 as against the actual value of ₹82,000 due to wrong
quantity considered while billing.
ITUS Co. asks you to answer the following
1. Who shall issue a Debit / Credit Note under CGST Act, 2017?

Illustration 2: Babu & Sona Co., a registered supplier under GST, provides the following
information regarding various tax invoices issued by it during the month of March 2022:
(a) Value of supply charged in an invoice was ₹12,90,000 against the actual taxable value of
₹12,70,000.
(b) Tax charged in an invoice was ₹52,000 against the actual tax liability of ₹98,000 due to wrong
HSN code being chosen while issuing invoice.
(c) Value charged in an invoice was ₹7,20,000 as against the actual value of ₹8,20,000 due to
wrong quantity considered while billing.
Babu & Sona Co. asks you to answer the following
1. Who shall issue a Debit / Credit Note under CGST Act, 2017?

Illustration 3: Good & Night Co., a registered supplier under GST, provides the following
information regarding various tax invoices issued by it during the month of March 2022:
(a) Value of supply charged in an invoice was ₹20,000 against the actual taxable value of ₹40,000.
(b) Tax charged in an invoice was ₹50,000 against the actual tax liability of ₹90,000 due to wrong
HSN code being chosen while issuing invoice.
(c) Value charged in an invoice was ₹60,000 as against the actual value of ₹45,000 due to wrong
quantity considered while billing.
Good & Night Co. asks you to answer the following
1. Who shall issue a Debit / Credit Note under

By Akash Gupta 69