Taxable Event under GST

Under the previous regime, there were different taxable events for different taxes. For example,
the taxable event was manufacturing or production of goods in India for excise duty. Similarly,
the taxable event for services was when a service was supplied or agreed to be supplied. It was the
sale of goods under CST and VAT. All this has resulted in a lot of confusion in determining the
taxes to be paid. To replace such multiple taxable events, GST brought a single, uniform taxable
event that is, supply and tax will increase to the taxing authority that has jurisdiction over the place
of consumption and will in most cases be the place of supply.

There are few activities which are specifically not to be considered as SUPPLY, these are as
following:

1. Schedule III activities which includes

 Services from an employee to employer

 Services by any court or Tribunal
 Functions and Duties
A. functions performed by members of Parliament, member of State Legislature, member
of Parchayats, member of Municipalities and members of other local authorities
B. the duties performed by any person who holds any post is pursuance of the provision
of the Constitution is that capacity or
C. the duties performed by any person as a Chairperson or a Member or a director in a
body established by Central Government or a State Government or local authority &
who is not deened as an employee before the commencement of this clause
 Services of funeral, burial, crematorium or mortuary
 Sale of land subject to Schedule II(5)(b), sale of building
 Actionable claims, other than lottery, betting and gambling

2. Activities or transactions undertaken by the Central Government, the State Government or any
local authority in which they are involved as public authorities, as the Government may notify on
the Council's recommendations.
Time of Supply

Point of taxation means the point in time at which goods were deemed to be supplied or services
were deemed to be provided. The point of taxation allows us to determine the tax rate, value, and
due dates for tax payment. Under GST, the point of taxation, i.e. the liability to pay CGST / SGST,
arises as determined for goods and services at the time of supply. CGST Act, 2017 provides for
the determination of the time of supply of goods under section 12 and the time of supply of services
under section 13 of the Act.

Nature of Supply

GST is a tax based on destination, i.e. consumption tax, which means tax will be levied where
goods and services are consumed and will therefore accrue to that state, and it is of immense
importance that the place of supply of any transaction is correctly determined. It is important to
first understand the nature of the supply in order to determine the correct place of supply.
Following the provisions of the table list as contained in the IGST Act, 2017, to determine whether
a supply will be treated as a supply of Inter State or Intra State.

Following will be treated as establishments of distinct persons:

 an establishment in India and any other establishment outside India;

 an establishment in a State or Union territory and any other establishment outside that State
or Union territory; or
 an establishment in a State or Union territory and any other establishment being a business
vertical registered within that State or Union territory A person carrying on a business
through a branch or an agency or a representational office in any territory shall be treated
as having an establishment in that territory.
Place of Supply

Place of supply is important to determine the nature of the sale (inter - state, intrastate, import or
export) and the state in which the State component of GST will accrue.

Place of Supply of Goods Section 10 of the IGST Act, 2017 specifies the place of supply of goods
other than goods imported or exported from India.

Place of supply of telecommunications services Section 12(11) of the Integrated GST Act, 2017
provides for the determination of the place of supply of telecommunications services to any person,
including data transmission, broadcasting, cable and direct television services.

 In any other case, the address of the recipient as recorded by the service provider and,
where that address is not available, the place of supply shall be the location of the service
provider.
 If prepaid service is used or the recharge is made through internet banking or other
electronic mode of payment, the place of supply of such services shall be the location of
the recipient of services on the service provider's record. Where the leased circuit is
installed in more than one State or territory of the Union and a consolidated amount is
charged for the supply of services relating to that circuit, the place of service shall be
allocated in proportion to the value of the service received or to the contract or as may be
prescribed between States / Union Territories.

Value of Supply

The value of the taxable supply under GST is the value of the transaction. Transaction value means
the price actually paid or payable for the said supply of goods or services or both where the supplier
and the supply recipient are not related and the price is the sole consideration for the supply.

Input tax Credit

Input tax credit is a provision to reduce the tax already paid on inputs. This can be understood
using the following diagram:
Input Tax Credit (ITC) is considered to be a cornerstone of GST. There was a non-availability of
credit at various points of the supply chain in the previous tax regime, which led to a cascading
tax effect and increased the cost of goods and services. This flaw has been removed under GST
and a seamless credit flow will be provided throughout the value chain that will help to reduce the
tax cascading effect. Under GST, input tax means central tax (CGST), State tax (SGST), Integrated
Tax (IGST) or Union Territory Tax (UTGST) charged on the supply of goods or services or both
to a registered person and includes taxes paid on input goods, input services or both. To benefit
from ITC, it is necessary to register the person making use of such benefit under GST. An
unregistered person cannot take advantage of ITC. Section 16 of the CGST Act, 2017, states the
condition and eligibility for ITC. A registered taxable person must comply with four conditions:

 He should have a tax invoice or debit note or any other documents paying tax as may be
prescribed;
 The goods or services should have been received or both;
 The supplier should actually have paid the supply tax charged to the government; and
 The return should have been provided in accordance with section 39. (Where goods are
received in lots or installments against an invoice, the registered person is entitled to take
credit upon receipt of the last lot or installment) The availability of ITC to the recipient
was made dependent on the supplier's payment of tax. Thus, even if the receiver paid the
supplier the amount of tax and the goods and/or services so procured are eligible for ITC,
no credit would be available until the supplier's time tax is deposited with the government.
Also if the recipient fails to pay the amount of the supply together with the tax payable
thereon within 3 months from the date of issue of the invoice, the recipient shall be liable
to pay the amount equal to the input tax credit used by the recipient along with the interest
thereon.