DP Classes CA Final IDT May 2021 Module 3

CA FINAL – INDIRECT TAXATION GST
INDEX
REGISTRATION
CHAPTER PAGE
PARTICULARS
NO NO.
1 REGISTRATION 2 – 24
2 PROCEDURE FOR REGISTRATION 25 – 34
AMENDMENT / REVOCATION / CANCELLATION OF

3 REGISTRATION
35 – 39
4 REGISTRATION– QFP 40 – 49
| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 1

GST [CA FINAL – INDIRECT TAXATION]
CHAPTER – 1
REGISTRATION
TOPICS
Section Description
- Definitions
22 Persons Liable for Registration
23 Persons not liable for Registration
24 Compulsory Registration
DEFINITIONS
Section Term Definition
2(7) Agriculturist “Agriculturalist” means an individual or a HUF who undertakes
cultivation of land-
a) By own labour, or
b) By the labour of family, or
c) By servants on wages payable in cash or kind or by hired
labour under personal supervision or the person
supervision of any member of the family
2(47) Exempt Supply “Exempt Supply” means-
 Supply of any goods or services or both which attracts nil rate
of tax or which may be wholly exempt from tax under Section
11, or under Section 6 of the IGST Act, and
 Includes non-taxable supply.

PERSON LIABLE FOR REGISTRATION – SECTION 22
Persons liable to Registration
In case of
Those who exceed In case of transfer of
threshold limit amalgamation / business on
demerger by an account of
order of High succession, etc.
Court etc
Aggregate
Aggregate Turnover > Rs 10 Transferee liable to
Turnover > Lakh in case of be registered from
Rs 20 Lakh Special Category Transferee the date on which
States liable to be Registrar of
registered Companies issues
from the date incorporation
of succession certificate giving
of business effect to order of
High Court Etc
Particulars Description
 Every supplier shall be liable to be registered under this Act
Every supplier liable to be
registered if  inthe State or Union territory,
aggregate
turnover in financial year Other than special category States,
 from where he makes a taxable supply of goods or services or
exceeds Rs. 20 lakhs/Rs. 10
lakhs in Special Category both,
States - Section 22(1)  if his aggregate turnover in a financial year exceeds 20 lakhs.
First proviso to Section However, where such person makes taxable supplies of goods or
22(1) services or both from any of the specialcategory States, he shall be
liable to be registered if his aggregate turnover in a financial year
exceedsRs. 10lakhs.
Second proviso to Section However, the Government may, at the request of a special
22(1) category State and on the recommendations of theCouncil,
enhance the aggregate turnover from Rs. 10 lakh to such amount,
not exceeding Rs. 20 lakh and subject to such conditions and
limitations, as may be so notified.
Third proviso to Section The government may, at the request of a State and on the
22(1) recommendations of the Council, enhance the aggregate turnover
from Rs. 20 lakh to such amount not exceeding Rs. 40 lakh in case
of supplier who is engaged exclusively in the supply of goods,
subject to such conditions and limitations, as may be notified.
Explanation A person shall be considered to be engaged exclusively in the
supply of goods even if he is engaged in exempt supply of services
provided by way of extending deposits, loans or advances in so far
as the consideration is represented by way of interest or discount.
[ Inserted by FA 2019, w.e.f. 01 – 01 - 2020]

Special Category States for Only Mizoram, Tripura, Manipur and Nagaland areSpecial
the purpose of Section 22 Category States for the purpose of section 22.Thus, the threshold
limit of 10 lakhs is applicable for the State of Manipur, Mizoram,
Nagaland, andTripura.
It must be noted that if a person having place of business in
different States across India has one branch inany of the States
being Manipur, Mizoram, Nagaland, and Tripura, the threshold
limit for GST registrationwill be reduced to Rs. 10 lakhs.
Transfer of business – Where a businesscarried on by a taxable person registered under
Transferee to obtain fresh this Act is transferred, whether on account of succession or
registration – Section 22(3) otherwise (including transfer / change in the ownership of
business due to death of the sole proprietor), to another person as
a going concern, the transferee or the successor, as the case may be,
shall be liable to be registered w.e.f. the date of such transfer or
succession.
Transfer pursuant to In a case of transfer pursuant to sanction of a scheme or an
scheme for amalgamation / arrangement for an amalgamation or, as the case may be,
demerger – Transferee demerger of two or more companies pursuant to an order of a
liable to be registered from High Court, Tribunal or otherwise, the transferee shall be liable
date of incorporation – to be registered, with effect from the date on which the Registrar
Section 22(4) of Companies issues a certificate of incorporation giving effect to
such order of the High Court or Tribunal.
AGGREGATE TURNOVER
Includes Excludes
Value of all outward supplies  CGST
 Taxable Supplies  SGST
 Exempt Supplies  UTGST
 Exports  IGST
 Inter-State Supplies  Cess
Of persons having the same PAN be  Value of inward supplies on which tax is
computed on all India basis payable under reverse charge

ANALYSIS!!!
No Particulars Explanation
1 Aggregate Aggregate turnover of persons having the same PAN is to be computed
turnover to on all India basis.
include total Example :
turnover of all A dealer 'D' has two offices - one in Rajasthan and another inMadhya
branches with Pradesh. In order to determine whether 'D' is liable forregistration,
same PAN turnover of both the offices would be taken into account andonly if the
same exceeds 40 lakh, 'D' is liable for registration.
2 Outward It must be noted that Outward Supplies taxable under reverse
Supplies taxed chargewould continue to be part of the 'aggregate turnover' of the
on reverse charge supplier ofsuch supplies.
basis to be
included in the
turnover of the
supplier
3 Aggregate "Aggregate turnover" shall include all supplies made by the taxable
Turnover to person, whether on his own account or made on behalf of all his
include all Principals.
supplies made on Example :
behalf of principal Ragini Enterprises has appointed M/s. Kamal & Associatesas its agent.
All the supplies of goods made by M/s. Kamal & Associates as agent of
Ragini Enterprises will also be included in the aggregate turnoverof
M/s. Kamal & Associates.
4 Supply of goods The supply of goods, after completion of job-work, by a registered job-
by Job worker to worker shall be treated as the supply of goods by the principal, and
be included in thevalue of such goods shall not be included in the aggregate turnover
supplies of of theregistered job-worker.
Principal
5 ‘Aggregate The aggregate turnover is different from turnover in a State. The former
Turnover’ v. is used for determining the threshold limit for registration as well
‘Turnover in a aseligibility for composition scheme. However, the composition levy in
State’ respect of suppliers of goods as wellas for service suppliers would be
calculated on the basis of 'turnover inthe State'. Besides this in case of
the distribution of credit that isattributable to two or more units of the
person, the credit shall bedistributed amongst such units on a pro rata
basis (i.e., ratio of theirrespective 'turnover in State' to the aggregate of
the 'turnover in State' ofall such units).
6 No centralized Every supplier liable for registration will have to take a
Registration separateregistration in every state even though such supplier may be
supplyinggoods or services or both from more than one State as a single
entity.

Relevant Notification: -
Notification Explanation
Notification No Suppliers of goods having aggregate turnover not exceeding Rs. 40
10 / 2019 dated 07 lakh - Exempt from obtaining registration :
– 03 – 2019 w.e.f The Central Government, has specified the following categoryof
01 – 04 – 2019 persons, as the category of persons exempt from obtaining registration
under thesaid Act, namely,-
- THL - Any person, who is engaged in exclusive supply of goods and whose
aggregateturnover in the financial year does not exceed Rs. 40 lakh,
except, -
1) persons required to take compulsory registration u/s 24 of the said
Act;
2) persons engaged in making supplies of the goods being-
a) Ice cream and other edible ice, whether or not containing cocoa;
b) Pan masala;
c) Tobacco and manufactured tobacco substitutes.
3) persons engaged in making intra-State supplies in the States of
ArunachalPradesh, Manipur, Meghalaya, Mizoram, Nagaland,
Puducherry, Sikkim,Telangana, Tripura, Uttarakhand; and
4) personsexercising option of voluntary registration under the
provisions of Section25(3), or such registered persons who intend to
continue with their registrationunder the said Act.
Summary for the Examination

States with threshold States with threshold limit of States with threshold limit of
limit of Rs. 10 lakh for Rs. 20 Lakh for both goods Rs. 20 lakh for services and
both goods and services and services Rs. 40 lakh for goods **
Tripura Meghalaya All other States
Nagaland Arunachal Pradesh Jammu & Kashmir
Manipur Telangana Assam
Mizoram Puducherry Himachal Pradesh
Sikkim
Uttarakhand
** Persons engaged exclusively in supply of goods.

EXAMPLES RELATED TO THRESHOLD LIMIT

Applicable Whether liable to
Aggregate
Supplier Engaged threshold limit for obtain
turnover
registration registration?
Prithiviraj
Assam
of Exclusively in supply of
shoes
Rs 22 lakh Rs 40 lakh

Exclusively in supply of
pan Masala

taxable services

In supply of both
taxable goods and

services
Shivaji
Telangana
toys

taxable services

In supply of both
taxable goods and

services
Ashoka
Manipur
paper

taxable services

In supply of both
taxable goods and

services
No Example
1 Hemant of Himachal Pradesh is exclusively engaged in intra-State supply of furniture. His
aggregate turnover in the current financial year isRs. 25 lakh. In view of the discussion in
the above paras, the applicable threshold limit for registration for Hemant in the given case
is Rs. 40 lakh. Thus, he is not liable to get registered under GST.
 If in above example, all other things remaining the same, Hemant is exclusively engaged in
supply of ice-cream instead of furniture, he will not be eligible for higher threshold limit
ofRs. 40 lakh and the applicable threshold limit for registration in that given case will be
Rs. 20 lakh. Thus, Hemant will be liable to get registered under GST.
 If instead of ice-cream, Hemant is exclusively engaged in supply of taxable services, the
applicable threshold limit for registration willstill be Rs. 20 lakh. Thus, Hemant will be
liable to get registered under GST.
 Further, if Hemant is engaged in supply of both taxable goods and services, the applicable
threshold limit for registration will be Rs. 20 lakh. Thus, Hemant will be liable to get
registered under GST.
2 Sultan of Telangana is exclusively engaged in intra-State supply of leather products. Its
aggregate turnover in the current financial year is Rs. 25 lakh. Since Sultan is making
taxable supplies from Telangana, he will not be eligible for higher threshold limit available
in case of exclusive supply of goods. The applicable threshold limit for registration for
Sultan in the given case isRs. 20 lakh. Thus, he is liable to get registered under GST.

 If in above example, all other things remaining the same, Sultan is exclusively engaged in
supply of taxable services instead of leather products, the applicable threshold limit for
registration will still beRs. 20 lakhs. Thus, Sultan will be liable to get registered under
GST.
 Further, if Sultan is engaged in supply of both taxable goods and services, the applicable
threshold limitfor registration will beRs. 20 lakhs only. Thus, Sultan will be liable to get
3 Karmveer of Mizoram is exclusively engaged in intra-State supply of toys. Its aggregate
turnover in thecurrent financial year is 15 lakh. Since Karmveer is making taxable supplies
from Mizoram which isSpecial Category State, the applicable threshold limit for
registration for Karmveer in the given case isRs. 10 lakhs. Thus, he is liable to get registered
under GST.
 If in above example, all other things remaining the same, Karmveer is exclusively engaged
in supply oftaxable services instead of toys, the applicable threshold limit for registration
will still beRs. 10 lakhs.
 Thus, Karmveer will be liable to get registered under GST. Further, if Karmveer is engaged
in supply ofboth taxable goods and services, the applicable threshold limit for registration
in that given case will beRs. 10 lakhs only. Thus, Karmveer will be liable to get registered
under GST.
4 Ramesh of Assam is exclusively engaged in intra-State supply of footwear. Its turnover in the
current FY from Assam showroom is Rs. 28 lakhs. It has another showroom in Tripura with a
turnover ofRs. 11 lakh in the current FY. Since Ramesh is engaged in supplying footwear from
a Special Category State, the applicable threshold limit for him gets reduced toRs. 10 lakh.
Further, Ramesh is liable to get registered under GST in both Assam and Tripura on his
aggregate turnover crossing the threshold limit of Rs. 10 lakh.
TAXABLE SUPPLY / EXEMPTED SUPPLY???

Registration required A person is required to obtain registration with respect to his each place of
only for a place of business in India from where a taxable supply has taken place. However, a
business from where supplier is not liable to obtain registration in a State/UT from where he
taxable supply takes makes an exempt/non-taxable supply.
place
Example Mishra Enterprises is engaged in supply of taxable goods in Maharashtra. It
also suppliesalcoholic liquor for human consumption from Nagaland. Its
turnover in the current financial year isRs. 34lakhs in Maharashtra andRs. 8
lakhs in Nagaland. Since Mishra Enterprises is exclusively engaged in
making taxable supplies of goods from Maharashtra, the applicable
threshold limit for obtaining registration is Rs. 40lakhs. However, the
threshold limit will not be reduced to Rs. 10 lakh in this case, as supply of
alcoholic liquorfor human consumption from Nagaland (one of the Special
Category States) are non-taxable supplies.
In the given case, since the aggregate turnover of Mishra Enterprises
exceeds the applicable threshold limitofRs. 40 lakh, it is liable to obtain
registration. It will obtain registration in Maharashtra, but is not required
toobtain registration in Nagaland as he is not making any taxable supplies
from said State.

PERSONS NOT LIABLE FOR REGISTRATION – SECTION 23
Person not liable to be registered
Person Person Agriculturist to

exclusively exclusively the extent of
making supply making supply of supply of
*Notified Persons
of non - taxable wholly exempted produce out of
goods or services goods or services cultivation of
or both or both land
Persons not liable The following persons shall not be liable for registration,-
for registration - a) Person exclusively making supply of non taxable goods or services
Section 23(1) or both: Any person engaged exclusively in the business of supplying
goods or services or both that are not liable to tax under this Act or
under the IGST Act.
b) Person exclusively making supply of wholly exempted goods or
services or both: Any personengaged exclusively in the business of
supplying goods or services or both that are wholly exemptfrom tax
under this Act or under the IGST Act.
c) Agriculturist: An agriculturist, to the extent of supply of produce out
of cultivation of land.
"Agriculturist" - Means an individual or a Hindu Undivided Family who undertakes
Section 2(7) cultivation ofland-
a) by own labour, or
b) by the labour of family, or
c) byservants on wages payable in cash or kind or by hired labour
under personal supervision or thepersonal supervision of any
member of the family.

RELEVANT NOTIFICATIONS
Notification Explanation
Notification No 10 Suppliers of goods having aggregate turnover not exceeding Rs. 40 lakh -
/ 2019 dated 07 – 03 Exempt from obtaining registration :
– 2019 w.e.f 01 – 04 The Central Government, has specified the following categoryof persons, as the
– 2019 category of persons exempt from obtaining registration under thesaid Act,
namely,-
- THL - Any person, who is engaged in exclusive supply of goods and whose
aggregateturnover in the financial year does not exceed Rs. 40 lakh, except, -
5) persons required to take compulsory registration u/s 24 of the said Act;
6) persons engaged in making supplies of the goods being-
d) Ice cream and other edible ice, whether or not containing cocoa;
e) Pan masala;
f) Tobacco and manufactured tobacco substitutes.
7) persons engaged in making intra-State supplies in the States of
ArunachalPradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry,
Sikkim,Telangana, Tripura, Uttarakhand; and
8) personsexercising option of voluntary registration under the provisions of
Section25(3), or such registered persons who intend to continue with their
registrationunder the said Act.
Notification Person making interstate supplies of taxable services having aggregate
No.10/2017- IT turnover not exceeding Rs. 20 lakh - exempt from obtaining registration: The
dated 13-10-2017 Central Governmenthas specified the persons making inter-State supplies of
w.e.f 13 – 10-2017 taxable services and having anaggregate turnover, to be computed on all India
as amended by basis, not exceeding Rs. 20 lakh in a financial year as the category of persons
Notification No. exempted from obtaining registration.
3/2019- IT dated
However, aggregate value of such supplies, to be computed on all India basis,
29.01.2019
shouldnot exceed Rs. 10 lakh in case of Special Category States of Mizoram,
Tripura, Manipurand Nagaland as specified in Section 22.
- INTER STATE -
Example :
M/s. X & Co., located in Delhi, is engaged in supply of taxable goods in
theneighbouring States of Punjab and Haryana. Its aggregate turnover in
current FY is Rs. 15 lakh. Since it is engaged in making inter-State taxable
supply of goods, it is requiredto register mandatorily under GST irrespective
of its aggregate turnover.
However, if in the above case, M/s. X & Co. is engaged in inter-State supply
of taxableservices instead of goods, it will be eligible for exemption from
registration till itsaggregate turnover does not exceed Rs. 20 lakh.
Notification No. 3 Persons making inter-State taxable supplies of notified handicraft goods up
/ 2018 IT dated to Rs. 20 lakh :The Central Government has specified the following persons
22.10.2018 making inter – Statesupplies of goods have been exempted from obtaining
registration:
a) Persons making inter-State taxable supplies of notified handicraft goods
b) Persons making inter-State taxable supplies of notified products, when
made bycraftsmen predominantly by hand even though some
machinery may also be usedin the process.
- INTER STATE -
Conditions to be fulfilled:

1) The aggregate value of such supplies, to be computed on all India basis,

does notexceed an amount of Rs. 20 lakh [Rs. 10 lakh in case of Special
Category States ofMizoram, Tripura, Manipur and Nagaland] in a FY.
2) Such persons have obtained a PAN and have generated an eway bill
Example:
HastShilpPvt. Ltd., located in Rajasthan, is a supplier of taxable and notified
handicraft goods. It supplies these goods in the neighbouring States of Delhi
and Haryana. Its aggregate turnover in the month of April is Rs. 15 lakh.
Although HastShilpPvt. Ltd. is engaged in making inter - State supplies of
taxable goods, it is not liable to obtain registration till its aggregate turnover
does not exceed Rs. 20 lakh as it has availed the exemption from registration
under Notification No. 03 / 2018 IT.
Notification No. Job – workers engaged in making interstate supply of services – exempt from
7/2017 – IT dated obtaining registration : The CG has specified the job workers engaged in
14 – 09 – 2017 as making inter – state supply of services to a registered person as the category of
amended by persons exempted from obtaining registration
Notification No. 2
However, nothing contained in this notification shall apply to a job – worker –
/ 2019 - IT dated
a. Who is liable to be registered under section 22 (1) or who opts to take
29.01.2019
registration voluntarily under section 25 (3) of the said act or
b. Who is involved in making supply of services in relation to the goods
mentioned against serial number 5 (Jewellery, Goldsmiths and Silversmiths
- INTER STATE -
wares and other articles) in the Annexure to Rule 138 of the CGST Rules,
2017.
Notification No. 5 Persons only engaged in making taxable supplies, total tax on which is liable
/ 2017 - CT dated to be paid on reverse charge basis - Exempt from obtaining registration.
19 – 06 – 2017 w.e.f
The Central Government has specified the persons who are only engaged in
22 – 06- 20 17
makingsupplies of taxable goods or services or both, the total tax on which is
liable to be paidon reverse charge basis by the recipient of such goods or
- RCM -
services or both under Section9(3) of the said Act as the category of persons
exempted from obtaining registrationunder the aforesaid Act.
Example:
Vakil and Associates is a law firm engaged exclusively in supplying legal
Consultany services liable to tax under reverse charge. Thus, it is exempt
fromregistration as it is engaged exclusively in making supplies, tax on which is
liable to bepaid on reverse charge basis.
Notification No. Casual taxable persons making taxable supplies of handicraft goods and
56/2018- CT dated Handmade shawls, stoles etc. - Exempt from obtaining registration.
23.10.2018 The Central Government has specified casual taxable persons making taxable
suppliesof handicraft goods as the category of persons exempted from obtaining
registration.However, the aggregate value of such supplies, to be computed on
all India basis, doesnot exceed an amount of Rs. 20 lakhs in a financial year (Rs.
10 lakhs in case of SpecialCategory States of Mizoram, Tripura, Manipur and
Nagaland).
Obtaining of PAN and Generation of E- way Bill: The casual taxable
- CTP -
personsmentioned above shall obtain a Permanent Account Number and
generate an e-way billin accordance with the provisions of Rule 138 of the CGST
Rules, 2017.

Exemption available to persons making exempt interstate supplies of

handicrafts:The above exemption shall be available to such persons who are
making inter – Statetaxable supplies of handicraft goods and are availing the
benefit of Notification No.3/2018-IT dated 22-10-2018.
Exemption in respect of inter-state supplies of specified goods made by
craftsmen:Exemption is also available to such persons making inter-State
taxable supplies of thespecified products when made by the craftsmen
predominantly by hand even thoughsome machinery may also be used in the
process.
However, the aggregate value of such supplies, to be computed on all India
basis, doesnot exceed an amount of Rs. 20 lakhs in a financial year (Rs. 10 lakh
in case of SpecialCategory States of Mizoram, Tripura, Manipur and
Nagaland).Such persons making inter-State taxable supplies shall be required to
obtain aPermanent Account Number and generate an e-way bill in accordance
with theprovisions of rule 138 of the Central Goods and Services Tax Rules,
2017.
Notification No. Suppliers of services supplying services through an e – commerce platform –
65 / 2017 - CT Exempt from obtaining registration : The Central Government has exempted
dated 15 – 11 – the personsmaking supplies of services, other than supplies specified under
2017 as Amended Section 9(5) of the saidAct through an electronic commerce operator who is
by Notification required to collect tax at sourceunder Section 52 of the said Act, and having an
No. 06/2019 - CT aggregate turnover, to be computed onall India basis, not exceeding an amount
dated 29- 01- 2019 ofRs. 20 lakh in a financial year, as thecategory of persons exempted from
w.e.f 01 – 02 – 2019 obtaining registration under the said Act.
However, the aggregate value of such supplies, to be computed on all India
- ECO - basis,should not exceed an amount of Rs. 10 lakh in case of Special Category
States ofMizoram, Tripura, Manipur and Nagaland.
Circular No. Services provided by the commission agent for sale/purchase of agricultural
57/31/2018 GST produce - Registration requirements:This circular lays down the deciding
dated 04.09.2018 factor to determine whether a particular principal-agent relationship falls within
the ambit of the Para 3 of Schedule I to CGST Act, 2017. Said circular carifies it
- AGENT / further, taking the help of 4 different scenarios [discussed in detail in the
OTHERWISE - Chapter - Supply under GST]. Scenario 4 in said circular is as follows :
Mr. A sells agricultural produce by utilizing the services of Mr. B who is a
commissionagent as per the Agricultural Produce Marketing Committee Act
(APMC Act) of theState. Mr. B identifies the buyers and sells the agricultural
produce on behalf of Mr. Afor which he charges a commission from Mr. A.
As per the APMC Act, the commission agent is a person who buys or sells
theagricultural produce on behalf of his principal, or facilitates buying and
selling ofagricultural produce on behalf of his principal and receives, by way of
remuneration, acommission or percentage upon the amount involved in such
transaction. In caseswhere the invoice is issued by Mr. B to the buyer, the
former is an agent covered underPara 3. of Schedule I.
However, in cases where the invoice is issued directly by Mr. A to the buyer,
thecommission agent (Mr.B) doesn't fall under the category of agent covered
under Para 3.Since services by any APMC/board/services provided by the
commission agents forsale or purchase of agricultural produce are exempt from

GST, such commission agents(even when they qualify as agent under Schedule
I) are not liable to be registered inaccordance with provisions of section 23(1)(a).
Further, according to section 24(vii), a person is liable for mandatory
registration if hemakes taxable supply of goods or services or both on behalf of
other taxable persons.Accordingly, the requirement of compulsory registration
for commission agent, underthe said clause shall arise when both the following
conditions are satisfied, namely:
a) the principal should be a taxable person; and
b) the supplies made by the commission agent should be taxable.
Generally, a commission agent under APMC Act makes supplies on behalf of
anagriculturist. As per provisions of section 23(1)(b), an agriculturist who
suppliesproduce out of cultivation of land is not liable for registration and
therefore does notfall within the ambit of the term 'taxable person'.
Thus, a commission agent who is making supplies on behalf of such an
agriculturist- not a taxable person - is not liable for compulsory registration u/
s 24(vii). However,where a commission agent is liable to pay tax under
reverse charge, such an agentwill be required to get registered compulsorily
u/s 24(iii) of the CGST Act.
COMPULSORY REGISTRATION IN CERTAIN CASES – SECTION 24

1. Person making Interstate taxable Supply subject to NN 10 / 2017 – IT dated 13-10-2017 w.e.f. 13-
10-2017.
2. Person who are required to pay tax under reverse charge basis. i.e., recipient of supply is liable to
pay tax.
3. Casual Taxable person who does not have a fixed place of business in the state or union Territory
from where he wants to make supply
4. Non – resident taxable persons making taxable supply
5. Persons who are required to deduct TDS u/s 51 whether or not separately registered under the
Act
6. Every electronic commerce operator who is required to collect tax at source u/s 52.
7. Persons who supply goods or services or both, other than supply specified in section 9(5)
,through such electronic commerce operator who is required to collect tax at source under section
52. (Persons who are suppliers of service through e-commerce operator are not required to register
under GST if their aggregate turnover is less than Rs 20 lakhs per annum( Rs 10 lakhs in case of
Special Category States)
8. Person who are required to pay tax under section 9(5) i.e. E – Commerce Operator who is
required to pay tax on specified services

9. Every person supplying online information & database access or retrieval services(OIDAR)
from a place outside India to a person in India , other than a registered person
10. Input Service Distributor, whether or not separately registered under this Act
11. Persons who make taxable supply of goods/services or both on behalf of other taxable persons
whether as an agent or otherwise
12. Such other person or class of persons as may be notified by the government on the
recommendations of the Council.
SUMMARY
Set Particulars
Inter state supply subject to Notification
I
Persons liable to pay tax at RCM
Casual Taxable Person - CTP
II
Non Resident Taxable Person – NRTP
TDS
III
TCS
Every ECO
IV
Person supplying through ECO
OIDAR
V
ISD
Agent / Otherwise
VI
Any Other Notified Person
INTER STATE SUPPLY - ANALYSIS
Interstate
Supply
Goods Services
Covered u/s Covered u/s Covered u/s Covered u/s

23(2) 24 23(2) 24
Not. No - 3 / All other Inter Not. No - As of now no

2018 state supply of 10/2017 one except
Not. No - Goods are Sub Not. No - Jewellery /
56/2018 to S. 24 7/2017 Gold Smith etc

ECO
Registration
requirement
for ECO
Person
ECO supplying
through ECO
Liable to
Supplying
Collect TCS Other ECO Goods Services
S.9(5) Cases
u/s 52
No
Compulsory Compulsory No mandatory
Compulsory
Normal TCS Compulsory registration
Registration
Registration Registration Registration u/s 24 (Refer
u/s 24
as per S.24 as per S.52 u/s 24 Noti.
65/2017)

QUESTIONS FOR UNDERSTANDING

1. Raghav of Assam is exclusively engaged in intra – state supply of ready made garments. Its
turnover in the current FY from Assam showroom is Rs. 28 lakh. It has another showroom in
Tripura with a turnover of Rs. 11 lakh in the current FY.
Solution:
Since Raghav is engaged in supplying garments from a Special Category State, the applicable threshold limit
for him gets reduced to Rs. 10 lakh. Further, Raghav is liable to get registered under GST in both Assam and
Tripura on his aggregate turnover crossing the threshold limit of Rs. 10 lakh.
2. Mr. A of Rajasthan has effected following supplies within the State of Rajasthan. You are
required to determine whether he is required to obtain registration under GST Law.
No. Particulars Amount
Intra-State supply of goods agricultural produce grown out of
1 5,50,000
cultivation of land by family members
Intra-State supply of goods which are wholly exempt from GST u/s 11
2 6,00,000
of CGST Act, 2017
3 Intra - State supply of goods chargeable with GST @ 5% 8,50,000
4 Intra – state supply of services which are wholly exempt from tax 50,000
Solution:
Intra-State supply of goods agricultural produce grown out of
1 5,50,000
cultivation of land by family members [WN – 1]
Intra-State supply of goods which are wholly exempt from GST u/s 11 of
2 6,00,000
CGST Act, 2017 [WN – 2]
3 Intra - State supply of goods chargeable with GST @ 5% [WN – 3] 8,50,000
Intra – state supply of services which are wholly exempt from tax [WN –
4 50,000
4]
Total Value of supplies 20,50,000
Working Note:
1) An agriculturist is not liable to obtain registration under the Act to the extent of supply of produce out of
cultivation of land. Since, Mr. A is engaged in supply of other goods and services also, he is not covered
u/s 23. In such a case aggregate turnover will include all supplies made by him including supply of
agricultural produce.
2) Intra – state supply of goods which are wholly exempt from GST u/s 11 of CGST Act, 2017 is to be
included since the same is specifically included in the definition of aggregate turnver.
3) Intra – state supply of goods chargeable with GST @ 5% is specifically included for determination of
aggregate turnover.
4) Intra – state supply of services through exempt from tax is specifically included in the definition of
aggregate turnover.
Since he is angaged in intra state supply of both goods and services from Rajasthan, the applicable threshold
limit for registration will be Rs. 20 lakh.

Since the aggregate turnover exceeds Rs. 20,00,000, hence Mr. A is required to obtain registration under
GST law.
3. From the following information you are required to determine whether XYZ Ltd incorporated in
Rajasthan is liable to be registered under GST Law if the Company has effected following
supplies within the state of Rajasthan.
1 Intra-State supply of goods chargeable with GST @ 5% 15,51,000
Intra-State supply of goods which are wholly exempt from GST u/s 11
2 5,00,000
of CGST Act, 2017
3 Interest received from FD made with Bank of Rajasthan 1,00,000
4 Intra-State supply of goods chargeable with 18% GST 50,000
4 Intra - state supply of goods chargeable with Nil Rate 18,50,000
Solution:
Section 22(1) of the CGST Act, 2017 read with NN 10 / 2019 – CT dated 07-03-2019 inter alia providesthat
every supplier who is engaged in intra – state exclusive supply of goods is liable to be registered under GST
in the State / UT from where he makes the taxable supply of goods only when aggregate turnover in a FY
exceeds Rs. 40,00,000.
Since XYZ Ltd. is exclusively engaged in making intra – state taxable supplies of goods from Rajasthan, the
applicable threshold limit for obtaining registration is Rs. 40 lakhs as specified in NN 10/2019 – CT dated 07-
03-2019.
XYZ Ltd. shall be considered to be engaged exclusively in the supply of goods even if it is engaged in exempt
supply of services provided by way of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount. Hence, the threshold limit of registration shall not be reduced to
Rs. 20 lakh.
According to Section 2(6) of CGST Act, 2017 ‚Aggregate Turnover‛ means the aggregate value of all taxable
supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),
exempt supplies, export of goods or services or both and inter – state supplies of persons having the same
PAN, to be computed on all India basis but excludes central tax, State tax, UT tax, integrated tax and cess.
Computation of aggregate turnover

1 Intra-State supply of goods chargeable with GST @ 5% [WN – 1] 15,51,000
Intra-State supply of goods which are wholly exempt from GST u/s 11 of
2 5,00,000
CGST Act, 2017 [WN – 2]
3 Interest received from FD made with Bank of Rajasthan [WN – 4] 1,00,000
4 Intra-State supply of goods chargeable with 18% GST [WN – 3] 50,000
4 Intra - state supply of goods chargeable with Nil Rate of GST [WN – 4] 18,50,000
Total value of supplies 40,51,000

Thus, in this case since aggregate turnover of the company exceeds Rs. 40 lakhs, it is liable to get registered
under GST law.
Working note:
aggregate turnover.
2) Intra – state supply of goods which are wholly exempt from GST u/s 11 of CGST Act, 2017 is to be
included for determination of aggregate turnover.
aggregate turnover.
4) Intra – state supply of goods chargeable with Nil rate of GST is covered under exempt supplies, hence it
is to be included in computation of aggregate turnover.
5) Services by way of extending deposits, loans or advances in so far as the consideration is represented by
way of inerest or discount (other than interest involved in credit card services) is exempt vide NN
12/2017 – CT (R) dated 28-06-2017 Since aggregate turnover includes exempt supply, interest received
from banks on the FDs, being exempt supply, is included in the aggregate turnover.
4. SNP Pvt. Ltd., Coimbatore exclusively manufactures and sells product 'X' which is exempt from
GST vide notification issued under relevant GST legislation, The Company sells 'X' only within
Tamil Nadu. The turnover of the company in the previous year was Rs 45 lakh. The company
expects the sales to grow by 30% in the current year. The Company purchased additional
machinery for manufacturing ‘X’ on 01-07-2019. The purchase price of the capital goods was Rs
30 lakh exclusive of GST @ 18%.
However, effective from 01-11-2019, exemption available on 'X'was withdrawn by the Central
Government and GST @ 12% was imposed thereon. The turnover of the company for the half
year ended on 30-09-2019 was Rs 45 lakh.
Examine the above scenario and advice SNP Pvt. Ltd. whether it needs to get register under GST.
If the answer to the above question is in affirmative, advice SNP Pvt. Ltd. whether it can avail
ITC on additional machinery purchased exclusively for manufacturing ‘X’?
(RTP Nov 2019)
Solution:
Case Explanation
a. Registration Section 22(1) of the CGST Act, 2017 read with Notification No. 10 / 2019 - CT dated
requirements: 07.03.2019 inter alia provides that every supplier who is engaged in Intrastate exclusive
supply of goods is liable to be registered under the GST in the State / UT from where he
makes the taxable supply of goods when the aggregate turnover for the FY exceeds Rs.
40,00,000.
 Howver the above provisions are not applicable to few specified states i.e States of
Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry,
Sikkim, Telegana, Tripura, Uttarakhand. Futher a person exclusively engaged in the
business of supplying goods and / or services that are not liable to tax or are wholly
exempt from tax is not liable to registration in terms of section 23(1)(a) of CGST

Act, 2017
 In the given case, the turnover of the company for the half year ended on 30-09-2019
is Rs 45 lakh which is more than the threshold limit of the Rs. 40 lakh. Therefore as
per above mentioned provisions, the company should be liable to registration.
However, since SNP Pvt. Ltd. supplied exempted goods till 31.10.2019, it was not
required to be registered till that day though voluntary registration was allowed
under Section 25 (3) of the CGST Act, 2017.
 However, the position will change from 01-11-2019 as the supply of goods become
taxable from that day and the turnover of company is above Rs40 lakh. It is
important to note here that in terms of Section 2 (6) of the CGST Act, 2017 the
aggregate turnover limit of Rs 40 lakh includes exempt turnover also.
 Therefore, turnover of'X'will be considered for determining the limit of Rs 40 lakh
even though the same was exempt from GST. Therefore, the company needs to
register within 30 days from 01-11-2019 (the date onwhich it becomes liable to
registration) in terms of Section 25 (1) of the CGST Act, 2017.
b. Input tax Section 18(1)(a) of the CGST Act, 2017 provides that a person who has applied for
credit eligibility registration within 30 days from the date on which he becomes liable to registration and
has been granted such registration shall be entitled to take credit on input tax in respect
of inputs held in stock and inputs contained in semi finished goods or finished goods
held in stock on the day immediately preceeding the date on which he becomes liable to
pay tax under the provisions of this Act. Thus SNP Pvt Ltd. cannot avail credit for
additional machinery exclusively for manufacturing as input tax credit of only inputs is
allowed when a person gets registered for the first time.
5. Rishabh Enterprises - a sole proprietorship firm - started an air - conditioned restaurant in Virar,
Maharashtra in the month of February wherein the customers are served cooked food as well as
cold drinks / non - alcoholic beverages. In March, the firm opened a liquor shop in Kohima,
Nagaland for trading of alcoholic liquor for human consumption.
Determine whether Rishabh Enterprises is liable to be registered under GST law with the help of
the followinginformation:
Particulars February March
(Rs.)* (Rs.)*
Serving of cooked food and cold drinks/non-alcoholic beverages in 5,50,000 6,50,000
restaurant in Maharashtra
Sale of alcoholic liquor for human consumption in Nagaland - 5,00,000
Supply of wholly exempted services 1,00,000 1,00,000
Export of packed food items from restaurant in Maharashtra 1,50,000 2,00,000
* excluding GST.
You are required to provide reasons for treatment of various items given above.

Solution:
Registration provisions: As per section 22 of the CGST Act, 2017, a supplier is liable to be registered in
the State/Union territory from where he makes a taxable supply of goods or services or both, if his aggregate
turnover in a financial year exceeds Rs 20 lakh.
 However, if such taxable supplies are made from any of the specified special category states, namely,
states of Manipur, Mizoram, Nagaland, Tripura, he shall be liable to be registered if his aggregate
turnover in a financial year exceeds Rs 10 lakh.
 In the given question, since Rishabh Enterprises is engaged in making taxable supplies from Maharashtra
which is not a specified Special Category State, the threshold limit for obtaining registration is Rs 20
Lakh. It will not get the benefit of higher threshold limit of Rs. 40 lakhs since it is not engaged in
exclusive supply of goods as it is also providing exempt services.
 The threshold limit is not reduced to Rs 10 lakh in this case, as sale of alcoholic liquor for human
consumption from Nagaland (one of the specified Special Category States) are non-taxable supplies in
terms of Section 9 (1) of CGST Act, 2017.
 As per Sec. 2 (6) of the CGST Act, 2017 aggregate turnover includes the aggregate value of-
1. all taxable supplies,
2. all exemptsupplies,
3. exports of goods and/or services and
4. all inter-State supplies of persons having the same PAN.
 The above is computed on all India basis. Further, the aggregate turnover excludes central tax, State tax,
Unionterritory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is
payable underreverse charge is not taken into account for calculation of'aggregate turnover'.
 In the light of the afore-mentioned provisions, the aggregate turnover of Rishabh Enterprises is computed
asunder
Computation of aggregate turnover of Rishabh Enterprises (amount in Rs)

Turnover of Cumulative turnover of
Particulars
February February & March
Serving of cooked food and cold drinks/non-alcoholic 5,50,000 12,00,000
beverages inrestaurant in Maharashtra [Rs 5,50,000 + Rs 6,50,000]
Add Sale of alcoholic liquor for human consumption - 5,00,000
in Nagaland [WN 1]
Add Supply of wholly exempted services [WN-2] 1,00,000 2,00,000
[Rs 1,00,000 + Rs 1,00,000]
Add: Export of packed food items from restaurant in 1,50,000 3,50,000
Maharashtra [Rs 1,50,000 + Rs 2,00,000]
Aggregate Turnover 8,00,000 22,50,000
Working Notes
1) As per Section 2 (47) of the CGST Act, 2017, exempt supply includes non-taxable supply. Thus,
supply of alcoholic liquor for human consumption in Nagaland, being a non-taxable supply, is an
exempt supply and is, therefore, includible while computing the aggregate-turnover.
2) Supply of wholly exempt services is includible while computing the aggregate turnover.

Conclusion:
Rishabh Enterprises was not liable to be registered in the month of February since its aggregate turnover did
not exceed Rs 20 Lakh in that month. However, since its aggregate turnover exceeds Rs 20 Lakhs in the
month of March, it should apply for registration within 30 days from the date on which it becomes liable to
registration.
6. ABC Ltd. of Jaipur, Rajasthan has affected Intra-State supplies of Taxable goods amounting Rs.
38, 00,000 till 31 – 12-2019. On 01-01-2020 it has affected Inter-State supply of Taxable goods
amounting Rs. 1,00,000. ABC Ltd. is of the opinion that it is not required to get registered under
GST Law since its aggregate Turnover is not likely to exceed Rs. 40,00,000 during Financial Year
2019-20. As a consultant of the Company you are required to advise the Company relating to
registration requirements.
Solution:
The opinion of ABC Ltd. is not correct. As per provision of Sec. 24 of CGST Act, 2017, person making inter –
state taxable supply of goods are compulsorily required to obtain registration thus, sec. 24 is an overriding
section that makes it mandatory to obtain registration by certain prescribed persons even though the
condition prescribed u/s 22 are not met. Hence, ABC Ltd. is mandatorily required to obtain registration.
As per provisions of sec. 25 of CGST Act, 2017, every person who is liable to be registered under sec. 22 or
sec. 24 shall apply for registration in every such state or UT in which he is so liable within 30 days from the
date on which he becomes liable to registration, in such manner and subject to such conditions as may be
prescribed. Thus, ABC Ltd. is required to obtain registration upto 31-01-2020.
7. AB Pvt. Ltd., Pune provides house - keeping services. The company supplies its services
exclusively through an e - commerce website owned and managed by Hi - tech Indya Pvt. Ltd.,
Pune. The turnover of AB Pvt. Ltd. in the current FY is Rs. 18 lakh.
Advise AB Pvt. Ltd. as to whether they are required to obtain GST registration. Will your advice
be any different if AB Pvt. Ltd. sells readymade garments exclusively through the e-commerce
website owned and managed by Hi-Tech Indya Pvt. Ltd.?
Solution:
Sec. 24 of the said Act enlists certain categories of persons who are mandatorily required to obtain
registration, irrespective of their turnover. Persons who supply goods or services or both through such ECO,
who is required to collect tax at source u/s 52, is one such person specified u/s 24(ix). However, where the
ECO is liable to pay tax on behalf of the suppliers of services under a notification issued u/s 9(5), the
suppliers of such services are entitled for threshold exemption. Besides this vide Notification No. 65/2017 –
CT dated 15-11-2017, it has been provided that persons who are suppliers of service and supplying services
through ECO are not required to register under GST if their aggregate turnover is less than Rs. 20 lakhs per
annum (Rs. 10 lakh in case of Special Category States of Mizoram, Tripura, Manipur and Nagaland)

Particulars Explanation
E-commerce Sec. 2(45) of the CGST Act defines ECO as any person who owns, operates or
Operator manages digital or electronic facility or platform for electronic commerce.
Electronic commerce is defined u/s 2(44) to mean the supply of goods or services or
both, including digital products over digital or electronic network.
Since, Hi-Tech Indya Pvt. Ltd. owns and manages a website for e - commerce
where both goods and services supplied, it will be classified as an ECO u/s 2(45).
ECO liable for Notification No. 17/2017-CT (R) dated 28-06-2017 issued u/s 9(5) specifies
Registration services by way of house-keeping, except where the person supplying such service
through ECO is liable for registration u/s 22(1), as one such service where the
ECO is liable to pay tax on behalf of the suppliers.
In the given case, AB Pvt. Ltd. provides house-keeping services through an ECO.
It is presumed that Hi-Tech Indya is an ECO which is required to collect tax at
source u/s 52. However, house-keeping services provided by AB Pvt. Ltd., which is
not liable for registration u/s 22(1) as its turnover is less than Rs. 20 lakh, is a
service notified u/s 9(5). Thus, AB Pvt. Ltd. will be entitled for threshold
exemption for registration and will not be required to obtain registration even
though it supplies services through ECO.
Supply of goods In the second case, AB Pvt. Ltd., sells readymade garments through ECO. Such
through ECO – supply cannot be notified u/s 9(5) as only supplies of services are notified under
Supplier liable for that section. Therefore, in the second case, AB Pvt. Ltd., will not be entitled for
Compulsory threshold exemption and will have to compulsorily obtain registration in terms of
Registration sec. 24(ix)
8. Mahadev Enterprises, a sole proprietorship firm, opened a shopping complex dealing in supply
of goods at multiple locations, i.e., in Himachal Pradesh, Uttarakhand and Tripura in the month
of June.
It has furnished the following details relating to the sale made at such multiple locations for the
month of June:-
Himachal
No Particulars Uttarakhand(Rs.) Tripura(Rs.)
Pradesh(Rs.)*
1 Intra-state sale of taxable goods 22,50,000 - 7,00,000
2 Intra-state sale of exempted goods - - 6,00,000
3 Interest received from Banks on
- - 60,000
the FDs
4 Intra-state sale of non-taxable
- 21,00,000 40,000
goods
*Excluding GST.
With the help of the above mentioned information, answer the following questions giving reasons:-
1) Determine whether Mahadev Enterprises is liable to be registered under GST law and what
is the threshold limit of taking registration in this case.
2) Explain with reasons whether your answer in 1) will change in the following independent
cases:
a) If Mahadev Enterprises is dealing in taxable supply of goods only from Himachal Pradesh;

b) If Mahadev Enterprises is dealing in taxable supply of goods and services only from
Himachal Pradesh;
c) If Mahadev Enterprises is dealing in taxable supply of goods only from Himachal Pradesh
and has also effected inter-state supplies of taxable goods amounting to Rs. 4,00,000.
Solution:
As per sec. 22 of the CGST Act, 2017 read with notification no. 10/2019 CT dated 07-03-2019, a supplier is
liable to be registered in the State/UT from where he makes a taxable supply of goods and / or services, if his
aggregate turnover in a FY exceeds the threshold limit. The threshold limit for a person making exclusive
intra-state taxable supplies of goods is as under:-
i. Rs. 10 lakh for the states of Mizoram, Tripura, Manipur and Nagaland.
ii. Rs. 20 lakh for the states of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana and
Uttarakhand.
iii. Rs. 40 lakh for rest of India.
The threshold limit for a person making exclusive taxable supply of services or supply of both goods and
services is as under:-
i. Rs. 10 lakh for the states of Mizoram, Tripura, Manipur and Nagaland.
ii. Rs. 20 lakh for the rest of India.
Aggregate turnover: As per sec. 2(6) of the CGST Act, 2017, aggregate turnover includes the aggregate
value of:
i. All taxable supplies,

ii. All exempt supplies,
iii. Export of goods and / or services and
iv. All inter-state supplies of persons having the same PAN.
The above is computed on all India basis.
In the light of the afore-mentioned provisions, the aggregate turnover of Mahadev Enterprises is computed as
under:
Computation of state-wise aggregate turnover:
Himachal
Particulars Uttarakhand(Rs.) Tripura(Rs.)
Pradesh(Rs.)*
Intra-state sale of taxable goods 22,50,000 - 7,00,000
Intra-state sale of exempted goods - - 6,00,000
Interest received from Banks on the FDs
- - 60,000
[WN-1]
Intra-state sale of non-taxable goods
- 21,00,000 40,000
[WN-2]
Aggregate turnover 22,50,000 21,00,000 14,00,000
Working notes:
1) Services by way of extending deposits, loans or advances in so far as the consideration is represented by
way of interest or discount (other than interest involved in credit card services) is exempt vide

notification no. 12/2017-CT (R) dated 28-06-2017. Since aggregate turnover includes exempt supply,
interest received from banks on FDs, being exempt supply is included in the aggregate turnover.
2) As per sec. 2(47) of the CGST Act, 2017, exempt supply includes non-taxable supply. Thus, intra-state
supply of non-taxable goods in Uttarakhand, being a non-taxable supply, is an exempt supply and is
therefore included in the aggregate turnover.
In the given case, Mahadev Enterprises is engaged in exclusive intra-state supply of goods from Himachal
Pradesh and Uttarakhand and in supply of both goods and exempted services from Tripura, the threshold
limit for registration will be Rs. 40 lakh, Rs. 20 lakh and Rs. 10 lakh respectively.
Further, since Mahadev Enterprises also makes taxable supply of goods from one of the Specified Special
category states (i.e., Tripura) the threshold limit for registration will be reduced to Rs. 10 lakh.
1) Thus, in view of above mentioned provisions Mahadev is liable to be registered under GST law with
the aggregate turnover amounting to Rs. 57,50,000 (computed on all India basis). The applicable
threshold limit of registration in this case is Rs. 10 lakh.
2)
a) If Mahadev is dealing in supply of goods only from Himachal Pradesh, the applicable threshold
limit of registration would be Rs. 40 lakh. Thus, Mahadev will not be liable for registration as its
aggregate turnover would be Rs. 22,50,000
b) If Mahadev is dealing in taxable supply of goods and services only from Himachal Pradesh, then
higher threshold limit of Rs. 40 lakh will not be applicable as the same applies only in case of
exclusive supply of goods. Therefore, in this case, the applicable threshold limit will be Rs. 20 lakh
and hence Mahadev will be liable to registration.
In case of inter-state supplies of taxable goods, sec. 24 of the CGST Act, 2017 requires compulsory
registration irrespective of the quantum of aggregate turnover. Thus, Mahadev will be liable to registration.

CHAPTER – 2
PROCEDURE FOR REGISTRATION
SECTION DESCRIPTION
25 Procedure for Registration
26 Deemed Registration
27 Special Provisions for CTP & Non – Resident Taxable Person
| BY CA DEEPAK P ANDIAN& CA ANEESH NOOR MOHAMMED 25

Section Explanation
Application to be Every person who is liable to be registered shall apply for registration
made within 30 days in every such State or UT in which he is so liable within 30 days from
in every State / UT the date on which he becomes liable to registration, in such manner
in which such and subject to such conditions as may be prescribed.
person is liable for
registration – 25(1)
Supplier making Every person who makes a supply from the TWI shall obtain
supply from TWI – registration in the coastal State or UT where the nearest point of the
Registration to be appropriate baseline is located.
obtained from
nearest coastal State
or UT – Explanation
Separate registration A person having a unit, as defined in the SEZ Act, 2005, in a SEZ or
for SEZ units and being a SEZ developer shall have to apply for a separate registration,
Non – SEZ units as distinct from his place of business located outside the SEZ in the
same State or UT.
Example Raheja Services Ltd. is engaged in taxable supply of services in
Rajasthan. The turnover of Raheja Services Ltd., exceeded Rs. 20 lakh
on 1st September. It is liable to get registered by 1st October in the State
of Rajasthan.
One registration per A person seeking registration under this Act shall be granted a single
State – 25(2) registration in a State or UT. Thus, if within a State, an entity with
different branches would have single registration wherein it can
declare one place as principal place of business (PPoB) and other
branches as additional place of business (APoB).
Separate registration A person having multiple places of business in a State or UT may be
for multiple place of granted a separate registration for each such place of business, subject
business in a State / to such conditions as may be prescribed.
UT However, separate registration for each place of business shall be
granted provided all separately registered place of business of such
person pay tax on supply of goods / services / both made to another
registered place of business, of such person and issue a tax invoice /
bill of supply, for such supply. Separate registration application needs
to be filed for each place of business.
Composition levy in  If a person is paying tax for one of his places of business under
case of separate normal scheme, he shall not pay tax under composition levy for
registration for any other place of business.
multiple places of  If one of the places of business [separately registered] of a
business within a registered person becomes ineligible to pay tax under composition
State / UT levy, all other registered places of business of said person would
also become ineligible to pay tax under composition levy.
 The provisions of rules 9 and 10 relating to verification and grant
of registration shall mutatis mutandisapply to an application
submitted under this rule.
Voluntary A person who is not liable to be registered u/ s 22 or section 24 may get
registration – All himself registered voluntarily. In case of voluntary registration, all
provisions of provisions of this Act, as are applicable to a registered person, shall
Registration apply to voluntarily registered person.
Applicable – 25(3)
Advantages of Voluntary registration is advantageous for the persons which supply

voluntary of goods or services or both to registered persons. The reason for the
registration same is that by virtue of section 9(4) of the CGST Act, in case of
supplies of notified goods and services received from unregistered
supplier by registered recipient, recipient has to pay the tax under
reverse charge.
Therefore, business units would prefer receiving supplies from the
registered persons only. Thus, voluntary registration enables a
supplier of goods or services or both to enhance its B2B transactions.
However, once a person obtains voluntary registration, he has to pay
tax even though his aggregate turnover does not exceed Rs. 40 lakh /
Rs. 20 lakh / Rs. 10 lakh.
Person having more A person who has obtained or is required to obtain more than one
than one registration registration, whether in one State or UT or more than one State or UT
– each such shall, in respect of each such registration, be treated as distinct persons
registration to be for the purposes of this Act.
treated as Distinct
persons – 25(4)
Premises in separate Where a person who has obtained or is required to obtain registration
states – Deemed in a State or UT in respect of an establishment, has an establishment in
distinct persons – another State or UT, then such establishments shall be treated as
25(5) establishments of distinct persons for the purposes of this Act.
PAN mandatory for Every person shall have a PAN issued under the IT Act, 1961 in order
obtaining to be eligible for grant of registration.
registration – 25(6)
TAN mandatory However, a person required to deduct tax u/ s 51 may have, in lieu of a
PAN, a Tax Deduction and Collection Account Number issued under
the said Act in order to be eligible for grant of registration.
Authentication of Every registered person shall undergo authentication, or furnish proof
registered person by of possession of aadhaar number, in such form and manner and
Aadhaar number - within such time as may be prescribed.
section 25(6A)
Alternate means of However, if an aadhaar number is not assigned to the registered
authentication if person, such person shall be offered alternate and viable means of
aadhaar number not identification in such manner as Govt. may, on the recommendations
assigned of the council, prescribe.
Authentication In case of failure to undergo authentication or furnish proof of
failure – possession of aadhaar number or furnish alternate and viable means
Registration invalid of identification, registration allotted to such person shall be deemed
to be invalid and other provisions of this Act shall apply as if such
person does not have a registration.
Authentication by On and from the date of notification, every individual shall, in order to
aadhaar number for be eligible for grant of registration, undergo authentication, or furnish
grant of registration proof of possession of aadhaar no. in such manner as the Govt. may on
- sec. 25(6B) the recommendations of the council, specify in the said notification.
Vide NN 18/220 CT – dated 23-03-2020 the CG has notified 01-04-
2020 as the date from which an individual shall undergo
authentication, of Aadhaar no., as specified in Rule 8 of the CGST
Rules, 2017 in order to be eligible for registration.

Alternate means of If an aadhaar no. is not assigned to an individual, such individual shall
authentication if be offered alternate and viable means of identification in such manner
aadhaar no. not as the Govt. may on the recommendations of the council, specify in the
assigned said notification.
Non-individuals – On and from the date of notification, every person, other than an
authentication by individual, shall, in order to be eligible for grant of registration,
aadhaar no. of undergo authentication, or furnish proof of possession of aadhaar no. of
authorized persons the Karta, MD, WTD, such no. of partners, Members of Mnaging
- sec. 25(6C) Committee of Association, Board of Trustees, authorized
representative, authorized signatory and such other class of persons, in
such manner, as the Govt. may on the recommendations of the council,
specify in the said notification.
Alternate means of Where such person or class of persons have not been assigned the
authentication if aadhaar no. such person or class of person shall be offered alternate and
aadhaar no. not viable means of identification in such manner as the Govt. may on the
assigned recommendations of the Council, specify in the said notification.
CG Notification The CG has notified on 01-04-2020, as the date, from which the –
a) Authorized signatory of all types;
b) Managing and Authorized partners of a partnership firm; and
c) Karta of an HUF,
Shall undergo authentication of possession of Aadhaar no., as specified
in rule 8 of the CGST Rules, 2017, in order to be eligible for registration
under GST.
Non - applicability The provisions of sec. 25(6A)/(6B)/(6C) shall not apply to such person or
- Sec. 26(6D) class of persons or any state or UT or part thereof, as the Govt. may on
the recommendations of the council, specify by notification.
Aadhaar No. It shall have the same meaning as assigned to it in sec. 2(a) of the
explanation Aadhaar Act, 2016.
Persons exempted The CG on the recommendations of the council, hereby notifies that
from aadhaar aadhaar authentication provisions shall not apply to a person who is
authentication not a citizen of India or to a class of persons other than the following
persons namely:
a) Individual,
b) Authorized signatory of all types,
c) Managing and authorized partner, and
d) Karta of an HUF
Non – resident A non – resident taxable person may be granted registration on the
taxable person – basis of such other documents as may be prescribed.
registration can be
granted on basis of
other documents –
25(7)
Failure to obtain Where a person who is liable to be registered under this Act, fails to
registration – obtain registration, the proper officer may, without prejudice to any
Mandatory action which may be taken under this Act or under any other law for
Registration – 25(8)
the time being in force, proceed to register such person in such manner
as may be prescribed.

Unique Identity Notwithstanding anything contained in Section 25(1) –

Number (UIN) to a) Any specialized agency of the UNO or any Multilateral
be granted to Financial Institution and Organization notified under the
specialized agency United Nations (Privileges and Immunities) Act, 1947,
of UNO / Consulate Consulate or Embassy of foreign countries; and
/ Embassy of b) Any other person or class of persons, as may be notified by the
foreign country / Commissioner
Other notified Shall be granted a Unique Identity Number in such manner and for
persons – 25(9) such purposes, including refund of taxes on the notified supplies of
goods or services or both received by them, as may be prescribed.
This UIN is needed for claiming refund of taxes paid on notified
supplies of goods and / or services received by them, and for such
other purpose as may be notified.
RC / UIN to be The registration or the UIN shall be granted or rejected after due
granted or rejected verification within 3 working days from the date of submission of
after due application.
verification – 25(10)
RC to be issued in A certificate of registration shall be issued in such form and with effect
prescribed form – from such date as may be prescribed.
25(11)
RC / UIN not A registration or a UIN shall be deemed to have been granted after the
granted within expiry of the period prescribed u/ s 25(10), if no deficiency has been
prescribed period – communicated to the applicant within that period.
Deemed to be
granted – 25(12)

PROCEDURE FOR REGISTRATION – RULE 8

PART- I
Every person liable to get registered and person seeking voluntary registration, shall, before
applying for registration, declare his PAN, Mobile Number, E - Mail Address, State / UT Act in
Part A of Form GST REG - 01 on GST Common Portal. Applicant shall undergo Aadhaar
authentication. Failure of Aadhaar authenication - Registration to be granted only after
physical verification of the PPoB.
Validation of PAN, Mobile & E - mail ID
1)PAN validated online by common portal from CBDT database

2)Mobile number and email verified through one time password sent to it.
Temporary Reference Number (TRN) is generated and communicated to the applicant on the
validated mobile number and e - mail address
Using TRN, applicant shall electronically submit application in Part B of the application form,
along with specified documents at the Common Portal
On receipts of such application,

an acknowledgement in the prescribed form shall be issued to the applicant electronically.
A Casual Taxable (CTP) applying for registration gets a TRN for making an advance deposit of
tax in his electonic cash ledger and an acknowledgment is issued only after said deposit.
Application shall be forwarded to the Proper Officer
The procedure after receipt of application by the Proper Officer is depicted in

Part II of the diagram

PART- II
Proper Officer examines the application and accompanying accounts.

If the same are found in Order?
YES NO
Within 3 working days Proper Officer Issues Notice Electronically, within 3

from the date of working days from application date thereby seeking
submission of clarification, information or documents from the
application applicant.
If applicant has furnished the clarification,

Proper officer will grant information or documents within 7 working days
registration certificate in from receipt of notice and
Form GST REG - 06
If Proper Officer is satisfied with it?
YES NO
Within 7 working days from

the date of receipt of Proper Officer will reject
information / clarification / the application for
documents, Proper officer will reasons to be recorded
grant registration certificate in in writing
Form GST REG - 06

DEEMED REGISTRATION – SEC 26
Section Explanation
Deemed The provisions of deemed registration are as under –
registration –
Section 26
RC / UIN granted The grant of registration or the UIN under the SGST Act or the UTGST
under SGST / Act shall be deemed to be a grant of registration or the UIN under this
UTGST Act – Act subject to the condition that the application for registration or the
Deemed UIN has not been rejected under this Act within the time specified in
registration under section 25(10).
CGST Act
Rejection of Any rejection of application for registration or the UIN under the SGST
registration Act or the UTGST Act shall be deemed to be a rejection of application for
application under registration under this Act.
SGST / UTGST
Act – Deemed
rejection under
CGST Act
SPECIAL PROCEDURE FOR REGISTRATION OF CTP & NRTP – SEC 27
Casual \ NR A casual taxable person or a non-resident taxable person shall
taxable person – apply for a registration at least 5 days prior to the
application to be commencement of business.
made at least 5
days prior to the
commencement
of business –
Section 25.
Advance deposit A casual taxable person or a non-resident taxable person shall, at
to be made the time of submission of application for registration, make an
equivalent to the advance deposit of tax in an amount equivalent to the estimated
estimated tax tax liability of such person for the period for which the
liability – Section registration is sought.
27(2).
Additional Where any extension of time sought, such taxable person shall
deposit in case of deposit an additional amount of tax equivalent to the estimated
extension – Equal tax liability of such person for the period which the extension
to additional tax sought.
Amount The amount of estimated tax deposited shall be credited to the
deposited to be electronic cash ledger of such person and shall be utilized in the
credited to manner provided under Section 49. [section 49 provides for
Electronic cash manner of payment of tax]
ledger – Section
27(3).

Casual \ non- The certificate of registration issued to taxable person or a non-

resident taxable resident taxable person shall be valid for –
person –  The period specified in the application for registration; or
Registration  90 days from the date of effective date of registration,
valid uptoperiod Whichever is earlier
specified or 90
days – Section
27(1).
Extension for The proper officer may, on sufficient cause being shown by the
further period of said taxable person, extend the said period of 90 days by the
90 days further period not exceeding 90 days.
Taxable supplies Such person shall make taxable supplies only after the issuance of
to be effected the certificate of registration.
only after the
issuance of RC
SPECIAL PROCEDURE FOR REGISTRATION OF CTP & NRTP– SEC 27
Casual Taxable Person Non Resident Taxable Person

A Casual Taxable person means a person who A Non-Resident taxable person means a
occasionally undertakes transactions involving person who occasionally undertakes
supply of goods or services or both in a State transactions involving supply of goods or
or UT where he has no fixed place of business. services but has no fixed place of business/
residence in India.
He has a PAN Number He does not have PAN number. A non-
resident person, if having PAN number may
take registration as a casual taxable person.
Application form for registration is same as for Different application form for registration by
normal taxable person viz. GST REG–01 non - resident taxable person viz. GST REG -
09
He has to undertake transactions in the course There is no such requirement.
or furtherance of business
He has to file normal GSTR - 1, GSTR - 2 and He has to file a separate simplified return in
GSTR - 3B the format GSTR – 5
He can claim ITC of all inward supplies He can get ITC only in respect of import of
goods.

GST Laws Prescribes special procedure for registration, as also for exemption of
the operation period of such Casual or Non - resident taxable person
They have to apply for registration at least 5 days in advance before

commencement of business
Registration is granted to them or period of operation is extended only after

they make advance deposit of the estimated tax liability
Registration is granted to them for the period specified in the registration

application or 90 days from the effective date of registration which ever is
earlier
Examples: -
Vena Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. The turnover
of Vena Services Ltd. exceeded Rs. 20 lakh on 1st November. It is liable to get registered by 1st
December in the State of Madhya Pradesh.
Mohan, a Chartered Accountant, has a registered head office in Delhi. He has also obtained
registration in the State of West Bengal in respect of his newly opened branch office. Mohan
shall be treated as distinct persons in respect of registrations in West Bengal and Delhi.
Suvarna Industries is engaged in manufacturing activities in Uttar Pradesh. It has two

manufacturing units in UP - one in SEZ and another outside SEZ. Under GST, one registration
per State is required. However, since in this case, one of the two units of Suvarna Industries is
located in SEZ, it will make a separate application for registration as a business vertical
distinct from unit located outside SEZ
Sugam Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. The
turnover of Sugam Services Ltd. exceeded Rs.20 lakh on 1st November. It is liable to get
registered by 1st December [30 days] in the State of Madhya Pradesh. It applies for registration
on 28th November and is granted registration certificate on 5th December. The effective date
of registration of Sugam Services Ltd. is 1st November.
In above example, if Sugam Services Ltd. applies for registration on 3rd December and is
granted registration certificate on 10th December. The effective date of registration of Sugam
Services Ltd. is 10th December.

CHAPTER – 3
AMENDMENT / REVOCATION /
CANCELLATION OF REGISTRATION
SECTION DESCRIPTION
28 Amendment of Registration
29 Cancellation of Registration
30 Revocation of Cancellation

AMENDMENT OF REGISTRATION

Except for the changes in some core information in the registration application, a
taxable person shall be able to make amendments without requiring any specific
approval from the tax authority.
In case the change is for legal name of the business, or the State of Place of
business or additional place of business, the taxable person will apply for
amendment within 15 days of the event necessitating the change.
The proper officer, then, will approve the amendment within the next 15
days.
For other changes like the name of day to day fuctionaries, e-mail IDs, mobile
numbers etc no approval of the Proper Officer is required, and the amendment
can be affected by the taxable person on his own on the common portal.
CANCELLATION OF REGISTRATION – SECTION 29

Cancellation or The proper officer may,-
suspension of  either on his own motion, or
registration - Section  on an application filed-
29 [Amended by - by the registered person, or
CGST Amendment - by his legal heirs, in case of death of such person,
Act , 2018 w.e.f 01 – cancel the registration, in such manner and within such period as may
02 – 2019] be prescribed
Circumstances in The registration can be cancelled having regard to thefollowing
which Registration is circumstances where,-
Cancelled a) the business has been –
 discontinued,
 transferred fully for any reason including death of the
proprietor,
 amalgamated with other legal entity,
 demerged, or
 otherwise disposed of, or
b) there is any change in the constitution of the business or
c) the taxable person, other than the person registered under
Section 25 (3) i. e. Voluntary Registration,isno longer liable to be
registered under Section 22 or Section 24

Cancellation of The proper officer may cancel the registration of a person from such
registration by proper date, including any retrospective date, as he may deem fit, where,-
officer-Reasons a) a registered person has contravened such provisions of the Act
thereof – Section or the rules made there under i. e.
29(2) and Rule 21 of 1) he does not conduct any business from the declared place
CGST Rules, 2017 of business or
2) he issues invoice or bill without supply of goods or services
in violation of the provisions of thisAct, or the rules made
thereunder.
3) he violates the provisions of Section 171 of the Act or the
rules made thereunder
4) Violates the provision of Rule 10A (i.e, furnishing of bank
account details)
Note: Section 171 provides for Anti Profiteering Measure.
b) a person paying tax under Section 10 i. e. composition scheme
has not furnished returns for 3 consecutive tax periods or
c) any registered person, other than a person specified in Section
29(2)(b), has not furnished returns for acontinuous period of 6
months or
d) any person who has taken voluntary registration under Section
25(3) has not commenced businesswithin 6 months from the date
of registration or
e) Registration has been obtained by means of fraud, wilful
misstatement or suppression of facts.
Opportunity of being The proper officer shall not cancel the registration without giving the person
heard an opportunity of being heard.
Cancellation of The cancellation of registration under this Section shall not affect the
registration-Not to liability of the person to pay tax and other dues under this Act or to
affect tax liability - discharge any obligation under this Act or the rules made thereunder
Section 29(3)
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
Cancellation under The cancellation of registration under the SGST Act or the UTGST Act,
SGST/ UTGST Act- as the case may be, shall be deemed to be a cancellation of registration
Deemed cancellation under this Act
under CGST Act -
Section 29(4)
On cancellation- Pay Every registered person whose registration is cancelled shall pay
ITC availed on goods anamount calculated in such manner asmay be prescribed, by way of
in stock or output tax debit in the electronic credit ledger or electronic cash ledger
whichever is higher -
 equivalent to the credit of input tax in respect of
Section 29(5)
- inputs held in stock, or
- inputs contained in semi-finished goods, or
- inputs contained in finished goods held in stock, or
- capital goods or plant and machinery
on the day immediately preceding the date of such cancellation, or
 the output tax payable on such goods,
whichever is higher

Payment in case of In case of capital goods or plant and machinery, the taxable person
capital goods shall pay -
 an amount equal to the input tax credit taken on the said capital
goods or plant and machinery, reducedby such percentage points
as may be prescribed i.e., ITC involved in theremaining useful in
months of the capital goods will be reversed on pro - rata basis,
taking the useful life as 5 years; or
 the tax on the transaction value of such capital goods or plant and
machinery under Section 15
Whichever is higher
REVOCATION OF CANCELLATION OF REGISTRATION - SECTION 30

Application for Subject to such conditions as may be prescribed, any registered
restoration of person whose registration is cancelled by the proper officer on his
registration to be own motion, may apply to such officer for revocation of cancellation
made within 30 days of the registration in the prescribed manner within 30 days from the
from service of date of service of the cancellation order.
cancellation Order
Section 30(1)
Acceptance/ Rejection The proper officer may, in such manner and within such period as
of Application - may be prescribed, by order, either revoke cancellation of the
Section 30(2) registration or reject the application.
Opportunity of being The application for revocation of cancellation ofregistration shall not
heard – Before be rejected unless the applicant has been given an opportunity of
rejection being heard.
Restoration of RC The revocation of cancellation of registration under the SGST Act or
under SGST/ UTGST the UTGST Act, as the case may be, shall bedeemed to be a revocation
Act -Deemed of cancellation of registration under this Act.
restoration under
CGST Act – S.30 (3)

CHAPTER – 4
REGISTRATION – QUESTIONS FOR PRACTICE
1. What are the advantages of taking registration in GST?
Ans:
Registration will confer following advantages to the business:
a. Legally recognized as supplier of goods or services.
b. Proper accounting of taxes paid on the input goods or services which can be utilized for payment
of GST due on supply of goods or services or both by the business.
c. Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on
the goods or services supplied to purchasers or recipients
d. Become eligible to avail various other benefits and privileges rendered under the GST laws.
2. Determine the effective date of registration in following cases:

(1) The aggregate turnover of Balrampur Industries of Delhi has exceeded Rs. 20 lakhs
on 1st November. It submits the application for registration on 20th November.
Registration certificate is granted to it on 25th November
(2) Shyam Teleservices is an internet service provider in Manipur. Its aggregate
turnover exceeds Rs. 10 lakhs on 15th January. It submits the application for
registration on 27th February. Registration certificate is granted to it on 5th March.
(ICAI P.Q.)
Ans:
(1) As per provisions of Section 22 of CGST Act, 2017, every supplier becomes liable to registration if
his turnover exceeds Rs. 20 lakh [in a State / UT other than Special Category States] in a financial
year. Since in the given case, the turnover of BalrampurIndustries exceeded Rs. 20 lakh on 1st
November, it becomes liable to registration on said date.
 As per provisions of Section 25 read with Rule 10 of the Chapter III Registration of CGST Rules,
2017, if the application for registration has been submitted within 30 days from such date, the
registration shall be effective from the date on which the person becomes liable to registration. Since
Balrampur Industries has made application for registration within 30 days, therefore, the effective date
of registration is 1st November.
(2) As per provisions of Section 22 of CGST Act, 2017, every supplier located in North - Eastern
States becomes liable to registration if his turnover exceeds Rs. 10 lakh in a financial year. Since in
the given case, the turnover of Shyam Teleservices exceeds Rs. 10 lakhs on 15th January, it becomes
liable to registration on said date.
 Further, since the application for registration has been submitted after 30 days from the date such
person becomes liable to registration, the registration shall be effective from the date of grant of
registration. Therefore, the effective date of registration is 5th March.

3. Time limit for obtaining registration: State the time-period within which registration needs to
be obtained in each of the following independent cases:
(a) Casual taxable person
(b) Person making inter - state taxable supply
Ans:
Section 25 (1) of the CGST Act stipulates the time period within which registration needs to be obtained
in various cases. It provides the following time limits:
Case Time limit
 A person who is liable to be registered under Within 30 days from the date on which he
section 22 or section 24 becomes liable to registration.
 A casual taxable person or a non - resident At least 5 days prior to the commencement of
taxable person business
In view of the aforesaid provisions:

(a) A casual taxable person must obtain registration at least 5 days prior to the commencement of its
business.
(b) As per section 24 of the CGST Act, person making inter - state taxable supply is liable to get
compulsorily registered. Therefore, such person must obtain registration within 30 days from the
date on which he becomes liable to registration.
4. In order to be eligible for grant of registration, a person must have a Permanent Account
Number issued under the Income - Tax Act, 1961. State an exception to it.
Ans:
A Permanent Account Number is mandatory to be eligible for grant of registration. However, Non-
resident taxable person is exception. As per provisions of Section 25 (5) and 25 (6) of the CGST Act,
2017, a non - resident taxable person may be granted registration on the basis of other prescribed
documents instead of PAN. He has to submit a self - attested copy of his valid passport along with the
application signed by his authorized signatory who an Indian Resident is having valid PAN and
application will be submitted in a different prescribed form.
5. State which of the following suppliers are liable to be registered:

(a) Agent supplying goods on behalf of some other taxable person and its aggregate turnover
does not exceed Rs. 20 lakhs during the financial year.
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land.
Ans:
(a)Section 24 of the CGST Act, 2017 provides for compulsory registration of certain persons
irrespective of turnover limit. As per section 24, a person supplying goods / services or both on
behalf of other taxable persons whether as an agent or not is liable to be compulsory registered even
if its aggregate turnover does not exceed Rs. 20 lakhs during the financial year.
(b)As per Section 23, an agriculturist who is only engaged in supply of produce out of cultivation of
land is not required to obtain registration.
6. If a person is operating in different States, with the same PAN number, can he be granted
centralized registration?
Ans:
No. Every person who is liable to take a registration will have to get registered separately for each of the
states where he has a business operation (and is liable to pay GST).

7. Can a person having multiple business verticals in a State obtain separate registration
for each business vertical?
Ans:
Yes, as per the proviso to Section 25 (2), a person having multiple business verticals in a State may
obtain a separate registration for each business vertical, subject to such conditions as may be
prescribed.
8. Can the Department, through the proper officer, suo - moto proceed to register of a
person?
Ans:
Yes. As per provisions of Section 25 (8), where a person who is liable to be registered under GST
law fails to obtain registration, the proper officer may, without prejudice to any action which may
be taken under CGST Act, or under any other law for the time being in force, proceed to register
such person in the manner as is prescribed in the CGST Rules, 2017.
9. Whether the registration granted to any person is permanent?

Ans:
Yes, the registration certificate once granted is permanent unless surrendered, cancelled suspended
or revoked.
10. Is it necessary for the UN bodies to get registration under GST?

Ans:
Yes, as per Section 25 (9) of the CGST Act, any specialized agency of the United Nations
Organization or any Multilateral Financial institution and organization as notified under the
United Nations (Privileges and Immunities) Act, 1947, consulate or embassy of foreign countries
and any other person notified by the Commissioner, is required to obtain a UIN from the GSTN
portal. UIN shall be assigned and registration certificate shall be issued within 3 working days from
the date of submission of application.
 The structure of the said ID would be uniform across the States in conformity with GSTIN
structure and the same will be common for the Centre and States.
 The UIN will be needed for claiming refund of taxes paid on notified supplies of goods and services
received by them, and for any other purpose as may be notified.
11. What is the responsibility of the taxable person making supplies to UN bodies?
Ans:
The taxable supplier making supplies to UN bodies is expected to mention the UIN on the invoices
and treat such supplies as supplies to another registered person (B2B) and the invoices of the same
will be uploaded by the supplier.
12. What is the validity period of the registration certificate issued to a casual taxable
person and non - resident taxable person?
Ans:
Registration Certificate granted to Casual taxable person / Non - resident taxable person will be
valid for
(1) Period specified in the registration application, or

(2) 90 days from the effective date of registration [can be extended further by a period not exceeding 90
days by making an application before the end of the validity of registration granted to him].
Whichever is earlier
13. What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Ans:
As per provisions of Section 22 (3) of CGST Act, 2017, the transferee or the successor shall be liable to be
registered with effect from such transfer or succession and he will have to obtain a fresh registration with
effect from the date of such transfer or succession - Section 22 (3).
14. At the time of registration, will the assessee have to declare all his places of business?
Ans:
The principal place of business and place of business have been separately defined under section 2 (89)
& 2 (85) of the CGST Act respectively. The taxpayer will have to declare the principal place of business
as well as the details of additional places of business in the registration form.
15. What will be the time limit for the decision on the on - line registration application?
Ans:
If the information and the uploaded documents are found in order, the proper officer has to respond to
the application within 3 common working days. If he communicates any deficiency or discrepancy in
the application within such time, then the applicant will have to remove the discrepancy / deficiency
within 7 days of such communication.
 Thereafter, for either approving the application or rejecting it, the proper officer has 7 days’ time
from the date when the taxable person communicates removal of deficiencies. In case no response is
given by the proper officer within the said time line, the portal shall automatically generate the
registration.
16. What will be the time of response by the applicant if any query is raised in the online
application?
Ans:
If during the process of verification, one of the tax authorities raises some query or notices some error,
the same shall be communicated to the applicant and to the other tax authority through the GST
Common Portal within 3 common working days. The applicant will reply to the query / rectify the error
/ answer the query within a period of 7 days from the date of receipt for deficiency intimation.
On receipt of additional document or clarification, the relevant tax authority will respond within 7
common working days from the date of receipt of clarification.
17. Does cancellation of registration impose any tax obligations on the person whose
registration is so cancelled?
Ans:
Yes, as per Section 29 (5) of the CGST Act, every registered taxable person whose registration is
cancelled shall pay an amount, by way of debit in the electronic cash ledger, 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 or capital goods or plant and machinery on the day immediately preceding the date of such
cancellation or the output tax payable on such goods, whichever is higher.

18. Examine whether the supplier is liable to get registered in the following independent
cases:
a) Raghav of Assam is exclusively engaged in intra - state taxable supply of
readymade garments. His turnover in the current financial year (FY) from Assam
showroom is Rs. 28 lakh. He has another showroom in Tripura with a turnover of
Rs. 11 lakh in the current FY.
b) Pulkit of Panjim, Goa is exclusively engaged in intra - state taxable supply of shoes.
His aggregate turnover in the current financial year is Rs. 22 lakh.
c) Harshit of Himachal Pradesh is exclusively engaged in intra - state supply of pan
masals. His aggregate turnover in the current financial year is Rs. 24 lakh.
d) Ankit of Assam is exclusively engaged in intra - state supply of taxable services. His
aggregate turnover in the current financial year is Rs. 25 lakh.
e) Sanchit of Assam is engaged in intra - state supply of both taxable goods and services.
His aggregate turnover in the current financial year is Rs. 30 lakh.
Ans:
As per Section 22 of the CGST Act, 2017 read with Notification No. 10 / 2019 CT dated 07-03-2019, a
supplier is liable to be registered in the State / Union Territory from where he makes a taxable supply
of goods and / or services, if his aggregate turnover in a financial year exceeds the threshold limit. The
threshold limit for a person making exclusive intra - state taxable supplies of goods is as
under-
a) Rs. 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
b) Rs. 20 lakh for the States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telengana, and
Uttarakhand.
c) Rs. 40 lakh for rest of India
The threshold limit for a person making exclusive taxable supply of services or supply of both
goods and services is as under:
a) Rs. 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland
b) Rs. 20 lakh for the rest of India.
In the light of the afore-mentioned provisions, the answer to the independent cases is as under-
a) Raghav is eligible for higher threshold limit of turnover for registration, i.e. Rs. 40 lakh as he is
exclusively engaged in intra-state supply of goods. However, since Raghav is engaged in
supplying readymade garments from a Special Category State i.e. Tripura, the threshold limit gets
reduced to Rs. 10 lakh. Thus, Raghav is liable to get registered under GST as his turnover exceeds
Rs. 10 lakh. Further, he is required to obtain registration in both Assam and Tripura as he is
making taxable supplies from both the States.
b) The applicable threshold limit for registration for Pulkit in the given case is Rs. 40 lakh as he is
exclusively engaged in intra-state taxable supply of goods. Thus, he is not liable to get registered
under GST as his turnover is less than the threshold limit.
c) Harshit being exclusively engaged in supply of pan masala is not eligible for higher threshold limit
of Rs. 40 lakh. The applicable threshold limit for registration in this case is Rs. 20 lakh. Thus,
Harshit is liable to get registered under GST.
d) Though Ankit is dealing in Assam, he is not entitled for higher threshold limit for registration as
the same is applicable only in case of exclusive supply of goods while he is exclusively engaged in
providing services. Thus, the applicable threshold limit for registration in this case is Rs. 20 lakh
and hence, Ankit is liable to get registered under GST.

e) Since Sanchit is engaged in supply of both taxable goods and services, the applicable threshold
limit for registration in his case is Rs. 20 lakh. Thus, Sanchit is liable to get registered under GST
as his turnover is more than the threshold limit.
19. Barmer Oils, Rajasthan, is engaged in supplying machine oil as well as petrol. The turnover
of machine oil is Rs. 24 lakhs and of petrol is Rs. 18 lakhs. Supply of petrol is not leviable to
GST, but supply of machine is oil is taxable. Barmer Oils contend that since turnover of
machine oil does not exceed Rs. 40 lakh, it is not liable for registration under GST. Decide.
Ans:
The contention of Barmer Oils is not correct in law. In order to determine whether Barmer Oils is liable
for registration, turnover of both the supplies – non-taxable as well as taxable would be taken into
account and since the same exceeds Rs. 40 lakh, Barmer Oils is liable for registration.
20. Rajesh Dynamics, having its head office in Chennai, carries on the following activities with
respective turnovers in a Financial Year:
No Particulars Rs
1 Supply of petrol at Chennai 18,00,000
2 Value of inward supplies on which tax is payable on reverse charge basis 9,00,000
3 Supply of transformer oil at Chennai 2,00,000
4 Value of branch transfer from Chennai to Bengaluru without payment of 1,50,000
consideration
5 Value of taxable supplies at Manipur branch 11,50,000
It argues that it does not have taxable turnover crossing threshold limit of Rs. 40,00,000
either at Chennai or Bengaluru and including turnover at Manipur branch. It believes that
the determination of aggregate turnover is not required for the purpose of obtaining
registration but it is required for determining composition levy.
Decide based on the above facts:
a) The aggregate turnover of Rajesh Dynamics
b) All conditions that fulfill the requirement for registration under CGST Act, 2017 in the
given circumstances. (May 2018)
Ans:
Registration Provisions: As per section 22 of the CGST Act, 2017 read with Notification No.
10/2019-CT dated 07-03-2019, a supplier is liable to be registered in the State/ Union Territory from
where he makes a taxable supply of goods and / or services, if his aggregate turnover in a financial year
exceeds the threshold limit. The threshold limit for a person making exclusive intra-state taxable supplies
of goods is as under:
a) Rs. 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
b) Rs. 20 lakh for the States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telengana and
Uttarakhand.
c) Rs. 40 lakh for rest of India.
Meaning of Aggregate Turnover: As per Section 2(6) of the CGST Act,2017, aggregate turnover
includes the aggregate value of:
a) All taxable supplies
b) All exempt supplies
c) Exports of goods and / or services and

The above is computed on all India basis. Further, the aggregate turnover excludes central tax, State tax,
Union territory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is
payable under reverse charge is not taken into account for calculation of ‘aggregate turnover’.
Non-Taxable supply included for determination of aggregate turnover: Section 9 of the CGST Act, 2017
provides that CGST is not leviable on five petroleum products i.e. petroleum crude, motor spirit (petrol),
high speed diesel, natural gas and aviation turbine fuel. As per section 2(47) of the CGST Act, 2017,
exempt supply includes non-taxable supply. Thus, supply of petrol in Chennai, being a non-taxable
supply, is an exempt supply and is, therefore, includible while computing the aggregate turnover.
Since one of the branches is located in Manipur and is making taxable supplies from that state, the
turnover limit will be Rs. 10 lakh for determination of registration requirements.
In the backdrop of the above-mentioned discussion, the aggregate turnover is computed as
under-
No Particulars Rs
1 Supply of petrol at Chennai 18,00,000
2 Value of inward supplies on which tax is payable on reverse charge basis -
3 Supply of transformer oil at Chennai 2,00,000
4 Value of branch transfer from Chennai to Bengaluru without payment of 1,50,000
consideration
5 Value of taxable supplies at Manipur branch 11,50,000
6 Aggregate Turnover 33,00,000
Rajesh Dynamics’ argument that it is not liable to registration since the threshold exemption of Rs. 40
lakh is not being crossed either at Chennai, Bengaluru or Manipur is not correct as firstly, the aggregate
turnover to be considered in its case is Rs. 10 lakh and not Rs. 40 lakh and secondly, the same is
computed on all India basis and not State-wise.
Further, Rajesh Dynamics is also wrong in believing that aggregate turnover is computed only for the
purpose of determining the eligibility limit for composition levy since the aggregate turnover is required
for determining the eligibility for both registration and composition levy. However, Rajesh Dynamics is
compulsorily required to register under section 24 of the CGST Act, 2017 irrespective of the turnover
limit as it is liable to pay tax on inward supplies under reverse charge and it also makes inter-state
taxable supply.
21. LMN Pvt. Ltd. Coimbatore exclusively manufactures and sells product ‘X’ which is exempt
from GST vide notifications issued under relevant GST legislations. The company sells ‘X’
only within Tamil Nadu. The turnover of the company in the previous year was Rs. 45 lakh.
The company expects the sales to grow by 30% in the current year. The company purchased
additional machinery for manufacturing ‘X’ on 01.07.2019. The purchase price of the capital
goods was Rs. 30 lakh excusive of GST @ 18%. However, effective from01.11.2019, exemption
available on ‘X’ was withdrawn by the Central Government and GST @ 12% was imposed
thereon. The turnover of the company for the half year ended on 30.09.2019 was Rs. 45 lakh.
a) Examine the above scenario and advise LMN Pvt. Ltd whether it needs to get

b) If the answer to the above question is in affirmative, advise LMN Pvt. Ltd. whether it can
avail input tax credit on the additional machinery purchased exclusively for manufacturing
‘X’? (RTP May 2018 & Nov 2019, 5 marks – Nov 2018)
Ans:
a) Registration requirements: Section 22(1) of the CGST Act, 2017 read with Notification No.
10/2019-CT dated 07-03-2019 inter alia provides that every supplier who is engaged in intra-state
exclusive supply of good is liable to be registered under GST in the State/ Union territory from
where he makes the taxable supply of goods only when aggregate turnover in a financial year
exceeds Rs. 40,00,000.
 However, the above provisions are not applicable to few specified States, i.e. States of Arunachal
Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telengana, Tripura,
Uttarakhand.
 Further, a person exclusively engaged in the business of supply of goods and / or services that are
not liable to tax or are wholly exempt from tax is not liable to registration in terms of section
23(1)(a) of CGST Act, 2017.
 In the given case, the turnover of the company for the half year ended on 30.09.2019 is Rs. 45 lakh
which is more than the applicable threshold limit of Rs. 40 lakh. Therefore, as per above mentioned
provisions, the company should be liable to registration. However, since LMN Pvt. Ltd. supplied
exempted goods till 31.10.2019 it was not required to be registered till that day; thought voluntary
registration was allowed u/s 25(3) of the CGST Act, 2017.
 However, the position will change from 01.11.2019 as the supply of goods become taxable from
that day and the turnover of company is above Rs. 40 lakh. It is important to note here that in
terms of section 2(6) of the CGST Act, 2017 the aggregate turnover limit of Rs. 40 lakh includes
exempt turnover also.
 Therefore, turnover of ‘X’ will be considered for determining the limit of Rs. 40 lakh even though
the same was exempt from GST. Therefore, the company needs to register within 30 days from
01.11.2019 (the date on which it becomes liable to registration) in terms of section 25(1) of the
CGST Act, 2017.
b) Input tax credit eligibility: Section 18(1)(a) of the CGST Act, 2017 provides that a person who
has applies for registration within 30 days from the date on which he becomes liable to registration
and has been granted such registration shall be entitled to take 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 from which he becomes liable to pay tax under the provisions
of this Act.
 Thus, LMN Pvt. Ltd. cannot avail credit for additional machinery purchased exclusively for
manufacturing X as input tax credit of only inputs is allowed when a person gets registered for
the first time.

22. With the help of the following information in the case of M/s Jayant Enterprises, Jaipur
(Rajasthan) for the year 2019-20, determine the aggregate turnover for the purpose of
registration under CGST Act, 2017.
No Particulars Rs
1 Sale of diesel on which Sale Tax (VAT) is levied by Rajasthan Government 1,00,000
2 Supply of goods, after completion of job work, from the place of Jayant 3,00,000
Enterprises directly by principal
3 Export supply to England (U.K) 5,00,000
4 Supply to its own additional place of business in Rajasthan 5,00,000
5 Outward supply on which GST is to be paid by recipient under reverse 1,00,000
charge
All the above amounts are excluding GST. You are required to provide reasons for treatment
of various items given above. (5 marks, May 2018)
Ans:
Computations of aggregate turnover of M/s Jayant Enterprises for the FY 2019-20
No Particulars Rs
1 Supply of diesel [Being a non-taxable supply, it is an exempt supply and thus, 1,00,000
includible in aggregate turnover]
2 Supply of goods, after completion of job work, from the place of Jayant Enterprises Nil
directly by principal [to from part of the aggregate turnover of principal]
3 Export supply to England (UK) [Specifically includible in the aggregate turnover] 5,00,000
4 Supply to its own additional place of business in Rajasthan [Supply made without Nil
consideration to units within the same State (under same registration) is a not a
supply and hence not includible in aggregate turnover]
5 [However if separate registration has been obtained for such additional place of
business, then the value will be included for purpose of determination of aggregate
turnover]
6 Outward supply on which GST is to be paid by recipient under reverse charge 1,00,000
7 Aggregate turnover 7,00,000
23. Dharma Dutta has taken voluntary registration and has not opted for the composition
scheme of levy. He is aggrieved by the cancellation of his registration under GST, although
he is filing NIL returns, as he has not conducted any business for the past 8 months. He
wants to know the circumstances under which the proper officer can cancel registration on
his own. (4 marks, Nov 2019)
According to section 29 (2) read with Rule 21 of CGST Rules 2017, the proper officer may
cancel the registration of a person from such date, including any retrospective date, as he may
deem fit where,
a) A registered person has contravened such provisions of the Act or the rules made
thereunder i.e., -
b) A person paying tax u/ s 10 i.e., composition scheme has not furnished returns for 3
consecutive tax periods; or
c) Any registered person, other than a person specified in section 29(2)(b), has not
furnished returns for a continuous period of 6 months; or

d) Any person who has taken voluntary registration u/ s 25(3) has not commenced
business within 6 months from the date of registration; or
e) Registration has been obtained by means of fraud, willful misstatement or suppression
of facts.
Thus, in this case, since Dharma Dutta has obtained voluntary registration and has not
conducted any business for the past 8 months, hence the proper officer may cancel his
registration, but before cancellation Dharma Dutta must be given a reasonable opportunity
of being heard.

CHAPTER –3
PAYMENT OF TAX
TOPICS
Section Description
- Definitions
49 Payment of Tax, Interest, Penalty & Other Amounts
49A Utilisation of ITC subject to certain Conditions
49B Order of Utilisation of ITC
50 Interest on Delayed Payment of Tax
51 Tax Deducted at Source
52 Tax Collected at Source
53 Tranfer of ITC
DEFINITIONS
2(5) Agent “Agent” means a person, including a factor, broker, commission,
agent, arhatia, del credere agent, an auctioneer or any other
mercantile agent, by whatever name called, who carries on the
business of supply or receipt of goods or services or both on behalf of
another.
2(14) Authorised “Authorised Bank” shall mean a bank or a branch of a bank
Bank authorised by the Government to collect the tax or any other amount
payable under this Act.
2(21) Central Tax “Central Tax” means the central goods and services tax levied under
Section 9.
2(26) Common “Common Portal” means the common goods and services tax
Portal electronic portal referred to in Section 146.
2(43) Electronic “Electronic Cash Ledger” means the electronic cash ledger referred to
Cash Ledger in Section 49(1).
2(46) Electronic “Electronic Credit Ledger” means the electronic credit ledger
Credit Ledger referred to in Section 49(2).
2(58) Integrated “Integrated Tax” means the Integrated Goods and Services tax levied
Tax under the Integrated Goods and Services Tax Act.
2(62) Input Tax “Input Tax” in relation to a registered person, means the Central Tax,
State Tax, integrated tax or union territory tax charged on any
Supply of goods or services or both made to him and includes-
(a) The Integrated Goods and Services tax charged on import of
goods
(b) The tax payable under the provisions of Section 9(3) and (4)
(c) The tax payable under the provisions of Section 5(3) and (4) of the
Integrated Goods and Services Tax Act.
(d) The tax payable under the provisions of Section 9(3) and (4) of the
respective State Goods and Services Tax Act,

(e) The tax payable under the provisions of Section 7(3) and (4) of the
Union Territory Goods and Services Tax Act
But does not include the tax paid under the composition levy.
2(63) Input Tax “Inter Tax Credit” means the credit of input tax.
Credit
2(69) Local ‚Local Authority‛ means-
Authority a) A “Panchayat” as defined in clause (d) of article 243 of the
Constitution;
b) A “Municipality” as defined in clause(e) of article 243P of the
constitution
c) A Municipal Committee, a ZillaParishad, a District Board,
and any other authority legally entitled to, or entrusted by the
Central Government or any State Government with the
control or management of a municipal or local fund;
d) A Cantonment Board as defined under Section 3 of the
Cantonments Act, 2006,
e) A Regional Council or District Council constituted under the
Sixth Schedule to the Constitution;
f) A Development board constituted under Article 371 of the
constitution; or
g) A Regional Council constituted under Article 371 A of the
Constitution.
2(80) Notification “Notification” means a notification published in the Official Gazette
and the expression “notify” and “notified” shall be construed
accordingly.
2(82) Output Tax “Output Tax” in relation to a taxable person means-
 The tax chargeable under this Act on taxable supply of goods or
services or both made by him or by his agent.
 But excludes tax payable by him on reverse charge basis.
2(104) State Tax “State Tax” means the tax levied under any State Goods and Services
Tax Act.
2(107) Taxable “Taxable Person” means a person who is registered or liable to be
Person registered under Section 22 or Section 24.
2(117) Valid Return “Valid Return” means a return furnished under sub- section (1) of
section 39 on which self-assessed tax has been paid in full.

PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS - S 49
Section Description
49(1) Electronic Cash Ledger
49(2) Electronic Credit Ledger
49(3) Utilisation of amount in Electronic Cash Ledger
49(4) Utilisation of amount in Electronic Credit Ledger
49(5) Manner of Utilisation of ITC in Electronic Credit Ledger
49(6) Refund of balance in ECL
49(7) Electronic liability Ledger
49(8) Order of discharge of Liability
49(9) Incidence of Tax
49(10) Transfer of CGST to IGST / SGST / UTT in Electronic Cash Ledger
49(11) Amount transferred in CGST – Deemed Deposit
ELECTRONIC CASH LEDGER - 49(1)

Section Explanation
Amount deposited Every deposit made towards tax, interest, penalty, fee or any other
to be credited to amount by a person –
Electronic Cash  By Internet Banking or
Ledger - Section  By using Debit or Credit Cards or
49(1)  By National Electronic Fund Transfer (NEFT) or
 By Real Time Gross Settlement (RTGS), or
 By such other mode and subject to such conditions and restrictions
as may be prescribed, shall be credited to the electronic cash ledger
of such person to be maintained in such manner as may be
prescribed.
Electronic Cash Means the electronic cash ledger referred to in Section 49(1). The
Ledger – Section Electronic Cash Ledger contains a summary of all the deposits/ payments
2(43) made by a taxpayer. Electronic Cash Ledger is maintained on the GST
Portal
UTILISATION OF AMOUNT IN EL. CASH LEDGER – 49(3)
Section Explanation
Utilization of amount in The amount available in the electronic cash ledger may be used for
Electronic Cash Ledger - making any payment towards tax, interest, penalty, fees or any
Section 49(3) other amount payable under the provisions of this Act or the rules
made there under in such manner and subject to such conditions
and within such time as may be prescribed.
Head wise information is In electronic cash ledger, information is kept minor head wise for
to be Maintained each major head as under:

Major Heads Minor Heads

 IGST  Tax
 CGST  Interest
 SGST/ UTGST and  Penalty
 CESS  Fee and
 Others
SUMMARY: -
Main Tax Interest Penalty Fees Others
IGST
CGST
SGST / UTGST
CESS
.
INTRA HEAD & INTER HEAD TRANSFER – 49(10) / 49(11)
Transfer of CGST A registered person may, on the common portal, transfer any amount of
to IGST / SGST / tax, interest, penalty, fee or any other amount available in the electronic
UTT in electronic cash ledger under this Act, to the electronic cash ledger for integrated tax,
cash ledger - central tax, state tax, union territory tax or cess, in such form and manner
Section 49(10) and subject to such conditions and restrictions as may be prescribed and
such transfer shall be deemed to be a refund from the electronic cash
ledger under this Act.
Amount transferred Where any amount has been transferred to the ECL under this Act, the
in CGST – Deemed same shall be deemed to be deposited in the said ledger as provided in
deposit – Section Sec. 49(1).
49(11)
Objective of Tax payers deposit money using challan and the paid amount gets
amendment credited in the particular head in the ECL and the same can be utilized in
settling liabilities of that head only. In case a taxpayer deposited any
amount under a major head i.e., IGST, CGST, SGST or UTGST and Cess
or minor head i.e., tax, interest, penalty, fee and others, they can then
utilize this amount for discharging their liabilities only under that major
head and minor head. Sometimes, inadvertently, the tax payer pays the
amount under the wrong head and it cannot be used to discharge the
liabilities which may be due in another head. In such cases taxpayers can
claim the refund of the amount which may have been deposited under
wrong head in GST by filing a refund application in FORM RFD – 01
under the category ‚Excess balance in ECL‛. The process of filing refund
claim and its disbursement can sometimes lead to blockage of funds for
the taxpayer.
Form GST PMT – 09 is now available on GST portal and it enables a
taxpayer to make intra – head or inter – head transfer of amount available
in ECL. A taxpayer can file GST PMT – 09 for transfer of any amount of
tax, interest, penalty, fee or others available under one (major or minor)
head to another (major or minor) head in ECL. Form GST PMT – 09
provides flexibility to taxpayers to make multiple transfers from more

than one major or minor head to another major or minor head if the
amount is available in the ECL.
ELECTRONIC CASH LEDGER – RULE 87

Detail Explanation
Maintenance of The electronic cash ledger shall be maintained inFORM GST PMT-05 for
Electronic Cash each person, liable to pay tax, interest, penalty, late fee or any other
Ledger amount, on thecommon portal for crediting the amount deposited and
debiting the payment therefrom towards tax,interest, penalty, fee or any
other amount.
Transfer of amount A registered person may, on the common portal, transfer any amount of
from one account tax, interest, penalty, fee or any other amount available in the electronic
head to another - cash ledger under the Act to the electronic cash ledger for integrated tax,
Rule 87(13) central tax, state tax or UT tax or cess in FORM GST PMT - 09.
PAYMENT OF TAX VIA ELECTRONIC CASH LEDGER

Debit Amount (DR) Credit Amount (CR)
 Credit amount of this ledger may be  Any deposit made towards tax, interest,
used for payment of tax, interest, fees penalty, late fee etc. via internet banking,
etc. RTGS, fund transfer etc.
 Remaining Credit balance amount after  TDS/TCS claimed
payment of above tax etc. will be
refunded to taxable person.
NOTES
 It reflects all deposits made in cash, and TDS/TCS made on account of the tax payer
 This ledger can be used for making any payment towards tax, interest, penalty, fees or any
other amount on account of GST
Modes of
Deposit
Online Offline
Payment Payment
Over the Counter (Rs.

Internet Credit/Debit
NEFT/RTGS 10,000 per challan per
Banking Card
tax period)

Exceptions to OTC: -
 Govt Departments or any other deposit to be made by persons as may be notified

by the commissioner in this behalf
 PO or any other officer authorised to recover outstanding dues from any person,
whether, registered or not, including recovery made through attachment or sale of
movable or immovable properties
 PO or any other officer authorized for the amounts collected by way of cash,
Cheque or DD during any investigation or enforcement activity or any ad hoc
deposit
QUESTION FOR UNDERSTANDING
1. M/s. Daksha Enterprises has made a cash deposit of Rs. 10,000 under minor head ‘tax’ of major
head ‘ CGST’. It has a liability of Rs. 2,000 for minor head ‘interest’ under the major head
‘CGST’. State whether M/s Daksha Enterprises can utilize the amount available for payment
of interest.
Solution: As per sec. 49(10) of the CGST Act, 2017, a registered person may, on the common portal,
transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash
ledger under this Act to the electronic cash ledger for integrated tax, central tax, state tax, UT tax or
cess, in such form and manner and subject to such conditions and restrictions as may be prescribed and
such transfer shall be deemed to be a refund from the electronic cash ledger under this Act.
Thus, it has to transfer the amount of Rs. 2,000 from minor head tax to minor head interest by filing
form GST PMT-09 and after transfer of the said amount to minor head interest, such amount can be
utilized for payment of interest liability.
ELECTRONIC CREDIT LEDGER – 49(2)
Section Explanation
ITC to be credited to The input tax credit as self-assessed in the return of a registered person
Electronic Credit shall be credited to his electronic credit ledger, in accordance with
Ledger - Section 49 *Section 41, to be maintained in such manner as may be prescribed.
(2)
Electronic credit Means the electronic credit ledger referred to in section 49(2).
ledger – Section
2(46)
*S. 41 - AVAILMENT OF UTLISATION OF ITC
Section Explanation
Claim of ITC on Every registered person shall, subject to such conditions and
Provisional basis restrictions as may be prescribed, be entitled to take the credit of
eligible input tax, as self assessed, in his return and such amount shall

be credited on a provisional basis to his electronic credit ledger
Utilization of ITC – ITC is credited to a registered person’s electronic credit ledger. The
for payment of person may use this to pay his output tax liability. The use of ITC for
Output tax payment of tax on inter - state supplies is the point in which GST
differs sharply from previous system of central & State taxation
ELECTRONIC CREDIT LEDGER- RULE 86

 It will reflect Input Tax Credit as self-assessed in monthly returns.
 The credit in this ledger can be used to make payment of ONLY TAX i.e., output tax and no
other amounts such as interest, penalty, fees etc.
Detail Explanation
Maintenance of The electronic creditledger shall be maintained in FORM GST PMT-02
electronic credit for each registered person eligible for input tax creditunder the Act on
ledger by persons the common portal and every claim of input tax credit under the Act
eligible for ITC – shall be credited tothe said ledger.
Rule 86(1)
Re-credit in ledger - Where a registered person has claimed refund of any amount paid as tax
Rule 86(4A) wrongly paid or paid in excess for which debit has been made from the
electronic credit ledger, the said amount, if found admissible, shall be re
- credited to the electronic credit ledger by the proper officer by an order
made in FORM GST PMT - 03.
RULE 86A
Conditions of use of The conditions are as follows:
amount available in
electronic credit ledger
- Rule 86A
Restriction on The Commissioner or an officer authorized by him in this behalf, not
utilization of balance below the rank of an AC, having reasons to believe that credit of
in EcrL – Conditions input tax available in the electronic credit ledger has been
fraudulently availed or is ineligible in as much as –
a) The credit of input tax has been availed on the strength of tax
invoices or debit notes or any other document prescribed under
rule 36:
i. Issued by a registered person who has been found non-
existent or not to be conducting any business from any
place for which registration has been obtained; or
ii. Without receipt of goods or services or both; or
b) The credit of input tax has been availed on the strength of tax
invoices or debit notes or any other document prescribed under
rule 36 in respect of any supply, the tax charged in respect of
which has not been paid to the Govt; or

c) The registered person availing the credit of input tax has been
found non-existent and not to be conducting any business from
any place for which registration has been obtained; or
d) The registered person availing any credit of input tax is not in
possession of a tax invoice or debit note or any other document
prescribed under rule 36,
may, for reasons to be recorded in writing, not allow debit of an
amount equivalent to such credit in electronic credit ledger for
discharge of any liability under sec. 49 or for claim of any refund of
any unutilized amount.
Utilization of balance The commissioner, or the authorized officer may, upon being
when conditions cease satisfied that conditions for disallowing debit of electronic credit
to exist ledger as above, no longer exist, allow such debit.
Maximum period of Such restriction shall cease to have effect after the expiry of a period
restriction – one year of one year from the date of imposing such restriction.
PAYMENT OF TAX VIA ELECTRONIC CREDIT LEDGER

Credit amount of this ledger may be used for Input tax credit as self-assessed in the return
payment of output tax viz IGST, CGST, SGST, in the form of IGST, CGST, SGST, UTGST
UTGST in the prescribed order.
UTILISATION OF AMOUNT IN EL. CREDIT LEDGER – 49(4)
Section Explanation
Utilization of amount in The amount available in the electronic credit ledger may be used
Electronic Credit Ledger for making any payment towards output tax under this Act or
for payment of output tax under the IGST Act in such manner and subject to such conditions
under CGST and IGST and within such time as may be prescribed.
Act - Section 49(4)

MANNER OF UTLISATION OF AMOUNT IN ECRL – 49(5)
The amount of input tax credit available in the electronic credit ledger of the registered person on
account of -
Section Explanation
Credit of Integrated tax shall first be utilized towards payment of integrated tax and the
IGST –To be amount remaining, if any, may be utilized towards the payment of central tax
utilized for and State tax, or as the case may be, Union territory tax, in that order;
payment of
IGST, CGST, SGST /
IGST CGST
SGST and IGST Cr UTGST
Payable Payable
UTGST Payable
sequentially
Credit of The central tax shall first be utilized towards payment of central tax and the
CGST – To be amount remaining, if any, may be utilized towards the payment of integrated
utilized for tax;
payment of
CGST and
IGST CGST Cr CGST Payable IGST Payable
sequentially
Credit of The State tax shall first be utilized towards payment of state tax and the amount
SGST –To be remaining, if any, may be utilized towards payment of integrated tax;
utilized for However, the input tax credit on account of State tax shall be utilized towards
payment of payment of integrated tax only where the balance of the input tax credit on
SGST and account of central tax is not available for payment of integrated tax;
IGST
sequentially
SGST Cr SGST Payable IGST Payable
Credit of The Union territory tax shall first be utilized towards payment of union territory
UTGST - To tax and the amount remaining, if any, may be utilized towards payment of
be utilized for integrated tax.
payment of However, the input tax credit on account of Union territory tax shall be utilized
UTGST and towards payment of integrated tax only where the balance of the input tax
IGST credit on account of central tax is not available for payment of integrated tax;
sequentially
UTGST Cr UTGST Payable IGST Payable

Credit of The Central tax shall not be utilized towards payment of State tax or Union
CGST – territory tax; and
Cannot be
utilized for
payment of Not Against
CGST Cr Not Against SGST
SGST and UTGST
UTGST
Credit of The State tax or Union territory tax shall not be utilized towards payment of
SGST/ central tax.
UTGST –
Cannot be
utilized for
SGST / UTGST Cr Not Against CGST
payment of
CGST
UTILISATION OF ITC AND ITS ORDER OF UTILISATION – 49A / 49B
Section Explanation
Utilisation of input tax Notwithstanding anythingcontained in section 49, the input tax
credit subject to certain credit on account of
conditions - Section 49A  central tax,
 State tax or Union territory tax
[IGST Cr should be  shall beutilised towards
killed]  payment of integrated tax, central tax, State tax or Union
territory tax, as the case may be,
 only after the input tax credit available on account of integrated
tax has first been utilised fully towards such payment.
Order of utilisation of Notwithstanding anything contained in this Chapterandsubject
input tax credit - Section toSection 49 (5) (e) & (f), the Government may, on the
49B recommendations of the Council, prescribethe order and manner of
utilisation of the input tax credit on account of integrated tax,
central tax, State taxor Union territory tax, as the case may be,
towards payment of any such tax
Order of utilization of  Input tax credit on account of integrated tax shall first
input tax credit - Rule beutilised towards payment of integrated tax, and the amount
88A remaining, if any, may be utilised towards thepayment of
central tax and State tax or Union territory tax, as the case may
be, in any order.
 However, the input tax credit on account of central tax, State
tax or Union territory tax shall be utilized towards payment of
integrated tax, central tax, State tax or Union territory tax, as
the case may be, only after the input tax credit available on
account of integrated tax has first been utilised fully.

SUMMARY - ORDER OF UTILISATION OF ITC

Order of Utilisation
ITC
(1) (2)
IGST IGST CGST/SGST/UTGST – any proportion
ITC of IGST to be completely exhausted mandatorily
CGST CGST IGST
ITC of CGST has been utilised fully

SGST/UTGST SGST/UTGST IGST
ELECTRONIC LIABILITY LEDGER- S.49(7)
Section Explanation
Electronic All liabilities of a taxable person under this Act shall be recorded and
liability Register maintained in an electronic liability register in such manner as may be
- Section 49(7) prescribed.
ELECTRONIC LIABILITY REGISTER – RULE 85

Detail Explanation
Meaning Electronic Liability Register will reflect the total tax liability of a tax payer
(after netting) for the particular month
Maintenance of The electronic liability register specified underSection 49(7) shall be
Electronic maintained in FORM GST PMT-01 for each person liable to pay tax,
Liability Register interest, penalty,late fee or any other amount on the common portal and all
– 85(1) amounts payable by him shall be debited to thesaid register
PAYMENT OF TAX VIA ELECTRONIC LIABILITY LEDGER

 Amount payable towards tax, interest, fees  Electronic Cash Ledger
etc
 Tax or interest payable due to mismatch
 Any other dues
 Amount payable towards output tax  Electronic Credit Ledger

No Amount to be credited Amount Utilization

Sec 49(1) - Every deposit made towards Section 49(3) - The amount available in
- the electronic cash ledger may be used
 Tax, for making any payment towards
 Interest,  Tax,
 Penalty,  Interest,
Electronic Cash Ledger
 Fee or any other amount  Penalty,

By a person by  Fees or any other amount
 internet banking or Payable under the Provision of this Act
 by using credit or debit card or or the rules made there under in such
 National Electronic Fund Transfer or manner and subject to such conditions
 Real Time Gross Settlement or within such time as may be prescribed.
 by such other mode and subject to
such condition and restrictions
 as may be prescribed, shall be
credited to the electronic cash ledger
of such person to be maintained in
such manner as may be prescribed.
Section 49 (2) - The input tax credit as Section 49(4):
Electronic Credit Ledger
self -assessed in the return of a The amount available in the electronic

registered person shall be credited in credit ledger may be used for making
electronic credit ledger, in accordance any payment towards -
with section 41, to be maintained in such  Output tax under this Act or
manner as may be prescribed.  Under the integrated Goods and
Service Tax Act in such manner and
subject to such conditions within
such time as may be prescribed
49(7) – All liabilities of a taxable person  Utilize from Electronic Credit
Liability Ledger
under this Act shall be recorded and Ledger – S.49(4)

Electronic
maintained in electronic liability register  Utilize from Electronic Cash

in such manner as may be prescribed Ledger – S.49(3)

OTHER SUB SECTIONS OF SEC 49

Section Explanation
Refund of The balance in the electronic cash ledger or electronic credit ledger after
balance in payment of tax, interest, penalty, fee or any other amount payable under this
electronic ledger Act or the rules made thereunder may be refunded in accordance with the
- Section 49(6) provisions of Section 54
Order of Every taxable person shall discharge his tax and other dues under this Act or
discharge of the rules made thereunder in the following order, namely-
liabilities - a) Self assessed tax, and other dues related to returns of previous tax
Section 49(8) periods;
b) Self assessed tax, and other dues related to the return of the current tax
period;
c) Any other amount payable under this Act or the rules made there under
including the demand determined under Section 73 or Section 74;
3. All dues
including
2. All demand
Dues determined
related to under Section
1. All dues current
73 and 74
related to tax period
previous
tax period
Incidence of tax Every person who has paid the tax on goods or services or both under this
– Deemed to Act shall, unless the contrary is proved by him, be deemed to have passed on
have been the full incidence of such tax to the recipient of such goods or services or
passed - Section both.
49(9)
Explanation For the purposes of this Section
a) Date of credit in Government Account – Date of deposit the date of
credit to the account of the Government in the authorized bank shall be
deemed to be the date of deposit in the electronic cash ledger;
b) The expression, -
i. ‚tax dues‛ means the tax payable under this Act and does not
include interest, fee and penalty; and
ii. ‚Other dues‛ means interest, penalty, fee or any other amount
payable under this Act or the rules made there under.
Authorized Shall mean a bank or a branch authorized by the Government to collect the
bank – Section tax or any other amount payable under this Act.
2(14)
SUMMARY: -

TYPES OF ELECTRONIC LEDGER
Types of Electronic Ledger
Electronic Credit Electronic Liability

Electronic Cash Ledger
Ledger Register
Terms Details
 It will reflect all deposits made in cash and TDS/TCS made on
Electronic Cash account of the tax payer.
Ledger  This ledger can be used for making ANY PAYMENT towards tax,
interest, penalty, fees or any other amount on account of GST.
 It will reflect Input Tax Credit as self-assessed in monthly returns.
Electronic Credit  The credit in this ledger can be used to make payment of ONLY
Ledger TAXi.e output tax and not other amounts such as interest, penalty,
fees etc.
Electronic  Electronic liability Register will reflect the total tax liability of a
Liability Register taxpayer (after netting) for the particular month.
RELEVANT TERMS
Terms Full Form
CPIN Common Portal Identification Number
CIN Challan Identification Number
BRN Bank Reference Number
E – FPB Electronic Focal Point Branch

QUESTIONS FORUNDERSTANDING
1. The following are details of purchases, sales, etc. effected by M/s. TAB & Co a registered
manufacturer under CGST Act, 2017:
1) Purchased raw material ‘A’ from local dealer Rs.86, 100(inclusive of GST @ 5%)
2) Purchased raw material ‘B’ from local dealer Rs.1, 12,000(inclusive of GST @ 12%)
3) Purchased capital goods from within the state to be used in manufacture of the taxable
goods Rs. 1, 96, 000(inclusive of GST @ 12%). Depreciation @ 15% to be charged.
4) Other Direct and Indirect expenses Rs. 55,460.
5) Earned 5% profit margin on total cost.
6) During the tax period only 70% production is sold within the state and applicable GST
rate being 12%.
Calculate the amount of CGST and SGST payable after utilizing input tax credit assuming
no opening balance of input tax credit is available.
Solution:
Computation of Taxable value of supply
No Particulars Amount
(Rs.)
1) Purchase raw material from ‘A’ from local dealer – Rs. 86,100 x 100 / 105[WN] 82,000
2) Purchase raw material from ‘B’ from local dealer – Rs. 1,12,000 x 100 / 112 [WN] 1,00,000
3) Depreciation expense [(Rs. 1,96,000 – Rs. 1,96,000 x 12 / 112) x 15%] 26,250
4) Other direct and indirect expense 55,460
5) Total cost of goods manufactured 2,63,710
6) Cost of goods sold (70% of goods produced were sold) 1,84,597
7) Add:Profit margin @ 5% of cost 9,230
8) Taxable value of supply 1,93,827
Working Note: Credit wil be available for CGST and SGST charged by local suppliers. Hence, the
same is not be included in the cost.
Computation of CGST and SGST payable after utilising the available ITC
No Particulars CGST (Rs.) SGST (Rs.)

1 Output tax liability @ 12% being CGST 6% and SGST 6% - Rs. 11,630 11,630
1,93,827 x 12%
2 Less: Eligible ITC in respect of purchases of
Raw material ‘A’ – Rs. 82,000 x 5% 2,050 2,050
Raw Material ‘B’ – Rs. 1,00,000 x 12% 6,000 6,000
Capital Goods – Rs. 1,75,000 x 12% 10,500 10,500
3 CGST / SGST to be carried forward (6,920) (6,920)

2. M Ltd. a registered manufacturer in state of Gujarat provides the following particulars for
tax period.
1) Inputs purchased within state Rs. 1,05,000(includes GST @5%)
2) Machinery purchased for Rs. 1,00,000 (excluding 18% GST) from a local dealer in
Gujarat, eligible for input tax credit. Depreciation rate 15% p.a.
3) Manufacturing expenses and profits Rs. 55, 000.
4) Goods produced were sold outside Gujarat with IGST @ 18% on sales.
Calculate the amount of IGST payable after utilizing input tax credit assuming no opening
balance of input tax credit available.
Solution:
Computation of Taxable value of supply and Tax liability
No Particulars Amount (Rs.)

1) Inputs purchased from local dealer [WN – 1] 1,00,000
2) Depreciation expense 15,000
3) Manufacturing expense and profits 55,000
5) Output tax liability – IGST @ 18% 30,600
6) Less:ITCavailable on [WN – 2]
Inputs -
 CGST 2,500
 SGST 2,500
Capital goods -
 CGST 9,000
 SGST 9,000
7) IGST to be deposited in cash 7,600
Working Notes:
1) Credit will beavailable for CGST and SGST charged by local suppliers, hence same is not to be
included in the cost.
2) The credit of CGST and SGST is to be utilized for payment of CGST and SGST output tax liability
respectively and any amount remaining thereafter shall be utilized towards IGST liability.
3. Mr. K of Kolkata purchased goods from Mr. A of Assam amounting to Rs. 1,18,000
(including 18% IGST). He also purchased raw material worth Rs. 1,25,000 from local dealer
who has opted for composition scheme. He incurred Rs. 50,000 as direct and indirect
expenses and added profit margin @ 12% of cost.
Mr. K sold 70% of finished goods to Mr. M of Mumbai with IGST @ 12% payable thereon,
and 30% of finished goods to Mr. N of Kolkata with CGST and SGST @ 12% payable
thereon.Computethe net CGST, SGST and IGST liability and input tax credit if any.

Solution:
Computation of taxable value of supply
1) Purchases of raw material from Mr. A of Assam [WN – 1] 1,00,000
2) Purchases of raw material from dealer opted for composition scheme [WN 1,25,000
– 2]
3) Other direct and indirect expenses 50,000
4) Total cost of goods manufactured 2,75,000
5) Add:Profit margin @ 12% of cost 33,000
7) Goods sold to Mr. M of Mumbai – 70% of goods produced 2,15,600
8) Goods sold to Mr. N of Kolkata – 30% of goods produced 92,400
Computation of GST liability

No Particulars CGST @ 6% SGST @ IGST @ 12%
6%
1) Goods sold to Mr. M of Mumbai - - 25,872
2) Goods sold to Mr. N of Kolkata 5,544 5,544 -
3) Less:Eligible ITC in respect of purchases of - - (18,000)
raw material from Assam
4) CGST / SGST / IGST to be paid in cash 5,544 5,544 7,872
Working Notes:
1) Credit will be available for IGST charged by outside state suppliers, hence same shall not be
included in the cost.
2) No ITC shall be admissible on purchases made from dealer who has opted for the composition
scheme.
3) The credit of IGST is to be utilized for payment of IGST output tax liability first and if any
amount remains thereafter then such amount is to be utilized towards payment of CGST and
SGST liability in any order.
4. Vivitha& Co., a registered dealer in Ludhiana, furnishes the following details of

purchases and sales pertaining to the month of July:
1) Goods ‘A’ purchased from local market including GST @ 12% 50,400
2) Goods ‘B’ purchased from Jaipur including IGST @ 18% 82,600
3) Sales made during the month to dealer of Kolkata of product:
 Goods ‘A’ 80,000
 Goods ‘B’ 45,000
4) Sales made within the state of Goods ‘B’ 35,000
Above sales amount given is exclusive of tax. Compute the net CGST, SGST and IGST
liability and ITC, if any for the month of July.

Solution:
Computation of GST liability

No Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)
1) Inter – state sale:
Goods ‘A’ sold to Kolkata – IGST @ 12% - - 9,600
Goods ‘B’ sold to Kolkata – IGST @ 18% - - 8,100
2) Intra – state sale:
Goods ‘B’ sold within state – CGST / SGST @ 9% 3,150 3,150 -
each
3) Less:Eligible ITC [(Rs. 50,400 x 100 / 112) x 12%] 2,700 2,700 12,600
[(Rs. 82,600 x 100 / 118) x 18%]
4) Net amount of CGST / SGST / IGST payable
450 450 5,100
INTEREST ON DELAYED PAYMENT OF TAX – SECTION 50

Interest payable Every person who is liableto pay tax in accordance with the provisions of
on delayed this Act or the rules made thereunder, but fails to pay the taxor any part
payment of tax thereof to the Government within the period prescribed, shall for the
not exceeding period for which the tax orany part thereof remains unpaid, pay, on his
18% - Section own, interest @ 18% p.a.
50(1)
Calculation of The interest under Section 50(1) shall be calculated -
Interest - Section  in such manner as may be prescribed,
50(2)  from the day succeeding the day on which such tax was due to be
paid.
Thus, the period of interest will be from the date following the due date of
payment to the actual date ofpayment of tax.
Interest on excess A taxable person-
claim of credit/  who makes an undue or excess claim of input tax credit under
excess reduction Section 42(10), or
of output tax  undue or excess reduction in output tax liability under Section
liability Not 43(10),
exceeding 24% - Shall pay interest on such undue or excess claim or on such undue or
Section 50(3) excess reduction, as the case may be, atsuch rate not exceeding 24%, as may
be notified by the Government on the recommendations of the Council.
[Interest @ 24% p.a. has been notified vide Notification No. 13/2017-CT
dated 28-6-2017 w.e.f. 1-7-2017]
Note 1) Section 42(10) of CGST Act deals with contravention of provisions for
matching of claims for input tax credit by a recipient; and
2) Section 43(10) of CGST Act deals with contravention of provisions for
matching of claims for reductionin output tax liability by a supplier.
Other relevant a) The term "tax" here means the tax payable under the Act or Rules
points relating to made thereunder.
interest b) The payment of interest in case of belated payment of tax should be
made voluntarily i.e. even without ademand.
c) The interest payable under this Section shall be debited to the

Electronic Liability Register.

d) The liability for interest can be settled by adjustment with balance in
Electronic Cash Ledger but notwith balance in electronic credit ledger.
Interest Rates
Undue or excess claim of ITC or undue

If person pays the unpaid amount on
or excess reduction in Output Tax
his own
Liability
18% per annum 24% per annum

1. M/ s Salty & Spicy Ltd. reduced the amount of Rs. 1,50,000 from the output tax liability in
contravention of provisions of section 42(10) of the CGST Act, 2017 for the month of April
2019, which is ineligible credit. A show - cause notice was issued by the Tax Department to
pay tax along with interest. M/ s Salty & Spicy Ltd. paid the tax and interest on 31st July,
2019. Calculate interest liability (Ignore penalty).
Solution:
A taxable person who makes an undue or excess claim of ITC shall pay interest @ 24% p.a. on such
undue or excess claim in terms of section 50 of CGST Act, 2017. The period of interest will be from the
date following the due date of payment to the actual date of payment of tax. Thus interest liability shall
be calculated as under:

1) Due date of payment of tax 20 – 05 - 2019
2) Actual date of payment of tax 31 – 07 - 2019
3) Period of delay in days 72 days
4) GST Payable 1,50,000
5) Rate of interest 24% p.a.
6) Interest payable – Rs. 1,50,000 x 24% x 72 / 366 [Leap year (Rounded off)] 7,082

INDEX
RETURNS
CHAPTER PAGE
PARTICULARS
NO NO
1 RETURNS 2 – 16
2 SPECIAL RETURNS FOR SPECIFIED PERSONS 17 - 24

CHAPTER – 1
RETURNS
SECTIONS
Section Description
37 Outward Supplies
38 Inward Supplies
39 Furnishing of Returns
40 First Return
41 ITC on Provisional basis
42 Matching, Reversal & reclaim of Input tax credit
43 Matching, Reversal & reclaim of reduction in Output tax liability
44 Annual Return
45 Final Return
46 Notice to Return Defaulters
47 Late Fees
48 GST Practitioner
DEFINITIONS
2(26) Common Portal “Common Portal” means the common goods and services tax
electronic portal referred to in Section 146.
2(37) Credit Note “Credit Note” means a document issued by a registered
person u/s 34(1).
2(38) Debit Note “Debit Note” means a document issued by a registered
person under sub-Section (3) of Section 34.
2(43) Electronic Cash “Electronic Cash Ledger” means the electronic cash ledger
Ledger referred to Section 49(1).
2(44) Electronic “Electronic Commerce” means the supply of goods or
Commerce services or both, including digital products over digital or
electronic network.
2(45) Electronic “Electronic Commerce operator” means any person who
Commerce owns, operates or manages digital or electronic facility or
Operator platform for electronic commerce.
2(46) Electronic Credit “Electronic Credit Ledger” means the electronic credit ledger
Ledger referred to Section 49(2).
2(55) Goods & Services “Goods & Services Tax practitioner” means any person who
Tax practitioner has been approved under Section 48 to act as such
practitioner.
2(66) “Invoice” or “tax “Invoice” or “tax invoice” means the tax invoice referred to

invoice” in Section 31.

2(61) Input Service “Input Service Distributor” means an office of the supplier of
Distributor goods or services or both which-
 Receives tax invoices issued under Section 31 towards the
receipt of input services, and
 Issues a prescribed document for the purposes of
distributing the credit of Central tax, State Tax, integrated
tax or Union territory tax paid on the said services.
 To a supplier of taxable goods or services or both having
the same Permanent Account Number as that of the said
office.
2(77) Non-resident “Non-resident Taxable Person” means any person who
Taxable Person occasionally undertakes transactions involving supply if
goods or services or both, whether as principal or agent or in
any other capacity, but has no fixed place of business or
residence in India.
2(87) Prescribed “Prescribed” means prescribed by rules made under this Act
on the recommendations of the council.
2(91) Proper Officer “Proper Officer” in relation to any function to be performed
under this Act, means the Commissioner or the officer of the
central tax who is assigned that function by the commissioner
in the board.
2(92) Quarter “Quarter” shall mean a period comprising three consecutive
calendar months, ending on the last day of March, June,
September and December of a Calendar Year.
2(97) Return “Return” means any return prescribed or otherwise required
to be furnished by or under this Act or the rules made
thereunder.
2(98) Reverse Charge “Reverse Charge” means the liability to pay tax by the
recipient of supply of goods or services or both instead of the
supplier of such goods or services or both under Section
9(3)/(4) or under Section 5(3)/(4) of the Integrated Goods and
Services Tax Act.
2(106) Tax Period “Tax Period” means the period for which the return is
required to be furnished.
2(117) Valid Return “Valid Return” means a return furnished under sub- section
(1) of section 39 on which self- assessed tax has been paid in
full.

INTRODUCTION
Features of Return Mechanism
Auto - population Auto -

Electronic Uploading of Invoice reversal of
of information
Filing of invoice level level Input Tax
relating to ITC from
Returns information information Credit in
returns of supplier
matching case of
to that of recipient
mismatch
Modes of filing return
GSTN Portal Offline Utilities GST Suvidha

(www.gst.gov.in) provided by GSTN Providers (GSPs)
FURNISHING DETAILS OF OUTWARD SUPPLIES – SECTION 37

Persons liable to furnish The details of outward supplies of both goods and services are
the details of outward required to be furnished by every registered person including casual
supply-Section 37(1) registered person except the following-
 an Input Service Distributor (ISD),
Exceptions  a non-resident taxable person,
 ISD  a person paying tax under the provisions of Section 10 i.e.
 NRTP Composition Scheme,
 CD  a person paying tax under the provisions of Section 51 i.e. person
 TDS deducting tax at source,
 TCS  a person paying tax under the provisions of Section 52 i.e. person
 OIDAR collecting tax at source i.e., e-commerce operator (ECO), not
being an agent,
 a supplier of online information and database access or retrieval
services (OIDAR).
The above excluded persons have to file special returns
Form for submission of The details of outward supplies are required to be furnished,
details of outward electronically, in Form GSTR-1. Such details can be furnished
supplies - Section 37(1) through the common portal, either directly or from a notified
facilitation centre.
Due date of submission GSTR-1 for a particularmonth is filed on or before the 10th day of
of GSTR-1 - upto 10th of the immediately succeeding month. In other words, GSTR-1 of
next month - Section amonth can be filed any time between 1st and 10th day of the
37(1) succeeding month.

Extension of time limit The due date of filing GSTR-1 may be extended by
by Commissioner theCommissioner/ Commissioner of State GST/Commissioner of
UTGST for reasons to be recorded inwriting, by notification, for a
class of taxable persons.
Details cannot be The registered person shall not beallowed to furnish the details of
furnished from 11 to outward supplies i.e. GSTR-1 during the period from 11thday to
th
15th of succeeding 15thday of month succeeding the tax period.

month
GSTR-1 cannot be A taxpayer cannot file GSTR-1 before the endof the current tax
furnished before the period i.e. to say for the month of November before 30thof
end of tax period November.
However,following are the exceptions to this rule:
Exceptions  Casual taxpayers, after the closure of their business
- CTP  Cancellation of GSTIN of a normal taxpayer
- Cancellation A taxpayer who has applied for cancellation of registration will be
allowed to file GSTR-1 after confirmingreceipt of the application.
Note As a measure of easing the compliance requirement for small tax
payers, GSTR-1 has been allowedto be filed quarterly by small tax
payers with aggregate annual turnover up to Rs. 1.5 crore in the
precedingfinancial year or the current financial year. Tax payers
with annual aggregate turnover above Rs. 1.5 crorewill however
continue to file GSTR-1 on a monthly basis


1. M/s Cavenon Enterprises, a registered supplier of designer wedding dresses under regular
scheme, has aggregate annual turnover of Rs. 30 lakh in the preceding financial year. It is
of the view that in the current financial year, it is permitted to file its monthly statement of
outward supplies – GSTR-1 on a quarterly basis while its accountant advises it to file the
same on a monthly basis. You are required to advise M/s. Cavenon Enterprises on the
same. During a given tax period in the current financial year, owing to an off-season, M/s
Cavenon Enterprises has not made any taxable supply. Therefore, M/s Cavenon
Enterprises opines that no return under GST is required to be filed for the said period.
You are required to examine the technical veracityof the opinion of M/s Cavenon
Enterprises. (RTP May 2019)
Solution:
Section 37 of the CGST Act, 2017 stipulates that GSTR-1 for a particular month is required to be filed
on or before the 10th day of the immediately succeeding month, i.e. on a monthly basis.
However, presently, as a measure of easing the compliance requirement for small tax payers, GSTR-1
has been allowed to be filed quarterly by small tax payers with aggregate annual turnover up to Rs. 1.5
crore in the preceding financial year or the current financial year. Tax payers with annual aggregate
turnover above Rs. 1.5 crore will however continue to file GSTR-1 on a monthly basis.
In view of the same, M/s. Cavenon Enterprises can file its GSTR-1 on quarterly basis as its aggregate
turnover does not exceed Rs. 1.5 crore in the preceding financial year.
Further, GSTR-1 needs to be filed even if there is no business activity in a tax period. Thus, in the
present case,even if no supply has been made by M/s. Cavenon Enterprises, a nil return is required to
befiled for the relevant tax period.

Outward Taxable Supplies
B2B Supplies B2C Supplies
Inter - Intra - Inter - Intra -

State State state state
Supplies Supplies Supplies Supplies
Invoice - Invoice > Invoice

wise details Invoice - Rs. <= Rs. Consolidate
of all wise details 2,50,000 2,50,000 d details of
supplies to of all all supplies
be supplies to Invoice - wise to be
State - wise
uploaded be uploaded details to be uploaded
consolidated
uploaded details to be
uploaded
1. Mr. Gauri Shiva, a registered person in Punjab, supplies goods taxable @ 12% [CGST @ 6%,
SGST @ 6% & IGST @ 12%] in the states of Punjab and Haryana. He has furnished the
following details in relation to independent supplies made by him in the quarter ending
June, 2019:
Supply Recipient Nature of supply Value (Rs.)

1 Mr. A, a registered person Inter-state 2,20,000
2 Mr. B, a registered person Inter-state 2,55,000
3 Mr. C, an unregistered person Intra-state 1,80,000
4 Mr. D, an unregistered person Intra-state 2,60,000
5 Mr. M, an unregistered person Inter-state 3,00,000
6 Mr. N, an unregistered person Inter-state 50,000
7 Mr. O, an unregistered person Inter-state 2,50,000
8 Mr. P, an unregistered person Inter-state 2,80,000
9 Mr. Q, a registered person Intra-state 1,50,000
10 Mr. R, a registered person Intra-state 4,10,000
The aggregate annual turnover of Mr. Gauri Shiva in the preceeding FY was Rs. 1.20 crore. With
reference to rule 59 of the CGST Rules, 2017, discuss the manner in which the details of above
supplies are required to be furnished in GSTR-1.

Solution: Rule 59 of the CGST Rules, 2017, inter alia stipulates that the details of outward supplies of
goods and / or services furnished in FORM GSTR-1 shall include the –
a) Invoice wise details of all –

i. Inter-state and intra-state supplies made to the registered persons; and
ii. Inter-state supplies with invoice value more than Rs. 2,50,000 made to the unregistered
persons;
b) Consolidated details of all –
i. Intra-state supplies made to unregistered persons for each rate of tax; and
ii. State wise inter-state supplies with invoice value upto Rs. 2,50,000 made to unregistered
persons for each rate of tax;
Thus, in view of the above-mentioned provisions, Mr. Gauri Shiva should furnish the details of
outward supplies of goods made by him during the quarter ending June 2019 in the following
manner:
Nature of Manner of
Supply Recipient Value (Rs.)
supply furnishing details
1 Mr. A, a registered person Inter-state 2,20,000 Invoice-wise details
2 Mr. B, a registered person Inter-state 2,55,000 Invoice-wise details
3 Mr. C, an unregistered person Intra-state 1,80,000 Consolidated details
4 Mr. D, an unregistered person Intra-state 2,60,000 of supplies 3 and 4
Mr. M, an unregistered
5 Inter-state 3,00,000 Invoice-wise details
person
6 Mr. N, an unregistered person Inter-state 50,000 Consolidated details
7 Mr. O, an unregistered person Inter-state 2,50,000 of supplies 6 and 7
8 Mr. P, an unregistered person Inter-state 2,80,000 Invoice-wise details
9 Mr. Q, a registered person Intra-state 1,50,000 Invoice-wise details
10 Mr. R, a registered person Intra-state 4,10,000 Invoice-wise details
TIME LIMIT FOR RECTIFICATION – 37(3)

Time limit for The maximum time limit within which such amendments are
rectification permissible isearlier of the following dates:
 Date of filing of monthly return under section 39 for the month of
September following the end of thefinancial year to which such
details pertain i.e, upto 20th October of the following financial year;
or
 Date of filing of the relevant annual return.
Note In other words, once annual return for financial year is filed before the
filing of return for the month ofSeptember following the end of
financial year, no amendments relating to that financial year will be
Permitted thereafter and in such case, mismatch will become
permanent and liability to that extent willbefastened on the receiver.

It may be noted that, the expression 'due date' is missing in time limits
prescribed for making amendmentsunder section 37(3) GSTR - 1.
Therefore, dates mentioned in these sections apparently mean actual
date offiling and not the due date.
1. XYZ Ltd. furnished the annual return for the year 2019 - 20 on August 25, 2020. An error is
discovered in respect of a transaction pertaining to outward supplies of November 2019.
Determine the time limit to rectify the mistake in case return of September 2020 is furnished
on 19th October 2020. Would your answer be different if annual return for financial year
2019 - 20 is furnished on 25-12-2020?
Solution:
As per provisions of Section 37(3) of the CGST Act, 2017, no rectification of error or omission in respect
of the details furnished of outward supplies shall be allowed after –furnishing of the return under section
39 for the month of September following the end of the financial year to which such details pertain,
orfurnishing of the relevant annual return,whichever is earlier.
Thus, in this case the annual return for financial year 2019-20 has been furnished by XYZ Ltd. on
August 25, 2020and return for the month of September, 2020 is furnished on 19th October 2020, the
rectification of the errorpertaining to a transaction in November 2019 cannot be made beyond August
25th, 2020 i.e. earlier of 25th August2020 or 19th October 2020.
In other words, once annual return for financial year 2019-20 is filed before the filing of return for the
month ofSeptember, 2020, no amendments relating to financial year 2019-20 will be permitted thereafter
and in such case,mismatch will become permanent and liability to that extent will be fastened on the
receiver. Thus, even if annualreturn for financial year 2019-20 is furnished on 25-12-2020, the
rectification of the error pertaining to atransaction in November 2019 cannot be made beyond 19th
October, 2020.

FURNISHING OF RETURNS – SECTION 39

Furnishing of monthly Section 39(1) prescribes a monthly return in Form GSTR-3 forevery
return - Section 39(1) registered person, other than an
 Input service distributor or
 A non - resident taxable person or
Exceptions :  Acomposition tax payer,
- ISD
 Person deducting tax at source,
- NRTP
 Electronic commerce operator and
- CD
- TDS  Supplier ofOIDAR services.
- TCS
- OIDAR  GSTR-3 is to be filed by 20th day of the month succeeding the
relevant calendar monthorpart thereof. However, filing of
GSTR-3 has been deferred by the GST Council.
 Currently, return in Form GSTR-3B is being notified as the

monthly return to be filed by the registeredpersons who are
required to file GSTR-3. Presently, the due date of submission for
GSTR-3B is being notifiedas 20thday of the month succeeding the
relevant month.
 GSTR-3B can be submitted electronically through the common

portal, either directly or through a notifiedFacilitation Centre.
 GSTR-3B is a simple return containing

 Summary of outward supplies,
 Inward supplies liable to reversecharge,
 Eligible ITC,
 Payment of tax etc.
Thus, GSTR-3B does not require invoice-wise data of
outwardsupplies.
GSTR- 3 not required to Where a return in FORM GSTR-3B isrequired to be furnished by a
be furnished when person referred to Rule 61(1) then such person shall not be required
GSTR-3B furnished - tofurnish the return in FORM GSTR–3
[Inserted vide
Notification No. 49/2019-
CT dated 9 – 10-2019
w.e.f.01–07-2017]
Payment of taxes for Every registered person furnishingthe return in FORM GSTR-3B
discharge of tax liability shall, subject to the provisions of Section 49 of the Act, discharge his
as per FORM GSTR-3B liability towards tax, interest, penalty, fees or any other amount
payable under the Act by debiting the electronic cashledger or
electronic credit ledger, as the case may be, not later than the last
date for filing of return in FORMGSTR-3B.
Manner of furnishing of A registered person who is required to furnish a Nil return u/s 39 in
return by short FORM GSTR-3B for a tax period, any reference to electronic
messaging service furnishing shall include furnishing of the said return through a short
facility - Rule 67A messaging service using the registered mobile number and the said

return shall be verified by a registered mobile number based OTP

facility.
Explanation A Nil return shall mean a return u/s 39 for a tax period that has nil or
no entry in all the Tables in FORM GSTR-3B - w.e.f. 08-06-2020.
CONTENTS OF GSTR-3B
Basic and other details Other details relating to supplies

 GSTN  Summarised details of outward supplies and
 Legal name of the registered person inwardsupplies liable to reverse charge
 Tax period  Summarised details of inter-State supplies made
tounregistered persons, composition
taxablepersonsandUIN holders.
 Eligible ITC
 Values of exempt, nil-rated and non-GST inward
supplies
 Payment of tax
 TDS/TCS credit
DUE DATES OF FILING GSTR 3B RETURN
Period Due date

October 2019 to March, 2020 20 day of succeeding month
th
FIRST RETURN
First return- Every registered person who has made outward supplies in the period
Section 40 betweenthe date on which he became liable to registration till the date on
which registration has been granted shalldeclare the same in the first
return furnished by him after grant of registration.
 A person has to apply for registration within 30 days when his
turnover crosses the threshold limit of 20 lakh/40 lakhs in case of
suppliers engaged exclusively in supply of goods (10 lakh in case of
notified SpecialCategory States). Thus, there might be a time lag
between a person becoming liable to registration and grant of
registration certificate.
 During the intervening period, such person might have made the
outward supplies, i.e. after becoming liable toregistration but before
grant of the certificate of registration.
 Now, in order to enable such registered person to declare the taxable

supplies made by him for the periodbetween the date on which he
became liable to registration till the date on which registration has
been granted sothat ITC can be availed by the recipient on such
supplies, firstly, the registered person may issue Revised TaxInvoices
against the invoices already issued during said period within 1 month

from the date of issuance ofcertificate of registration [Section 31(3)(a)

read with rule 53 of CGST Rules, 2017].
 Further, section 40 provides that registered person shall declare his

outward supplies made during said period inthe first return furnished
by him after grant of registration. The format for this return is the
same as that forregular return.
ANNUAL RETURN – S.44

Annual return to be Every registered person, other than-
furnished electronically  An Input Service Distributor,
upto 31st December of  A person paying tax under section 51, i.e. persons deducting tax
succeeding financial at source,
year - Section 44(1)  A person paying tax under Section 52, i.e. persons collecting tax
at source,
Exceptions
 A casual taxable person, and
- ISD
 Non-resident taxable person,
- TDS
Shall furnish an annual return for every financial year electronically
- TCS
in GSTR – 9form through common portal on or before the 31st day of
- CTP
December following the end of such financial year.
- NRTP
Composition Scheme A person paying tax under composition scheme is required to file
Supplier the Annual Return in Form GSTR-9A.
Extension The Commissioner may, on the recommendations of the Council and
for reasons to be recorded in writing, by notification, extend the time
limit for furnishing the annual return for such class of registered
persons as may be specified therein.
Any extension of time limit notified by the Commissioner of State
tax or the Commissioner of UT tax shall be deemed to be notified by
the Commissioner - w.e.f. 01-01-2020.
Annual return to be Every registered person who is required to get his accounts audited
accompanied with a in accordance with the provisions of Section 35(5) shall furnish,
copy of the audited electronically, the annual return under S. 44(1) –
annual accounts and a a) Along with a copy of the audited annual accounts, and
reconciliation statement b) A reconciliation statement
if accounts are required
Reconciling the value of supplies declared in the return furnished for
to be audited - Section
the financial year with the audited annual financial statement, and
44(2)
such other particulars as may be prescribed. It must be noted that
every registered person, other than those referred to in the proviso to
section 35(5) of CGST Act, must get his accounts audited by a
Chartered Accountant or a Cost Accountant if his aggregate
turnover during a Financial Year exceeds Rs. 2 crore.
Annual Return FY 2018- The annual return for the period from 01 – 04 - 2018 to 31 – 03 - 2019
19 – due date 30 – 09- shall be furnished on or before 30-09-2020.
2020 - Explanation
Optional filing for tax The CG vide Notification No. 47/ 2019 – CT dated 9 – 10 - 2019 has
payers having aggregate made the filing of annual return under sec. 44(1) of CGST Act for FY

turnover upto Rs. 2 crore

2017 - 18 and 2018 - 19 optional for small taxpayers whose aggregate
turnover in a FY does not exceed Rs. 2 crore and who have not filed
the said return before the due date.
The said return shall be deemed to be furnished on the due date if it
has not been furnished before the due date.
Audit of accounts if Every registered person whose aggregate turnover during the FY
aggregate turnover 2018 - 19 exceeds Rs. 5 crore shall get his accounts audited as
exceeds Rs. 2 crore - specified u/s 35(5) and he shall furnish a copy of audited annual
Rule 80(3) accounts and a reconciliation statement, duly certified, in FORM
GSTR - 9C for the FY 2018 - 19, electronically through the common
portal either directly or through a Facilitation Centre notified by the
Commissioner.
RECENT NOTIFICATIONS
Person supplying online The Govt. has notified the persons compulsorily registered u/ s 24(xi)
information technology of the CGST Act read with rule 14 of CGST Rules supplying OIDAR
and database access services from a place outside India to a person in India, other than a
retrieval [OIDAR] registered person, as the class of registered persons who shall not be
services not required to required to furnish –
furnish annual return 1) The annual return under section 44(1) of the CGST Act read with
and reconciliation rule 80(1) of the CGST Rules, and
statement - NN 30 / 2019 2) The reconciliation statement under section 44(2) of the CGST Act
– CT dated 28.06.2019 read with rule 80(3) of the CGST Rules.
Foreign company which The Central Govt. has notified the persons who are foreign company
is an airlines company which is an airlines company covree under the notification issued u/
not required to furnish s 381(1) of the Companies Act, 2013 and who have complied with
reconciliation statement rule 4(2) of the Companies (Registration of Foreign Companies)
– N 09 / 2020 – CT dated Rules, 2014, as the class of registered persons who shall follow the
16.03.2020 special procedure as mentioned below.
The said person shallnot be required to furnish reconciliation

statement in FORM GSTR – 9C to the CGST Rules, 2017 u/ s 44(2) of
the said Act read with Rule 80(3) of the said rules.
However, a statement of receipts and payments for the financial year

in respect of its Indian Business operations, duly authenticated by a
practicing CA in India or a firm or a LLP of practicing CAs in India
is submitted for each GSTIN by the 30th September of the year
succeeding the financial year.

Annual Return u/s 44
Normal Special
Persons Persons
Sec 9 Route Sec 10 -

NRTP OIDAR ISD TDS TCS
other than Compo /
CTP PT
NA - GSTR9
NA NA NA
GSTR Notification B
GSTR 9
9A
FINAL RETURN – S. 45
Every registered person who is required to furnish a return under section 39(1) and whose
registration has been cancelled shall furnish a final return, in such form and manner as may be
prescribed within 3 months of -
 The date of cancellation, or
 The date of order of cancellation
Whichever is later
NOTICE TO RETURN DEFAULTERS – S.46

Where a registered person fails to furnish a return under Section 39 - Normal Return, or Section 44
- Annual Return, or Section 45 - Final Return, a notice shall be issued requiringhim to furnish such
return within 15 days in such form and manner as may be prescribed.
Notice to non - filers of A notice in FORM GSTR-3A shall be issued, electronically, to
returns - Rule 68 aregistered person who fails to furnish return under Section 39 or
Section 44 or Section 45 or Section 52.
LEVY OF LATE FEE - S. 47

Delay in furnishing As per Section47(1), any registered person who fails to furnish the
return - Fees of 100 per details of outward or inward supplies required underSection 37 or
day subject to maximum Section 38 or returns required u/s 39 or Section 45 by the due date
of 5,000 payable shall pay a late fee of-
a) Rs. 100 for every day during which such failure continues; or
b) Rs. 5,000
Which ever is less
Delay in furnishing As per Section 47(2), any registered person who fails to furnish the
annual return - Fees of return required under Section44 i.e. annual return by the due date
Rs. 100 per day subject shall be liable to pay a late fee of-
to maximum of 0.25% of a) Rs. 100 for every day during which such failure continues; or

turnover in the b) 0.25% of his turnover in the State or Union territory

State/UT Which ever is less
Note It may be noted that the late fee payable by a registered person for
delayed filing of a return and/or annualreturn, as mentioned above,
is with reference to only the CGST Act. An equal amount of late fee
would bepayable by such person under the respective SGST/UTGST
Act as well.
SEC – 48 GOODS AND SERVICES TAX PRACTITIONER

GST Practitioner – The manner of approval of GST practitioners, their eligibility
Approvsas as per rules conditions, duties and obligations, manner of removal and other
conditions relevant for their functioning shall be such as may be
prescribed.
Furnishing of returns A registered person may authorize an approved goods and services
through GST tax practitioner to furnish the details of outward supplies u/ s 37, the
practitioners details of inward supplies u/ s 38 and return u/ s 39 or section 44 or
section 45 and to perform such other functions in such manner as
may be prescribed.
Responsibility vests The responsibility for correctness of any particulars furnished in the
with registered person return or other details filed by the GST practitioners shall continue to
rest with the registered person on whose behalf such return and
details are furnished.
GST Practitioner – Means any person who has been approved u/ s 48 to act as such
Section 2(55) practitioner.
Surrender of enrolment The procedure will be as follows
of goods and services
tax practitioner - Rule
83B – Inserted by NN 33
/ 2019 – CT dated
18.07.2019 w.e.f. date to
be notified later
E-Application for A GST practitioner seeking to surrender his enrolment shall
surrender electronically submit an application in FORM GST PCT-06, at the
common portal, either directly or through a facilitation centre
notified by the Commissioner.
Cancellation of The Commissioner, or an officer authorized by him, may after
enrolment causing such enquiry as deemed fit and by order in FORM GST PCT-
07, cancel the enrolment of such practitioner.

CHAPTER – 2
SPECIAL RETURNS FOR SPECIFIED PERSONS
TOPICS
No Specified Person Form
1 Composition Dealer GSTR - 4
2 Non-ResidentTaxable Person GSTR - 5
3 Online Information & Data Accesses and RetivalServices - OIDAR GSTR 5A
4 Input Service Distributor – ISD GSTR 6
5 Tax Deducted at Source – TDS GSTR 7
6 Tax Collected at Source - TCS GSTR 8
7 Information Return Sec 150
COMPOSITION DEALER
Composition A special procedure for furnishing of return and payment of tax has
taxpayers and beenprescribed for the following persons:
presumptive
a) registered persons paying composition tax
scheme service
b) Registered person paying tax by availing the benefit of Notification No.
suppliers to file
02/2019-CT (R) dated 7–3-2019i.e. presumptivescheme for services
return annually
suppliers.
and make
payment Such persons will:
quarterly a) Quarterly statement for payment of tax - furnish a statement in form
GST CMP-08 containing detailsof payment of self-assessed tax, for
every quarter (or part of the quarter), by 18th day of the
monthsucceeding such quarter.
b) Yearly return - furnish a return (GSTR 4) for every financial year (or
part of the financial year), on orbefore 30th day of April following the
end of such financial year.
The registered persons paying tax by availing the benefit of Notification
No. 02/2019-CT (R) dated 7–3–2019will be deemed to have complied with
the provisions of section 37 and section 39 of the CGST Act, 2017 ifthey
have furnished the prescribed statement and GSTR 4 as mentioned above.
Payment of tax, Every registered person furnishing thestatement under Rule 62(1) shall
interest, etc. by discharge his liability towards tax or interest payable by debiting
electronic cash theelectronic cash ledger
ledger

Annual Return A person paying tax under composition scheme / Presumptive route under
u/s 44 Notification 2 / 2019 is required to file the Annual Return in Form GSTR -
9A.
Summary Quarterly Annual

Yearly Return
Statement in Return in
in GST4
GST CMP O8 GSTR 9A
NON - RESIDENT TAXABLE PERSON - NRTP

Non-resident Means any person who occasionally undertakes transactions
taxable person – involvingsupply of goods or services or both, whether as principal or agent
Section 2(77) or in any other capacity, but who has nofixed place of business or residence
in India.
FILING OF RETURNS BY NRTP

1 Monthly A registered NRTP is not required to file separately the
Return  Statement ofOutward Supplies,
 Statement of Inward Supplies and
 Return like a normaltax payer.
In place of the same, a simplified monthly tax return has beenprescribed in
Form GSTR-5 for a NRTP for every calendar month or partthereof.
NRTP shall incorporate the details of outward supplies and inwardsupplies
in GSTR-5.
2 Last Date of The details in GSTR-5 should be furnished within 20 days after the end
filing return ofthe calendar month or within 7 days after the last day of validity period
of the registration, whichever is earlier.
3 Payment of NRTP shall pay the tax, interest, penalty, fees or any other amount
interest, payableunder the CGST Act or rules thereunder if return is not furnished as
penalty, fees per theabove time limit.
or any other
amount
payable
4 Annual No Annal Return need to File under GSTR9 / 9A / 9B
Return u/s
44
5 Summary
With in 20 Days after the
Monthly Return in EOCM or with in 7 days after No Annual Return
GSTR 5 the validity period of U/s 44
Registration W.E.E.
.

OIDAR
PARTICULARS EXPLANATION
Simplified The supplier of OIDAR services referred above shall, for payment of
Registration Scheme integrated tax, take a single registration under the Simplified
in respect of OIDAR Registration Scheme to be notified by the Government. [Principal
Services – Section 14 Commissioner of Central tax, Bengaluru West has been notified vide
(3) Notification No. 2/2017 – IT dated 19-06-2017 w.e.f. 22-06-2017]
Representative of Any person located in the taxable territory representing such supplier
supplier in taxable for any purpose in the taxable territory shall get registered and pay
territory liable to pay integrated tax on behalf of the supplier.
tax
Appointment of any If such supplier does not have a physical presence or does not have a
person in taxable representative for any purpose in the taxable territory, he may appoint
territory to pay tax a person in the taxable territory for the purpose of paying integrated tax
and such person shall be liable for payment of such tax.
Additional A person supplying OIDAR services from a place outside India to a non
provisions for -taxable online recipient referred to in Section 14 of the IGST Act, 2017,
payment of tax for may also make the deposit through international money transfer
persons supplying through Society for Worldwide Inter – bank Financial
OIDAR services from Telecommunication payment network, from the date to be notified by
outside India to Non the Board.
– taxable Online
Recipient - Rule 87(2)
and 87 (3)
Grant of registration E – Application by supplier of OIDAR services Rule 14(1) – Any
to a person supplying person supplying OIDAR services from a place outside India to a non-
online information taxable online recipient shall electronically submit an application for
and data base access registration, duly signed or verified through EVC, in FORM GST REG
or retrieval services – 10, at the common portal, either directly or through a Facilitation
from a place outside Centre notified by the Commissioner.
India to a non –
taxable online Grant of RC – Rule 14(2) – The applicant referred to in Rule 14(1) shall
recipient- Rule 14 of be granted registration, in FORM GST REG – 06, subject to such
CGST Rules, 2017 conditions and restrictions and by such officer as may be notified by the
Central Government on the recommendations of the Council.
Form and manner of Every registered person providing online information and data base
submission of return access or retrieval services from a place outside India to a person in
by persons providing India other than a registered person shall file return in FORM GSTR-
online information 5A on or before the 20th day of the month succeeding the calendar
and database access month or part thereof.
or retrieval services
Rule 64
Annual Return u/s 44 No Annual Return required because of Notification

Summary
On or before
Monthly Return 20th of the No Annual
in GSTR 5A Suceeding Return
month
INPUT SERVICE DISTRIBUTOR

Periodicity and ISD is required to file only a monthly return in Form GSTR –
form of Return 6electronically through the common portal. Form GSTR-6 contains the
details of
 Input tax credit received fordistribution,
 Total ITC/
 Eligible ITC
 Ineligible ITC to be distributed for the tax period,
 Distribution of ITC,
 Detailsof debit/ credit notes, etc.
Due date for Filing The details in GSTR-6 should be furnished on or before 13th of the
of Return monthsucceeding the calendar month. GSTR-6 can only be filed after
10th of the month and before 13th of themonth succeeding the tax period.
Auto-population The details of input tax credit received fordistribution by an ISD will be
of input tax credit auto populated in Form GSTR-6A. Such details are auto-populated in
received for FormGSTR-6A when the registered suppliers file their GSTR-1.
distribution ISD can view the auto-populated details of ITC received for distribution in
GSTR-6A and, where required,after adding, correcting or deleting the
details, furnish GSTR-6.
No supplies can be An ISD cannot acceptany invoices on which tax is to be discharged under
procured by ISD reverse charge mechanism. If ISD wants to take reversecharge supplies, in
on which tax is that case it has to separately register as a Normal taxpayer. This is because
paid on Reverse the ISDmechanism is only to facilitate distribution of credit of taxes paid.
Charge Basis The ISD itself cannot discharge any taxliability (as person liable to pay tax)
and remit tax to Government account. ISD will have late fee and anyother
liability only.
Annual Return u/s No Annual Return required u/s 44 in Form number GSTR9 / 9A / 9B
44
Summary
On or before
Monthly Return 13th of the No Annual
in GSTR 6 Suceeding Return u/s 44
. month
TAX DEDUCTED AT SOURCE

Return for tax deducted at source - Section 39(3) read with rule 60(6) and rule 66 of the CGST
Rules:Whenever taxable goods or services or both are supplied to a Central/ State Government's
Department/ establishment or, local authority, or Governmental agencies, recipient is required to
deduct tax at source under Section 51.

Monthly return Deductor shall furnish a monthly return in Form GSTR-7 electronically
through thecommon portal.
Last date of The details in GSTR-7 should be furnished onorbefore 10th of the
filing return monthsucceeding the calendar month in which tax has been deducted at
source.
TDS details The details of TDS furnished by the deductor in GSTR-7 shall be made
made available available electronically to each of the deducteeson the common portal after
to the deductee filing ofForm GSTR – 7 for claiming the amount of tax deducted in his
electronic cash ledger after validation.
Tax Deduction A TDS certificate is required to be issued by deductor (theperson who is
at Source (TDS) deducting tax) in Form GSTR-7A to the deductee (the supplier from whose
Certificate payment, TDS isdeducted), within 5 days of crediting the amount to the
Government. It contains the details pertaining tovalue on which tax has been
deducted, rate of deduction, amount of tax deducted at source and amount
paid to the Government.
Annual Return No Need to File Annual Return u/ s 44 in Form GSTR 9 / 9A / 9B
u/s 44
Summary
On or before the No Annual
Mon thly Return
Suceeding Return u/s 44 in
in GSTR 7
month GSTR 9 / 9A / 9B
TAX COLLECTION AT SOURCE

GSTR-8 - Statement for tax collection at source - Section 52(4) read with rule 60(7) and rule 67 of
the CGST Rules:The relevant provisions are discussed as under-
Monthly return An ECO liable to collect tax at source shall furnish a monthly return in Form
GSTR – 8electronically through the common portal. Form GSTR-8 contains
the details of supplies of goods or servicesor both effected through ECO,
including the supplies of goods or services or both returned through it
andthe amount of tax collected at source.
Last date of The details in GSTR-8 should be furnished onor before 10th of the month
filing return succeeding the calendar month in which tax has been collected at source.
Further, the amount of tax collectedby ECO (TCS amount) is required to be
deposited by the 10th of the month succeeding the calendar month in which
tax has been collected at source.
TCS details The details of TCS furnished by the ECO in Form GSTR-8 shall be made
made available available electronically to each of the suppliers in Part C of Form GSTR-2A
in GSTR-2A on the commonportalafter the due date of filing of Form GSTR-8.
Rectification of If after submission of GSTR-8, the ECO discovers anydiscrepancy therein on
errors/omissions his own not being the result of any scrutiny, audit, inspection or
in GSTR–8 enforcementproceedings - he should rectify such discrepancy in GSTR-8 to
be filed for the month during which suchdiscrepancy is noticed, subject to
payment of interest under section 50.
The rectification is not allowed after the due date of filing of GSTR-8 for the

month of September followingthe end of the financial year [i.e., 10th October
of next financial year] or the actual date of filing of the relevantannual
statement [GSTR-9B], whichever is earlier.
Claiming of The supplier who has supplied the goods and/or servicesthrough the ECO
TCS by claims credit, in his electronic cash ledger of the TCS reported by the ECO in
supplier- the GSTR – 8filed by it.
Section 52(7)
Annual Return Annual Return needs to file in GSTR 9B

u/s 44
Summary
On or before
AR with in 31st
Monthly Return 10th of the Annual Return
december of
in GSTR 8 Suceeding in GSTR 9B
S.F.Y
month
OBLIGATION TO FURNISH INFORMATION RETURN - SECTION 150

Authorities Many authorities who is responsible for maintaining record of registration
required to furnish or statement of accounts or any periodic return or document containing
information return details of payment of tax and other details of –
- Section 150(1) a) Transaction of goods or services or both, or
b) Transactions related to a bank account, or
c) Transactions related to consumption of electricity, or
d) Transaction of purchase, sale or exchange of goods or property or right
or interest in a property under any law for the time being in force,
Shall furnish an Information Return of the same in respect of such periods,
within such time, in such form and manner and to such authority/ agency
as may be prescribed.
Specified Persons - The following persons are required to furnish information return-
Section 150(1) a) Taxable person;
b) Local authority or other public body or association;
c) State Government’s authority responsible for the collection of VAT/
Sales tax/ State excise duty or Central Government’s authority
responsible for the collection of excise duty or custom duty;
d) Income tax authority;
e) Banking company;
f) State Electricity Board or an electricity distribution or transmission
licensee under the Electricity Act, 2003, or any other entity entrusted
with such functions by the Central Government or the State
Government.
g) Registrar or the Sub-Registrar appointed under Section 6 of the
Registration Act, 1908;
h) Registrar within the meaning of the Companies Act, 2013;
i) Motor Vehicle registering authority;
j) Collector referred to in Section 3(c) of the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013.

k)Recognized stock exchange;

l)Depository; or
m)Officer of the Reserve Bank of India;
n)GSTN, or
o)Unique Identity Number holders, or
p)Any other person as may be specified, on the recommendations of the
Council, by the Government.
Defective Where the commissioner, or an officer authorized by him in this behalf-
information return  Considers that the information furnished in the information return is
– Notice of defect - defective;
Defect to be  He may intimate the defect to the person who has furnished in the
rectified within 30 information return and
days, or extended  Give him an opportunity of rectifying the defect;
period - Section  Within a period of 30 days from the date of such intimation, or within
150(2) such further period which, on an application made in this behalf, the
said authority may allow.
If defect not If the defect is not rectified within the said period of 30 days, or the further
rectified – Deemed period so allowed, then, notwithstanding anything contained in any other
non submission of provisions of this Act, such information return shall be treated as not
return furnished and the provisions of this Act shall apply.
Returns not Where a person who is required to furnish information return has not
furnished – furnished the same within the time specified in Section 150(1)/(2), the said
Prescribed authority may serve upon him a notice requiring furnishing of such
authority may information return within a period not exceeding 90 days from the date of
serve notice to service of the notice and such person shall furnish the information return.
furnish return-
Section 150(3)
Penalty for failure If a person who is required to furnish an information return under Section
to furnish 150 fails to do so within the period specified in the notice issued under
information return Section 150(3), thereof, the proper officer may direct that such person shall
- Section 123 be liable to pay a penalty of Rs. 100 for each day of period during which
the failure to furnish such return continues.
Maximum Penalty - The penalty imposed under this Section shall not
exceed Rs. 5000.
LIST OF RETURNS UNDER GST

Return Description Who Files? Date for Filing
Monthly Statement of Registered Person with 10 of the next month
th
Outward suppliers of annual aggregate turnover

Goods or Services greater than Rs. 1.5 crore.
GSTR – 1
Quarterly Statement Registered Person with 10th of the next quarter
of Outward suppliers annual aggregate turnover
of Goods or Services upto Rs. 1.5 crore
GSTR-3B Monthly Return for a Registered Person 20th of the next month
normal taxpayer
GSTR – 4 Return for the FY Registered person paying tax 30th April of the month
under composition scheme/ following the end of
Notification No. 2/2019-CT such financial year

(R) dated 07.03.2019

GST CMP -08 Quarterly statement Registered person paying tax 18th of the month
for payment of tax under composition scheme/ succeeding the quarter
Notification No. 2/2019-CT
(R) dated 07.03.2019
GSTR–5 Monthly Return for a Non-resident taxpayer 20th of the month
non-resident taxpayer succeeding the tax
period or within 7
days after expiry of
registration, whichever
is earlier
GSTR - 5A Monthly Return Registered person providing 20th of the next month
OIDAR services from a place
outside India to a non-
taxable online recipient
GSTR–6 Monthly Return for Input Service Distributor 13th of the next month
Input Service
Distributor
GSTR–7 Monthly Return for Tax deductor at source 10th of the next month
tax deduction at
source
GSTR–8 Monthly Return for E-Commerce operator who 10th of the next month
tax collection at source is required to collect tax at
source
GSTR–9 Annual Return Registered Person other than 31st December of next
an ISD, TDS/ TCS Taxpayer, Financial Year
Casual Taxable Person and
Non-resident Taxpayer
GSTR - 9A Annual Return Registered person paying tax 31st December of next
underComposition Scheme Financial Year
GSTR - 9B Annual Statement E commerce operator 31st December of next
required to collect TCS Financial Year
GSTR - 9C Reconciliation Registered person whose To be submitted along
Statement aggregate turnover during with the annual return
the FY exceeds Rs. 2 Crores (GSTR 9/9A)
GSTR–10 Final Return Taxable Person whose Within three months
registration has been of the date of the
surrendered or cancelled cancellation or date of
order of cancellation,
whichever is later.
GSTR - 11 Details of Inward Person who have been
Supplies issued a Unique Identity
Number (UIN)

INDEX
PAGE
CHAPTER PARTICULARS
NO
1 TAX DEDUCTED AT SOURCE – S. 51 2-19
2 TAX COLLECTED AT SOURCE – S. 52 20-27

CHAPTER – 1
TAX DEDUCTED AT SOURCE – S. 51
Tax Recovery Mechanism
TDS TCS
Section 51 Section 52
Section 51 - TDS
Charging Section Procedural Aspects
S. 51(1) S. 51(2) to 51(8)
Applicability Non Applicability
Section Description
51(1) Person liable to Deduct TDS – Applicability &Non Applicability
51(2) Time limit for deposit of tax
51(3) TDS Certificate
51(4) Late Fees
51(5) TDS Credit in Electronic Cash Ledger
51(6) Interest on delayed deposit

51(7) Determination of amount in default

51(8) Refund of excess amount of deduction
APPLICABILITY
Person The TDS provisions empower the central Government to make it mandatory for
liable to the following persons (the deductor) to deduct tax at source from payments made
deduct tax to the suppliers of taxable goods and/or services.
at source - a) A Department or Establishment of the Central Government or State
Section Government or
51(1) – b) Local Authority or
Deductor c) Governmental Agencies or
d) Such persons or category of persons as may be notified by the Government
on the recommendations of the Council.
Person Liabile to Deduct TDS
Department or
Local Governmental *Notified
Establishment of
Authority Authority Persons
CG/SG
Notified 1. An authority or a board or any other body,-

Persons a) set up by an Act of Parliament or a State Legislature or
b) established by any Government,
with 51% or more participation by way of equity or control, to carry out
any function
2. Society established by the Central Government or the State Government or a
Local Authority under the Societies Registration Act. 1860
3. Public Sector Undertakings.
Notified Persons
Authority set up by
Public Sector
an Act of Parliament Society
Undertakings
or a State Legislature

The CBIC vide circular No. 76/50/2018 - GST dated 31.12.2018 has clarified that the
provisions of Section 51 of the CGST Act are applicable only to such authority or a
board or any other body set up by an Act of parliament or a State Legislature or
established by any government in which 51% or more participation by way of
equity or control is with the government.
TDS @ 1% The deductor has to deduct tax @ 2% (1%CGST and 1% SGST) from the payment
if total made or credited to the supplier ("the deductee") of taxable goods or services or
value of both, where the total value of such supply, under a contract, exceeds Rs 2,50,000.
taxable
Thus, individual supplies may be less than Rs 2,50,000/-, but if total value of
supply
supply under a contract is more than Rs 2,50,000/-, tax will have to be deducted at
exceeds Rs
source. The deductors have to deduct tax @ 2% from the payment made or credited
2,50,000
to the supplier of taxable goods and/or services.
Deductor enters in to a
contract for purchase of Total Value of taxable Excluding GST exceeds
Taxable Goods / Services or Supply under a Contract Rs.2,50,000
both with any supplier
Value ofFor the purpose of deduction of tax specified above the value of supply shall be
supply to taken as the amount excluding the
exclude  Central tax,
taxes  State tax,
Explanation Union territory tax,
 Integrated tax and
 Cess indicated in the invoice.
Provisions It may be noted that Section 20 of the IGST Act provides that in the case of tax
under the deducted at source, the deductor shall deduct tax @ 2% from the payment made or
IGST Act, credited to the supplier.
2017
Further, the value of a supply include any taxes, duties, cesses, fees and charged
levied under any law for the time being in force other than this Act, and the Goods
and Services Tax (Compensation to States) Act, if charged separately by the
supplier.

NON - APPLICABILITY
TDS Provisions not  TDS provisions shall not apply to the supply of goods or
applicable in certain services or both from a public sector undertaking to another
cases public sector undertaking, whether or not a distinct person.
 TDS provisions shall not apply to the supply of goods or
services or both which takes place between one person to
another person specified in clauses (a), (b), (c) and (d) of
Section 51 of the said Act i.e supplies made by Government
Departments and PSUs to another Government Departments
and vice-versa are exempt from TDS.
No deduction in Certain No deduction shall be made if the location of the supplier and the
Case place of supply is in a State or Union territory which is different
from the State or as the case may be, Union Territory of
registration of the recipient
This can be explained as under:

a) Supplier, place of supply and recipient are in the same state.
It would be intra-State supply and TDS (Central plus State
tax) shall be deducted. It would be possible for the supplier (i.
e. The deductee) to take credit of TDS in his electronic cash
ledger.
b) Supplier as well as the place of supply are in different states.
In such cases, integrated tax would be levied. TDS to be
deducted would be TDS (Integrated tax) and it would be
possible for the supplier (i.e. the deductee) to take credit of
TDS in his electronic cash ledger.
c) Supplier as well as the place of supply are in State A and the
recipient is located in State B, The supply would be intra-
State supply and Central tax and State tax would be levied. In
such case/transfer of TDS (Central tax + State tax of State B) to
the cash ledger of the supplier (central tax + State tax of State
A) would be difficult. So in such cases, TDS would not be
deducted.
Thus, when both the supplier as well as the place of supply are
different from that of the recipient, no tax deduction at source
would be made.

SUMMARY: -
Case 1 Case 2 Case 3 Case 4 Case 5
 S - A  S -A  S -A  S -A  S -A
 POS – A  POS – B  POS – B  POS – A  POS – B
 R–A  R–A  R–B  R–B  R–C
 TDS  TDS  TDS X - TDS  TDS
PROCEDURAL ASPECTS
Time limit for The amount deducted as tax under this section shall be paid to the Government
deposit of tax- by the deductor within 10 days after the end of the month in which such
Upto 10th of deduction is made, in such manner as may be prescribed.
next Month -
Section 51(2) Payment of deducted tax 10 Days after the EOM in
within which deduction was made
TDS The deductor shall furnish to the deductee a certificate in Form GSTR-7A
certificate to mentioning therein the contract value, rate of deduction, amount deducted,
be Furnished amount paid to the Government within 5 days of crediting the amount to the
to Deductee - Government.
Section 51(3)
TL for TDS Certificate Form With in 5 days of crediting
GSTR - 7A payment of TDS to Govt
Example : -
The Municipal Corporation of Mumbai deducts CGST at source @ 1% from the
payment to be made to a notified supplier on 4th July. This TDS amount has to
be remitted into the Treasury on or before 10th August. The TDS certificate with
the above mentioned details has to be issued on before 15th of August.
Levy of late If any deductor fails to furnish to the deductee the certificate, after deducting
fees for not the tax at source,
furnishing  within 5 days of crediting the amount so deducted to the Government the
certificate to deductor shall pay,
deductee  by way of a late fee,
within 5 days-  a sum of Rs 100 per day from the day after the expiry of such 5 days period
100 per day until the failure is rectified, subject to a maximum amount of Rs 5,000.
subject to
maximum of Sum of Rs. 100 per day up to
5,000 - Section Late Fees
a max of Rs.5,000
51(4)

Credit of TDS  The deductee shall claim credit, in his electronic cash ledger, of the tax
in electronic deducted and reflected in the return of the deductor furnished under Section
cash ledger of 39 (3), in such manner as may be prescribed.
supplier -  The deductee can claim credit of the tax deducted, in his electronic cash
Section 51(5) ledger. This provision enables the Government to cross check whether the
amount deducted by the deductor is correct and that there is no mis-match
between the amount reflected in the electronic cash ledger and the amount
shown in the return filed by deductor.
 This is similar to existing practice in income tax relating to E-TDS returns
filed by deductor and 26ASstatement available for viewing the TDS remitted
in respect of transactions by deductee.
Interest on If any deductor fails to pay to the Government the amount deducted as tax
delayed under Section 51(1), he shall pay interest in accordance with the provision of
deposit of Section 50(1) i. e. @ 18% p. a., in addition to the amount of tax deducted.
TDS - Section
51(6)
Determination The determination of the amount in default under this Section shall be made in
of the amount the manner specified in Section 73 or Section 74.
in default -
Section 51(7)
Refund of The refund to the deductor or the deductee arising on account of excess or
excess amount erroneous deduction shall be dealt with in accordance with the provisions of
of deduction - Sec. 54.
Section 51(8) No refund if TDS is credited to the electronic cash ledger of the deductee
No refund to the deductor shall be granted, if the amount deducted has been
credited to the electronic cash ledger of the deductee.
Example Suppose a supplier makes a supply worth Rs. 1000 to a recipient and the GST at
the rate of 18% is required to be paid. The recipient, while making the payment
of Rs. 1000 to the supplier shall deduct 1% viz Rs. 10 as TDS. The value for TDS
shall not include GST @ 18%. The TDS, so deducted shall be deposited in the
account of Government by 10th of the succeeding month.
The TDS so deposited in the Government account shall be reflected in the
electronic cash ledger of the supplier (i.e deductee) who would be able to use
the same for payment of tax or any other amount. The purpose of TDS is just to
enable the Government to have a trail of transaction and to monitor and verify
the compliances

CBIC CLARIFICATION – CONDITIONS FOR TDS DEDUCTION

Tax deduction is required if all the following conditions are satisfied –
a) Total value of taxable supply > Rs. 2.5 Lakh under a single contract. This value shall
exclude taxes &cess leviable under GST.
b) If the contract is made for both taxable supply and exempted supply, deduction will be
made if the total value of taxable supply in the contract >Rs 2.5 Lakh. This value shall
exclude taxes &cess leviable under GST.
c) Where the location of the supplier and the Place of supply are in the same State / UT, it is an
intra - State supply and TDS @ 1% each under CGST Act and SGST / UTGST Act is to be
deducted if the deductor is registered in that State or Union territory without legislature.
d) Where the location of the supplier is in State A and the place of supply is in State or Union
territory without legislature - B, it is an inter State supply and TDS @ 2% under IGST Act is
to be deducted if the deductor is registered in State or Union territory without legislature –
B.
e) Where the location of the supplier is in State Aand the place of supply is in State or Union
territory without legislature B, it is an inter State supply and TDS 2 % under IGST Act is to
be deducted if the deductor is registered in State A.
f) When advance is paid to a supplier on or after 01.10.2018 to a supplier for supply of taxable
goods or services or both.
NO TDS DEDUCTION
a) Total value of taxable supply ≤ Rs 2.5 Lakh under a contract.
b) Contract value > Rs 2.5 Lakh for both taxable supply and exempted supply, but the value of
taxable supply under the said contract ≤ Rs 2.5 lakh.
c) Receipt of services which are exempted, For Example, services exempted under notification
No. 12/2017 – Central Tax (Rate) dated 28.06.2017 as amended from time to time.
d) Receipt of goods which are exempted. For example, goods exempted under notification No.
2/2017 – Central Tax (Rate) dated 28.06.2017 as amide from time to time.
e) Goods on which GST is not leviable. For example, petrol, diesel, petroleum crude, natural
gas aviation turbine fuel (ATF) and alcohol for human consumption.
f) Where a supplier had issued an invoice for any sale of goods in respect of which tax was
required to be deducted at source under the VAT Law before 01.07.2017, but where
payment for such sale is made on or after 01.07.2017 - Section 142 (13) refers.
g) Where the location of the supplier and place of supply is in a State (s) / UT (s) which is
different from the State / UT where the deductor is registered.
h) All activities or transactions specified in Schedule III of the CGST / SGST Acts 2017,
irrespective of the value.
i) Where the payment relates to a tax invoice that has been issued before 01.10.2018.
j) Where any amount was paid in advance prior to 01.10.2018 and the tax has been issued on
or after 01.10.2016, to the extent of advance payment made before 01.10.2018.
k) Where the tax is to be paid on reverse charge by the recipient i.e, the deductee
l) Where the payment is made to an unregistered supplier.

m) Where the payment relates to “Cess” component.
Deduction
Situations / Contracts required Remarks
Yes / No
Finance Department is making a Yes Where the total contract value of
payment of Rs 3 Lakh to a supplier taxable supply is more than Rs 2.5
of ‘printing & stationary’ lakh deduction is mandatory
Education Department is making Yes, deduction is Books are exempted goods; no
Payment of Rs 5 lakh to a supplier required in deduction is required in respect of
of ‘printed books and printed or respect of supply of books. However, payment
illustrated post cards ‘where payment of Rs 3 involving ‘printed or illustrated
payment for books is Rs 2 lakh and Lakh only i.e for post cards is for supply of taxable
Rs 3 Lakh is for other printed or payment in goods and value of such supply is
illustrated post cards. respect of taxable >Rs 2.5 Lakh; so, deduction is
supply. required.
Finance department is making No Deduction is mandatory in case the
payment of Rs 1.5 lakh to a supplier total value of taxable supply under
of car rental services. the contract >Rs 2.5 Lakh paid
irrespective of the amount paid.
However, if the total value of
supply under a contract is <Rs 2.5
lakh, deduction is not required.
Health Department executed a No Total value of supply as per the
contract with a local supplier to contract is Rs 2.6 lakh (including
supply “medical grade oxygen” of GST). Tax rate is 12 % So, taxable
Rs 2.6 lakh (including GST) and is value of supply (excluding GST)
making full payment. stands at Rs 2.6 L x 100/112 = Rs 2.32
Lakh <Rs 2.5 lakh. Hence, deduction
is not required.
Municipal Corporation of Kolkata Yes, deduction is Deduction is required in case of
purchases a heavy generator from a required @ 2% inter State supply and if the value of
supplier in Delhi. Now it is making taxable supply under a contract
payment of Rs 5 lakh and IGST @ exceeds Rs 2.5 lakh.
18% on Rs 5 lakh for such purchase.
Fisheries Department is making a No This supply of service is exempt in
payment of Rs. 10 Lakh to a terms of S1, No 3 of Notification No
contractor for supplying labour for 12/2017 Central Tax (Rate) dated
digging a pond for the purpose of 28.06.2017 and hence deduction is
Fisheries. not required.

Situation (in all

Place State of
cases taxable Location of Type of TDS
of registration Tax
contract value is Supplier Supply Deduction
Supply of recipient
over Rs 2.5 Lakh)
Govt. of WB Kolkata Kolkata West Bengal Intra State CGST Yes
purchases taxable +
goods from a local SGST
supplier.
Govt. of Punjab Delhi Punjab Punjab Inter State IGST Yes
purchases taxable
goods from a
supplier in Delhi.
Govt. of WB Delhi Delhi West Bengal Intra State CGST No
engages a in the +
contractor of Delhi State of SGST
for renovation of Delhi
Bangla Bhawan in
Delhi
EXAMPLES
Supplier is registered and contract value is excluding GST:
Example 1:
Supplier X makes taxable supply worth Rs. 10,000/- to a Municipality where contract for supply
is for Rs. 15 lacs. The rate of GST is 18%. Supplier and the deductor are in the same State.
Following payment is being made by this Municipality to X; Rs 10,000 (value of Supply) + Rs
900 (Central Tax) + Rs 900 (State tax).
Value of supply = Rs 10,000
Tax to be deducted from payment:
Central tax = 1 % on Rs 10,000 = Rs 100; State Tax = 1% on Rs 10,000 = Rs 100/-
Payment due to X after TDS as per GST provisions Rs. 11600
Supplier is registered and contract value is inclusive of GST:

Example 2:
Supplier Y of Mumbai makes taxable supply worth Rs 10,000 /- & exempted supply worth Rs
20,000/- in an invoice/bill of supply to Finance Department of GOI located in New Delhi where
contract for supply is for Rs 6,00,000/- ( Rs 2,60,000 for taxable supply including GST and Rs
3,40,000 for exempted supply). The rate of GST 18%, Following payment is being made by

GOIto Y; Rs 10,000/-(value of taxable supply + Rs 1,800 (Integrated Tax) + Rs 20,000/-(value of

exempted Supply). Where any deduction of tax is required?
Value of taxable supply in the contract =Rs 2, 60,000(including GST)
Value of such contract excluding tax = Rs 260000 x 100/118 = Rs. 220340/-
Since, the value of taxable supply in the contract does not exceed Rs2.5 lakh; deduction of tax is
not required.
Supplier is registered under composition scheme:

Example 3:
Supplier ZA is a person registered under the composition scheme in Jharkhand who makes
taxable supply worth Rs 10,000/- to a Local Authority of Jharkhand where value of taxable
supply under the contract is for Rs 2,55,000/- Following payment is being made by the Local
Authority of Jharkhand to ZA Rs 10,000/-
Value of taxable supply under the contract is Rs 2,55,0000 which is more than Rs 2.5 lakh and
hence deduction of tax is required.
SUMMARY: -
Procedural
Aspects - Late
Fees, Int,
Penalty &
Refund
Fails to Furnish Fails to Furnish

Fails to make If excecess
Form GSTR - 7 Form GSTR 7A Amount in
payment of amount
- S.47(1) Late with in DD - Default
deducted tax deducted
Fees 51(4)
Rs.100 per day Rs.100 per day Recovery may Refund may
Both deducted
maximum of maximum of be initiated u/s be claimed by
Tax & Interest
Rs.5000 Rs.5000 73 or 74 the Deductor /
to be paid - S.
Deductee as
50(1) read with
the Case may
51(6)
be

Note: -
If Excess tax gets credited to the deductee then no refund shall be granted to the deductor
SUMMARY
TDS
Person Liable Due Date of

Threshold Rate of
to Deduct No TDS Payment of
Limit Deduction
TDS TDS to Govt.
Total value of When location Within 10

supply under CGST @ 1% of supplier and days from the
As Below
a contract > SGST @ 1% place of supply end of the
Rs. 2.5 Lakhs, is differenet month
exclusive of from the state
GST as per of registration
invoice of recipient
Person Liabile to Deduct TDS
Department or
Local Governmental *Notified
Establishment of CG /
Authority Authority Persons
SG
*Notified Persons
Authority set up by
Public Sector
an Act of Parliament Society
Under takings
or a State Legislature

QUESTIONS FOR PRACTICE
1. XYZ Ltd. has supplied goods to local authority for Rs. 11,80,000 (inclusive of GST @ 18%).
Determine the amount of tax to be deducted at source. Also determine the interest
liability if the tax deducted at source on 25.12.2019 is deposited on 28.03.2020.
Ans: As per provisions of Section 50(1) of the Act, the local authority has to deduct tax @ 2% (1%
CGST and 1% SGST) from the payment made or credited to the supplier of taxable goods or services
or both, where the total value of such supply, under a contract, exceeds Rs. 2,50,000, Such tax has to
be paid to the Government by the deductor within 10 days after the end of the month in which such
deduction is made, in such manner as may be prescribed otherwise interest shall be levied @ 18% p.a.
for the period for which the tax or any part thereof remains unpaid.
Hence, the amount of tax to be deducted at source shall be 2% of Rs. 10,00,000 = Rs.20,000 [i.e. Rs.
10,000 – CGST and Rs. 10,000 – SGST]
Computation of Interest on delay in deposit of TDS:
1 Due date for deposit of TDS [A] 10.01.2020
2 Actual date of deposit of TDS [B] 28.03.2020
3 Period of delay (in days) [C=B-A] 78
4 Amount of TDS [D] 20,000
5 Interest payable @ 18% p.a. for delay in payment of days [D x18% x 767
C/366 days]
2. Manihar Enterprises, registered in Delhi, is engaged in supply of various goods and

services exclusively to Government departments, agencies, etc. and persons notified
under section 51 of the CGST Act, 2017. It has provided the information relating to the
supplies made, their contract values and the payment due against each of them in the
month of October, 2019 as under:
Total
Payment
contract
due in
value
No Particulars October,
(inclusive
2019
of GST)
(Rs)
(Rs)
1 Supply of stationery to Fisheries Department, Kolkata 2,60,000 15,000
2 Supply of case rental services to Municipal Corporation 2,95,000 20,000
of Delhi
3 Supply of a heavy machinery to Public Sector 5,90,000 25,000
Undertaking located in Uttarakhand
4 Supply of taxable goods to Delhi office of National 6,49,000 50,000

Housing Bank, a society established by Government of

India under the Societies Registration Act, 1860
5 Interior decoration of Andhra Bhawan located in Delhi. 12,39,000 12,39,000
Service contract is entered into with the Government of
Andhra Pradesh
6 Supply of printed books and printed post cards to a 9,72,000 50,000
West Delhi Post Office [Out of total contract value of Rs. for
9,72,000, contract value for supply of books (exempt books &
from GST) is Rs. 7,00,000 and for supply of printed post 20,000
cards (taxable under GST) is Rs. 2,72,000] for
printed
post
cards
7 Maintenance of street lights in Municipal area of East 3,50,000 3,50,000
Delhi* [The maintenance contract entered into with the
Municipal Corporation of Delhi also invoices
replacement of defunct lights and other spares.
However, the value of supply of goods is not more than
25% of the value of composite supply]
*an activity in relation to any function entrusted to a
Municipality under article 243W of the Constitution
You are required to determine amount of tax, if any, to be deducted from each of the
receivable given above assuming the rate of CGST, SGST and IGST as 9%, 9% and 18%
respectively. Will your answer be different, if Manihar Enterprises is registered under
composition scheme?
Ans:
As per Section 51 of the CGST Act, 2017 read with section 20 of the IGST Act, 2017, following
persons are required to deduct CGST @ 1% [Effective tax 2% (1% CGST + 1% SGST / UTGST) or
IGST @ 2% from the payment made/ credited to the supplier (deductee) of taxable goods or services or
both, where the total value of such supply, under a contract, exceeds Rs. 2,50,000.
a) A department or establishment of the Central Government or State Government; or
b) Local authority; or
c) Governmental agencies; or
d) An authority or a board or any other body-
a. Set up by an Act of Parliament or a State Legislature; or
b. Established by any Government,
With 51% or more participation by way of equity or control, to carry out any function; or
e) Society established by the Central Government or the State Government or a Local Authority
under the Societies Registration Act, 1860 or
f) Public sector undertakings.

Further, for the purpose of deduction of tax, the value of supply shall be taken as the amount
excluding CGST, SGST/ UTGST, IGST and GST Compensation Cess indicated in the invoice.
Since in the given case, Manihar Enterprises is supplying goods and services exclusively to
Government departments, agencies etc. and persons notified under section 51 of the CGST Act, 2017,
applicability of TDS provisions on its various receivables is examined in accordance with the above-
mentioned provisions as under:
Total Tax to be deducted

Payment
Particulars contract
due (Rs) CGST SGST IGST
value (Rs)
Supply of stationery to Fisheries 2,60,000 15,000 -
Department, Kolkata [WN-1]
Supply of car rental services to Municipal 2,95,000 20,000 -
Corporation of Delhi [WN – 2]
Supply of a heavy machinery to Public Sector 5,90,000 25,000 - - 500
Undertaking located in Uttarakhand [WN-3]
Supply of taxable goods to Delhi office of 6,49,000 50,000 500 500
National Housing Bank, a society established
by Government of India under the Societies
Registration Act, 1860 [WN-4]
Interior decoration of Andhra Bhawan 12,39,000 12,39,000 -
located in Delhi [WN-5]
Supply of printed books and printed post 9,72,000 -
cards to a West Delhi Post Office [WN-6]
Maintenance of street lights in Municipal 3,50,000 3,50,000 -
area of East Delhi [WN-7]
Working Notes:
No Particulars
1 No TDS where total value of supply under the contract do not exceed Rs. 2,50,000:
Being an inter-state supply of goods, supply of stationery to Fisheries Department, Kolkata is
subject to IGST @ 18%. Therefore, total value of taxable supply [excluding IGST] under the
contract is as follows :
= Rs. 2,60,000 x 100/118
=Rs. 2,20,339 (rounded off)
Since the total value of supply under the contract does not exceed Rs. 2,50,000 tax
is not required to be deducted.
2 Being an intra-state supply of Services, supply of car rental services to Municipal Corporation
of Delhi is subject of CGST and SGST @ 9% each. Therefore, total value of taxable supply
[excluding CGST and SGST] under the contract is as follows:
=Rs. 2,95,000 x 100/118

=Rs. 2,50,000
Since the total value of supply under the contract does not exceed Rs. 2,50,000 tax
is not required to be deducted.
3 Being an inter-state supply of goods, supply of heavy machinery to PSU in Uttarakhand is
contract is as follows:
=Rs. 5,90,000 x 100/118
=Rs. 5,00,000
Since the total value of supply under the contract exceeds Rs. 2,50,000, PSU in
Uttarakhand is required to deduct tax @ 2% of Rs. 25,000 i.e. 500
4 Being an intra-state supply of goods, supply of taxable goods to National Housing Bank, Delhi
is subject to CGST and SGST @ 9% each. Therefore, total value of taxable supply [excluding
CGST and SGST] under the contract is as follows:
=Rs. 6,49,000 x 100/118
Rs. 5,50,000 (rounded off)
Since the total value of supply under the contract exceeds Rs. 2,50,000, National
Housing Bank, Delhi is required to deduct tax @ 2% (1% CGST + 1% SGST) of
Rs. 50,000 i.e. Rs. 1000.
5 No TDS if the location of the supplier and POS is in a State / UT which is different
from State / UT of registration of the receipient:
Proviso to section 51 of CGST Act 2017, stipulates that no tax shall be deducted if the location
of the supplier and POS is in a State or UN which is different from the state or as the case may
be, UN of the registration of the receipient.
Section 12(3) of the IGST Act, 2017, interalia stipulates that the POS of service, directly in
relation to an immovable property, including services provided by interior decorators, shall be
the location at which the IMP is located or intended to be located.
Accordingly, the POS of the Andhra Bhavan shall be in delhi.
Since the location of the supplier (Maniher Enterprises) and the POS is delhi and the state of
registration of the receipient – Govt of Andhra Pradesh is Andhra Pradesh, no tax is liable to
be deducted.
6 TDS only if total value of taxable supply in the contract exceeds Rs. 2,50,000, exempt
supply not to be considered:
If the contract is made for both taxable supply and exempted supply, tax shall be deducted if
the total value of taxable supply in the contract exceeds Rs. 2,50,000. Being an intra-state
supply of goods, supply of printed post cards to a West Delhi Post Office is subject to CGST
and SGST @ 9% each. Therefore, total value of taxable supply [excluding CGST and SGST]
under the contract is as follows:
=Rs. 2,72,000 x 100/118
Since the total value of taxable supply under the contract does not exceed Rs.
2,50,000, tax is not required to be deducted.
7 No TDS in case of exempt supply: Composite supply of goods and services in which the value
of supply of goods constitutes not more than 25% of the value of the said composite supply

provided to, inter alia local authority by way of any activity in relation to any function
entrusted to a Municipality under article 243W of the Constitution is exempt from GST.
Thus, maintenance of street lights (an activity in relation to a function entrusted to a
Municipality) in Municipal area of East Delhi involving replacement of defunct lights and
other spares where the value of supply of goods is not more than 25% of the value of composite
supply is a service exempt from GST. Since tax is liable to be deducted from the payment made
or credited to the supplier of taxable goods or services or both, no tax is required to be deducted
in the given case as the supply is exempt.
The answer will remain unchanged even if Manihar Enterprises is registered under
composition scheme. Tax will be deducted in all cases where it is required to be
deducted under section 51 of the CGST Act, 2017 including the scenarios when the
supplier is registered under composition scheme.
3. Yash Shoppe a registered supplier of Jaipur, is engaged in supply of various goods and
services exclusively to Government Department, Agencies, Local authority and persons
notified under section 51 of the CGST Act, 2017.
You are required to briefly explain the provisions relating to tax deduction at source under
section 51, of the CGST Act, 2017 and also determine the amount of tax, if any, to be
deducted from each of the receivables given below (independent cases) assuming that the
payments as per contract values are made on 31.10.2019. The rates of CGST, SGST and IGST
may be assumed at 6%, and 12% respectively.
a) Supply of Computer stationery to Public Sector Undertaking (PSU) located in
Mumbai. Total contract value is Rs. 2,72,000 (inclusive of GST)
b) Supply of Air conditioner to GST Department located in Delhi. Total contract value
is Rs. 2,55,000 (exclusive of GST)
c) Supply of Generator renting service to Municipal Corporation of Jaipur. Total
contract value is Rs. 3,50,000 (inclusive of GST)
Ans: As per section 51 of the CGST Act, 2017 read with section 20 of the IGST Act, 2017, following
persons are required to deduct CGST @ 1% [Effective tax 2% (1% CGST + 1%SGST/ UTGST)] or
IGST @ 2% from the payment made/ credited to the supplier (deductee) of taxable goods or services or
both, where the total value of such supply, under a contract, exceeds Rs. 2,50,000:
a) A department or establishment of the Central Government or State Government; or
b) Local authority; or
c) Governmental agencies; or
d) An authority or a board or any other body-
a. Set up by an Act of Parliament or a State Legislature; or
b. Established by any Government,
With 51% or more participation by way of equity or control, to carry out any function; or
e) Society established by the Central Government or the State Government or a Local Authority
under the Societies Registration Act, 1860 or

f) Public sector undertakings.
Further, for the purpose of deduction of tax, the value of supply shall be taken as the excluding CGST,
SGST/ UTGST, IGST and GST Compensation Cess indicated in the invoice.
Since in the given case, Yash Shoppe is supplying goods and services exclusively to Government
departments, agencies etc. and persons notified under section 51 of the CGST Act, 2017, applicability
of TDS provisions on its various receivables is examined in accordance with the above-mentioned
provisions as under:
Total Tax to be deducted
Contract Value
Particulars contract
Exclusive GST CGST SGST IGST
value (Rs)
Supply of Computer stationery to 2,72,000 2,42,857 - -
Public Sector Undertaking (PSU)
located in Mumbai [WN-1]
Supply of Air conditioner to GST 2,55,000 2,55,000 - - 5,100
Department located in Delhi
[WN-2]
Supply of Generator renting 3,50,000 3,12,500 3,125 3,125
service to Municipal Corporation
of Jaipur [WN-3]
Total 3,125 3,125 5,100
Working Notes:
1) No TDS where total value of supply under the contract does not exceed Rs. 2,50,000: Being
an inter-state supply of goods, supply of stationery to Public Sector Undertaking (PSU)
located in Mumbai is subject to IGST @ 12%. Therefore, total value of taxable supply
[excluding IGST] under the contract is as follows:
=Rs. 2,72,000 x 100/112
2) TDS to be deducted where total value of supply under the contract exceed Rs. 2,50,000: Being
an inter-state supply of goods, supply of air-conditioner to GST Department in Delhi is
contract is as follows:
=Rs. 2,55,000
Since, the total value of supply under the contract exceed Rs. 2,50,000, tax is required to be
deducted.
3) TDS to be deducted where total value of supply under the contract exceed Rs. 2,50,000: Being
an intra-state supply of services, supply of Generator renting service to Municipal
Corporation of Jaipur is subject to CGST and SGST @ 9% each. Therefore, total value of
taxable supply [excluding CGST and SGST] under the contract is as follows:

=Rs. 3,50,000 x 100/112

=Rs. 3,12,500
Since the total value of supply under the contract exceed Rs. 2,50,000, tax is required to be
deducted.

CHAPTER – 2
TAX COLLECTED AT SOURCE – S. 52
Section 52
Procedural Return Related Departmental

Applicability
Aspects by ECO Matters Matters
- 52(2) - 52(7) - 52(12)

52(1)
- 52(3) - 52(8) - 52(13)
- 52(4) - 52(9)
- 52(5) - 52(10)
- 52(6) - 52(11)
Section Description
52(1) Applicability
52(2) Other modes of recovery not to be affected
52(3) Time limit for deposit of tax
52(4) E-Statement to be filed upto 10th of Next month
52(5) Annual Statement
52(6) Rectification of Mistake
52(7) Claim of TCS by the Supplier
52(8) Matching
52(9) Communication of Discrepancy
52(10) Non rectification of Discrepancy
52(11) Interest Payable
52(12) Notice
52(13) Information to be furnished

APPLICABILITY
E-commerce operator  Every electronic commerce operator,
to collect tax at source  not being an agent,
of the net value of  shall collect an amount calculated at such rate not exceeding 2%
taxable supplies (1% CGST and 1% SGST), as may be notified by the
made through it by Government on the recommendations of the Council,
Other Suppliers -  of the net value of taxable supplies made through it by other
Section 52(1) suppliers where the consideration with respect to such supplies
is to be collected by the operator.
"Net value of taxable  Shall mean the aggregate value of taxable supplies of goods or
supplies" – services or both, other than services notified under Section 9(5),
Explanation made during any month by all registered persons through the
operator reduced by the aggregate value of taxable supplies
returned to the suppliers during the said month.
 The Net Value of Taxable supplies will be calculated at GSTIN
level and not at gross level.
 In other words, net supplies are to be calculated for each
supplier separately.
TCS ON Net TO (Supplier Wise)

No Particulars Amt
1 Aggregate Turnover of TS Xxx
2 Less: Supplies Returned Xxx
3 Net Value of taxable Supplies Xxx
Note: - Exclude Notified Supplies u/s 9(5)
No TCS if net value Calculation for each supplier to be made separately - no provision
Nil - to carry forward negative figures - If in a particular month, the sale
returns are more than supplies made, there will be no TCS for that
month. However, such negative figure will not be carried forward.
Hence, such shortage cannot be adjusted in next month.
TCS on billing basis The TCS by electronic commerce operator shall be on billing basis
and not on collection and not on collection basis
basis
CGST Notification The Government vide Notification No. 52/2018-CT dated 20-09-2018
has notified that every electronic commerce operator, not being an
agent, shall collect an amount calculated @ 1% (0.5% CGST and
0.5%SGST) of the net value of intra-State taxable supplies made
through it by other suppliers where the consideration with respect
to such supplies is to be collected by the said operator.
IGST Notification  It may be noted that Section 20 of IGST Act provides that in case
of tax collected at source, the operator shall collect tax at such

rate not exceeding 2%, as may be notified on the

recommendations of the Council, of the net value of taxable
supplies.
 Further, the value of a supply shall include any taxes, duties,
cesses, fees and charges levied under any law for the time being
in force other than this Act, and the Goods and Services Tax
(Compensation to States)Act, if charged separately by the
supplier.
 The Central Government vide Notification No. 02/2018-IT dated
20–09-2018 has notified that every electronic commerce operator,
not being an agent, shall collect an amount calculated @ 1% of
the net value of inter-State taxable supplies made through it by
other suppliers where consideration with respect to such
supplies is to be collected by the said operator.
PROCEDURAL ASPECTS BY ECO
Other modes of recovery The power of collect the amount specified in Section 52(1)
not to be affected - shall be without prejudice to any other mode of recovery
Section 52 (2) from the operator
This sub-section establishes that the power of e-commerce
operator is restricted only to the extent of tax collection at
source under circumstance specified therein and nothing
more
Time limit for deposit of The amount collected under Section52(1) shall be paid to the
tax-Up to 10th of next Government by the operator within 10 days after the end of the
month - Section 52(3) month in which such collection is made, in such manner as may
be prescribed.
Example : -
If the TCS has been collected in the month of January, the amount
has to be remitted into the Government Treasury on or before
10th February.
E-Statement to be filed Every operator who collects the amount specified in Section 52(1)
upto 10th of next month - shall furnish a statement, electronically, containing the details of-
Section 52(4)  outward supplies of goods or services or both effected
through it, including the supplies of goods or services or both
returned through it, and
 the amount collected under Section 52(1) during a month,
in such form and manner as may be prescribed, within 10 days
after the end of such month.

Extension – Inserted by The commissioner may for reasons to be recorded in writing, by

FA 2019, w.e.f. 01.01.2020 notification, extend the time limit for furnishing the statement for
such class of registered persons as may be specified therein.
Any extension of time limit notified by the Commissioner of State

tax or the Commissioner of UT tax shall be deemed to be notified
by the Commissioner.
Annual Statement to be Every operator who collects the amount specified in Section 52(1)
filed up to 31stDecember shall furnish an annual statement, electronically containing the
of succeeding financial details of-
year - Section 52 (5)  outward supplies of goods or services or both effected
through it, including the supplies of goods or services or both
returned through it, and
 the amount collected during the financial year,
in such form and manner as may be prescribed, before the 31st
December following the end of such financial year.
Extension – Inserted by The Commissioner may, on the recommendations of the Council
FA 2019, w.e.f. 01.01.2020 and for reasons to be recorded in writing, by notification, extend
the time limit for furnishing the annual statement for such class
of registered persons as may be specified therein.
Any extension of time limit notified by the Commissioner of state

tax or the Commissioner of UT tax shall be deemed to be notified
by the Commissioner.
Rectification of mistake If any ECO after furnishing a statement under Section 52(4)
in monthly statement by discovers
ECO - Section 52(6)  any omission or
 incorrect particulars therein,
 other than as a result of scrutiny, audit, inspection or
enforcement activity by the tax authorities,
 he shall rectify such omission or in correct particulars in the
statement to be furnished for the month during which such
omission or incorrect particulars are noticed,
 Subject to payment of interest, as specified in Section 50(1).
Time limit of No such rectification of any omission or incorrect particulars
Rectification shall be allowed after -
 the due date for furnishing of statement for the month of
September following the end of the financial year, or
 the actual date of furnishing of the relevant annual statement,
Which ever is earlier

RETURN RELATED MATTERS
Claim of TCS by the The supplier who has supplied the goods or services or both
supplier - Section 52(7) through the operator shall claim credit, in his electronic cash
ledger, of the amount collected and reflected in the statement of
the operator furnished under section 52(4), in such manner as
may be prescribed.
Matching of details The details of supplies furnished by every operator under section
furnished by the E - 52(4) shall be matched with the corresponding details of outward
commerce operator with supplies furnished by the concerned supplier registered under
the details furnished by this Act in such manner and within such time as may be
the supplier - Section prescribed.
52(8)
Communication of Where the details of outward supplies furnished by the operator
discrepancy in details under Section 52(4) do not match with the corresponding details
furnished by the E - furnished by the supplier under Section 37 or Section 39, the
commerce operator and discrepancy shall be communicated to both persons in such
the supplier- Section manner and within such time as may be prescribed.
52(9)
Non-rectification of The amount in respect of which any discrepancy is
discrepancy, addition of communicated under section 52(9) and which is not rectified by
amount of discrepancy to the supplier in his valid return or the operator in his statement
output tax liability of for the month in which discrepancy is communicated, shall be
supplier - Section 52(10) added to the output tax liability of the said supplier, where the
value of outward supplies furnished by the operator is more than
the value of outward supplies furnished by the supplier, in his
return for the month succeeding the month in which the
discrepancy is communicated in such manner as may be
prescribed.
Interest payable on The concerned supplier, in whose output tax liability any amount
amount added to the has been added under section 52(10), shall pay the tax payable in
output tax liability of the respect of such supply along with interest, at the rate specified
supplier - Section 52(11) under section 50(1) on the amount so added from the date such
tax was due till the date of its payment.

DEPARTMENTAL MATTERS
Issuance of notice to Any authority not below the rank of Deputy Commissioner may
furnish details of serve a notice along with summary thereof electronically in form
supplies and stock - GSTDRC-01, either before or during the course of any
Section 52(12) proceedings under this Act, requiring the ECO to furnish such
details relating to
a) supplies of goods or services or both effected through such
ECO during any period; or
b) stock of goods held by the suppliers making supplies through
such ECO in the godowns or warehouses, by whatever name
called, managed by such ECO and declared as additional
places of business by such suppliers, as may be specified in
the notice.
Information to be Every ECO on whom a notice has been served under Section
furnished within 15 days 52(12) shall furnish the required information within 15 days of
from service of notice - the date of service of such notice.
Section 52(13)
Penalty for failure to Any person who fails to furnish the information required by the
furnish information- notice served under Section 52(12) shall, without prejudice to any
Upto Rs 25, 000 action that may be taken under Section 122, be liable to a
penalty which may extend to 25,000.

TCS
Person Value of Tax Due date of

Rate of
liable to Thershold collection collection payment of
Tax
collect tax Limit of tax at when to TDS to
Collection
at source source be made Government
CGST - During
Within 10
Electronic 0.5% Net value the month
days from
commerce Nil of Taxable of which
SGST - the end of
operator supply supply
0.5% month
was made
TDS & TCS
No TDS TCS
1 Receipient u/s 51 used to deduct and pay to ECO is liable to deduct and pay to Govt
Govt
2 TDS obligation on only Notified receipients TCS is on ECO who receives payment
(Deductors)
3 TDS is only when Value under Contract No Threshold limit is Conditions
Exceeds Rs.2,50,000 Satisfied like
 ECO should not be an Agent
 Consideration should be received by
ECO
4 Return in GSTR – 7 Return in GSTR – 8

INDEX
PAGE
CHAPTER PARTICULARS
NO
1 INPUT TAX CREDIT - BASICS 2-9
2 BLOCKED CREDIT – S.17(5) 10-21
3 QUESTIONS FOR PRACTICE 22-48

APPORTIONMENT OF INPUTS & INPUT
4 49-58
SERVICES
5 APPORTIONMENT OF CAPITAL GOODS 59-69
SPECIAL PROVISIONS FOR ITC IN CASE OF
6 BANKING COMPANY & FI INCLUDING 70-73
NBFC – 17(4)
7 SEC 18 - ITC IN SPECIAL CASES 75-85
SEC 18 – ITC IN SPECIAL CASES – OTHER
8 86-93
ISSUES

CHAPTER –1
INPUT TAX CREDIT - BASICS
SECTIONS
Sec Name of the Section

16 Basic Section
17 Apportionment & Blocked Credit
18 ITC in Special Cases
19 ITC & Job Work Provisions
20 Input Service Distribotor
21 Manner of Recovery of Excess Credit Distributed
DEFINITIONS
Input Tax
Means Includes Excludes
Tax Payable Tax Payable

Under Forward IGST leviable on Composition
under Reverse
Charge Import of Goods Tax
Charge
Sec 16
16(1) 16(2) 16(3) 16(4)
If Depreciation
Who can Claim Conditions for Claimed on tax TL for Availment
ITC ? claiming ITC Component then of ITC
no ITC

SECTION 16 – BASIC SECTION

Section Description
Only registered Every registered person shall,
person eligible to  subject to such conditions and restrictions as may be prescribed, and
take ITC - Section  in the manner specified in *Section 49,
16 (1) be entitled to take credit of input tax-
 charged on any supply of goods or services or both to him
 Which are used or intended to be used in the course or furtherance
of his business, andthe said amount shall be credited to the
electronic credit ledger of such person.
Conditions to be Notwithstanding anything contained in this Section, no registered
satisfied for person shall be entitled to the credit of any input tax in respect of any
taking ITC – supply of goods or services or both to him unless-
Section 16(2)  Possession of tax paying document
 Receipt of Goods/Services
 Tax charged is actually paid to Government
 Furnishing of Return
ITC not Where the registered person has claimed depreciation on the tax
admissible if component of the cost of capital goods and plant and machinery under
deprecation the provisions of the Income-tax Act, 1961, the ITC on the said tax
claimed on tax component shall not be allowed.
component - Thus, in respect of the tax paid on such items, double benefit cannot be claimed
Section 16(3) under Income-tax Act, 1961 and GST laws simultaneously.
In other words, either depreciation on the tax component can be claimed under
Income Tax Act or ITC of such tax paid can be availed under GST laws.
Time Limit for A registered person shall not be entitled to take input tax creditin
availing ITC - respect of any invoice or debit note for supply of goods or services or
Section 16(4) both after -
 the due date of furnishing of the return under section 39 for the
month of September following theend of financial year to which such
invoice or invoice relating to such debit note pertains, or
 furnishing of the relevant annual return,
Whichever is earlier
Exception It must be noted that the time limit under Section 16(4) does not apply to claim
for re-availing of credit that had been reversed earlier.

Proviso to 16(2)
Proviso 1 Proviso 2
REVERSAL OF ITC
Section Description
Goods received in lots or Where the goods against an invoice are received in lots or
instalments - First instalments, the registered person shall be entitled to take credit
Proviso to 16(2) upon receipt of the last lot or instalment
Payment is not made ITC availed is to be paid along with interest as per Second
within 180 days from Proviso to Section 16, where a recipient fails to pay
date of invoice – Second  to the supplier of goods or services or both,
Proviso to 16(2)  the amount towards the value of supply along with tax
payable thereon,
 within a period of 180 days from the date of issue of invoice
by the supplier,an amount equal to the input tax credit
availed by the recipient shall be added to his output tax
liability along with interest thereon, in such manner as may be
prescribed.
Re-credit when payment However, the recipient shall be entitled to avail of the credit of
is made subsequently input tax on payment made by him of the amount towards the
(Refer above exception value of supply of goods or services or bothalong with tax payable
in 16(4)) thereon.
In case part payment has been made, proportionate credit would
be allowed.
Exceptions This condition of payment of value of supply plus tax within
180 days does not apply in the following situations:
a) Supplies on which tax is payable under reverse charge
b) Deemed supplies without considerationi.e., value of supplies
made without consideration as specifiedin Schedule I of the
said Act.
c) The value of supplies on account of any amount added in
accordance with the provisions of Section15 (2) (b) shall be
deemed to have been paid for the purposes of the second
proviso to Section 16 (2),i.e.,additions made to the value of

supplies on account of supplier's liability, in relation to

suchsupplies, being incurred by the recipient of the supply.
Note - Under situations given in points (b) & (c), the value of
supply is deemed to have been paid.
Restriction on availment ITC to be availed by a registered person in respect of invoices or
of ITC in respect of debit notes, the details of which have not been uploaded by the
invoices / debit notes not suppliers u/ s 37(1) i.e., in GSTR – 1 and not reflected in GSTR –
uploaded by the 2A of the recipient, shall not exceed 10% of the eligible credit
suppliers in their GSTR available in respect of invoices or debit notes the details of whch
– 1 – unmatched credit have been uploaded by the suppliers u/ s 37(1) i.e., in GSTR – 1
cannot exceed 10% of and reflected in GSTR – 2A of the recipient.
ITC available in GSTR –
2A – Rule 36(4)
Amended vide NN 75 /
2019 – CT dated
26.12.2019 w.e.f.
01.01.2020
This can be further understood as under –
Case Amount of ITC to be claimed by recipient

Where invoice / debit Full ITC, if all other conditions of availing ITC are fulfilled
note has been uploaded
by the supplier in his
GSTR – 1
Where invoice / debit 10% of the eligible ITC available in respect of the uploaded
note has not been invoices / debit notes. However, the ITC so claimed should not
uploaded by the exceed the actual eligible ITC available in respect of the invoices
supplier in his GSTR – 1 not uploaded.
However, the said condition shall apply cumulatively for the period Feb, March, April, May,
June, July, and August 2020 and the return in FORM GSTR – 3B for the tax period sep 2020
shall be furnished with the cumulative adjustment of ITC for the said months in accordance
with the condition above – Inserted vide NN 30 / 2020 – CT dated 03.04.2020 w.e.f. 03.04.2020.

RECEIPT OF THE GOODS AND / OR SERVICES - SECTION 16(2) (B)
Delivery of goods or It shall be deemed that the registered person has received the
services at registered goods or, as the case may be, services
persons direction is i. Where the goods are delivered by the supplier to a
valid receipt of goods recipient or any other person on the direction of such
or services Explanation registered person, whether acting as an agent or otherwise,
- before or during movement of goods, either by way of
transfer of documents of title to goods or otherwise;
ii. Where the services are provided by the supplier to any
person on the direction of and on account of such
registered person.
Thus, ‚Bill to Ship to‛Model, where the goods are delivered to a third party on the direction of the
registered person who purchases the goods from the supplier is also included for the purpose of ITC.
Examples:
No Examples
1 X is a trader who places an order on Y for a consignment of chemicals. X receives a buying order
from Z for the same quantity of chemicals. X instructs Y to deliver the goods to Z, and in turn he
raises an invoice on Z. Though the goods are not physically received at the premises of X, the
condition of Section 16(2)(b) is satisfied, and X is entitled to ITC on the consignment.
2 The registered head office (Jaipur, Rajasthan) of JJ Pvt. Ltd., enters into a contract with SS Pvt.
Ltd., of Jaipur, Rajasthan for repair and maintenance of computer systems installed at its
registered branch office in Bengaluru, Karnataka. DEF Pvt. Ltd., issues an invoice on JJ Pvt. Ltd.,
Jaipur for the services provided by it. Though the actual services are received by the branch office
and not by the head office, sec. 16(2)(b) allows ITC of such repair and maintenance services to head
office.
3 A is a trader who places an order on B for a consignment of soda ash. A receives a buying
order from C for the same quantity of soda ash. A instructs B to deliver the goods to C,
and in turn he raises an invoice on C. Though the goods are not physically received at the
premises of A, the condition of section 16(2)(b) is satisfied, and A is entitled to ITC on
the consignment.
4 In case of Bill to Ship model the goods received by job worker will be considered as
received by buyer only.

GOODS RECEIVED IN LOTS–QUESTION FOR UNDERSTANDING

1. S Ltd. a registered manufacturer of Jaipur entered in a contract with a supplier for supply
of Input X in October 2019. As per contract it was agreed that 10,000 kgs of Input X will be
supplied for Rs. 7,28,000 (Inclusive of CGST and SGST @ 6% each) in 4 lots. Invoice of Rs.
7,28,000 has been issued with supply of first lot of Input X. Following further information
has been provided regarding supply of Input received in subsequent lots.
Briefly explain whether S Ltd. eligible to take credit on proportionate basis.

Date of Receipt of
No Input X (In Lots) Quantity in Kgs
Supply
1 First Lot 2,500 19.10.2019
2 Second Lot 3,000 21.10.2019
3 Third Lot 1,500 12.11.2019
4 Fourth Lot 3,000 01.12.2019
Solution:
No, S Ltd. is not eligible to take credit on proportionate basis. As per first proviso to section 16(2),
where the goods against an invoice are received in lots or instalments, the registered person shall be
entitled to take credit upon receipt of the last lot or instalment. Therefore, in the given case Input ‘X’
has been received in lots hence, the credit of tax of Rs. 78,000 i.e., (Rs. 7,28,000 x 12 / 112) paid on
such input shall be taken by S Ltd. only after receipt of fourth lot i.e., 01 – 12 – 2019.
PAYMENT TO BE MADE WITHIN 180 DAYS - SECOND PROVISO TO SECTION 16(2)

Due to a quality dispute, ABC Ltd withheld payment on a machine supplied by a vendor
till it could be rectified. Over 180 days went by in this dispute. The credit taken by ABC on
the invoice got added to the output tax liability of ABC and thus, it had to pay back the
credit. Only after the vendor rectified the machine and ABC released the payment, could
ABC take the credit again.


1. A registered supplier of taxable goods supplied goods valued Rs. 2,24,000 (Inclusive of
CGST Rs. 12,000 and SGST Rs. 12,000) to Mohan Ltd. under the forward charge on
15.08.2019 for which tax invoice was also issued on the same date. The inputs were
received by Mohan Ltd. on 15.08.2019. Mohan Ltd. availed credit Rs. 24,000 on 18.08.2019.
But Mohan Ltd. did not make any payment towards such supply along with tax thereon
to the supplier. Is Mohan Ltd. eligible to avail Input Tax credit on such supply? What are
the consequences of such non-payment by Mohan Ltd? Discuss ITC provisions if Mohan
Ltd. makes the payment of Rs. 2,24,000 to the supplier on 18.03.2020.
Solution:
As per section 16 of the CGST Act, 2017, Mohan Ltd. is eligible to avail ITC of the tax paid on inputs
received by it on the basis of the invoice issued by the supplier provided other conditions for availing
ITC are fulfilled.
Payment of value of the goods along with the tax to the supplier is not a pre – requisite at the time of
availing credit, but Mohan Ltd. has to pay the said amount within 180 days from the date of issue of
invoice.
If Mohan Ltd. does not If Mohan Ltd. did not make any payment towards such supply along with
make payment within tax thereon to the supplier, it has to report the fact of non – payment in the
180 days from the date ITC return (GSTR – 2) for the month immediately following the period of
of invoice 180 days from the date of issue of invoice. When such report is made, ITC of
Rs. 24,000 will be added to his output tax liability. Mohan Ltd., will be
required to discharge this liability with interest @ 18% p.a. from the date of
availing credit till the date when the amount added to the output tax liability
– Second proviso to sec. 16(2) of the CGST Act, 2017 read with rule 37 of the
CGST Rules, 2017.
Mohan Ltd liable to If Mohan Ltd. does not pay the supplier as mentioned above, subject to the
general penalty not provisions of sec. 126 of the CGST Act, 2017, a general penalty which may
exceeding Rs. 25,000 extend to RS. 25,000 may also be levied for such contravention by Mohan
Ltd. u/ s 125 of the CGST Act, 2017.
Re – credit of input tax If Mohan Ltd. makes the payment of Rs. 2,24,000 (Value + Tax) to the
if payment made after supplier on 18 – 03 – 2020 i.e., after the expiry of 180 days from the date of
180 days issue of invoice, Mohan Ltd. will have to report the default in the monthly
report, add the amount of ITC to his output tax liability and when the
payment is made to the supplier, take the credit of Rs. 24,000. The output tax
liability added will have to be paid with interest @ 18% for the period from
the date of availment of credit till the date of addition of the amount to the
output tax liability.

TIME LIMIT FOR AVAILING ITC:
Due date of filing of return for the month of September of succeeding financial year or
date of filing of annual return, whichever is earlier - section 16 (4)
Hercules Machinery delivered a machine to ABC in January 2020 under Invoice no. 49
dated 28th January, 2020 for Rs4,15,000 plus GST, and undertook trial runs and calibration
of the machine as per the requirements of ABC. The amount chargeable for the post -
delivery activities was covered in a debit note raised in April 2020 for Rs.50,000 plus GST.
ABC did not file its annual return till October, 2020. Though the debit note was received in
the next financial year, it relates to an invoice received in the financial year ending March
2020. Therefore, the time limit for taking ITC available on Rs.50,000 as well as on
Rs.4,15,000 is 20th October, 2020; earlier of the date of filing the annual return for 2019 - 20
or the return for September 2020.

CHAPTER – 2
BLOCKED CREDIT – S.17(5)

Sec 17
Apportionment Blocked Credit
Input & Input Services Capital Goods NAVARATNA
SECTION 17(5) - SUMMARY
Blocked Credit
Part I Part II Part III
1. Personal
1. Inputs and service for
1. Motor Vehicles Consumption
construction of IMP
2. Food, beauty treatment, 2. Lost or stolen
2. Inputs on Composition
Health care services goods
scheme
3. Work Contract Services 3. Evasion or
3. Inputs by Non Resident
Confiscation

MOTOR VEHICLES
Motor Vehicles
Motor vehicles for Insurance, Repairs and

Vessels and
transportation of Maintenance of Motor
Aircraft
persons Vehicles, vessels and aircraft
Input tax credit shall not be available in respect of the following, namely: -
No Blocked Credit Description
(a) Motor vehicles Motor vehicles for transportation of persons having approved
for transportation seating capacity of not more than 13 persons (including the driver),
of persons However, credit will be available when they are used for making
the following taxable supplies, namely:
A. Further supply of such motor vehicles: or
B. Transportation of passengers: or
C. Imparting training on driving such motor vehicles.
(aa) Vessels and However, credit will be available when they are used –
Aircraft i. For making the following taxable supplies, namely:-
A. Further supply of such vessels or aircraft; or
B. Transportation of passengers; or
C. Imparting training on navigating such vessels: or
D. Imparting training on flying such aircraft;
ii. For transportation of goods.
(ab) Insurance, Services of general insurance, servicing, repair and maintenance in
Repairs and so far as they relate to motor vehicles, vessels or aircraft referred to
Maintenance of in clause (a) or clause (aa).
Motor Vehicles, However, the input tax credit in respect of such services shall be
vessels and available-
aircraft i. Where the motor vehicles, vessels or aircraft referred to in
clause (a) or clause (aa) are used for the purposes specified
therein;
ii. Where received by a taxable person engaged-
a. In the manufacture of such motor vehicles, vessels or

aircraft; or
b. In the supply of general insurance services in respect of
such motor vehicles, vessels or aircraft insured by him;
- Scope of Motor Motor vehicles exclude –
Vehicles a) Vehicle running upon fixed rails
b) Special purpose vehicles for being used in factory or any
enclosed premises
c) Vehicles with less than 4 wheels fitted with engine capacity
of upto 25cc.
(Thus, railways, two/three wheelers with engine capacity of upto
25cc, bicycle etc. do not fall in the definition of motor vehicle)
SUMMARY
Motor Vehicles
Motor vehicles for Vessel and Insurance,

transporatation of Aircraft Repair and
persons Maintenance
of Motor
vehicles,
Seating Seating Exceptions vessel and
capacity <= 13 capacity > 13 as below aircraft
persons persons
As
Not covered Below
Covered in
under
blocked
Blocked
credit
credit
Exceptions
Further Imparting
supply of Transporation motor
such Motor of passengers driving
vehicle skills

VESSEL OR AIRCRAFT
Vessel or Aircraft -
Exceptions
Further Transporation Transporation Imparting Imparting

supply of of Goods of Passengers Training training on
such on flying navigating
aircraft/vessel
EXPENSES FOR CLAUSE (A)/CLAUSE (AA)
Expenses for Clause (a) / Clause (aa)
ITC for motorvehicle, ITC for motorvehicle,

aircraft and vessel are aircraft and vessel not
eligible eligible
ITC for expenses related to ITC for expenses for motor

Motor vehicle / aircraft / vehicle / aircraft / vessel is
vessel is also eligible not eligible
Examples:
No Examples
1 ITC on cars purchased by a manufacturing company for official use of its employees is
blocked.
2 ITC on cars purchased by a car dealer for sale to customers is allowed.
3 ITC on cars purchased by a company engaged in renting out cars for transportation of
passengers, isallowed.
4 ITC on cars purchased by a car driving school is allowed.
5 ITC on buses (seating capacity for 24 persons) purchased by a company for
transportation of itsemployees from their residence to office and back, is allowed.

6 ITC on trucks purchased by a company for transportation of its finished goods is

allowed.
7 ITC on aircraft purchased by a manufacturing company for official use of its CEO is
blocked.
8 ITC on aircraft purchased by an Aviation School providing training on flying aircrafts,
isallowed.
9 ITC on general insurance taken on a car used by employees of a manufacturing company
forofficial purposes, is blocked.
10 ITC on maintenance & repair services availed by a company for a truck used for
transporting itsfinishedgoods, is allowed.
11 ITC on general insurance services taken on cars manufactured by a car manufacturing
companyis allowed.
ANALYSIS
Particulars Details
Expanding the scope  Section 17(5)(a) provides that the restriction of availing shall only
of ITC available on apply to such kind of motor vehicles (specified vehicles) which
motor vehicles arefor the transportation of persons not having approved seating
capacity exceeding 13 persons (including driver). The restriction
shall also apply to aircraft and vessels.
 Hence, input tax credit shall not be restricted in case of any other
motor vehicle [e.g. goods transportation vehicle or vehicle having
seating capacity exceeds 13 persons (bus)].
 Even in respect of specified vehicles, input tax credit shall be
available if the concerned registered supplier who intends to
avail such credit is engaged in the business of (a) further supply
of such vehicles or (b) transportation of passengers or (c) using
the same in imparting training skills.
 In respect of motor vehicle used for the purpose of transportation
of goods, the same is not be covered under the ambit of blocked
credit, hence input tax credit shall be admissible in respect of
such motor vehicles.
 Input tax credit will also be allowed on dumpers, tippers etc.
Expenses related to  The Input Tax Credit in respect of general insurance, servicing,
motor vehicle repair and maintenance of the motor vehicle which is not entitled
for Input Tax Credit shall also not be allowed.
 Hence one has to now see whether the Input Tax Credit is

available or not in respect of the motor vehicle for which such

expenses have been incurred.
 If such motor vehicle is eligible forInput Tax Credit, then
expenses pertaining to such motor vehicle shall also be eligible
for Input TaxCredit
 It may also be noted that Input Tax Credit shall also be available
in respect of services of general insurance, servicing, repair and
maintenance where the registered receiver is engaged in
themanufacture of such motor vehicles, vessels or aircraft; or is in
the supply of general insuranceservices in respect of such motor
vehicles, vessels or aircraft insured by him.
ITC ON FOODS & BEVERAGES / OUTDOOR CATERING / BEAUTY TREATMENT ETC

(a) Foods & i. The following supply of goods or services or both -
Beverages,  Food and beverages,
Outdoor  Outdoor catering
Catering, Beauty  Beauty treatment
Treatment etc.  Health services
 Cosmetic and plastic surgery
 Leasing, renting or hiring of motor vehicles, vessels or
aircraft referred to in clause (a) or clause (aa) above except
when used for the purpose specified therein,
 Life insurance and,
 Health insurance.
However, theinput tax credit in respect of such goods or services
or both shall be available where an inward supply of such goods
or services or both is used by a registered person for making an
outward taxable supply of the same category of goods or services
or both or as an element of a taxable composite or mixed supply;
ii. Membership of a club, health and fitness centre; and
iii. Travel benefits extended to employees on vacation such as leave
or home travel concession.
However, the input tax credit in respect of such goods or services or both
shall be available, where it is obligatory for an employer to provide the
same to its employees under any law for the time being in force.

FOOD, BEAUTY TREATMENT - SUMMARY
Food, Beauty treatment, Health care services
Travel benefit to
8 Specified Services Membership of employees
club / Health and
fitness centre
Exceptions
Similar line of Used for providing taxable

business or composite or mixed supply
Examples:
No Examples
1 A manufacturing company purchases food items for being served to its customers, free of
cost.ITC on such goods is blocked.
2 XY & Co., a caterer of Jodhpur, has been awarded a contract for catering in a marriage to
be heldat Jaipur. The firm has given the contract for supply of snacks, to be served in the
marriage, to PQ& Sons, a local caterer of Jaipur. ITC on such outdoor catering services
availed by XY &Co.,is allowed.
3 ITC on outdoor catering services availed by a footwear exporter for a marketing event
organized for its prospective customers, is blocked.
4 Outdoor catering service is availed by a company to run a free canteen in its factory. The
Factories Act, 1948 requires the company to set up a canteen in its factory. ITC on such
outdoorcatering is allowed.
5 The Managing Director of a company has taken membership of a club, the fees for which
is paidby the company. ITC on such service is blocked.
6 A company avails services of a travel agency for organizing a free vacation for its
topperforming employees. ITC on such services is blocked.

ANALYSIS
Particulars Details
Food & beverages,  Input tax credit in respect of food and beverages and outdoor
outdoor catering as catering will be permitted if provision of such goods or services is
well as health services obligatory for an employer to provide to its employees under any
law for the time being in force and where such inward supply is
used by a registered person for making an outward taxable
supply of the same category of goods or services or as an element
of taxable composite or mixed supply.
 Hence, in case of a factory covered under the Factories Act
(having more than 250 workers) it is obligatory for a factory to
provide the canteen facility to its workers and hence input tax
credit in respect of the tax charged by the canteen contractor shall
be admissible.
 Similarly even in case of health services, life insurance and health
insurance; Input Tax Credit shall be admissible if the same is
obligatory on the employer to provide to its employees under any
law for the time being in force.
 It may however be noted that there is difference between health
insurance and an accidental policy. Accidental policy is expressly
not restricted under any provisions of Section 17(5).
 Henceinput tax credit in respect of such accidental policy shall be
available even if the same is notobligatory under any law for the
time being in force.
Rent – a-cab  The input tax credit in respect of leasing, renting or hiring of
motor vehicles, vessels or aircraft referred to in clause (a) or
clause (aa) shall be available only if they are used for thepurposes
specified in the exception to said clauses.
 In other words, input tax credit shall beavailable of tax paid on
leasing, renting or hiring in following circumstances:
a) Motor vehicles not referred under clause (a). i.e. Motor
vehicles for transportation ofpersons having approved
seating capacity of more than 13 persons.
b) Motor vehicles, vessels or aircraft referred to in clause (a) or
clause (aa) but used formaking following taxable supplies:
1. Further supply of such vehicles;
2. Transportation of passengers; and
3. Using the same in imparting training skills.
c) Vessels or aircraft used for transportation of goods.
 ITC on such services is allowed in the case of sub-contracting, i.e.
when such services are usedby the taxpayer who is in the same
line of business.

WORKS CONTRACT SERVICES

Particulars Details
Works contract Works contract services when supplied for construction of an
services immovable property.
However, credit is allowed –
1) Where it is an input service for further supply of works contract
service.
2) Where it is supplied for construction of plant and machinery.
Plant and machinery means apparatus, equipment, and machinery fixed to earth by
– Explanation foundation or structural support that are used for making outward
supply of goods or services or both and includes suchfoundation and
structural supports but excludes
a. Land, building or any other civil structures
b. Telecommunication towers and
c. Pipelines laid outside the factory premises.
Construction - includes re-construction, renovation, additions or alterations or
Explanation repairs, to the extent of capitalisation, to the said immovable
property.
Examples:
No Examples
1 ITC on works contracts services availed by a software company forconstruction of its
office, is blocked.
2 XY & Co., a works contractor of Jaipur, has been awarded a contract forconstruction of a
commercial complex in Alwar. The firm avails servicesof PQ & Co., a local works
contractor of Alwar, for the construction ofcomplex. ITC on such works contract services
availed by XY & Co., isallowed.
3 ITC on works contract services availed by an automobile company forconstruction of a
foundation on which a machinery (to be used in theproduction process) is to be mounted
permanently, is allowed.
4 ITC on works contract services availed by a manufacturing company forconstruction of
pipelines to be laid outside its factory, is blocked.
5 A consulting firm has availed services of a works contractor for repair ofits office
building. The company has booked such expenditure in itsprofit and loss account. I'TC
on such services is allowed.
6 A telecommunication company has availed services of a workscontractor for repair of its office
building. The company has capitalizedsuch expenditure. ITC on such services is blocked.

ANALYSIS
Particulars Details
Analysis 1) ITC on works contract services for construction of an immovable
property is blocked. However ITC on works contract services can be
availed only by that taxpayer who is in the same line of business, i.e.
only a works contractor can avail ITC on works contract services
received by him (sub-contracting).
2) Plant and machinery affixed permanently to the earth constitutes an
immovable property. However, ITC on works contract services used
for construction of such plant and machinery is allowed as an
exception.Thus, ITC on works contract services availed for construction
of eligibleplant and machinery is allowed to the recipient irrespective
of the line ofbusiness of such recipient.
For instance, ITC on works contract services for construction
ofmachinery fixed to earth by a foundation would be allowed.
However,ITC on works contract services for construction of
telecommunication towers would be blocked.
3) As per the definition of term Construction, if re-construction,
renovation, additions or alterations or repairs are not capitalized, it
would not tantamount to construction under GST law. Consequently,
ITC on works contract services availed for such construction (which is
not capitalized) whether for any immovable property or for any plant
and machinery,would be allowed to all the recipients irrespective of
their line ofbusiness.
INPUTS AND SERVICES FOR CONSTRUCTION OF IMP

Blocked
No Description
Credit
d) Inputs and Goods or services or both received by a taxable person for construction of
Services for an immovable property on his own account including when such goods or
construction services or both are used in the course or furtherance of business.
of However Credit is allowed if they are is supplied for Construction of
immovable plant & machinery
property

Examples:
No Examples
1 A company buys cement, tiles etc. and avails the services of an architectfor construction
of its office building. ITC on such goods and services isblocked.
2 MN & Constructions procures cement, paint, iron rods and services ofarchitects and
interior designers for construction of a commercialcomplex for one of its clients. ITC on
such goods and services is allowedto MN & Constructions.
3 A company buys cement, tiles etc. and avails the services of an architectfor renovation
of its office building. The company has booked suchexpenditure in its profit and loss
account. ITC on such goods andservices is allowed.
4 ITC on goods and/or services used by an automobile company forconstruction of a
foundation on which a machinery (to be used in theproduction process) is to be
mounted permanently, is allowed.
ANALYSIS
Particulars Details
Analysis  ITC on goods and/or services used in the construction of an
immovableproperty is blocked only in those cases where the
taxable person constructsthe immovable property for his
own use even if the immovable propertybeing constructed is
used in the course or furtherance of his business.
 The discussion on terms, 'construction' and 'plant and
machinery' for workscontract services [Elaborated in point (c)
above] applies to construction onown account also.
OTHER BLOCKED CREDITS

e) Inputs under  Goods or Services or both on which tax has been paid under
Composition Section 10.
Scheme  Since a composition supplier cannot collect any tax on its
supplies, from the recipient of its supplies, it is obvious that
no ITC can be availed in respect of such supplies by the
recipients.
 Nevertheless, section 17(5)(e) specifically blocks the ITC on
inward supplies received by a taxable person from a
composition supplier.

f) Inputs by NR Goods or Services or both received by a non - resident taxable

person except goods imported by him.
Analysis:
 A non-resident taxable person has no fixed place of business
in India but he sporadically supplies goods or services in
India
 Tax paid on goods and/or services received by such non-
resident taxable person, is not available as ITC. Whereas ITC
on goods imported by a non-resident taxable person is
allowed, ITC on services imported by him isblocked.
g) Personal  Goods or Services or both used for personal consumption.
Consumption  The term 'personal consumption' has not been defined in the
GST law. Thus,it may be understood in the general sense
which would mean non-business use.
h) Lost, Stolen goods Goods lost, Stolen, destroyed , written off or disposed of by way
etc of gifts or free samples;
Analysis:
 ITC shall not be available to the supplier on the inputs,
inputservices and capital goods to the extent they are used in
relation to the gifts orfree samples distributed without any
consideration. However, where theactivity of distribution of
gifts or free samples falls within the scope of"supply" on
account of the provisions contained in Schedule I of the said
Act,the supplier would be eligible to avail the ITC.
i) Evasion, Any tax paid in accordance with the provisions of Sec 74, 129
confiscation etc and 130 (These sections prescribe the provisions relating to tax
paid as a result of evasion of taxes, or upon detention of goods or
conveyances in transit, or towards redemption of confiscated
goods/conveyances.

CHAPTER – 3

1. What are the conditions necessary for obtaining ITC?
Solution:
Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:
(a) He is in possession of a tax invoice or debit note issued by a supplier registered under this Act,
or such other taxpaying documents as may be prescribed.
(b) He has received the goods or services or both.
(c) The tax charged in respect of such supply has been actually paid to the Government, either in
cash or through utilization of input tax credit admissible in respect of the said supply.
(d) He has furnished the return under section 39.
2. Can a person take ITC without payment of consideration for the supply along with tax to
the supplier?
Solution:
Yes, the recipient can take ITC without payment of consideration for the supply along with tax to the
supplier. However, he is required to pay the consideration along with tax within 180 days from the
date of issue of invoice. This condition is not applicable where tax is payable on reverse charge basis,
deemed supplies without consideration i.e. value of supplies made without consideration as specified
in Schedule I of the said Act and the value of supplies on account of any amount added in accordance
with the provisions of Sec. 15(2)(b) shall be deemed to have been paid for the purposes of the second
proviso to Sec. 16(2).
3. What is the time limit for taking ITC and reasons therefor?
Solution:
A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note
for supply of goods or services or both after –
 The due date of furnishing of the return under section 39 for the month of September following
the end of financial year to which such invoice or invoice relating to such debit note pertains, or
 Furnishing of the relevant annual return,
Whichever is earlier.

4. From the following information, determine the amount of ITC admissible to ABC Ltd., in
respect of various inputs purchased during the month of Sep 2019:
Amount
No Particulars
(Rs.)
1 Goods purchased without invoice 25,000
2 Goods purchased from PQR Ltd., (Full payment is made by ABC Ltd. to 1,20,000
PQR Ltd., against such supply but tax has not been deposited by PQR
Ltd.)
3 Purchases of goods not to be used for business purposes 18,000
4 Purposes of goods from TT Ltd., (Invoice of TT Ltd. is received in 24,000
month of Sep 2019, but goods were eceived in month of Oct 2019)
5 Goods purchased against valid invoice from FF Ltd. Tax has been 36,000
deposited by FF Ltd. ABC Ltd. has made payment to FF Ltd., for such
purchases in the month of Oct 2019.
Solution:
Computation of admissible ITC to ABC Ltd. for the month of Sep 2019
Amount
No Particulars
(Rs.)
1 Goods purchased without invoice - WN 1 -
2 Goods purchased from PQR Ltd. - WN 2 -
3 Purchase of goods not to be used for business purposes - WN 3 -
4 Purchase of goods from TT Ltd., (Invoice of TT Ltd. is received in month of Sep -
2019, but goods were received in month of Oct 2019) - WN 4
5 Goods purchased against valid invoice from FF Ltd. tax has been deposited by FF 36,000
Ltd. ABC Ltd. has made payment to FF Ltd. for such purchases in the month of
Oct 2019 - WN 5
6 Total admissible ITC for the month of Sep 2019 36,000

Working Notes:
No Notes
1 No ITC will be available since ABC Ltd., is not in possession of valid tax paying document.
2 As per sec. 16(2), no registered person shall be entitled to the credit of any input tax in respect
of any supply of goods unless the tax charged in respect of such supply has been actually paid
to the Govt. Since PQR Ltd., has not deposited the tax to the credit of Govt., no ITC can be
claimed by ABC Ltd.
3 A registered person shall be entitled to take ITC on goods which are used or intend to be used
in the course or furtherance of his business. Since ABC Ltd. has purchased the goods for non
business purpose, hence no credit will be admissible on such purchases.
4 ITC is admissible only when registered person has received such goods. Since the goods are
received in the month of Oct, 2019, ITC cannot be taken in the month of Sep, 2019.
5 ITC shall be admissible in month of Sep, 2019 even if payment is made by ABC Ltd. in month
of Oct, 2019.
5. XYZ Ltd. purchased goods valuing Rs. 6,00,000 (exclusive of CGST and SGST @ 9% each)
under the cover of invoice dated 25.12.2019. The company made payment to the supplier
on the same date. Since there was a doubt regarding admissibility of tax credit on such
inputs, the company did not take the ITC at the time of receipt of input. The company
obtained clarification from a legal consultant who opined that the goods were eligible as
inputs under ITC rules. The opinion was received on 05.05.2020. The company now wants
to avail ITC of the tax paid on such inputs. Can it do so? The company has filed its
annual return for the year 2019 - 20 on 12 – 08 – 2020.
Solution:
As per sec. 16(4), a registered person shall not be entitled to take ITC in respect of any invoice or
debit note for supply of goods or services or both after –
a) The due date of furnishing of the return under sec. 39 for the month of Sep. following the end of
FY to which such invoice pertains; or
b) Furnishing the relevant annual return,
In this case, the input were purchased by invoice dated 25 – 12 – 2019, hence ITC in respect of such
inputs can be taken on earlier of following dates –
 20 – 10 – 2020 being due date of furnishing return of month of Sep, 2020; or

 12 – 08 – 2020 being the date of furnishing of annual return.
Since, XYZ Ltd., can avail credit of input tax paid on inputs till 12 – 08 – 2020. Therefore, it can
avail credit of CGST Rs. 54,000 and SGST of Rs. 54,000 on 05 – 05 – 2020.

6. HM Ltd. delivered a machine to ABC Ltd. in January 2020 under Invoice No. 50 dated 28 th
January, 2020 for Rs. 5,00,000 plus GST @ 12%, and undertook trial runs and calibration of
the machine as per the requirements of ABC & Co. The amount chargeable for the post-
delivery activities was covered in a debit note raised in April 2020 for Rs. 50,000 plus GST
@ 12%. The company has filed its annual return for Financial Year on 15.12.2020.
Determine the time limit for taking Input tax credit for the amount of tax covered in debit
note as well as original invoice.
Solution:
As per Section 16(4) of CGST Act, 2017, a registered person shall not be entitled to take input tax
credit in respect of any invoice or debit note for supply of goods or services or both after –
 The due date of furnishing of the return under section 39 for the month of September following
the end of financial year to which such invoice or invoice relating to such debit note pertains, or
 Furnishing of the relevant annual return,
Though the debit note was received in the next financial year, it relates to an invoice received in the
financial year ending March 2020. Therefore, the time limit for taking ITC of Rs. 6,000 (12% of Rs.
50,000) as well as on Rs. 60,000 (12% of Rs. 5,00,000) is 20th October, 2020; being earlier of the date
of filing the annual return for 2019-20 or the return for September 2020.
7. A flying school imports an aircraft for use in its training activity, and takes ITC of the
IGST paid on the import. The departmental audit raises an objection that aircrafts fall
within the definition of ‚conveyance‛ in section 2(34) of the Act and that ITC is not
allowed on conveyances. Offer your comments.
Solution:
The objection raised by the departmental audit is not valid in law. As per Section 17(5)(aa) of the
CGST Act, ITC is allowed on aircraft if they are used to make the taxable supply of imparting
training on flying an aircraft. Therefore, flying school has validly taken the credit of IGST paid on
import of aircraft.
8. Hero Automobiles is engaged in the manufacture of motor cars. Compute the amount of
Input tax credit admissible from the following particulars with suitable explanations
where required:
GST paid at the time of
No Goods Purchased
purchase of the goods (Rs.)
1 Raw Steel 5,00,000
2 Batteries 2,00,000
3 Cutting oil 70,000
4 Electric lamps for lighting manufacturing area 80,000
[May 2010]

Solution:
The amount of ITC available in the current year is computed as follows:
No Goods Amount
1 Raw Steel (Eligible as ‘input’) 5,00,000
2 Batteries (Eligible as ‘input’) 2,00,000
3 Cutting Oil (Eligible as ‘input) 70,000
4 Electric Lamps for lighting manufacturing area (Eligible as ‘input’) 80,000
Total ITC admissible 8,50,000
9. Dev Ltd., a manufacturer registered under GST, has furnished the following information
regarding inputs received in the factory and input service used for manufacture:
Excise duty
No. Particulars Particulars GST (Rs.)
(Rs.)
1. Raw material Invoice dated 14.09.2019 31,500 -
2. Consumables Invoice dated 10.10.2020 5,000 -
3. Input Service Invoice dated 22.10.2020 19,500 -
4. Office Equipment Invoice dated 01.10.2020 7,250 -
5. Motor Spirit Invoice dated 02.10.2020 - 22,000
6. Paints Invoice is missing 3,000 -
Determine the total Input Tax Credit that can be availed during the month of October,
2020. The annual return for the financial year 2019-20 was filed on 15th September, 2020.
[May 2015]
Solution:
Computation of Input tax credit that can be availed by Dev Ltd. during the month of Oct,
2020
Amount
No Particulars
(Rs.)
1 Raw material - WN 1 -
2 Consumables - credit eligible as input 5,000
3 Input Service - credit eligible as Input Service 19,500
4 Office Equipment 7,250
5 Motor Spirit - WN 2 -
6 Paints - WN 3 -
7 Total ITC that can be availed 31,750

Working Notes:
No Notes
1 As per Section 16(4), ITC on an invoice cannot be availed after the due date of furnishing of the
return for the month of September following the end of financial year to which such invoice
pertains or the date of filing annual return, whichever is earlier.
Since the annual return for the Financial Year 2019-20 has been filed on 15th September, 2020
(prior to due date of filing the return for September, 2020 i.e. 20th October, 2020), ITC on the
invoice pertaining to Financial Year 2018-19 cannot be availed after 15th September, 2020.
2 Credit is not available of excise duty paid on motor spirit for discharging GST liability.
3 No Input tax credit will be available since Dev Ltd. is not in possession of valid taxpaying
document.
10. MNO Ltd. engaged in supplying outward taxable goods has availed various inward
supplies in month of January, 2020. Compute the ITC admissible on such inward
supplies:
No. Inward supplies GST (Rs.)
1. Engaged in imparting Motor vehicle training on driving services 90,000
2. Outdoor catering services availed on the occasion of Board Meeting of 72,000
Company
3. Works contract service availed for repair/ alterations of plant and 1,02,000
machinery installed
Note:
a. All the conditions necessary for availing the ITC have been fulfilled.
b. Registered person is not eligible for any threshold exemption.
Solution:
Computation of Input tax credit available with XYZ Ltd.
No Particulars GST (Rs)
1 Engaged in imparting Motor vehicle training on driving services
90,000
[WN-1]
2 Outdoor catering services availed on the occasion of Board Meeting of
Company [WN-2] -
3 Works contract service availed for repair/ alterations of plant and
machinery installed
1,02,000
[WN-3]
4 Total ITC available 1,92,000

Working Notes:
No Notes
1 Input tax credit will be available when motor vehicles are used for imparting
training on driving, flying, navigating such vehicle or conveyance.
2 No, Input tax credit shall be allowed on services of outdoor catering for Board
Meeting, as it is for personal consumption.
3 Input tax credit will be allowed for the works contract service availed for
reconstruction, renovation, addition or alteration or repairs of plant and machinery.
11. Ramoplast Soap Factory, a registered supplier, is engaged in manufacturing beauty soaps
– ‘Forever Glow’ in Mumbai. It has provided the following information pertaining to
purchases made/ services availed in the month of March, 2020.
Amount
No Particulars
(Rs.)
1 Soap making machine 50,000
2 Motor vehicles for transportation of inputs 70,000
3 Membership of ‘Fit and Fine’ health and fitness centre for its 25,000
employees
4 Inputs purchased, but stolen from the factory 40,000
You are required to compute the input tax credit (ITC) available with Ramoplast Soap
Factory for the month of March, 2020 assuming that all the other conditions for availing
ITC, wherever applicable, have been fulfilled. [May 2018]
Solution:
Computation of ITC available with Ramoplast Soap Factory (amount in Rs):
Amount
No Particulars
(Rs.)
1 Soap making machine - ITC in respect of goods used in course/ furtherance of 50,000
business is available in terms of section 16 of the CGST Act
2 Motor vehicles for transportation of inputs - ITC in respect of motor vehicles is 70,000
blocked, except when used, inter alia for transportation of goods, in terms of
section 17(5) of the CGST Act
3 Membership of ‘Fit and Fine’ health and fitness centre for its employees - ITC in Nil
respect of membership of a club, health and fitness centre is blocked in terms of
section 17(5) of the CGST Act, except where it is obligatory for an employer to
provide the same to its employees under any law for the time being in force
4 Inputs purchased but stolen from the factory - ITC in respect of goods stolen is Nil
blocked in terms of section 17(5) of the CGST Act

12. Z Ltd. is a manufacturer registered under GST laws. From the following information
made available regarding GST paid on procurement of inputs etc, during March, 2020,
you are required to determine the amount of ITC credit available to this company giving
explanations for the treatment of the given items:
No GST
Particulars
(Rs.)
1) Inputs used in factory of manufacture 1,00,000
2) Goods for use in generation of electricity for captive consumption 50,000
3) Cement for construction of a godown in the factory 15,000
4) Goods for laying of foundation for support of plant and machinery 25,000
5) Food and beverages primarily for personal use of employees 20,000
6) Consumable stores for use in manufacture of goods 15,000
[Nov2016]
Solution:
Computation of ITC available with Z Ltd.

Amount
No Particulars
(Rs.)
1 Inputs used in factory of manufacture - Eligible as input 1,00,000
2 Goods for use in generation of electricity for captive consumption - Eligible as 50,000
input
3 Cement for construction of a godown in the factory – WN 1 -
4 Goods for laying of foundation for support of plant and machinery – WN 2 25,000
5 Food and beverages primarily for personal use of employees - WN 3 -
6 Consumable stores for use in manufacture of goods - Eligible as input 15,000
Working Notes:
No Notes
1 As per Section 17(5) (d), input tax credit shall not be available in respect of goods or services
or both received by a taxable person for construction of an immovable property (other than
plant or machinery) on his own account including cases when such goods or services or both
are used in the course or furtherance of business. Hence, input tax credit shall not be available
in respect of goods used in construction of godown in the factory.
2 Input tax credit is admissible in respect of goods or services or both received by a taxable
person for construction of plant or machinery. Hence, tax paid on cement shall be available
for input tax credit.
3 As per Section 17(5) (b), no Input tax credit is available in respect of food and beverages
primarily used for personal use of the employees except where it is obligatory for an employer
to provide the same to its employees under any law for the time being in force.

13. Based on the following information of July 2019, determine the ITC available for use in
the current year as per CGST Act, 2017
No Particulars GST(Rs.) Excise duty

1 Pollution Control Equipment (value is capitalized in 25,000 -
books of account)
2 Spares for pollution control equipment 5,000 -
3 Equipments used in office within factory 12,000 -
4 Cement used for construction of storage Tank 10,000 -
5 Paints used for painting machinery used 6,000 -
6 Packing Material 4,000 -
7 Lubricating oils 8,000 -
8 High Speed Diesel Oil - 7,000
Solution:
Computation of eligible ITC –

Amount
No Particulars
(Rs.)
1 Pollution Control Equipment - Eligible as ‘Capital goods’ 25,000
2 Spares for pollution control equipment - Eligible as ‘Input’ 5,000
3 Equipments used in office within factory - Eligible as Inputs, since their value 12,000
has not been capitalized in books of accounts
4 Cement used for construction of storage Tank - Not Eligible – WN Nil
5 Paints used for painting machinery used - Eligible as ‘input’ 6,000
6 Packing Material - Eligible as ‘input’ 4,000
7 Lubricating oils - Eligible as ‘input’ 8,000
8 High Speed Diesel Oil - Excise duty paid on HSD cannot be availed as ITC for Nil
payment of GST on outward supplies
9 Total ITC available 60,000
As per Section 17(5) (d), input tax credit shall not be available in respect of goods or services or both
received by a taxable person for construction of an immovable property.

14. Determine amount of ITC available to Gangotri Manufacturing Ltd. in respect of the
following items procured by them in the month of October, 2019.
Excise
No Items GST (Rs.)
duty(Rs)
1 Raw materials 52,000 -
2 Capital goods used for generation of electricity for 1,00,000 -
captive use within the factory.
3 Motor spirit - 40,000
4 Inputs used for construction of a building 1,00,000 -
5 Dairy and bakery products consumed by the 5,000 -
employees
6 Motor vehicles for transportation of goods - value is 4,50,000 -
capitalized in books
[RTP Nov 2011]
Solution:
Computation of the eligible ITC

Amount
No Particulars
(Rs.)
1 Raw materials (Eligible as Input) 52,000
2 Capital goods used for generation of electricity for captive use – WN 1 1,00,000
3 Motor spirit - WN 2 Nil
4 Inputs used for construction of a building - WN 3 Nil
5 Dairy and bakery products consumed by the employees - WN 4 Nil
6 Motor vehicles for transportation of goods - ITC is admissible as Capital goods 4,50,000
Working Notes:
No Notes
1 CG used for generation of electricity for captive use within the factory are eligible capital
goods.
2 Excise duty paid on motor spirit is not eligible as Input tax credit.
3 As per Section 17(5) (d), input tax credit shall not be available in respect of goods or services
or both received by a taxable person for construction of an immovable property.
4 As per Section 17(5) (b), no Input tax credit is available in respect of dairy and bakery
products consumed by employees except where it is obligatory for an employer to provide the
same to its employees under any law for the time being in force

15. Compute the ITC available with Ram Services Ltd. a service provider in respect of the
following services billed to it in the month of August, 2019:
GST paid
No Services billed
(Rs)
1. Accounting and auditing services 1,80,000
2. Legal services 18,000
3. Security services 1,80,000
4. Rent – a-cab services 1,20,000
Solution:
Computation of ITC available with Ram Services Ltd.

Amount
No Particulars
(Rs.)
1 Accounting and auditing services - Eligible as Input Services 1,80,000
2 Legal services - Eligible as Input Services 18,000
3 Security services - Eligible as Input Services 1,80,000
4 Rent – a - cab services - Ineligible as specifically excluded under Section Nil
17(5)(b)
16. Computethe Input tax credit available with Ujjwal Motors Ltd, manufacture of cars, in
respect of the following services availed by it in the month of October,2019
Amount
No Inward Supplies
(Rs.)
1 Accounting and Auditing Services 7,200
Health Insurance Services for Employees (Services are not provided 16,200
2
under Government obligation)
3 Routine maintenance of the cars manufactured by Ujjwal Motors Ltd. 18,000
Repairs Services for office building (Cost of repairs is charged to 14,400
4
Profit and Loss Account)
Travel benefits extended to employees on vacation under statutory 3,360
5
obligation
6 Testing services availed for car engines. 9,000
Note:
a) All the conditions necessary for availing ITC have been fulfilled
b) Registered person is not eligible for any threshold exemption

Solution:
Amount
No Particulars
(Rs.)
1 Accounting and auditing services – ITC is eligible since such services are used 7,200
in course of business
2 Health insurance services provided to employees – Services are not provided Nil
under Govt. obligation - WN 1
3 Routine maintenance of the cars manufactured by Ujjwal Motors Ltd., - ITC 18,000
eligible since such services are used in course of business
4 Repair services for office building, cost of which is charged to P&L A/c – Repairs 14,400
are revenue in nature, hence, credit of tax paid shall be available
5 Travel benefits extended to employees on vacation under statutory obligation - 3,360
WN 2
6 Testing services availed for car engines – ITC is eligible since such services are 9,000
used in course of business
Working Notes:
No Notes
1 As per Section 17(5)(b)(i), no input tax credit shall be available in respect of health insurance
services availed for employees since the Government has not notified the said services as
obligatory services to be provided to employees.
2 As per Section 17(5)(b)(iii), input tax credit shall be allowed on travel benefits extended to
employees on vacation since it is obligatory for an employer to provide the same to its
employees under any law for the time being in force.
17. X Ltd. a registered manufacturer engaged in taxable supply of goods procured the
following goods during the month of October. The same has been capitalized in the
books of accounts of X Ltd. Determine the amount of Input Tax credit available by giving
necessary explanations for treatment of various items
No Inward Supplies GST (Rs.)
1 Electrical transformers used in the Factory 2,16,000
2 Moulds and dies used in the Factory 26,000
3 Pollution control equipment used in the Factory 2,34,000
4 Capital Goods purchased on which depreciation has been taken on 1,35,000
full value including Input Tax thereon
5 Capital Goods used as parts purchased from supplier who paid tax of Rs. 10,000
under composition scheme and the composite tax has not been collected from X
Ltd.

Solution:
Computation of ITC available to X Ltd.
Amount
No Particulars
(Rs.)
1 Electrical transformers used in the Factory - WN 1 2,16,000
2 Moulds and dies used in the Factory - WN 1 26,000
3 Pollution control equipment used in the Factory - WN 1 2,34,000
4 Capital Goods purchased on which depreciation has been taken on full Nil
value including Input Tax thereon - WN 2
5 Capital Goods used as parts purchased from supplier who paid tax under Nil
composition scheme and the composite tax has not been collected from X
Ltd. - WN 3
Working Notes:
No Notes
1 As per Section 2(19) ‚Capital goods‛ means goods, the value of which is capitalized in the
books of accounts of the person claiming the input Tax credit and which used in the course
are used or intended to be used in the course or furtherance of business. Hence-
a. Electrical transformers
b. Moulds and dies,
c. Pollution control equipment,
Which are used or intended to be used in the course or furtherance of business are eligible for
ITC as capital goods.
2 As per Section 16(3), no input tax credit shall be admissible where registered person has
claimed depreciation on the tax component of the cost of capital goods and plant and
machinery under the provision of the Income tax Act, 1961.
3 As per Section 17(5)(e), input tax credit shall not be available in respect of goods or services
or both on which tax has been paid under section 10, Thus, no ITC allowed of tax paid under
composition scheme by the supplier.

18. Determine the amount of Input Tax credit available to Posco Ltd. in respect of the
following items procured by them in the month February, 2020
Amount
No Inward Supplies
(Rs.)
1 Input used for the manufacture of the final product 72,000
Food and Beverages procured from Sweet Caterers for employees 48,000
2
under statutory obligation
3 Goods used for providing Services during warranty period 12,000
Goods used for setting up Telecommunication Towers being 90,000
4
Immovable Property
5 Inputs stolen from the factory store 13,200
Solution:
Computation of ITC available with Posco Ltd.
Amount
No Particulars
(Rs.)
1 Input used for the manufacture of the final product 72,000
Food and Beverages procured from Sweet Caterers for employees under 48,000
2
statutory obligation - WN 1
Goods used for providing Services during warranty period (since used 12,000
3
in course of business, hence, ITC shall be available)
Goods used for setting up Telecommunication Towers being Immovable Nil
4
Property - WN 2
5 Inputs stolen from the factory store - WN 3 Nil
Working Notes:
No Notes
1 As per Section 17(5)(b), no Input tax credit is available in respect of food and beverages
except where an inward supply of goods or services or both of a particular category is used
by a registered person for making an outward taxable supply of the same category of goods
or services or both or as an element of a taxable composite or mixed supply or if provision of
such goods or services is obligatory for an employer to provide to its employees under any
law for the time being in force. Since in this case food and beverages are provided to
employees under statutory obligation, hence, input tax credit is available.
2 As per Section 17(5)(d), Goods received by taxable person for construction of an immovable
property (other than Plant and Machinery) on his own account including when such goods
used in course or furtherance of business shall be considered as ineligible input and no

credit shall be allowed of tax paid on such goods. Since Telecommunication tower is an
immovable property, hence, no input tax credit shall be allowed in respect of goods used for
setting it up.
3 As per Section 17(5)(h), Goods lost, stolen, destroyed, written off or disposed of by way of
gift or free samples are considered as ineligible input and credit of GST paid on such goods
cannot be taken.
19. Determine the amount of Inputs tax credit admissible to PQR Ltd. in respect of the
following goods procured by it in the month of January
Amount
No Inward Supplies
(Rs.)
1 Goods used in constructing an additional floor of office building 28,800
2 Packing Materials used in a Factory 6,000
3 Goods destroyed due to natural calamities 12,500
Goods used for repairing the office building and cost of such repairs 12,000
4
is debited to profit and loss account
5 Paper for photocopying machine used in Administrative Office 950
6 Goods given as gifts 25,000
7 Inputs used for tests or quality control check. 15,600
Note:
a) All the conditions necessary for availing the ITC have been fulfilled
b) Registered Person is not eligible for any threshold exemption
Solution:
Computation of ITC available with PQR Ltd.
Amount
No Particulars
(Rs.)
1 Goods used in constructing an additional floor of office building - WN 1 Nil
Packing Materials used in a Factory (Since used in course of business, 6,000
2
hence, ITC shall be available)
3 Goods destroyed due to natural calamities - WN 2 Nil
Goods used for repairing the office building and cost of such repairs is 12,000
4
debited to profit and loss account - WN 3
Paper for photocopying machine used in Administrative Office (Since 950
5
used in course of business, hence, ITC shall be available)
6 Goods given as gifts - WN 2 Nil
Inputs used for tests or quality control check (Since used in course of 15,600
7
business, hence, ITC shall be available)

Working Notes:
No Notes
1 As per Section 17(5)(d), input tax credit shall not be available in respect of goods or services
or both received by a taxable person for construction of an immovable property (other
than plant and machinery) on his own account including when such goods or services or
both are used in the course or furtherance of business. Hence, input tax credit shall not be
available in respect of goods used in construction of an additional floor of office building.
2 Section 17(5)(h), input tax credit shall not be available in respect of goods lost, stolen,
destroyed, written off or disposed of by way of gift or free samples. Hence, no ITC shall be
available in respect of goods destroyed due to natural calamities.
3 As per the explanation, the expression ‚construction‛ includes re-construction, renovation,
additions or alternations or repairs, to the extent of capitalisation, to the immovable
property. Goods used for revenue repairs are considered as an eligible input and credit shall
be allowed on the same.
20. Determine the amount of Input tax credit admissible to P Ltd. in respect of the following
items procured by them in the month of March
Amount
No Inward Supplies
(Rs.)
1 Goods supplied for captive consumption in a Factory 9,800
Goods purchased for being used in repairing the factory shed and same 18,000
2
has been capitalized in books
Cement used for making foundation and structural support to Plant and 14,000
3
Machinery
4 Inputs used in trial runs 14,560
Foods and beverages purchased for the employees during office hours 8,400
5
not under statutory obligation
Note:
a) All the conditions necessary for availing the ITC have been fulfilled
b) Registered Person is not eligible for any threshold exemption

Solution:
Computation of ITC available with P Ltd.
Amount
No Particulars
(Rs.)
Goods used for captive consumption in a Factory (Since used in course of 9,800
1
business, hence, ITC shall be available)
Goods purchased for being used in repairing the factory shed and same Nil
2
has been capitalized to the cost of factory shed - WN 1
Cement used for making foundation and structural support to Plant and 14,000
3
Machinery - WN 2
Inputs used in trial runs (Since used in course of business, hence, ITC shall 14,560
4
be available)
Foods and beverages purchased for the employees during office hours not Nil
5
under statutory obligation - WN 3
Working Notes:
No Notes
1 As per Section 17(5)(d), input tax credit shall not be available in respect of goods or services or
both received by a taxable person for construction of an immovable property (other than
plant and machinery) on his own account including when such goods or services or both are
used in the course or furtherance of business. Construction includes re-construction,
renovation, additions or alterations or repairs, to the extent of capitalisation, to the said
immovable property. Since the cost of repairs is capitalized in books, no credit of input tax paid
on goods used shall be allowed.
2 As per Explanation to Section 17, ‚plant and machinery‛ means apparatus, equipments, and
machinery fixed to earth by foundation or structural support that are used for making outward
supply of goods or services or both and includes such foundation and structural supports.
Input tax credit is admissible in respect of goods or services or both received by a taxable person
for construction of plant or machinery. Hence, tax paid on cement shall be available for input
tax credit.
3 As per Section 17(5)(b), No input tax credit is available in respect of food and beverages except
where an inward supply of goods or services or both of a particular category is used by a
registered person for making an outward taxable supply of the same category of goods or
services or both or as an element of a taxable composite or mixed supply or where it is
obligatory for an employer to provide the same to its employees under any law for the time
being in force. Hence, no input tax credit is available on food and beverages for use of
employees during office hours.

21. ABC Ltd is engaged in the manufacture of heavy machinery. It procured the following
items during the month of July, 2019:
Amount
No Inward Supplies
(Rs.)
1 Electrical transformers to be used in the Manufacturing Process 3,60,000
2 Truck used for transportation of inputs in the factory 2,24,000
3 Raw Material 2,00,000
Confectionery items for consumption of Employees working in the 25,000
4
Factory under statutory obligation
Determine the amount of ITC available with ABC Co Ltd for the month of July by giving
necessary explanations for treatment of various items.
Note:
b) ABC Co Ltd is not eligible for any threshold exemption.
Solution:
Computation of ITC available with ABC Co Ltd for the month of July
1 Electrical transformers - WN 1 3,60,000
2 Truck used for transportation of inputs in the factory - WN 2 2,24,000
3 Raw Material - WN 3 2,00,000
Confectionery items for consumption of Employees working in the 25,000
4
Factory under statutory obligation - WN 4
Working Notes:
No Notes
1 As per Section 16(1), ITC is admissible in respect of any goods used in the course or
furtherance of business. Hence, ITC is admissible in case of electrical transformers and raw
materials used in course or furtherance of business.
2 Motor vehicle used for transportation of goods does not fall under the ambit of blocked
credit. Hence, input tax credit shall be allowed on same.
3 Being goods used in the course or furtherance of business, ITC thereon is available in terms
of Section 16(1).
4 As per Section 17(5)(b), ITC on food or beverage is specifically disallowed unless the same is
used for making outward taxable supply of the same category or as an element of the taxable
composite or mixed supply or where it is obligatory for an employer to provide the same to
its employees under any law for the time being in force. Hence, input tax credit is available
on Confectionery items for consumption of employees working in the factory, since the same
is provided under statutory obligation.

22. An Elite Training institute provides service of training pilot in flying commercial aircraft
so that candidates become eligible for obtaining aviation license. Determine whether the
institute is eligible to take credit on aircraft purchased for imparting training.
Solution:
As per section 17(5)(aa) , no credit of input tax shall be allowed on vessels and aircraft except when
they are used –
i. For making the following taxable supplies, namely:
a) Further supply of such vessels or aircraft; or
b) Transportation of passengers; or
c) Imparting training on navigating such vessels; or
d) Imparting training on flying such aircraft.
ii. For transportation of goods.
Since, aircraft is used to impart training on flying, therefore credit of input tax paid on purchase
of aircraft shall be available to Elite Institute.
23. XYZ Ltd. is engaged in manufacture of taxable goods. Compute ITC available with XYZ
Ltd. for the month of October, 2019 from the following particulars:
Inward
No Amount Remarks
Supplies
One Invoice on which GST payable was Rs. 10,000 is
1 Input X 1,20,000
missing
Inputs are to be received in two instalments. First
2 Input Y 1,00,000
Instalment has been received in October, 2019
XYZ Ltd. has capitalized the capital goods at full invoice
Capital
3 1,80,000 value inclusive of GST as it will avail depreciation on the
Goods
full invoice value.
Input One invoice dated 20.01.2019 on which GST payable was
4 2,50,000
Services Rs. 50,000 has been received in October, 2019.
Note:
b) XYZ Ltd is not eligible for any threshold exemption.
c) The annual return for the financial year 2018-19 was filed on 15th September, 2019.

Solution:
Computation of ITC available with XYZ Ltd. for the month of Oct 2019
(Rs.)
1 Inputs X - WN 1 1,10,000
2 Inputs Y Nil
3 Capital goods Nil
4 Input services 2,00,000
5 Total 3,10,000
WorkingNotes:
No Notes
1 ITC cannot be taken on missing invoice. The registered person should have the invoice in its
possession to claim ITC-section 16(2)(a).
2 When inputs are received in instalments, ITC can be availed only on receipt of last instalment-
First proviso to Section 16(2).
3 Input tax paid on capital goods cannot be availed as ITC, if depreciation has been claimed on
such tax component-Section 16(3).
4 As per Section 16(4), ITC on an invoice cannot be availed after the due date of furnishing of the
return for the month of September following the end of financial year to which such invoice
pertains or the date of filing annual return, whichever is earlier.Since the annual return for the
FY 2018-19 has been filed on 15th September, 2019 (prior to due date of filing the return for
September, 2019 i.e., 20th October, 2019), ITC on the invoice pertaining to FY 2018-19 cannot
be availed after 15th September, 2019.
24. XYZ Ltd. engaged in supplying taxable goods has availed following services in month of
September 2019. Compute the input tax credit admissible on such input services.
Amount
No Inward Supplies
(Rs.)
1 Sales Promotion Services 16,200
Health and fitness services availed from Physique Club for upkeep of 10,800
2 health of their Employees. The said service are not availed under
Government obligation.
Hiring of Motor bus for transportation of employees. Seating capacity 4,500
3
of motor bus is 40 passengers.
4 Market Research Services 10,080
5 Quality control Services 18,000
6 Work contract services for construction of office building 45,000

Note:
b) Registered person is not eligible for any threshold exemption
Solution:
Computation of ITC available with XYZ Ltd

1 Sales Promotion Services - WN 1 16,200
Health and fitness services availed from Physique Club for upkeep of Nil
2 health of their Employees. The said service are not availed under
Government obligation - WN 2
Hiring of Motor bus for transportation of employees. Seating capacity of 4,500
3
motor bus is 40 passengers - WN 3
4 Market Research Services - WN 1 10,080
5 Quality control Services - WN 1 18,000
Work contract services for construction of office building – not Nil
6
considered as eligible input service
Working Notes:
No Notes
1 As per the Section 2(60), ‚Input service‛ means any service used or intended to be used by a
supplier in the course or furtherance of business. So, service like-
a. Sales promotion services;
b. Market research services;
c. Quality control services,
are used by supplier in course or furtherance of business. Hence, the credit of the tax paid on
the aforesaid supply of services is available.
2 As per Section 17(5)(b), No input tax credit is available in respect of health and fitness centre
services where it is obligatory for an employer to provide the same to its employees under any
law for the time being in force. Thus, no input tax credit shall be admissible on health and
fitness services provided to employees.
3 As per Section 17(5)(b)(i), Input tax credit is not allowed in respect of leasing, renting or
hiring of motor vehicles referred to in clause (a) except when used for the purpose specified
therein. Since bus having seating capacity of 40 passengers do not fall under the ambit of
motor vehicles specified in Section 17(5)(a), hence input tax credit shall be admissible.

25. XYZ Ltd, a manufacturer which is engaged in supply of taxable goods has purchased
10,000 kg of inputs for Rs. 10,00,000 (Exclusive of CGST @ 6% and SGST @ 6%) on which
input tax credit has been taken. Due to technical changes in manufacturing process, the
said inputs became obsolete and their value has been written off in the books of
accounts. Explain Input tax credit treatment in above case.
Solution:
As per Section 17(5)(h) of the CGST Act, 2017, if the value of any goods is written off in the books of
account, then no input tax credit shall be allowed in respect of the said input. Where input tax credit
has been taken in respect of the said goods, the same has to be paid by recipient of input goods. Since
in the given case, XYZ Ltd. has availed input tax credit, thus it has to pay Rs.60,000 (Rs.10,00,000
@ 6%) towards CGST and Rs.60,000 towards SGST liability.
26. XYZ Ltd. is engaged in supply of works contract services for construction of immovable
property. It gives a part of the construction work to a sub-contractor. The sub-contractor
charges GST in his invoice to XYZ Ltd. You are required to advice XYZ Ltd. if it can avail
input tax credit of the GST charged to it by the sub-contractor.
Solution:
As per Section 17(5)(c), input tax credit shall not be available in respect of works contract services
when supplied for construction of an immovable property. However, credit is allowed where it is an
input service for further supply of words contract service. In the given case, the services supplied by
the sub-contractor have been used by the XYZ Ltd. for supply of works contract service. Hence, XYZ
Ltd. can avail the Input tax credit of the GST charged on the input service provided by the sub-
contractor.
27. XYZ Ltd. is engaged in supply of passenger transportation services. In the month of
September2019, it has purchased two motor cabs for Rs. 36,00,000 plus GST @ 28%. You
are required to advice XYZ Ltd if it can avail Input tax credit of the GST paid by it on
Motor cabs.
Solution:
As per Section 17(5)(a), input tax credit shall not be available in respect of motor vehicles for
transportation of persons having approved seating capacity of not more than 13 persons (including
the driver). However, credit will be available when they are used for making the taxable supplies of
transportation of passengers. In this case XYZ Ltd. is engaged in transportation of passengers it will
be entitled to take credit of GST amounting Rs.10,08,000 i.e. Rs.36,00,000 × 28%

28. XYZ Ltd conducted its 50th Annual General meeting at its head office in New Delhi and
availed services of delicious caterers on that occasion. Delicious caterers charged Rs. 15,
00,000 plus GST @ 18% for supply of outdoor catering services. You are required to advice
XYZ Ltd if it can avail Input tax credit of the GST paid on outdoor catering services.
Solution:
As per Section 17(5)(b), input tax credit shall not be available in respect of supply of outdoor catering
service unless inward supply of such services is used by a registered person for making an outward
taxable supply of the same category of goods or services or both or as an element of a taxable
composite or mixed supply or where it is obligatory for an employer to provide the same to its
employees under any law for the time being in force. Hence, XYZ Ltd. is not entitled to avail ITC of
GST paid on outdoor catering services availed from Delicious caterers.
29. PQR Company Ltd. a registered supplier of Bengaluru (Karnataka) is a manufacturer of

goods. The company provides the following information pertaining to GST paid on input
supplies during the month of April, 2020:
GST
No. Particulars paid in
(Rs.)
1 Life Insurance premium paid by the company on the life of factory 1,50,000
employees as per the policy of the company
2 Raw materials purchased for which invoice is missing but delivery 38,000
challan is available
3 Raw material purchased which are used for zero rated outward supply 50,000
4 Works contractor’s service used for repair of factory building which is 30,000
debited in the profits and loss account of company
5 Company purchased the capital goods for Rs. 4,00,000 and claimed 48,000
depreciation of Rs.44,800 (@10%) on the full amount of Rs. 4,48,000
under Income tax Act, 1961
Solution:
Computation of ITC available with XYZ Ltd. for the month of April, 2020:
No Inward Supplies GST (Rs.)
1 Life Insurance premium paid by the company on the life of factory employees Nil
as per the policy of the company - WN 1
2 Raw materials purchased for which invoice is missing but delivery challan is Nil
available - WN 2
3 Raw material purchased which are used for zero rated outward supply - WN 50,000
3
4 Works contractor’s service used for repair of factory building which is 30,000
debited in the profits and loss account of company - WN 4

5 Capital goods on which depreciation is claimed on full value inclusive of Nil

GST - WN 5
6 Total 80,000
Working Notes:
No Notes
1 Input tax credit on supply of life insurance service is not blocked if it is obligatory for an
employer to provide the same to its employees under any law for the time being in force.
[Section 17(5)(b) of the CGST Act]. In this case the life insurance service is provided as per
the policy of the company and not as per the statutory obligation; hence no input tax credit
shall be admissible.
2 ITC cannot be taken on missing invoice. The registered person should have the invoice or
any other prescribed document in its possession to claim ITC. Delivery challan is not a
prescribed document, hence input tax credit cannot be availed on basis of delivery challan –
Section 16(2)(a).
3 Section 16(2) of the IGST Act specifies that ITC may be availed on inward supplies for
making zero-rated supply, notwithstanding the exempt nature of the zero - rated supply.
Thus, Raw materials purchased for making zero rated supplies are eligible for input tax
credit.
4 As per Section 17(5)(c) ITC cannot be taken on works contract services when supplied for
construction of an immovable property. As per explanation thereto ‚Construction‛ includes
re-construction, renovation, additions or alterations or repairs, to the extent of capitalization
to the said immovable property. In this case since the cost of repairs is not capitalized in the
accounts, hence the same do not fall under construction. Thus, ITC can be availed on such
works contract services.
5 Input tax paid on capital goods cannot be availed as ITC, if depreciation has been claimed on
such tax component – Section 16(3).Notwithstanding anything contained in Section
16(2)(b), the principal shall be entitled to take credit of input tax on inputs even if the
inputs are directly sent to a job worker for job work without being first brought to his place
of business. Where the inputs sent for job work are not received back by the principal after
completion of job-work or otherwise or are not supplied from the place of business of the job
worker in accordance with Section 143(1)(a)(b) within one year of from the date of receipt of
inputs by the job worker, then it shall be deemed that such inputs had been supplied by the
principal to the job worker on the day when the said inputs were sent out.Hence, the ITC
taken by PQR Company Ltd. in Sep 2019 is valid and since 1 year period has yet not lapsed
in April, 2020, there will be no tax liability on such inputs.

31. Determine the amount of ITC available to Kalyan Ltd. in respect of the following
goods and services procured by them in the month of April 2019:
Amount
No Particulars
(Rs.)
1 Motor vehicles for transportation of persons having approved 70,000
seating capacity of 7 persons (including driver)
2 Motor bus for transportation of persons having approved seating 1,40,000
capacity of 14 persons (including driver)
3 Motor lorries for the transportation of goods 2,80,000
4 Food and beverages procured from sweet caterers for being used in 48,000
dealer’s meet
5 Services of repair and maintenance of motor lorries used for 36,000
transportation of goods
6 Services of general insurance of motor vehicles for transportation of 18,000
persons having approved seating capacity of 7 persons (including
driver)
7 Services of servicing of motor vehicles for transportation of persons 54,000
having approved seating capacity of 14 persons (including driver)
Solution:
Computation of ITC available with Kalyan Ltd.
Amount
No Particulars
(Rs.)
1 Motor vehicles for transportation of persons having approved seating Nil
capacity of 7 persons including driver – WN 1
2 Motor bus for transportation of persons having approved seating 1,40,000
capacity of 14 persons including driver – WN 2
3 Motor lorries for the transportation of goods – WN 3 2,80,000
4 Food and beverages procured from sweet caterers for being used in Nil
dealer’s meet – WN 4
5 Services of repair and maintenance of motor lorries used for 36,000
transportation of goods – WN 5
6 Services of general insurance of motor vehicles for transportation of Nil
persons having approved seating capacity of 7 persons including
driver – WN 6
7 Services of servicing of motor vehicles for transportation of persons 54,000
having approved seating capacity of 14 persons including driver –
WN 7

Working notes:
No Notes
1 As per sec. 17(5)(a), no ITC is available in respect of motor vehicles for transportation of
persons having approved seating capacity of not more than 13 persons including driver,
unless they are used for making the following taxable supplies, namely –
A) Further supply of such motor vehicles; or
B) Transportation of passengers; or
C) Imparting training on driving such motor vehicles. Hece, no ITC is available on the
said motor vehicles.
2 As epr sec. 17(5)(a), no ITC is available in respect of motor vehicles for transportation of
persons having approved seating capacity of not more than 13 persons including driver.
Thus, ITC shall be admissible on motor bus.
3 In respect of motor vehicle used for the purpose of transportation of goods, the same is not
be covered under the ambit of blocked credit. Hence, ITC shall be admissible in respect of
such motor vehicles.
4 As per sec. 17(5)(b), no ITC is available in respect of foods and beverages except where an
inward supply of goods or services or both of a particular category is used by a registered
person for making an outward taxable supply of the same category of goods or services or
both or as an element of taxable composite or mixed supply or if provision of such goods or
services is obligatory for an employer to provide to its employees under any law for the
time being in force. Hence, no ITC is available on food and beverages procured from sweet
caterers for being used in dealer’s meet.
5 Since, motor lorries meant fortransportation of goods is not covered under the ambit of
blocked credit, hence services of repair and maintenance of motor lorries is also eligibl for
credit.
6 Services of general insurance of motor vehicles for transportation of persons having
approved seating capacity of 7 persons including driver shall not be eligible for ITC since
the same is covered under the ambit of blocked credit under sec. 17(5)(ab) of the CGST
Act, 2017.
7 Since ITC is eligible for motor vehicles for transportation of persons having approved
seating capacity of 14 persons, hence services of serving of such motor vehicles shall be
eligible for ITC.
32. Krishna Motors is a car dealer selling cars of an international car company having
seating capacity of 7 persons excluding driver. It also provides maintenance and
repair services of the cars sold by it and also of other cars. It seeks your advice on
availability of ITC in respect of the following expenses incurred by it during the
course of its business operations.
i. Cars purchased from the manufacturer for making further supply of such cars.
Two of such cars are destroyed in accidents while being used for test drive by the
potential customers.

ii. A works contract services availed for constructing a car washing shed in its
premises. [RTP May 2018]
Solution:
As per sec. 16(1) of the CGST Act, 2017, every registered person can take credit of input tax
charged on any supply of goods or services or both to him which are used or intended to be
used in the course or furtherance of his business. However, Sec. 17(5) of CGST Act, 2017
specifies certain goods and services on which the ITC is not available.
In the light of the foregoing provisions, the availability of ITC in respect of the various
expenses incurred by Krishna Motors is discussed below –
i. Sec. 17(5)(a) specifically blocks ITC on the motor vehicles for transportation of person
having approved seating capacity of not more than 13 persons including the driver.
However, the same is allowed when the motor vehicle are used inter alia for further
supply of such motor vehicles. Thus, ITC on cars purchased from the manufacturer for
making further supply of such cars will be allowed.
However, ITC on the cars destroyed in accident will not be allowed as the ITC on goods
destroyed for whichever reason is specifically blocked u/ s 17(5)(a) of CGST Act.
ii. Sec. 17(5)(c) specifically blocks ITC on works contract services when supplied for
construction of an immovable property other than plant & machinery except where it is
an input service for further supply of works contract service. Since, in this case, the car
washing shed is not a plant & machinery and the works contract service is not used for
further supply of works contract service, ITC thereon will not be allowed.

CHAPTER – 4
APPORTIONMENT OF INPUTS & INPUT SERVICES
SECTION 17 – APPORTIONMENT OF INPUTS / INPUT SERVICES & CAPITAL GOODS
Apportionment
Inputs & Input Services Capital Goods
Goods / services partly Where the goods / services or both are used by the registered
used for business and person-
partly for other use – Pro-  Partly for the purpose of any business; and
rata credit admissible -  Partly for other purposes,
Sec. 17(1)] the amount of credit shall be restricted to so much of the input tax
as is attributable to the purposes of his business.
ITC restricted to goods / Where the goods / services or both are used by the registered
services used for taxable person-
supplies if the same are  Partly for effecting taxable supplies including zero-rated
used for effecting taxable supplies under this Act or under the IGST Act; and
as well as exempt supplies  Partly for effecting exempt supplies under the said Acts,
- Sec. 17(2) the amount of credit shall be restricted to so much of the input tax
as is attributable to the said taxable supplies including zero-rated
supplies.
Note Sec. 16(2) of the IGST Act specifies that ITC may be availed on
inward supplies for making zero-rated supply, notwithstanding
the exempt nature of the zero-rated supply.
Zero - rated supply It is an expression that covers two kinds of supplies: i) exports,
and ii) supplies to a SEZ or SEZ developer.
Therefore, ITC is available on goods and / or services used for

supplies made in the course of export or to an SEZ unit or SEZ

developer.
Inclusions in exempt The value of exempt supply u/s 17(2) shall be such as may be
supplies and valuation - prescribed, and shall include –
Sec. 17(3)  Supplies on which the recipient is liable to pay tax on
reverse charge basis,
 Transactions in securities,
 Sale of land and subject to Para 5(b) of Schedule II, sale of
building i.e., sale of land and sale of building when entire
consideration is received after completion certificate
issued by the competent authority.
Value of exempt supply For the purpose of sec. 17(3) the expression ‚value of exempt
not to include Schedule supply‛ shall not include the value of activities or transactions
III activities except sale of specified in schedule III, except those specified in para 5 of the
land/ building – said schedule. Thus, only transactions of sale of land and sale of
Explanation building post completion out of the transactions specified in
schedule III shall be treated as exempt supply for the purpose of
restricting the ITC attributable thereto. For other transactions
specified in schedule III, ITC shall be admissible.
Note The value of exempt supply in respect of land and building is the
value adopted for paying stamp duty and for security is 1% of the
sale value of such security.
Exempt supply to include The value of exempt supplies shall include supply on which tax is
supplies on RCM Applies paid under Reverse Charge basis. Supplies in respect of which the
outward supplier is not liable to pay tax but the recipient is made
liable to pay the tax, then due to sec. 17(3), for the limited purpose
of restricting ITC to the supplier (who is not made responsible to
pay tax due to RCM provisions) the value of these supplies will be
regarded as ‘exempt supplies’ while arriving at the net available
ITC.
Exempt supply – For the purposes of Rule 42 and Rule 43, it is hereby clarified that
Exclusions - Exp. 1 to Rule the aggregate value of exempt supplies shall exclude:
43 a) The value of services by way of accepting deposits,
extending loans or advances in so far as the consideration
is represented by way of interest or discount, except in
case of a banking company or a financial institution
including a non-banking financial company, engaged in

supplying services by way of accepting deposits,

extending loans or advances; and
b) The value of supply of services by way of transportation of
goods by a vessel from the customs station of clearance in
India to a place outside India.
Attributable Credit to be The govt. may prescribe the manner in which the credit referred
determined in accordance to in sec. 17(1) and 17(2) may be attributed.
with Rules - Sec. 17(6)
Apportionment of Inputs & Input Services – Rule 42
Input tax credit in respect of inputs or input services will attract provisions of Section 17(1) /
17(2) being partly used for the purpose of business and partly for other purposes
OR
Being partly used for effecting taxable supplies including Zero rated Supplies and partly for
effecting exempt supplies, shall be attributed to the purpose or for effecting taxable supplies in
the following manner namely
1. Compute Common Credit

2. Compute Credit attributable to exempt supplies (In – Eligible Credit)
3. Compute Eligible Credit
4. Compute Total Eligible ITC

SUMMARY
Goods and / or Services
Used partly for making taxable (

Used partly for business & partly for Including ZRS) supplies & partly for
non business purposes exempt supplies
ITC available only as
Attributable to taxable supplies

Attributable to business purposes
including ZRS
Total Input tax on Inputs + Input

Services (T)
Input tax on Remaining ITC

Input tax on Inputs + Blocked Credit
Inputs + Input credited to
Input Services used under Section
Services used Electronic
exclusively for non - 17(5) - (T3)
exclusively for Credit Ledger =
business purposes - (T1) exempt T - (T1 + T 2 +
supplies - (T2) T3) = C1

Remaining ITC Credited to ECL
Credit attributable to Inputs +

Input Services used exclusively
Common Credit = C1 - T4
in taxable supplies including
Zero Rated Supply - T4
Common Credit
Credit attributable to non -

business purpose if common Remaining Common
Credit attributable to
Inputs + Input services used Credit = C2 - (D1 +
Exempt Supply
partly for business + non - D2)
business purposes
Eligible Input tax

credit attributable to
D1 = E / F * C2 D2 = 5% X C2 business & taxable
supplies including
ZRS
Notes: -
 E = Value of Exempt Supplies during tax period

 F = Total turnover during tax period
 If no turnover during the tax period / values not available, values for last period may be
used


1. A garment factory receives a Government order for making uniforms for adefence
personnel. This supply is exempt from tax under a special notification. The fabric is
separately procured for the supply, but thread buttons and lining material for the collars
are the ones which are used for other taxable products of the factory.
The turnover of the other garments of the factory and exempted uniforms in July is Rs. 8
crore and Rs. 2 crore respectively, the ITC on thread, button and lining material procured
in July is Rs. 5,000, Rs. 25,000 and Rs. 15,000 respectively. Calculate the eligible ITC on
thread, button and lining material.
Solution:
Thread, button and lining material are inputs which are used for making taxable as well as exempt
supplies. Therefore, credit on such items will be apportioned and credit attributable to exempt
supplies will be added to the output tax liability in terms of rule 42 of the CGST Rules, 2017.
Credit attributable to exempt supplies = Common credit x (Exempt turnover / total
turnover)
Here, common credit = Rs. 15,000 + Rs. 25,000 + Rs. 5,000 =Rs. 45,000
Exempt turnover = Rs. 2crore
Total turnover = Rs. 10crore [Rs. 2crore + Rs. 8crore]
Amount of input tax credit attributable towards exempt supplies = [Rs. 2crore/Rs. 10crore] x
Rs. 45,000 = Rs. 9,000.
Ineligible credit of Rs. 9,000 will be reversed by the registered person in FORM GSTR – 3B for
the month of July. Credit of Rs. 36,000 will be eligible credit for the month of July.
2. X Ltd. provides taxable as well as exempted services. Turnover of X Ltd during the month
of October 2019 is as under:
15,00,00
1 Value of exempted supply of services
0
32,00,00
2 Value of taxable supply of services
0
3 Value of zero-rated taxable supply of services 8,00,000
4 Supply of services for Personal Use 5,00,000
60,00,00
Total
0

Details of Input tax credit for the month of October 2019 are as under:
Particulars CGST SGST IGST
Total Input tax 1,08,000 1,08,000 54,000
The above Input tax includes the following:
Tax on input services exclusively used for
1 18,000 18,000 7,200
supplying exempted services
Tax on input services exclusively used for
2 supplying taxable services (Including Zero rated 54,000 54,000 3,600
supplies)
3 Tax on inputs which are not eligible u/s 17(5) 18,000 18,000 6,300
Input tax on input services exclusively used for
4 10,800 10,800 5,400
supplying services for personal use
What would be the entitlement of input tax credit of X Ltd. for the month of October
2019 under Rule 42 of the CGST Rules and also calculate the amount to be reversed by
the X Ltd in GSTR 3B.
Solution:
Computation of ITC eligible for the tax period Oct 2019
CGST SGST IGST
No Particulars
(Rs.) (Rs.) (Rs.)
1 Total input tax in a tax period[T] 1,08,000 1,08,000 54,000
2 Less:
Tax on input services exclusively used for effecting 10,800 10,800 5,400
supply of services for personal use [T1]
Tax on input services exclusively used for effecting 18,000 18,000 7,200
exempt supply [T2]
Tax on inputs which are ineligible u/ s 17(5) [T3] 18,000 18,000 6,300
3 Amount of ITC to the Electronic Credit Ledger [C1] 61,200 61,200 35,100
C1 = T – [T1 + T2 + T3]
4 Less: Credit on input services exclusively used for
supplying taxable services including zero – rated 54,000 54,000 3,600
supplies [T4]
5 Common credit of input and input services used for 7,200 7,200 31,500
providing supply of services [C2] C2 = C1 – T4
6 Total inadmissible common credit as per Rule 42(1) [D1 2,160 2,160 9,450
+ D2] [WN]
7 Net eligible common credit C3 = C2 – [D1 + D2] 5,040 5,040 22,050
8 Total credit eligible i.e., [T4 + C3] 59,040 59,040 25,650
9 Amount to be reversed by X Ltd. in FORM GSTR – 2,160 2,160 9,450
3B [D1 + D2]

Working Note:
Calculation of amountof ITC towards exempt supplies and supply made for non business
use
CGST SGST IGST
No Particulars
(Rs.) (Rs.) (Rs.)
1 Aggregate value of exempted supply of services [E] 15,00,000 15,00,000 15,00,00
0
2 Total turnover for Oct 2019 [F] 60,00,000 60,00,000 60,00,00
0
3 Credit attributable towards exempt supplies D1 = [E / F] 1,800 1,800 7,875
X C2
4 Credit attributable for supplies made for non business 360 360 1,575
purpose as per clause (j) of Rule 42(1) [D2 = 5% X C2]
5 Total inadmissible common credit as per Rule 42(1) 2,160 2,160 9,450
[D1 + D2]
3. PQR Ltd. a registered supplier, supplies taxable as well as exempted goods. The
information regarding the exempted goods supplied by it during the month of Aug 2019
is not available. These exempted goods include the goods taxed at nil rate worth Rs.
9,00,000. Besides this turnover of supply of goods during the month of August, 2019
includes:
1 Value of taxable supply of goods 50,00,000
2 Value of zero rated taxable supply of goods 14,00,000
3 Value of supply of goods made for other than business use 10,00,000
Total 74,00,000
Details of Input tax credit for the month of August 2019 are as under:
No Particulars CGST SGST IGST
Total Input tax 1,80,000 1,80,000 2,16,000
The above Input tax credit in input services includes the following:
Tax on input goods exclusively used for supplying
1 45,000 45,000 72,000
exempted goods
Tax on input services exclusively used for supplying
2 63,000 63,000 23,400
taxable goods (Including Zero rated supplies)
3 Tax on inputs which are not eligible u/s 17(5) 42,000 42,000 48,000
Tax on input goods exclusively used for supplying
4 22,500 22,500 60,000
goods for personal use

During the month of July,2019, the value of taxable goods was Rs. 65,00,000 and value of
supplies of exempted goods was Rs, 10,00,000. What would be the input tax credit
entitlement of PQR Ltd. for month of August 2019 and also determine the amount if any
to be reversed in GST-3B by PQR Ltd for the month of August,2019.
Solution:
Computation of ITC eligible for the tax period Aug 2019
CGST SGST IGST

No Particulars
(Rs.) (Rs.) (Rs.)
1 Total input tax in a tax period[T] 1,80,000 1,80,000 2,16,000
2 Less:
Tax on input goods exclusively used for effecting supply 22,500 22,500 60,000
of services for personal use [T1]
Tax on input goods exclusively used for effecting exempt 45,000 45,000 72,000
supply of goods [T2]
Tax on input goods availed on which ITC not allowed 42,000 42,000 48,000
[T3]
3 Amount of ITC to the Electronic Credit Ledger [C1] 70,500 70,500 36,000
C1 = T – [T1 + T2 + T3]
4 Less: Credit on input services exclusively used for 63,000 63,000 23,400
supplying taxable goods including zero – rated supplies
[T4]
5 Common credit of input and input services used for 7,500 7,500 12,600
providing supply of services [C2] C2 = C1 – T4
6 Total inadmissible credit as per Rule 42(1) 1,375 1,375 2,310
7 Net eligible common credit C3 = C2 – [D1 + D2] 6,125 6,125 10,290
8 Total credit eligible i.e., [T4 + C3] 69,125 69,125 33,690
9 Amount to be reversed by X Ltd. in FORM GSTR – 1,375 1,375 2,310
3B

Working Note:
Calculation of amount of ITC towards exempt supplies and supply made for non business
use
CGST SGST IGST
No Particulars
(Rs.) (Rs.) (Rs.)
1 Aggregate value of exempted supply of goods [E] 10,00,000 10,00,000 10,00,000
2 Total turnover in July 2019 [F] 75,00,000 75,00,000 75,00,000
3 Credit attributable towards exempt supplies D1 = [E / 1,000 1,000 1,680
F] X C2
4 Credit attributable for supplies made for non business 375 375 630
purpose as per clause (j) of Rule 42(1) [D2 = 5% X C2]
5 Total inadmissible common credit as per Rule 1,375 1,375 2,310
42(1)
*Note:Where the registered person does not have any turnover information during the tax period under
consideration, the value of ‘E / F’ shall be calculated by taking values of ‘E’ and ‘F’ of the last tax period
for which details of such turnover are available, previous to the month during which the said value of ‘E /
F’ is to be calculated.

CHAPTER – 5
APPORTIONMENT OF CAPITAL GOODS
MANNER OF DETERMINATION OF ITC IN RESPECT OF CAPITAL GOODS

&REVERSAL THEREOF IN CERTAIN CASES – RULE 43
Amended by NN 16 / 2020 – CT dated 23 – 03 – 2020
Attribution of credit of capital goods used partly for business and partly for non – business
purposes, partly for effecting taxable supplies and partly for effecting exempt supplies –
Rule 43(1)
The input tax credit in respect of capital goods, being partly used for business and partly used
for other purpose, or partly used for effecting taxable supplies including Zero rated supplies
and partly for effecting exempt supplies, shall be attributed to the purposes or for effecting
taxable supplies in the following manner namely -
Step 1 – Determination of common credit ‘Tc’ on capital goods
a) Capital goods The amount of input tax in respect of capital goods used or
exclusively used for intended to be used exclusively for non – business purposes or
non – business used or intended to be used exclusively for effecting exempt
purpose / for effecting supplies shall be indicated in FORM GSTR – 2 and FORM
exempt supplies - ITC GSTR – 3B and shall not be credited to his electronic credit
shall not be taken ledger;
b) Capital Goods The amount of input tax in respect of capital goods used or
exclusively used for intended to be used exclusively for effecting supplies other than
effecting taxable exempted supplies but including zero – rated supplies shall be
supplies including indicated in FORM GSTR – 2 and FORM GSTR – 3B and shall
Zero rated Supplies – be credited to the electronic credit ledger;
ITC shall be taken
c) Other Capital Goods – The amount of input tax in respect of capital goods not covered
ITC to be credited in under clauses a) and b) i.e., the capital goods which are used /
Electronic ledger intended to be used commonly for making taxable as well as
exempt supplies & business and non-business purposes,

denoted as ‘A’, being the amount of tax as reflected on the

invoice, shall be credited directly to the electronic credit ledger
and the validity of the useful life of such goods shall extend
upto 5 years from the date of the invoice for such goods.
Change from exclusive However, where any capital goods earlier covered under clause
use for exempted supplies a) is subsequently covered in this clause, input tax in respect of
to common use such capital goods denoted as ‘A’ shall be credited to the
electronic credit ledger subject to the condition that the
ineligible credit attributable to the period during which such
capital goods were covered by clause a), denoted as ‘Tie’, shall
be calculated at 5% points for every quarted or part thereof and
added to the output tax liability of the tax period in which such
credit is claimed.
However, the amount ‘Tie’ shall be computed separately for ITC
of
central tax, state tax, UT tax and integrated tax and declared in
FORM GSTR-3B.
Sec. 18(4) – Not An item of capital goods declared under clause a) on its receipt
Applicable shall not attract the provisions of section 18(4), if it is
subsequently covered in this clause.
d) Common credit of The aggregate of the amounts of ‚A‛ credited to the electronic
capital goods credit ledger under clause c) in respect of common capital
goods whose useful life remains during the tax period, to be
denoted as ‚Tc‛, shall be the common credit in respect of such
capital goods.
Change from exclusive However, where any capital goods earlier covered under clause
use for taxable including b) are subsequently covered under clause c), the ITC claimed in
zero-rated supplies to respect of such capital goods shall be added to arrive at the
common use aggregate value ‚Tc‛.

Step 2 – Determination of common credit during the useful life of capital goods for a tax
period
Calculation of Tm The amount of ITC attributable to a tax period on common
capital goods during their useful life, be denoted as ‘Tm’and
calculated as
Tm = Tc ÷ 60
Useful life of capital For the removal of doubt, it is clarified that useful life of any
goods – 5 years from the capital goods shall be considered as 5 years from the date of
date of invoice – invoice and the said formula shall be applicable during the
Explanation useful life of the said capital goods.
Step 3 – Apportion common credit attributable to exempt supplies as under
Calculation of Te The amount of common credit attributable towards exempted
supplies, be denoted as ‘Te’ and calculated as
Te = (E ÷ F) x Tm
The amount of ITC (The aggregate value of exempt supplies during the tax period
attributable towards i.e., ‚E‛ ÷ The total turnover in the State of the egistered person
exempt supplies, be during the tax period i.e., ‚F‛) x ‘Tm’
denoted as ‚Te‛ =
Turnover details not Where the registered person does not have any turnover during
available – values for the the said tax period or the aforesaid information is not available,
last tax periods may be the value of ‘E / F’ shall be calculated by taking values of ‘E’ and
used ‘F’ of the last tax period for which the details of such turnover
are available, previous to the month during which the said value
of ‘E / F’ is to be calculated;
Duties and taxes to be The aggregate value of exempt supplies and the total turnover
excluded – Explanation shall exclude the amount of any duty or tax levied under entry
84 of List I of the Seventh Schedule to the Constitution (i.e.,
Central Excise Duty), entry 92A of List I of the Seventh Schedule
to the Constitution (i.e., Central Sales Tax) and entry 51 (i.e.,
State Excise Duty) and entry 54 of List II of the said Schedule i.e.,
(State VAT);

Step 4 – Restrict ineligible credit
Addition to output tax The amount Telong with the applicable interest shall, during
liability every tax period of the useful life of the concerned capital goods,
be added to the output tax liability of the person making such
claim of credit.
Separate computation for The amount Teshall be computed separately for ITC of Central
CGST / SGST / UTGST tax, State tax, UTT and Integrated tax and declared in FORM
and IGST GSTR – 3B.
Exempt supply – For the purposes of Rule 42 and this rule, it is hereby clarified
Exclusions – Explanation 1 that the aggregate value of exempt supplies shall exclude –
a. The value of services by way of accepting deposits,
extending loans or advances in so far as the consideration
is represented by way of interest or discount, except in
case of a banking company or a financial institution
including a NBFC, engaged in supplying services by way
of accepting deposits, extending loans or advances; and
b. The value of supply of services by way of transportation
of goods by a veseel from the customs station of clearance
in India to a place outside India.
Total Input Tax on

Capital Goods
IT on CG used IT on CG used IT on CG not covered

Exclusively for non exclusively for taxable under (a) & (b). Useful
business / Exempt supplies including ZRS - life of CG - 5 years from
Supplies - (a) (b) date of invoice = 'A'
Credit to ECrL
Not to be credited to Credited to Electronic
Tc = 'A'
ECL Credit Ledger
(Refer below) -

Notes
Common credit on CG = Tc = ∑(A)
If CG under (a) subsequently get covered under ‘A’ then 'A' =
IT on such CG
Tie = 5% of IT for a quarter or part thereof to be added to
the output tax liability.
If CG under (b) subsequently get covered under 'A', then 'A'
= IT on such CG
Common credit of CG for a tax period during their
useful life
Tm = Tc / 60
Common Credit towards exempted supplies

Te = (E / F) x Tm
Added to output tax liability along with interest
Notes: -
1. E = Aggregate value of exempt supplies during the tax period
2. F = Total turnover in the state during the tax period
3. If no turnover during the tax period / values not available , values for last tax period
may be used


1. M Ltd. a registered supplier, supplier supplying taxable as well as exempted goods,
provides following turnover details during the month of August, 2020.
1 Value of taxable supply of Goods 12,00,000
2 Value of zero rated taxable supply of goods 5,50,000
3 Value of exempted supply of Goods 5,00,000
4 Supply of goods made for non-business use 50,000
Total 23,00,000
Details of Input tax paid on capital goods for the month of August 2020 are as under:
CGST SGST Total
No Particulars
(9%) (9%)
The input tax on capital goods is as follows :
Input tax on capital goods exclusively used for
1 10,800 10,800 21,600
supplying exempted goods
2 supplying taxable goods (Including Zero rated 45,000 45,000 90,000
supplies)
3 11,700 11,700 23,400
supplying goods for non-business use
Capital Goods used for both supply of taxable as well as exempt goods:
Capital Value of Inward Supplies CGST SGST Date of Inward
Goods (Exclusive of CGST & SGST) (9%) (9%) Supplies
A 5,60,000 50,400 50,400 12.01.2020
B 2,56,000 23,040 23,040 21.04.2020
C 4,56,000 41,040 41,040 01.08.2020
Total 1,14,480 1,14,480
Determine the credit on capital goods attributed for tax period of August, 2020.
Solution:
Computation of credit on capital goods attributable for tax period of Aug 2020
CGST SGST
No Particulars
(Rs.) (Rs.)
1 Total input tax on capital goods
2 Tax on capital goods exclusively used for supplying exempted goods - -
(The amount of input tax in respect of capital goods used exclusively
for effecting exempt supplies shall be indicated in FORM GSTR – 2
and GSTR – 3B and shall not be credited to his Electronic Credit

Ledger)
3 Tax on capital goods exclusively used for supplying taxable supplies 45,000 45,000
including zero – rated supplies (The amount of input tax in respect of
capital goods used exclusively for effecting taxable supplies including
zero – rated supplies shall be indicated in FORM GSTR – 2 and GSTR
– 3B and shall be credited to the ECrL)
4 Tax on capital goods exclusively used for supplying goods for non – - -
business use (The amount of input tax in respect of capital goods used
exclusively for non – business purposes shall be indicated in FORM
GSTR – 2 and GSTR – 3B and shall not be credited to the ECrL)
5 Tax on capital goods C used for supplying taxable as well as exempted 41,040 41,040
supplies shall be credited to ECrL and the useful life of such goods shall
be taken as 5 years [A] Tc
6 ITC credited to ECrL for the month of Aug 2020 86,040 86,040
7 Computation of common credit for the month of Aug 2020:
Value of ‘A’ for Machinery A, B and C whose useful life remains 1,14,480 1,14,480
during the tax period [Tc]
ITC attributable to a month on common capital goods during their 1,908 1,908
useful life - Tm[ITC attributable to a month on common capital goods
during their useful life [Tm] shall be computed in accordance with rule
43(1)(e) of CGST Rules, 2017 as under:
= TC ÷ 60
= Rs. 1,14,480 ÷ 60 for CGST and SGST respectively
8 Amount of common credit attributable towards exempted supplies to be 456 456
added to output tax liability [Te]
Te = Tm x (Value of exempted supply and supply made for non –
business use during tax period / Total value of supply during tax
period) [(Rs. 1,908 / Rs. 23,00,000) x (Rs. 5,00,000 + Rs. 50,000)]
2. Mr. M a manufacturer engaged in supplying exempted as well as taxable goods. On 25 th

September, 2020 he purchased capital goods on which IGST paid Rs. 72,000 which were
used for making exempted supplies. On 10th April 2021 he used such capital goods for
purpose of supplying both taxable as well as exempted supplies (i.e partly for taxable and
partly for exempted supplies). Determine implication on ITC.
Solution:
As per Rule 43 of CGST Rules, 2017, where any capital goods earlier used for exempted supplies are
subsequently used for providing taxable supplies also, then the input tax in respect of such capital
goods denoted shall be credited to the ECrL subject to the condition that the ineligible credit
attributable to the period during which such capital goods were used for effecting exempted supplies
shall be calculated @ 5% points for every quarter or part thereof and added to the output tax liability
of the tax period in which such credit is claimed.

Thus, amount of Rs. 72,000 shall be credited to ECrL. Amount of ITC attributable to April, 2021 on
common capital goods during their useful life = (Rs. 72,000) / 60 i.e., Rs. 1,200.
The amount of ineligible credit shall be Rs. 72,000 x 5% x 4 (quarters i.e., from 25th Sep 2020 to 10th
April 2020) = Rs. 14,400 shall be added to the output tax liability for the month of April 2021.
Note:
As per section 2(92), “quarter”shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year. Here 4 quarters
taken as the quarter ending on September 2020, March 2021 and quarter beginning from April 2021.
3. Oberoi Industries is a manufacturing company registered under GST. It manufactures

two taxable products'X'and'Y'and one exempt product 'Z'. The turnover of 'X', 'Y'and'Z'in
the month of April, 2020 was Rs 2,00,000, if Rs 10,00,000 and Rs 12,00,000. Oberoi
Industries is in possessionof certain machines and purchases more of them. Useful life of
all the machines is considered as 5 years.
From the following particulars furnished by it, compute the amount to be credited to the
electronic credit ledger of Oberoi Industries and the amount of common credit
attributable towards exempted supplies, if any, for the month of April, 2020.
GST
No Particulars
Paid (Rs)
1 Machine'A' purchased on 01 – 04 - 2020 for being exclusively used for 19,200
non-business purposes
2 Machine ‘B’ purchased on 01 – 04 - 2020 for being exclusively used in 38,400
Manufacturing zero-rated supplies
3 Machine ‘C’ purchased on 01 – 04 - 2020 for being used in 96,000
manufacturing all the three products-X,Y and Z
4 Machine'D' purchased on April 1, 2 years before 01 – 04 - 2020 for 1,92,000
being exclusively used in manufacturing product Z. From 01 – 04 -
2020, such machine will also be used for manufacturing products X
and Y.
5 Machine'E' purchased on April 1, 3 years before 01 – 04 - 2020 for being 2,88,000
exclusively used in manufacturing products X and Y. From 01 – 04 -
2020, such machine will also be used for manufacturing product Z.

Solution:
Computation of the amount to be credited to the electronic credit ledger and amount of
common credit attributable towards exempted supplies, for the month of April, 2020
Amount to
Ineligible
No Particulars Amount be Credited
Credit
to ECrL
1 Machine 'A' - Since exclusively used for non- 19,200
business purposes, ITC is notavailable under rule
43(1)(a) of CGST Rules, 2017
2 Machine 'B' - Since taxable supplies include zero- 38,400
rated supplies under rule 43(1)(b) of CGST Rules,
2017. Hence, full ITC is available
3 Machine 'C' - Commonly used for taxable and 96,000 96,000
exempt supplies- Rule 43(1)(c) of the CGST Rules,
2017
4 Machine'D' - Owing to change in use from 1,92,000 1,92,000
exclusively exempt to both taxable and exempt, the
amount of input tax attributable to such capital goods
shall be credited to ECrL i.e., Rs. 1,92,000.
The ineligible credit attributable to the period during
which such capital goods were used for effecting
exempted supplies shall be calculated @ 5% points for
every quarter or part thereof and added to the output
tax liability of the tax period in which such credit is
claimed = Rs. 76,800
(Rs 1,92,000 × 5% × 8 quarters)
5 Machine 'E' - Owing to change in use from 2,88,000
exclusively taxable to bothtaxable and exempt, the
ITC claimed in respect of such capital goods shall be
added to arrive at the aggregate value “Tc”
6 Total common credit 5,76,000

7 Common credit for the tax period (in the given case, a 9,600
month) under rule 43(1)(e) of CGST Rules, 2017 (Rs
5,76,000 ÷ 60)
8 Common credit attributable to exempt supplies in 4,800
April, 2020 u/s 43 (1)(g)of the CGST Rules, 2017
= (Turnover of exempt supplies/Total turnover) ×
Common credit
= (Rs. 12,00,000/ Rs. 24,00,000) × 9,600
[Such credit, along with the applicable interest, shall
be added to the output tax liability of

OberoiIndustries]
9 Amount to be credited to the ECrL of Oberoi 3,26,400
Industries for the month of April, 2020
10 Amount to be added to output tax liability on 81,600
account of capital goods used for effecting
taxable as well as exempted supplies – Rs. 76,800
[Machine D] + Rs. 4,800 [Common Credit]
4. Soren Enterprises is in possession of certain capital goods and purchases more of them as
per the following particulars.
Input tax on
Particulars Status of its use
Capital Goods
Capital Goods A 12,000 Exclusively used for non-
business purpose
Capital Goods B 24,000 Exclusively used for zero-rated
supplies
Capital Goods C 60,000 Used both for taxable and
exempt supplies
Capital Goods D (has been exclusively 1,20,000 Now there is change in use,
used for 2 years for exempted both for taxable and exempt
supplies) supplies
Capital Goods E (has been exclusively 1,80,000 Now there is change in use,
used for 3 years for taxable supplies) both for taxable and exempt
supplies
Useful life of all the above capital good is considered as 5 years. Apportion the input tax
credit of capital goods, while being informed that aggregate value of exempt supplies
during the tax period being Rs. 6,00,000 and total turnover during the tax period being Rs.
12,00,000.
[May 2018, ICAI PQ]
Solution:
Computation of credit on capital goods attributable for tax period
Amt to be
Total
added to
Particulars Eligible
Output tax
ITC
liability
Total credit on Capital goods
Capital Goods A: Credit on capital goods exclusively used for Nil -
supplying goods for non-business use (The amount of input tax in
respect of capital goods used exclusively for non-business purposes shall
be indicated in FORM GSTR-3B and shall not be credited to his

electronic credit ledger)

Capital Goods B: Credit on capital goods exclusively used for 24,000 -
supplying Zero rated supplies (The amount of input tax in respect of
capital goods used exclusively for effecting taxable supplies including
zero-rated supplies shall be indicated in FORM GSTR-3B and shall be
credited to the electronic credit ledger)
Capital Goods C: Credit on capital goods used for supplying taxable 60,000 500
as well as exempted supplies (shall be credited to Electronic credit ledger
and the useful life of such goods shall be taken as 5 years)
Credit pertaining to tax period = Rs. 60,000 /60 = Rs. 1000. Since 50%
of the use is for making exempted supply, therefore 50% of the credit has
to be paid and added to output tax liability
Capital Goods D:[Owing to change in use from exclusively exempt to 1,20,000
both taxable and exempt, the amount of input tax attributable to such
capital goods shall be credited to ECrL i.e., Rs. 1,20,000]
The ineligible credit attributable to the period during which such 48,000
capital goods were used for effecting exempted supplies shall be
calculated @ 5% points for every quarter or part thereof and added to
the output tax liability of the tax period in which such credit is claimed
= Rs. 48,000 (Rs. 1,20,000 x 5% x 8 quarters)
Credit pertaining to the tax period = Rs. 1,20,000 / 60 = Rs. 2,000. 1,000
Since 50% of the use is for making exempted supply, therefore 50% of
the credit has to be paid and added to output tax liability.
Capital Goods E:[Owing to change in use from exclusively taxable to - 1,500
both taxable and exempt, the ITC claimed in respect of such capital
goods shall be added to arrive at the aggregate value ‚Tc‛] Now
Payment is required to be made for exempted use.
Credit pertaining to the tax period = Rs. 1,80,000 / 60 = Rs. 3,000.
Since 50% of the use is for making exempted supply, therefore 50% of
the credit has to be paid and added to output tax liability
Total 2,04,000 51,000

CHAPTER– 6
SPECIAL PROVISIONS FOR ITC IN CASE OF BANKING
COMPANY & FI INCLUDING NBFC – 17(4)
1. 50% of ITC can be availed: - A banking Company or a financial Institution including a non
– banking financial company, engaged in supplying services by way of accepting deposits ,
extending loans or advances shall have the option to –
 Either comply with the provisions of Section 17(2); or
 Avail of every month an amount equal to 50% of the eligible input tax credit on
inputs, input services & capital goods in that month and the rest shall lapse.
2. 50% restriction not applicable in case of supplies made to its own establishment
3. Non Availment of ITC for non - business use and of blocked Credits
4. Option Once exercised cannot be withdrawn during Financial Year

1. X Bank of India has corporate office in Mumbai and branches in Chennai, Delhi and
Kolkata. Mumbai office provided services to Chennai office accordingly IGST paid.
Office of Chennai will avail the credit of IGST. Chennai office is required to reverse such
credit? Explain.
Solution:
As per Section 17(4) of the CGST Act, 2017 that reversal of 50% shall not be made for the credit
availed by Chennai office on services provided by corporate office. Thus, no credit reversal shall be
made for the credit availed on input services provided by one registered person to another registered
person holding same PAN.
2. Punjab National Bank provides the following information for the month of November
2019:
CGST SGST
No Particulars
(Rs) (Rs)
1 Eligible Input tax Credit (CGST and SGST) available on
16,020 16,020
Inputs received.
2 Eligible Input tax Credit (CGST and SGST) available on
11,340 11,340
Input Services availed

3 Value of taxable supply of services 11,00,000 -

4 Value of exempted supply of services 10,00,000 -
Determine the amount of Input tax credit available to Punjab National Bank for the
month of November, 2019 and also determine net SGST and CGST liability.
Solution:
As per Section 17(4), every banking company or a financial institution, including a non-banking
financial company, engaged in supply of services by way of accepting deposits or extending loans or
advances has the option either to avail of, every month, an amount equal to 50% of the eligible input
tax credit on inputs, capital goods and input services in that month or to comply with the provisions
of Section 17(2) of taking credit of inputs and input services used for making taxable supplies.
 Option 1:
In case the Bank opts for option to avail 50% Eligible Input tax credit under Section
17(4)
No Particulars CGST SGST
1 Total Eligible Input tax credit available 27,360 27,360
2 Less: Amount of input tax credit credited to electronic ledger (50% 13,680 13,680
of eligible input tax credit on inputs, input services and capital
goods) i.e. Rs. 27,360 x 50%.
3 Remaining input tax credit Lapsed 13,680 13,680
Determination of Net Tax Liability of Bank for the month of November, 2019
CGST SGST @ Total GST

No Particulars
@ 9% 9% Liability
1 Tax liability of bank before availing eligible
99,000 99,000 1,98,000
Input tax Credit on taxable supply of services of
Rs. 11,00,000.
2 Less: Net Eligible CGST Credit available on 13,680 - 13,680
Inputs/Input services.
3 Less: Net Eligible SGST Credit available on
- 13,680 13,680
Inputs/Input services.
4 Net output Tax liability of bank after
85,320 85,320 170,640
availing eligible Input tax Credit

 Option II:
In case Punjab National Bank opted to comply with the provisions of Section 17(2)
1 Amount of input tax credit credited to electronic ledger 27,360 27,360
2 As per Rule 42 of CGST Rules, 2017, Credit of CGST paid on 13,029 -
input/input services attributable towards Exempted supplies to be
added to output tax liability = Rs. 27,360 x (Rs. 10,00,000 / Rs.
21,00,000)
3 Similarly the Credit of SGST paid on input/input services attributable - 13,029
towards Exempted supplies to be added to output tax liability = Rs.
27,360 x (Rs. 10,00,000 / Rs. 21,00,000)
Determination of Net Tax liability of Bank for the month of November, 2019
Total GST
No Particulars CGST@9% SGST@9% liability
@18%
1 Tax liability of bank before availing eligible 99,000 99,000 1,98,000
Input tax credit on taxable supply of services
of Rs. 11,00,000.
2 Add: CGST/SGST credit to be added to 13,029 13,029 26,058
output tax liability.
3 Less: CGST/SGST credit available on 27,360 27,360 54,720
Inputs/input services.
4 Net output tax liability of bank after
84,669 84,669 1,69,338
availing eligible ITC
3. Yes Bank, having a branch in Jaipur engaged in supply of services by way of

accepting deposits and extending loans opted for the option to avail credit of 50% of
input tax of the month to which input tax relates u/ s 17(4). Its head office is in
Mumbai and branch in Ahmedabad. ITC (CGST & SGST) available for the month
Aug 2019, is Rs. 90,000 which includes:
Total Input tax credit includes credit relating to -
Input Tax
No Particulars (CGST &
SGST in Rs.)
Services availed from its distinct establishment i.e from
1 18,000
Mumbai Head office
Outdoor catering services received for its employees(not under
2 14,400
statutory obligation)

Goods that has obsolete and whose value has been written off
3 2,500
in books
4 Auditing Services 22,500
5 Goods which are used for personal use of employees 6,500
Determine the amount of input tax credit of August 2019 that can be availed by Yes
Bank.
Solution:
As per section 17(4), every banking company or a financial institution, including a NBFC,
engaged in supply of services by way of accepting deposits or extending loans or advances which
is not opting for provisions of section 17(2), has the option to avail of, every month, an amount
equal to 50% of the eligible ITC on inputs, capital goods and input services in that month and
the rest shall lapse.
Since, Yes Bank has availed an option to avail every month, an amount equal to 50% of the
eligible ITC on inputs, capital goods and input services in that month and rest shall lapse.
Therefore, in given case –
Computation of eligible ITC for Aug 2019
Eligible
No Particulars
ITC
1 ITC available exclusing ITC availed from its Mumbai Head Office [Rs. 72,000
90,000 – Rs. 18,000]
2 Less: Credit relating to -
- Outdooe catering services received for its employees [Credit is not 14,400
available u/ s 17(5)]
- Goods that has obsolete and whose value has been written off in 2,500
books [credit is not available u/ s 17(5)]
- Auditing services NIL
- Goods received which are used for personal use 6,500
3 Total eligible ITC available 48,600
4 50% of eligible ITC shall be availed by Yes Bank [A] 24,300
5 Input tax on supply of services availed from its distinct establishment i.e., 18,000
from Mumbai branch [50% restriction not applicable hence full ITC can be
availed] [B]
6 Total eligible ITC available in respect of CGST & SGST [A] + [B] 42,300
7 Amount of ITC lapsed 24,300

CHAPTER – 7
SEC 18 - ITC IN SPECIAL CASES
Sec 18
Sec 18(1)(a) Sec 18(1)(b) Sec 18(1)(c) Sec 18(1)(d)
ITC available on
ITC available on ITC available on ITC available on
OS of Inputs at
OS of Inputs at opting out of conversion of
the time of
the time of Composition exempt supply in
Voluntary
Registration Scheme to taxable supply
Registration
Time Limit to take ITC – ONE YEAR from date of issue of tax invoice – Sec18 (2): A registered
person shall not be entitled to take input tax credit under section 18(1) in respect of any supply
of goods or services or both to him after the expiry of one year from the date of issue of tax
invoice relating to such supply
Amount to be calculated in prescribed manner – Section 18(5): The amount of Credit under
section 18(1) shall be calculated in such manner as may be prescribed

ITC AVAILABLE ON OPENING STOCK OF INPUTS AT THE TIME OF

REGISTRATION – S. 18(1) (A)
A person who has applied for registration under this Act within 30 days from the date on
which he becomes liable to registration has been granted registration shall be eligible to take
credit of input tax in respect of
INPUTS
Inputs contained in
Inputs held in Inputs contained in Semi -
finished Goods held in
Stock Finished Goods
Stock
On the immediately preceding the date from which he becomes liable to pay tax under the
provisions of this Act.
Mr. Z becomes liable to pay tax on 1st August and has obtained registration on 15th
August. Mr. Z is eligible for ITC on inputs held in stock and as part of semi-finished goods
or finished goods held in stock as on 31st July. Mr. Z cannot take ITC on capital goods.

1. PQR Pvt Ltd. is engaged in supplying taxable goods to its customers within the state and
it is not liable for registration under Section 22 of CGST Act, 2017. From 15.02.2020
onwards it started inter state supply of taxable goods hence it applied for registration on
25.02.2020 and same has been granted to him. Its CGST, SGST and IGST liability for the
month of February 2020 is Rs. 19,500, Rs. 19,500 and Rs. 40,500 respectively and PQR Pvt
Ltd has to make e payment of tax on the due date i.e on 20.03.2020.PQR Pvt Ltd has
provided the following details of stock of input held on 14.02.2020 and tax paid thereon:
Inputs received on 10.01.2020 (Invoice dated 11.01.2020) lying in
1 3,600 3,600
stock
Inputs received on 25.10.2019 (Invoice dated 26.10.2019) lying in
2 7,500 7,500
semi-finished stock
Inputs received on 15.01.2020 (Invoice dated 15.01.2020) contained
3 9,600 9,600
in Finished Goods
Briefly explain the tax payable by PQR Pvt Ltd in cash if any
Note: PQR Pvt Ltd has not opted for the Composition Scheme

Solution:
As per Section 18(1)(a), a person applying for registration within 30 days from date on which he becomes
liable to registration under this Act and has been granted registration shall be entitled to take credit of
input tax in respect of input held in stock, or contained in semi furnished goods in stock on date
immediately preceding the date from which he becomes liable to registration i.e., 14th Feb, 2020.
As per section 18(2), a registered person shall not be entitled to take ITC in respect of any supply of goods
or services or both to him after the expiry of 1 year from the date of issue of tax invoice relating to such
supply.
In view of above provision ITC available to PQR (Pvt.) Ltd. will be computed as follows:
(Amount in Rs)
CGST SGST
Particulars
@ 6% @ 6%
Inputs received on 10 – 01 -20 ( Invoice dated 11 – 01- 2020) lying in stock
as on 14 -02-2020 3,600 3,600
Inputs received on 25- 10-2019 (Invoice dated 26 -10 -2019) lying in semi
furnished stock as on 14 – 02- 2020 7,500 7,500
Inputs received on 15 -01-2020 (Invoice dated 15 – 01- 2020) contained in
Finished Goods as on 14 -02 -2020 9,600 9,600
Total Eligible input tax credit 20,700 20,700
Computation of Tax payable in cash by PQR (Pvt.) Ltd for month of February, 2020
(Amount in Rs)
Particulars CGST @ 6% SGST @ 6% IGST @12%
Output tax liability for February, 2020 19,500 19,500 40,500
Less: Eligible input tax Credit available on inputs
in respect of -
 CGST [See Note] 19,500 - 1,200
 SGST [ See Note] - 19,500 1,200
Output Tax Payable in Cash Nil Nil 38,100
Note:
As per Sections 49, 49 A and49 B of CGST Act and Rule 88 A of CGST Rules, the Central tax shall first
be utilized towards payment of central tax and amount remaining, if any, may be utilized towards the
payment of integrated tax and the State tax shall first be utilized towards payment of State tax and the
amount remaining if any, may be utilized towards payment of integrated tax.

ITC AVAILABLE ON OPENING STOCK OF INPUTS AT THE TIME OF

VOLUNTARY REGISTRATION – S.18 (1)(B)
A person who takes registration under section 25(3) i.e. Voluntary registration shall be entitled
to take credit on input tax in respect of
INPUTS
Inputs contained in Semi - Inputs contained in finished

Inputs held in Stock
Finished Goods Goods held in Stock
On the date immediately preceding the date of grant of registration
Mr. A applies for voluntary registration on 5th June and obtains registration on 22th June.
Mr. A is eligible for ITC on inputs held in stock and as part of semi-finished goods or
finished goods held in stock as on 21st June. Mr. A cannot take ITC on capital goods.

1. B Ltd. is not required to register under CGST Act, 2017 but it wishes to obtain voluntary
registration so it applied for voluntary registration on 18th September, 2019 and
registration certificate has been granted to it on 25th September 2019. The CGST and
SGST liability for the month of September 2019 is Rs. 21,000 each.
B Ltd provides the following information of inputs held in stock on 24th September 2019.
It is not engaged in making Inter State outward taxable supplies
No Particulars CGST SGST IGST
Input procured on 02.09.2019 lying in Stock(CGST
1 4,500 4,500 -
6% SGST 6%)
Input received on 21.02.2019 contained in Semi-
2 7,500 7,500 -
finished goods held in stock (CGST 6% SGST 6%)
Value of inputs contained in finished goods held in
3 Stock Rs. 2,00,000 were procured on 19.09.2018(IGST - - 36,000
18%)
Input valued Rs. 50,000 procured on 13.09.2019 lying
4 - - 9,000
in Stock(IGST 18%)
Capital Goods procured on 12.09.2019(CGST 6%
5 12,000 12,000 -
SGST 6%)

You are required to determine the amount of tax to be paid in by cash by B Ltd. for the
month of September, 2019.
Solution :
As per Section 18(1)(b), in case of a person obtaining voluntary registration he shall be entitled to
take credit of input tax in respect of input held in stock, or contained in semi furnished goods in stock
on date immediately preceding the date of grant of registration i.e., 24 th September, 2019.
A registered person shall not be entitled to take input tax credit in respect of any supply of goods or
services or both to him after the expiry of 1 year from the date of issue of tax invoice relating to such
supply. – Section 18(2)
In view of the above provision eligible ITC available to B Ltd. will be computed as follows
(Amount in Rs)
Particulars CGST @ 6% SGST @ 6% IGST @ 18%
Input procured on 02 – 09 – 2019 lying in stock
4,500 4,500 -
on 24 th September, 2019
Input Received on 21 – 02-2019 contained in
semi furnished goods held in stock on 24 th 7,500 7,500 -
September , 2019
Inputs valued Rs 2,00,000 contained in finished
goods held in stock on 24 th September, 2019 - - -
[WN – 1]
Inputs valued Rs 50,000 procured on 13 – 09 -
- - 9,000
2019 lying in stock
Capital Goods procured on 12 -09- 2019
- - -
[WN -2]
Total amount of CGST/SGST/IGST credit
12,000 12,000 9,000
eligible on inputs
Computation of Tax payable in cash by B Ltd. for the month of September, 2019
(Amount in Rs)
Particulars CGST SGST
Output tax liability for September, 2019 21,000 21,000
Less: Eligible input tax Credit available on inputs in respect of -
IGST [WN – 3] 9,000 -
CGST 12,000 -
SGST - 12,000
CGST/SGST payable in Cash Nil 9,000

Working Notes:
1. Since Inputs of value of Rs 2,00,000 has been purchased on 19 -09- 2018 invoice for same has been
issued on 19 -09-2018 hence one year has been elapsed on 18 th September, 2019 from date of issue of
invoice so no input tax credit shall be admissible in respect of said input.
2. There is no provision under Section 18 (1)(b) to take input tax credit of capital goods lying in stock
by the person who obtains voluntary registration.
3. As per section 49, 49A and 49 B of CGST Act and Rule 88 A of CGST Rules, Integrated tax shall
first be utilized towards payment of integrated tax and the amount remaining, if any, may be utilized
towards the payment of central tax and State tax/Union Territory tax, in any order subject to the
condition that the entire ITC on account of Integrated tax is completely exhausted first before the
input tax credit on account of Central tax or State tax/Union territory tax can be utilized. Since B
Ltd. is not engaged in inter - state outward supplies, therefore, the IGST credit is utilized towards
payment of CGST first and when credit of IGST is fully utilized, then credit of CGST and SGST has
been utilized.
ITC AVAILABLE ON OPTING OUT OF COMPOSITION SCHEME –

S.18(1)(C)
Where any registered person ceases to pay tax under section 10 i.e. Composition
Scheme, he shall be entitled to take credit of input tax in respect of
Input Tax on
Capital Goods Inputs
Inputs contained in
Inputs contained in Semi
finished goods held in Inputs held in Stock
Finished Goods
Stock
On the day immediately preceding the date from which he becomes liable to pay tax under
sec 9
Reduced credit available in respect of capital goods: The credit on capital goods shall be
reduced by such percentage points as may be prescribed.
Mr. B, a registered taxable person, was paying tax at composition scheme up to 30th July.
However, w.e.f. 31st July, Mr. B becomes liable to pay tax under regular scheme. Mr. B will
be eligible for ITC on inputs held in stock and inputs contained in semi-finished or finished

goods held in stock and on capital goods as on 30th July. ITC on capital goods will be
reduced by 5% per quarter from the date of the invoice.

1. ABC Traders paying tax under composition scheme crosses the threshold and becomes
liable to pay tax under regular scheme on 01.04.2020. Can it avail input tax credit and if so
calculate the amount of ITC available?
Break up of credit available with ABC Traders as on 31.03.2020:
1 Inputs lying in stock (Invoice dated 12.03.2020) 3,600 3,600
2 Capital goods procured on 25.09.2019 Invoice dated 25.09.2019 7,200 7,200
Inputs lying in semi-finished goods in stock (Invoice dated
3 2,400 2,400
12.12.2019)
Solution 3:
As perSection 18(1)(c), where any registered person ceases to pay tax under Section10, he shall be
entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi -
finished or finished goods held in stock and on capital goods on the day immediately preceding the
date from which he becomes liable to pay tax u/s 9.
Therefore, in given case, ABC traders shall be entitled from 01 -04-2020 to avail credit available as on
31 -03 -2020.
As per Rule 40 of the CGST Act 2017, the capital goods credit is to be claimed after reducing the tax
paid on such capital goods by 5% points per quarter of a year or part thereof from the date of invoice
or such other documents on which the capital goods were received by the taxable person.
Input tax credit available to ABC Traders in respect of inputs (Amount in Rs.)
Input Tax (CGST Eligible
Particulars
+ SGST) Credit
Inputs lying in stock 7,200 7,200
Inputs lying in semi - finished goods in stock (Invoice dated
12 -12- 2019) 4,800 4,800
Total Input Tax credit available 12,000 12,000
Input tax credit available to ABC Traders in respect of capital goods (Amount in Rs)
Particulars Amounts
Date of invoice of capital goods 25 - 09 - 2019
Date from which ABC traders are liable to pay tax under Section 9 01 - 04 - 2020
No. of quarters from date of invoice 3
CGST and SGST paid on capital goods procured on 25 -09-2019 14,400
ITC to be reduced by Rs 14, 400 x 5% x 3 quarters 2,160
Credit (CGST and SGST) available on capital goods 12,240

Note:
As per Section 2(92), ‚quarter‛ shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year.
ITC AVAILABLE ON CONVERSION OF EXEMPT SUPPLY INTO TAXABLE SUPPLY –

S.18(1)(D)
Where an exempt supply of goods or services or both by a registered person becomes a taxable
supply, such person shall be entitled to take credit of input tax in respect of
Input Tax on
Inputs contained in
Inputs contained in finished Inputs held in
Semi Finished
goods held in Stock Stock
Goods
On the day immediately preceding the date from which supply becomes taxable.
Reduced credit available in respect of capital goods - The credit on capital goods shall be
reduced by such percentage points as may be prescribed.

1. M/ s XYZ a registered dealer engaged in supplying exempted goods to its customers. On
17.06.2019 exemption notification was rescinded and goods were liable for tax. M/s XYZ
Ltd. has to make e payment of tax on the due date i.e on 20.07.2019. Determine the eligible
credit for the month of June 2019 if the following information is provided.
Value CGST SGST IGST
No Particulars
(Ex GST) – 6% – 6% – 12%
Value of Inputs lying in stock as on
1 16.06.2019. All inputs were procured after 1,00,000 - - 12,000
01.03.2019
Value of Inputs contained in semi-finished
goods lying in stock as on 16.06.2019 but
2 only inputs worth Rs. 85000 in semi- 1,35,000 8,100 8,100 -
finished goods were procured after
16.06.2018

Inputs received on 31.01.2019 lying in

3 1,55,000 9,300 9,300 -
finished goods in stock on 16.06.2019
Capital goods procured in 10.12.2018 which
4 is exclusively used in supplying exempted 8,00,000 - - 96,000
goods.
Solution:
As per sec. 18(1)(d), where an exempt supply of goods or services or both by a registered person
becomes a taxable supply, such person shall be entitled to take credit of input tax in respect of inputs
held in stock and inputs contained in semi – finished or finished goods held in stock relatable to such
exempt supply and on capital goods exclusively used for such exempt supply on the day immediately
preceding the date from which such supply becomes taxable.
As per rule 40(1)(a) of CGST Rules, 2017 the ITC on capital goods shall be claimed after reducing the
tax paid on such capital goods by 5% points per quarter of a year or part thereof from the date of
invoice or such other documents on which the capital goods were received by the taxable person.
Computation of ITC relating to CGST, SGST and IGST available to M/ s XYZ in respect of
inputs and cpital goods will be as follows
Total
CGST SGST IGST eligible
No Particulars
(Rs.) (Rs.) (Rs.) credit
(Rs.)
1 ITC on the value of inputs lying in stock (since all - - 12,000 12,000
inputs were acquired within 1 year prior to the
effective date on which the goods became taxable,
hence entire ITC would be allowed.
2 ITC on the value of inputs contained in semi – 5,100 5,100 - 10,200
finished goods – WN 1
3 ITC on value of inputs lying in stock of finished - - 81,600 81,600
goods stock (inputs received on 31 – 01 – 2019
lying in finished goods in stock on 16 – 06 – 2019
as all inputs were acquired within 1 year prior to
the effective date on which the goods became
taxable, therefore entire ITC would be allowed –
WN 2
4 Total ITC available 14,400 14,400 93,600 1,22,400

Working notes:
1) ITC on value of inputs contained in semi – finished goods:Out of the total stock of Rs. 1,35,000
inputs totaling to Rs. 50,000 are older than 1 year from the effective date on which the goods became
taxable. Therefore, ITC to this extent stands disallowed. ITC on inputs contained in stock of Rs.
85,000 would be eligible (eligible credit = Rs. 8,100 x(Rs. 85,000 / Rs. 1,35,000) each in respect of
CGST and SGST.
2) Credit available in respect of Capital goods:
Amount
No Particulars
(Rs.)
1 Date of invoice of capital goods 10 – 12 –
2018
2 Date from which the exempted goods become taxable 17 – 06 –
2019
3 No. of quarters or part thereof from date of invoice 3
4 % points to be reduced – 5% per quarter 15%
5 IGST paid on the capital goods used exclusively in relation to the goods 96,000
exempted upto 16 – 06 – 2019
6 ITC to be reduced by 15% 14,400
7 Amount of ITC available in respect of capital goods 81,600
Note:
As per sec. 2(92), “quarter” shall mean a period comprising 3 consecutive calendar months, ending
on the last day of Mar, June, Sep and Dec of a calendar year.

SUMMARY OF SECTION 18 (1)

Entitlement of ITC at the time of registration / voluntary registration or switching to regular tax
paying status or coming into tax – paying status (Sub – Sections (1) and (2) of Section 18 r.w.
rule 40 of CGST Rules)
Goods entitled to ITC
Persons eligible to Inputs held in
No Restrictions/ conditions
take credit Stock/ Capital As on
Goods
(1) (2) (3) (4) (5)
1 Person who has Inputs held in The day ITC to be availed within 1
applied for stock and inputs immediately year from the date of the
registration within contained in semi - preceding the issue of the tax invoice by
30 days from the finished or date from which the supplier.
date on which he finished goods he becomes
becomes liable to held in stock liable to pay tax
registration and has
been granted such
registration
2 Person who is not Inputs held in The day
required to register, stock and inputs immediately
but obtains contained in semi - preceding the
voluntary finished or date of
registration finished goods registration
held in stock
3 Registration person Inputs held in The day  ITC on capital goods will
who ceases to pay stock and inputs immediately be reduced by 5% per
composition tax and contained in semi - preceding the quarter of a year or part
switches to regular finished or date from which of the year from the date
scheme finished goods he becomes of invoice.
held in stock and liable to pay tax  ITC claimed shall be
capital goods under regular verified with the
scheme corresponding details
furnished by the
corresponding supplier
4 Registered person Inputs held in The day  ITC to be availed within
whose exempt stock and inputs immediately 1 year from the date of
supplies become contained in semi - preceding the the issue of tax invoice
taxable supplies finished or date from which by the supplier.
finished goods such supply
held in stock becomes taxable
relatable to such

exempt supply
and capital goods
exclusively used
for such exempt
supply
Procedural Compliances: In all the above cases, the following procedural compliances are
required to be followed as per provisions of rule 40 of CGST Rules, 2017.
Filing of electronic The registered person has to make an electronic declaration in the
declaration of stock FORM GST ITC-01 on the common portal, clearly specifying the details
relating to the inputs held in stock, inputs contained in semi-finished or
finished goods held in stock and capital goods on the days
mentionedin column (4) of table above.
Time limit of filing The declaration is to be filed within 30 days (extendable by
declaration Commissioner/Commissioner of State GST/Commissioner of UTGST)
from the date when the registeredperson becomes eligible to avail ITC.
Certification by If the claim of ITC pertaining to CGST, SGST/UTGST, and IGST put
CA/CMA together exceeds Rs 2,00,000, the declaration needs to be certified by a
practicing Chartered Accountant/Cost Accountant.

CHAPTER – 8
SEC 18 – ITC IN SPECIAL CASES – OTHER ISSUES
Sec 18 - Other Issues
18(3) 18(4) 18(6)
ITC reversal on
Transfer of ITC on swithching to
Supply of P & M
account of change Composition
after use - Credit
in constitution of scheme / goods or
Implications
registered person services become
wholly exempt
REVERSAL OF ITC – SWITCHING TO COMPOSITION / GOODS OR SERVICES

BECOME WHOLLY EXEMPT – 18(4)
Where any registered person who has availed of input tax credit
- Opts to pay tax under section 10 i. e Composition Levy or
- Where the goods or services or both supplied by him become wholly exempt he
shall pay an amount , by way of debit in the electronic credit ledger or electronic
cash ledger, equivalent to the credit of input tax in respect of

Input Tax on
Inputs contained in finished Inputs contained in Semi Inputs held in

goods held in Stock Finished Goods Stock
Capital goods shall be reduced by such percentage points as may be prescribed.

On the day immediately preceding the date of exercising of such option or, as the case
may be, the date of such exemption.
Note:Balance Credit to Lapse - After payment of such amount, the balance of input tax
credit, if any lying in his electronic credit ledger shall lapse.
Vide Notification No. 9/2019 – CT dated 29 – 03-2019 w.e.f 01.04.2019 it has been provided that
the provisions of section 18(4) and rules made there – under are also applicable in case of
service suppliers who has opted for composition scheme for payment of tax at concessional rate
of 6% (CGST 3% & SGST 3%) u/ s 10(2A) of the CGST Act, 2017
Example: -
Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months = 5 months ignoring a part of the month.
ITC taken on such capital goods = C
ITC attributable to remaining useful life = C x 5/60
RULE 44(1) –
1. Reversal of ITC
a. For Inputs – Credit to be calculated proportionately on the basis of corresponding
invoices
b. For Capital Goods – Credit to be calculated on pro rata basis taking useful life of capital
goods 5 Years.
2. Separate determination for CGST / SGST / UTGST and IGST
3. Tax invoices of inputs not available – Credit amount to be estimated on market price
4. Furnishing of details of Credit
5. Details certified by CA / CMA to be furnished


1. The goods manufactured by Royal Ltd. have been exempted from GST with effect from
01.05.2019. Earlier these goods were liable to CGST and SGST @ 6% respectively. The
inputs used in manufacturing were also liable to CGST and SGST @ 6% respectively.
Following information is provided on 30.04.2019:
a. The inputs costing Rs. 1,12,000 (Inclusive of CGST & SGST) are lying in Stock.
b. The inputs costing Rs. 80,640 (Inclusive of CGST & SGST) are held in process.
c. The finished goods valuing Rs. 5,60,000 are in stock, the input cost (Inclusive of
CGST and SGST) is 50% of the value.
d. The Input tax credit on capital goods lying in stock is Rs. 72,000. These goods were
purchased on 01.08.2018.
e. The balance in Electronic credit ledger is Rs. 1,52,000
The department has asked Royal Ltd to reverse the credit taken on inputs referred above.
However, Royal Ltd contents that credit once validly taken is indefeasible and not
required to be reversed. Decide.
What would your answer be if the balance in Electronic credit ledger account as on
30.04.2019 is Rs. 1, 00,000?
Solution:
As per section 18(4), where any registered person who has availed ITC and the goods or services or
both supplied by him become wholly exempt, he shall pay an amount, by way of debit in the ECrL or
ECL, 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 and on capital goods taking useful life of capital goods
5 years, on the day immediately preceding the date of such exemption.
The balance of ITC, if any, lying in his ECrL shall lapse.
Accordingly, Royal Ltd., will have to pay an amount computed as follows
Amount
No Particulars
(Rs.)
1 Inputs lying in stock (Credit = Rs. 1,12,000 x 12 / 112) Net purchase price 12,000
exclusive of tax
2 Inputs in process (Rs. 80,640 x 12 / 112) 8,640
3 Inputs contained in finished goods lying in stock (Rs. 5,60,000 x 50% x 12 / 112) 30,000
4 Input tax on capital goods used for 9 months taking residual life as 5 years (Rs. 61,200
72,000 x 51 / 60) - 51 months being remaining residual life of capital goods – Rule

44 of CGST Rules, 2017

5 Amount to be paid by Royal Ltd. 1,11,840
The aforesaid amount can be paid by utilizing the balance in ECrL. The balance credit = Rs. 1,52,000
– Rs. 1,11,840 = Rs. 40,160 shall lapse.
If balance in ECrL is Rs. 1,00,000:
If the balance ECrL as on 01.05.2019 is Rs. 1,00,000, then, Royal Ltd. will have to pay in cash an
amount of Rs. 1,11,840 – Rs. 1,00,000 = Rs. 11,840.
2. PQR Ltd a registered person supplying taxable goods in Jaipur has opted to pay tax on
composition scheme under Section 10 with effect from 28.02.2020. It provides
information relating to balanceof input tax credit lying as on 27.02.2020
1. Inputs lying in stock as such valued at Rs. 1, 68,000 (Inclusive of CGST & SGST @
12%)
2. Inputs contained in finished goods where tax invoice is not available relating to
such inputs but it is known that market price of such inputs (Inclusive of CGST &
SGST @ 12%) on 28.02.2020is Rs. 89,600
3. Input tax on capital goods purchased on 25.10.2018 is Rs. 72,000
4. Balance is Electronic credit ledger is Rs. 1,10,000
Decide whether PQR Ltd is eligible for input tax credit lying on 27.02.2020
Solution:
As per section 18(4) where any registered taxable person who has availed of ITC opts to
pay tax u/ s 10 i.e. Composition scheme, he shall pay an amount, by way of debit in the
ECrL or ECL, 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 and on capital goods,
taking useful life of capital goods 5 years, on the day immediately preceding the date of
exercising such option.
Therefore, in given case PQR Ltd., is required to pay following amounts
Amount
No Particulars
(Rs.)
1 Inputs lying in stock (Rs. 1,68,000 x 12 / 112) 18,000
2 Inputs contained in finished goods lying in stock (Rs. 89,600 x 12 / 112) 9,600
[WN]
3 Input tax on capital goods used for 4 months and 2 days, taking residual life 66,000
as 5 years (Rs. 72,000 x 55 / 60) – 55 months being remaining residual life
of capital goods
4 Amount to be paid by PQR Ltd., (CGST + SGST) 93,600

Working note:
As per rule 44(3) of CGST Rules, 2017, where the tax invoices related to the inputs lying in stock are not
available, the registered person shall estimate the amount under Rule 44(1) based on the prevailing
market price of goods on the date of opting for composition scheme.
The aforesaid amount can be paid by utilizing the balance in ECrL. The balance credit in ECrL = Rs.
1,10,000 – Rs. 93,600 = Rs. 16,400 shall lapse.
ITC IMPLICATIONS ON SUPPLY OF CAPITAL GOODS OR PLANT & MACHINERY

ON WHICH ITC HAS BEEN TAKEN – 18(6)
1. Supply of plant & machinery after use – Credit implications
In case of supply of capital goods or P&M, on which ITC has been taken, the registered person shall
pay higher of the following amounts:
 An amount equal to the input tax credit taken on the said capital goods or plant and
machinery reduced @ 5% points for every quarter or part thereof from the date of issue
of invoice of such goods or
 The tax on the transaction value of such capital goods or plant and machinery
determined u/s 15.
2. Refractory bricks, molds and dies, Jigs and fixtures are supplied as scrap – Tax leviable on
transaction value to be paid.
QUESTION
1. XYZ Ltd a supplier of goods has purchased capital goods under cover of invoice dated
01.10.2019 for Rs. 4,13,000 (Inclusive of CGST @ 9% and SGST @ 9%). After taking it for
business use the said capital goods were supplied for Rs. 2,85,000 on 26.04.2020. Explain
Input tax credit treatment in this case.
Solution:
As per sec. 18(6) of the CGST Act, read with rule 40(2) of CGST Rules 2017, in case of supply of
capital goods, on which input tax credit has been taken, the registered person shall pay an amount –
 Equal to the input tax credit taken on the said capital goods reduced by an amount calculated
@ 5% for every quarter or part thereof from the date of issue of invoice for such goods; or
 The tax on the transaction value of such capital goods or plant and machinery determined
under Section 15,
Which ever is higher.

Computation of amount of tax payable by XYZ Ltd.
No Particulars Amount (in Rs)

1 Date of invoice of purchase of capital goods 01 – 10-2019
2 Date of supply of capital goods after taking into use 26 – 04- 2020
3 No. Quarters from the date of issue of invoice for such goods 3
4 CGST and SGST paid on purchase of Capital Goods [ Rs 4,13,000 x 18 / 63,000
118]
5 Reduced by Rs 63,000 x 5% x 3quarters 9,450
6 Amount of CGST and SGST [A] 53,550
7 Transaction value on supply of Capital Goods u/s 15 2,85,000
8 CGST and SGST payable on supply of capital goods @ 18% [B] 51,300
9 Amount to be payable (higher of A Or B) 53,550
2. What would be your answer if capital goods being Refractory Bricks are removed as scrap
at a transaction value of Rs. 25,000 on 29.03.2020?
Solution:
As per Section 18(6), where refractory bricks, moulds and jigs and fixtures are supplied as scrap,
there shall be no requirement for reversal of Input tax credit, taxable person may pay tax on the
transaction value of such goods determined under Section 15.
In the given case, Refractory bricks are cleared as scrap, the manufacture shall pay an amount equal
to the tax leviable on transaction value i.e., CGST Rs 25,000 x 9% = Rs 2,250 and SGST Rs 25,000 x
9% = Rs 2,250.
CHANGE IN CONSTITUTION OF REGISTERED PERSON – 18(3)

Where there is a change in constitution of registered person on account of
 Sale
 Merger
 Demerger
 Amalgamation
 Lease
 Transfer of business
With the specific provisions of transfer of liabilities, the said registered person shall be allowed
to transfer the input tax credit which remains unutilized in his electronic credit ledger to such
 Sold
 Merged
 Demerged

 Amalgamated
 Leased
 Transferred Business
In such manner as may be prescribed
QUESTION
1. R Ltd. a registered company engaged in supplying taxable goods is being sold to X Ltd.
with specific provision for transfer of liabilities. The unutilized credit in respect of CGST
and SGST is Rs. 48,000 and Rs. 48,000 respectively. Now X Ltd wants to utilise such credit
remaining unutilized. Discuss its eligibility.
Solution:
As per sec. 18(3), where there is a change in the constitution of a registered person on account of sale,
merger, demerger, amalgamation, lease or transfer of the business with the specific provision for
transfer of liabilities, the said registered person shall be allowed to transfer the ITC which remains
unutilized in his ECrL to such sold, merged, demerged, amalgamated, leased or transferred business
in such manner as may be prescribed.
Therefore X Ltd. is entitled to utilize the unutilized credit on input and capital goods lying in account
of R Ltd., provided R Ltd., furnishes details of such transaction on sale of business in FORM GSt
ITC – 02 electroniclly in common portal with request to transfer unutilized tax credit in ECrL of
transferee i.e., X Ltd.
A certificate of CA / CMA is to be furnished and the transfer details to be accepted by the transferee.
2. R Ltd. a registered manufacturer demerged its entity into RX Cement Ltd. and RY Steel
Ltd. The total value of assets of R Ltd is 25,00,000 an unutilised credit on account of
CGST, SGST and IGST amounted to Rs. 60,000, 45,000 and 84,600 respectively. The value
of assets of RX Cement Ltd. and RY Steel Ltd is Rs. 12, 00,000 and Rs. 13, 00,000
respectively obtained as per the scheme. Discuss the eligibility of credit transferred to
new units on account of Demerger.
Solution:
As per sec. 18(3), where there is a change in the constitution of a registered person on account of sale,
merger, demerger, amalgamation, lease or transfer of the business with the specific provision for
transfer of liabilities, the said registered person shall be allowed to transfer the ITC which remains
unutilized in his ECrL to such sold, merged, demerged, amalgamated, leased or transferred business
in such manner as may be prescribed.
As per rule of CGST Rules, 2017 in case of demerger, ITC shall be apportioned in the ratio of value of
assets of new unit as specified in demerger scheme. In the given case, credit transferred to both the
new units would be –

No Particulars R Ltd. RX Ltd. RY Ltd.

1 Value of assets 25,00,000 12,00,000 13,00,000
2 Unutilised credit relating to: CGST – Rs. 60,000, SGST – 1,89,600 91,008 98,592
Rs. 45,000 and IGST – Rs. 84,600 = Rs. 1,89,600 (to be
apportioned in ratio of value of assets of RX cement and
RY steel Ltd.)
3 Total apportioned credit 1,89,600 91,008 98,592

INDEX
PAGE
CHAPTER PATRICULARS
NO
1 JOB WORK PROVISIONS 2 - 13
2 ITC PROVISIONS RELATING TO JOB WORK – SEC 19 14-17
3 INPUT SERVICE DISTRIBUTOR – SEC 20 18 - 26

CHAPTER – 1
JOB WORK PROVISIONS
TOPICS
1. Definitions
2. Job Work Procedure – Section 143
3. Taking ITC in respect of Inputs and Capital goods sent for Job Work u/s 19
4. Registration and Job work
DEFINITIONS
2(68) Job Work ‚Job Work‛ means any treatment or process undertaken by a
person on goods belonging to another registered person and
the expression ‚job worker‛ shall be construed accordingly.
2(107) Taxable Person ‚Taxable Person‛ means a person who is registered or liable
to be registered under Section 22 or Section 24.
SEC
NAME OF THE SECTION
NO
143 (1) Inputs & CG can be sent to Job Worker without payment of Duty
143 (2) Principal to keep Proper Records
143 (3) Deemed supply of Inputs
143 (4) Deemed supply of CG
143 (5) Removal of Waste & Scrap

JOB WORK PROCEDURE U/S 143

Inputs and  A registeredperson ("Principal") may send
Capital goods  any inputs or capital goods
can be sent to  under intimation and subject to such conditionsas may be prescribed,
job-worker  to a job worker for job work and
without payment  from there subsequently send to another job workerand likewise
of tax - Section  without payment of tax.
143(1)  The principal is not required to reverse the ITC availed on inputs
orcapitalgoodsdispatched to job-worker.
Another Job
Principal Job Worker
Worker
Inputs and Principal can send inputs or capitalgoods directly to the job-worker
capital goods can without bringing them to his premises and can still avail the credit of
be sent directly taxpaid on such inputs or capital goods.
to job workers However, he is required to bring back inputs, after completion of job Work or
premises otherwise, or capital goods,other than moulds and dies, jigs and fixtures, or
tools, within 1 year and 3 years, respectively, of their beingsent out, to any
of his place of business, without payment of tax.
Still ITC is
Sent Inputs / CG
Principal available to
directly to JW
Principal
Extention in time The period of one year and three years may, on sufficient cause being
limit of 1 year by shown, be extended by the commissioner for the further period not
further period of exceeding one year and two years respectively.
1 year and of 3 Extention of time is allowed to cover the situations where the period of
years by further one year specified is not adequate in respect of job works such as hull
period of 2 years construction/ fabrication of vessels (for defence purpose) since, these
processes complete in a period of around 14 to 16 months.
Goods can be He can also supply such inputs, after completion ofjob work or
supplied from otherwise, or capital goods, other thanmoulds and dies, jigs and fixtures,
job-worker's or tools, within 1 yearand 3 years, respectively, of their being sent out
premises from the place of business of a job worker-
a) on payment of tax within India, or
b) with or without payment of tax for export,
As the case may be.
The principal shall not, supply the goods from the place of business of a
Principal to
job worker in accordanc.e with the above provision principal declares the
declare job-
place of business of thejob worker as his additional place of business.
workers place as
However, such declaration is not required by principal -

additional place 1. where the job worker is registered under section 25 or

of business 2. Where the principal is engaged in the supply of such goods as may
be notified by the Commissioner.
Declare
Principal JW place 2 Exceptions
as APOB
Supply of goods to the job - worker, the principal would be required to

Intimation to be
intimate the Jurisdictional Officer containing the details of the description
given to
of inputsintended to be sent by the principal and the nature of processing
Jurisdictional
to be carried out by the job-worker. Thesaid intimation shall also contain
Officer Before
the details of the other job-workers, if any.
WHO SHOULD KEEP THE RECORDS??? – 143(2)

Principal to keep The responsibility for keeping proper accounts for theinputs or capital
proper records - goods shall lie with the principal.
Section 143(2)
CONCEPT OF DEEMED SUPPLY
Deemed Supply
143(3) 143(4)
Deemed Deemed
Supply of Supply of
Inputs Capital Goods
Deemed supply Where the inputs sent for job work-
of inputs -  are not received back by the principal after completion of job work
Section 143(3) or otherwise in accordance with theabove provisions, or
 are not supplied from the place of business of the job worker in
accordance with the above provisions

Within a period of 1 year or extended period (which canot exceed one

year) of their being sent out, it shall be deemed that such inputs had been
supplied by the principal to the job worker on the day when the said
inputs were sent out.
Deemed supply Where the capital goods, other thanmoulds and dies, jigs and fixtures, or
of capital goods - tools, sent for job work-
Section 143(4)  are not received back by the principal in accordance with the above
provisions, or
 are not supplied from the place of business of the job worker in
accordance with the above provisions
Within a period of 3 years or extended period (which canot exceed two
years) of their being sent out, it shall be deemed that such capital goods
had beensupplied by the principal to the job worker on the day when the
said capital goods were sent out.
WASTE & SCRAP – 143(5)

Removal of Any waste and scrap generated during the job work-
waste and scrap  may be supplied by the job worker directly from his place of
on payment of business on payment of tax, if such jobworker is registered, or
tax - Section  By the principal, if the job worker is not registered.
143(5)
Explanation:
Input input includes intermediate goods arising from any treatment or process carried out
includes on the inputs by the principal or the job worker. Such intermediate product can also be
intermediate removed without the payment of tax. Therefore, both input and intermediate product
goods can be cleared without payment of tax to job-worker.
Example:
XYZ Ltd. sent some semi-finished goods for further processing to P Ltd. (a Job worker) on
01.10.2017. P Ltd. directly received machinery (belonging to XYZ Ltd.) on 10.10.2017 for
some treatment. XYZ Ltd. received the finished goods after completion of job work activity
on 10.10.2018 and machinery on 31.12.2018.
As per section 19 of the Act, as the finished goods are received beyond period of one year, it
shall be a deemed supply of goods from XYZ Ltd to Job worker and needs to pay the GST
along with interest.
However, in case of Machinery (capital goods) being received within period of three years
from receipt at Job worker premises, there is no need to pay any tax on the same and input
tax credit can be validly availed.

RULE 45
Particulars Explanations
Inputs / Semi-furnished The inputs, semi furnished goods or capital goods shall be sent to
goods / Capital goods to the job worker under the cover of a challan issued by the
be sent to job worker principal, including where such goods are sent directly to a job
under the cover of a worker.
challan – Rule 45 (1)
Transfer to another job Where the goods are sent from one job worker to another job
worker – Challan can be worker, the challan may be issued either by the principal or the
issued by Job worker or job worker sending the goods to another job worker.
Principal Manufacturer
Endorsement on The challan issued by the principal may be endorsed by the job
Principal’s Challan worker, indicating therein the quantity and description of goods
where the goods are sent by one job worker to another or are
returned to the principal.
Further endorsement of The challan endorsed by the job worker may be further endorsed
challan by another job worker, indicating therein the quantity and
descriptionof goods where the goods are sent by one job worker to
another or are returned to the principal.
Challan to contain The challan issued by the principal to the job worker shall contain
details – Rule 45 (2) the details specified in Rule 55
Details of Challan to be The details of challans in respect of goods dispatched to a job
included in returns - worker or received from a job worker during a quarter shall be
Rule 45 (3) included in FORM GST ITC - 04 furnished for that period on or
before the 25thday of the month succeeding the said quarter or
within such further period as may be extended by the
Commissioner by a notification in this behalf.
However, any extension of the time limit notified by the

Commissioner of State tax or the Commissioner of Union
Territory tax shall be deemed to be notified by the Commissioner.
Deemed supply of Where the inputs or capital goods are not returned to the principal
goods if not returned within the time stipulated in Section 143, it shall be deemed that
within specified period such inputs or capital goods had been supplied by the principal to
and such supply to be the job worker on the day when the said inputs or capital goods
declared in GSTR – 1 – were sent out and the said supply shall be declared in FORM
Rule 45 (4) GSTR – 1 and the principal shall be liable to pay the tax along
with applicable interest.

REGISTRATION REQUIREMENT FOR JOB WORKER

Particulars Explanations
Threshold limit for Every supplier of goods or services or both is required to obtain
Registration – Section registration in the State or the Union territory from where he
22 (1)of the CGST Act makes the taxable supply if his aggregate turnover exceeds Rs 20
lakh in a financial year. However where such person makes
taxable supplies of goods or services or both from State of
Manipur, Mizoram, Nagaland, and Tripura, he shall be liable to
be registered if his aggregate turnover in a financial year
exceedsRs10 lakh.
As a Job work is a service, the job worker would be required to
obtain registration if his aggregate turnover exceeds the
prescribed threshold.
Job workers making Job workers engaged in making inter State supply of services to a
inter State supply of registeredperson have been exempted from obtaining registration.
services to aregistered However, nothing contained in this notification shall apply to a
person –Exempted - job worker:
Notification No. 7/2017 - i. Who is liable to be registered under Section 22 (1) or who
IT dated 14-09-2017 opts to take registration voluntarily under Section 25(3) of
the CGST Act; or
ii. Who is involved in making supply of services in relation to
jewellery, goldsmiths’ and silversmiths’ wares and other
articles (Chapter 71 of the tariff).
As per Explanation (i) to  The expression ‚aggregate turnover‛ shall include all supplies
Section 22 of CGST Act made by the taxable person, whether on his own account or
made on behalf of all his principals.
 However, the supply of goods,after completion of job work, by
a registered job worker shall be treated as the supply of goods
by the principal referred to in Section 143, and the value of
such goods shall not be included in the aggregate turnover of
the registered job worker in terms explanation (ii) to Section 22
of CGST Act.


1. PP Ltd. sends the goods to JB & Co. for making finished goods on 30 – 07-2019. What are the
tax implications, in the following cases if GST @18% is levied:
a) JB & Co. sends the goods back to PP Ltd within one year of being sent.
b) JB & Co. sells the goods directly to the customer on behalf of PP Ltd.
Make suitable assumptions as required.
Solution:
As per section 143 of the Act, supply of goods to a job worker without payment of tax is permissible
upon an intimation. In the given example, the implications are as follows:
1 On supply of As per Section 143 of the Act, no tax shall be payable on supply of
goods to JB & Co. goods to JB & Co. However, the tax will be payable if finished goods is
not returned before one year/ two years (i.e. if extension of further
period of one year has been obtained from the Commissioner) from 30 –
07-2019.
2 JB & Co sends the Asper the Act, there is no tax liability on returning of goods back to the
finished goods principal i.e. PP Ltd.withina period of two years (i.e. one year plus
back to PP Ltd extended period of one year).Hence, post completion of Job work, notax
is leviable on finished goods returned to PP Ltd
3 JB & co sells the Section 143 also allows the job worker to directly sell the goods on
finished goods on behalf of principal, wherein the liability to pay tax is of the Principal
behalf of PP Ltd. and not the job worker. PP Ltd. is liable to pay GST on sale of finished
goods to customer by JB & Co.
4 However, PP Ltd. must declare the premises of JB & Co. as an
‘Additional Place of Business’ and the sale of finished goods will
form part of aggregate turnover of PP Ltd. Such a declaration is not
required in case where:
a) Job worker is registered under Section 25; or
b) Principal is engaged in supply of notified goods.
2. P ltd sends the goods/inputs to JB & Co for further processing on 30-08-2019. The value of
goods sent for job work is Rs. 1,00,000. What are the tax implications, in following cases, if
GST @18% is levied:
a) JB & Co. sends the processed goods back to P Ltd on 30 – 10-2019
b) JB & Co. sends the processed goods back to P Ltd on 30 – 10-2021 and extension of
one year has been obtained from the Commissioner.
Make suitable assumptions as required.

Solution:
Case Particulars Explanation
a) JB & Co. sends As per Section 143 ofthe Act, Principal can remove the goods without
the processed payment of tax and take input tax credit provided inputs sent for job
goods back to P work are returned back within one year of removal. Otherwise, it shall
Ltd. on 30 – 10- be treated as supply from principal to Job worker as on 30–08-2019
2019 and subject to tax along with interest.In the present case, as the
inputs are received back on 30 – 10-2019 i.e. before completion of one
year, and hence no tax is payable.
b) JB & Co. sends In the present case, the goods are received after the period of two years
the processed (one year original period and one year extension) and hence, P Ltd.
goods back to P needs to pay the tax along with the interest on the supply made by
Ltd. on 30 – 10- him to JB & Co. Hence, P Ltd. need to pay Rs 9,000 (CGST) and Rs
2021 9,000 (SGST) along with specified interest thereon.
3. P Ltd sends the machinery to Q & Co. for fixing of some technical issue and maintenance on
15 – 08-2019. The value of goods sent to Q & Co. is Rs 1,00,000/-. What are the tax
implications, in the following cases:
a) Q & Co. sends the machinery back to P Ltd. on 30.12.2020
b) Q & Co. sends the machinery back to P Ltd. on 30 – 09-2022. No extension has been
obtained from the Commissioner.
Make suitableassumptions as required.
Solution:
In the given example the implications are as follows:
1 Q & Co. sends the As per Section 143 of the Act, Principal can remove the goods
machinery back to without payment of tax and take input tax credit provided
P Ltd. on 30 – 12- capital goods sent for job work are returned back within 3
2019 years of removal. Otherwise, it shall be treated as supply from
principal to Job worker as on 15 – 08-2019 and subject to tax
along with interest.
In the present case, as the machinery is receivedback on30– 12-
2020 i.e. before completion of 3 years, and hence no tax is
payable.

2 Q & Co sends the

machinery back to In present case, the machinery is received after the period of
P Ltd. on 30 – 09- three years and no extension has been obtained from the
2022 Commissioner and hence, Q Ltd needs to pay tax along with
the interest. Q Ltd needs to pay Rs 9,000 (CGST) and Rs 9,000
(SGST) along with specified interest on completion of 3 years.
4. Alok Pvt. Ltd., a registered manufacturer, sent steel cabinets worth Rs. 50 lakh under a
delivery challan to M/s Prem Tools, a registered job worker, for work on 28 – 01-2020. The
scope of job work included mounting the steel cabinets on a metal frame and sending the
mounted panels back to AlokPvt Ltd. The metal frame is to be supplied by M/s Prem Tools.
M/s Prem Tools has agreed to a consideration of Rs 5 Lakh for the entire mounting activity
including the supply of metal frame. During the course of mounting activity, metal waste is
generated which is sold by M/s Prem Tools for Rs 45,000. M/s Prem Tools sent the steel
cabinets mounted on the metal frame of AlokPvt Ltd on 03 – 12-2020.
Assuming GSTrate for metal frame as 28 %, for metal waste as 12 % and standard rate for
services as 18 % you are required to compute the GST liability of M/s Prem Tools. Also, give
reasons(s) for inclusion or exclusion of the value of cabinets in the job charges for the
purpose of payment of GST by M/s Prem Tools. (MTP May, 2018)
Solution:
1 Job work As per para 3 of Schedule II to the CGST Act, any treatment or process
deemed which is applied to another person’s goods is a supply of services and
Supply of accordingly is subject to GST rate applicable for services.
services - In the given case, M/s Prem Tools (job worker) undertakes the process of
GST rate of mounting the steel cabinets of Alok Pvt. Ltd (principal) on metal frames. In
services view of para 3 of Schedule II to the CGST Act, the mounting activity
applicable- classifies as service even though metal frames are also supplied as a part of
the mounting activity. Accordingly, the job charges will be chargeable to rate
of 18%, which is the applicable rate for services.
2 Valuation Further, the value of steel cabinets will not be included in the value of
of Job- work taxable supply made by M/s Prem Tools as the supply of cabinets doesnot fall
services within the scope of supply to be made by M/s Prem Tools. M/s Prem Tools is
only required to mount the steel cabinets, which are to be supplied by Alok
Pvt. Ltd., on metal frames, which are to be supplied by it.

3 Saleof As regards sale of waste generated during the job work, since M/s Prem
waste Tools is registered, the tax leviable on the supply will have to be paid by it in
generated terms of Section 143(5) of the CGST Act. Such supply will be treated as
during job supply of goods and subject to GST rate applicable for metal waste.
work –
Liable to
GST
4 Accordingly,
the GST No Particulars Amount
liability of 1 Job charges 5,00,000
M/s Prem 2 GST @18% - [A] 90,000
Tools will 3 Sale of metal waste 45,000
be computed 4 GST @ 12% - [B] 5,400
as follows 5 Total GST payable [A] + [B] 95,400
5. Sudama Industries Ltd., registered in the State of Jammu & Kashmir, manufactures plastic
pipes for other supplies on job work basis.
On 10 – 01-2020, Plasto Manufacturers (registered in the State of Himachal Pradesh) sent
plastic worth Rs. 4 lakh and moulds worth Rs. 50,000, free of cost, to Sudama Industries Ltd.
to make plastic pipes. Sudama Industries Ltd. also used its own material – a special type of
lamination material for coating the pipes – worth Rs. 1 lakh in the manufacture of pipes. It
raised an invoice of Rs 2 lakh as job charges for making pipes and returned the
manufactured pipes through challan to Plasto Manufacturers on 20 – 10-2020.
The same quality and quantity of plastic pipes, as was made for Plasto Manufacturers were
made by Sudama Industries Ltd. from its own raw material and sold to Solid Pipe
(registered in Jammu and Kashmir) for Rs. 7.5 lakh on 20 – 10-2020.
Examine the scenario and offer your views on the following issues with reference to the
provisions relating to job work under the GST laws:
a) Is there any difference between the manufacture of plastic pipes by Sudama Industries
Ltd. for Plasto Manufacturers and for Solid Pipes?
b) Whether Sudama Industries Ltd. can use its own material even when it is manufacturing
the plastic pipes on job -work basis?
c) Whether sending the plastic and moulds to Sudama Industries Ltd by Plasto
Manufacturers is a supply and a taxable invoice needs to be issued for the same?
d) Whether Sudama Industries Ltd should include the value of free of cost plastic supplied
by Plasto Manufacturers in its job charges. [MTP MAY 2019]

Solution:
Case Explanation
As per Section 2(68) of the CGST Act, 2017, job work means any treatment or process
a) undertaken by a person on goods belonging to another registered person and the
expression ‚job worker‛ shall be constructed accordingly. The registered person on whose
goods (inputs or capital goods) job work is performed is called the principal. Thus, the job
worker is expected to work on the goods sent by the Principal.
Therefore, when the goods are manufactured by SudamaIndutries Ltd for Plasto
Manufacturers, it is job work as the manufacturing process is undertaken on inputs (plastic
and moulds) supplied by the principal (Plasto Manufacturers ) and when goods are
manufactured for Solid Pipes, it is manufacture on own account as the pipes are
manufactured from company’s own raw material. Further, manufacture on job work basis is
a supply of service in terms of pars 3 of Schedule II to the CGST Act, 2017 and
manufacturer of pipes on own account is a supply of goods.
It has been clarified vide Circular No. 38/12/2018 - GST dated 26 – 03-2018 that the job
b) worker, in addition to the goods received from the principal, can use his own goods for
providing the services of job work.
Section 143 of the CGST Act, 2017 provides that the registered principal may, without
c) payment of tax, send inputs or capital goods to a job worker for job work. Subsequently, on
completion of the job work, the principal shall either bring back the goods to his place of
business or supply (including export) the same directly from the place of business/premises
of the job worker with in one year plus extended period of one year in case of inputs or
within three years plus extended period of two years in case of capital goods (except moulds
and dies, jigs and fixtures or tools). Thus, the provision relating to return of goods is not
applicable in case of moulds, dies, jogs, fixtures and tools.
If the time frame of one year plus extended period of one year/three years plus extended
period of two years for bringing back or further supplying the inputs/ capital goods is not
adhered to, the activity of sending the goods for job work shall be deemed to be a supply by
the principal on the day when the said inputs/ capital goods were sent out by him. Thus
essentially sending goods for job work is not a supply as such, but it acquires the character of
supply only when the inputs/ capital goods sent for job work are neither received back by the
principal nor supplied further by the principal from the place of business /premises of the job
worker within the specified period of being sent out.
Therefore sending of plastic and moulds by Plasto Manufacturers to SudamaIndustries

Ltd.(job worker) is not supply as the manufactured pipes are received back within the

stipulated time and theprovisions relating to return of goods are not applicable in case of
moulds.
Rule 45 of the CGST Rules provides that the inputs, semi-finished goods or capital goods
being sent for job work shall be sent under the cover of a challan issued by theprincipal.
Therefore,Plasto Manufacturers need not issue a taxable invoice for sending the inputs to
Sudama Industries Ltd. but should sendthe inputs under the cover of a challan.
As per section 15 (2)( b)of the CGST Act, any amount that the supplier is liable to pay in
d) relation to such supply but which has been incurred by the recipient of the supply and not
included in the price actually paid or payable for the goods or services or both, is includible
in the value of supply. However Sudama Industries Ltd. should not include the value of free
of cost plastic supplied by Plasto Manufacturers in its job charges asSudama Industries Ltd
is manufacturing the plastic pipes on job work basis.The scope of supply of the Sudama
Industries Ltd is to manufacture plastic pipes from theraw material supplied by the
Plasto Manufacturers. Thus, at no point of time was Sudama Industries Ltd.(supplier of
job work service) liable to pay for the raw material and therefore, the value of thereof should
not be included in its job charges even though the same has been incurred by Plasto
Manufacturers (recipient of job work service).

CHAPTER – 2
ITC PROVISIONS RELATING TO JOB WORK – SEC 19
SECTION 19 - OVERVIEW
Sec 19
Capital Moulds
Inputs
Goods & Dies
19(1) 19(2) 19(3) 19(4) 19(5) 19(6) 19(7)
No Section
19(1) ITC allowed in respect of Inputs sent to JW
19(2) ITC even if Inputs sent directly to JW
19(3) Inputs not received back with in 1 year – Deemed Supply
19(4) ITC allowed to Principal in respect of CG sent to JW
19(5) ITC even if CG sent directly to JW
19(6) CG not received back with in 3 years – Deemed Supply
19(7) Moulds, Dies, Jigs & Fixtures or Tools - TL NA
PROVISIONS RELATED TO INPUTS

ITC allowed to Principal The principal shall, subject to such conditions and restrictions as may
in respect of inputs sent be prescribed, be allowed input tax credit on inputs sent to a job
to job - worker – S. 19(1) worker for job work.
A1lowability of ITC even The principal shall be entitled to take credit of input tax on inputs
if Inputs sent directly to even if the inputs are directly sent to a job worker for job work
job - worker - Section without being first brought to his place of business.
19(2)
Inputs not received back Where the inputs sent for job work-

by principal within ONE  are not received back by the principal after completion of job-
year - Deemed supply of work or otherwise, or
inputs to job -worker –  are not supplied from the place of business of the job-worker in
Section19(3) accordance with section 143 (1) (a)/(b)
Within one year of being sent out, it shall be deemed that such inputs
had been supplied by the principal tothe job worker on the day when
the said inputs were sent out.
In case of direct dispatch Where the inputs are sent directly to a job worker, the period of one
to job worker-period of year shall be counted from the date of receipt of inputs by the job
ONE year starts from worker.
receipt of inputs by job –
worker
PROVISIONS RELATED TO CG
ITC allowed to Principal The principal shall, subject to such conditions and restrictions as may
in respect of capital goods be prescribed, be allowed input tax credit on capital goods sent to a
sent to job - worker - job worker for job work.
Section 19(4)
Allowability of ITC even Notwithstanding anything contained in section 16 (2)(b)The principal
if capital goods sent shall be entitled to take credit of input tax on capital goods even if the
directly to job-worker - capital goods are directly sent to a job worker for job work without
Section 19(5) being first brought to his place of business.
Capital goods not Where the capital goods sent for job work are not received back by
received back by Principal the principal within a period of 3 years of being sent out, it shall be
within 3 years-Deemed deemed that such capital goods had been supplied by the principal to
supply of capital goods to the job worker on the day when the said capital goods were sent out.
job-
Worker - Section 19(6)
In case of direct dispatch Where the capital goods are sent directly to a job worker, the period
to job worker-Period of 3 of 3 years shall be counted from the date of receipt of capital goods by
year starts from receipt by the job worker.
job – worker
PROVISIONS RELATING TO MOULDS & DIES ETC

Moulds and dies, jigs Nothing contained in Section 19 (3) or Section 19 (6) shall apply to
and fixtures, or tools- moulds and dies, jigs and fixtures, or tools sent out to a job worker
Time limit not for job work.
applicable - Section 19(7)
Explanation "Principal" means the person referred to in Section 143.


1. PQR Manufacturers, a registered person, instructs the supplier to send the capital goods
directly to SS Ltd, a job worker outside its factory premises for carrying out the certain
operations on the goods. The goods were sent by the supplier on 15 – 09-2019 and were
received by SS Ltd on 20 – 09-2019. The job worker SS Ltd carried out the job work but did
return the capital goods to their principal PQR Manufacturers. Discuss whether PQR
Manufacturers are eligible to retain the input tax credit availed by them on the capital
goods.What action under GST Act is required to be taken by PQR Manufacturers? What
would your answer be if in place of capital goods jigs and fixtures are supplied to the job
worker and the same has not been returned to the principal?
Solution:
As per sec. 19(5) of the CGST Act, 2017, the principal shall be entitled to take credit of input
tax on capital goods even if the capital goods are directly sent to a job worker for job work
without being first brought to his place of business. However, as per sec. 19(6) where the
capital goods sent for job work are not received back by the principal within a period of 3
years of being sent out, it shall be deemed that such capital goods had been supplied by the
principal to the job worker on the day when the said capital goods were sent out and in case
of direct dispatch to the job worker, the period of 3 years shall be counted from the date of
receipt of capital goods by the job worker.
Applying the above provisions, in the instant case, PQR Manufacturers can take ITC on such
capital goods even if they are sent directly to SS Ltd’s (a job worker’s) premises. Here, the 3
years period shall be counted from the date of receipt of the capital goods by the job worker
i.e., 20.09.2019 and hence the capital goods should be returned before 20.09.2022, otherwise
it shall be treated as deemed supply of the capital goods by the principal to the job worker
as on 20.09.2019.
Thus, in case the capital goods are not returned within the above mentioned time by the job
worker, PQR Manufacturers will have to pay tax along with interest on such deemed supply
of capital goods to SS Ltd.
In case of supply of moulds, dies, jigs, fixtures or tools to job worker in place of Capital
Goods:
As per sec. 19(7), the time limit as given in sec. 19(3) shall not apply in case of moulds, dies,
jigs and fixtures or tools sent to the job worker. Therefore, in this case, PQR Manufacturers
is not required to pay tax even if SS Ltd. has not returned the moulds and dies, jigs and
fixtures or tools.

CHAPTER – 3
INPUT SERVICE DISTRIBUTOR – SEC 20
DISTRIBUTION OF CREDIT BY INPUT SERVICE DISTRIBUTOR U/S 20 & 21
What is ISD is basically an office meant to received tax invoices towards receipt of input
ISD? services and distribute the credit of taxes paid on such input services to
supplier units (having the same PAN) proportionately.
Registration An ISD is required to obtain a separate registration even though it may be
separately registered. The threshold limit of registration is not applicable to ISD
Distribution  ITC of input services is distributed only amongst those recipients to whom
the input services are attributable
 ITC is distributed amongst the operational units only and in the ratio of
turnover in a State/UT of the recipient during the relevant period to the
aggregate of turnover of all recipients during the relevant period to whom
input services being distributed is attributable
 Relevant Period is previous FY or last quarter prior to the month of
distribution for which turnover of all recipients is available.
 Distributed ITC should not exceed the credit available for distribution.
 If the ISD has distributed excess credit to any recipient, the excess will be
recovered from the recipient with interest as if it was tax not paid.
Procedures  ISD should issue an ISD invoice for distributing ITC. It should be clearly
indicated in such invoice that it is issued only for distribution of ITC.
 The ISD needs to issue a ISD credit note, for reduction credit if the
distributed credit gets reduced for any reason
 ITC available for distribution in a month is to be distributed in the same
month
 Details of distribution of credit and all ISD invoices issued should be
furnished by ISD in monthly GSTR-6 within 13 days after the end of the
month.

Distribution
of Credit
ITC attributable to
ITC attributable to ITC arrtributable to
more than one
Specific Recipient all recipients
recipient
Distributed to
Pro - rata Pro - rata
such recipient
distribution distribution
only
NOTES: -
 ITC to be distributed =Turnover of recipient during the relevant period / Turnover of all
receipients during relevant period
 Turnover excludes central excise duty, State excise duty and VAT
 Relevant period = previous financial year OR last quarter prior to the month of distribution
for which turnover of all receipients is available
 Ineligible credit also to be distributed in the above manner
MANNER OF RECOVERY OF CREDIT
Where the Input Service Distributor distributes –
Manner of  The credit in contravention of the provisions contained in section –
recovery of 20
credit  Resulting in excess distribution of credit to one or more receipients
distributed in of credit,
excess
Section – 21 The excess credit so distributed shall be recovered from such receipients
along with interest, and the provisions of section 73 and 74, as the case
may be, shall mutatis mutandis, apply for determination of amount to be
recovered.

ISD – Manner of recovery of excess credit [Circular No. 71/45/2018 – GST dated 26-10-
2018]:
The CBIC has clarified the following in respect of recovery of credit distributed in excess:
 The receipient(s) who have received excess credit from ISD may deposit the said
excess amount voluntarily along with interest if any by using FORM GST DRC –
03
 If the said receipientunit(s) dose not come forward voluntarily, necessary
proceedings may be initiated against the said unit(s) under the provisions of
section 73 and 74 of the CGST Act as the case may be. FORM GST DRC – 07 can
be used by the tax authorities in such cases.
 It is further clarified that the ISD would also be liable to a general penalty under
the provisions contained in section 122(1)(ix) of the CGST Act.
DISTRIBUTION OF TAXES
The Corporate office of ABC Ltd., is at Bangalore, with its business locations of selling and
servicing of goods at Bangalore, Chennai, Mumbai and Kolkata. Software license and
maintenance is used at all the locations, but invoice for these services (indicating CGST and
SGST) are received at Corporate Office. Since the software is used at all the four locations,
the ITC of entire services cannot be claimed at Bangalore. The same has to be distributed to
all the four locations. For that reason, the Bangalore Corporate office has to act as ISD to
distribute the credit.
If the corporate office of ABC Ltd, an ISD situated in Bangalore, receives invoices
indicating Rs.4 lakh of CGST, Rs.4 lakh of SGST and RS.7 lakh of IGST, it can distribute the
ITC of CGST, SGST as well as IGST of Rs.15 lakh amongst its locations at Bangalore,
Chennai, Mumbai and Kolkata through an ISD invoice containing the amount of credit
distributed.
COMPUTATION OF CREDIT DISTRIBUTABLE TO VARIOUS UNITS

1. XYZ Ltd a registered supplier of goods having Head Office at Delhi, also registered as Input
Service Distributor (ISD). Furnishes the following information for month of July, 2019 and
asks you to distribute the credit to various units:
Input CGST SGST IGST
Particulars Total
Service (Rs) (Rs) (Rs)
A Used Exclusively in Unit III 27,000 27,000 -- 54,000
B Used in Unit-I,II and III -- -- 36,000 36,000
C Used in Unit- I,II,III and IV 12,600 12,600 -- 25,200
D Used in Unit I (Input service D is availed for
employee on vacation during the month not 1,080 1,080 -- 2,160
under statutory obligation)
Total Amount of Credit 40,680 40,680 36,000

Total Turnover of the units for the year ending 31st March, 2019 are as under:
Unit Rs
Unit – I 25,00,000
Unit – II 15,00,000
Unit – III (Not registered as exclusively engaged in supply of exempt goods) 75,00,000
Unit – IV 50,00,000
Total 1,65,00,000
All units are operational during the current year. Unit I is located in Delhi whereas units II,
III and IV are located in Mumbai, Rajasthan, and Gujarat respectively. Compute credit
attributable to each of the units.
Solution:
Computation of ITC to be distributed for month of July, 2019 to various units as per Rule 39
of the CGST Rules, 2017
Unit I: Credit to be Unit Unit
Total credit available Unit
distributed as: II: IV:
III:
Particulars (as (as
(as
CGST SGST IGST Total CGST SGST IGST IGST IGST
IGST)
) )
Input service 27,000 27,000 - 54,000 - - - - 54,000 -
‘A’ – WN 1
Input service - - 36,000 36,000 - - 7,826 4,696 23,478 -

‘B’ – WN 2
Input service 12,600 12,600 - 25,200 1,909 1,909 - 2,291 11,455 7,636
‘C’
Input service 1,080 1,080 - 2,160 1,080 1,080 - - - -
‘D’ –
Ineligible
ITC – WN 3
Total credit 2,989 2,989 7,826 6,987 88,933 7,636

distributed
Working notes:
1) The credit of input tax attributable as input service to a particulars unit shall be distributed only
to that unit. Since unit – III is exclusively engaged in supply of exempted goods, the total credit
of Rs. 54,000 is distributable to it. Further, as per Rule 39(1)(d) of CGST Rules, no
differentiation is to be made whether the unit is registered or not, and therefore, credit
attributable to Unit III is distributed to that unit although it is not registered, which implies, it is
a loss of credit.

2) As per sec. 20 (2)(b), the credit of tax attributable as input service to more than one unit but not
to all the units shall be distributed only amoungst such units to which the input service is
attributable and such distribution shall be pro rata on the basis of the turnover of such units, to
the total turnover of all such units during the relevant period. Hence, the credit of input service
‘B’ is distributed to Unit I, II and III.
3) Given that the service availed for employee on vacation during the month would not be eligible
input services u/ s 17(5) since the same is not under statutory obligation, the taxes relating to
invoice ‘D’ should be distributed as eligible input tax (Rs. 1,080 + Rs. 1,080), and the
distribution must be done separately for CGST and SGST. Since the service is wholly attributable
to Unit I, hence distributed only to such unit.
Note:
The ‘turnover in State’ is arrived at a value for the ‘relevant period’. Since all the 4 units were
operational during the preceding FY, the relevant period would be the preceding FY.
2. What would your answer be if in Question No 1, Unit IV Started its operations in April,2019
and following details of Turnover of Units for April, 2019 to June,2019 are as follows:
Unit Rs
Unit – I 2,55,000
Unit – II 3,89,000
Unit – IV 4,12,000
Total 16,66,000
Solution:
Computation of ITC to be distributed to various units as per Rule 39 of CGST Rules, 2017:
‚Relevant period‛ means –
i. If the recipients of credit have turnover in their State or Union Territories in the FY
preceding the year during which credit is to be distributed, the said FY; or
ii. In any other case, the last quarter for which details of such turnover of all the recipients are
available, previous to the month during which credit is to be distributed.
Since the detail of turnover of year 2018 – 19 of IV unit is not available we will consider the
turnover details of last quarter previous to the month for which credit is to be distributed. i.e., for
the quarter from April 2019 to June 2019.
Computation of ITC to be distributed for month of July 2019 to various units as per Rule 39 of
the
CGST Rules, 2017


Total credit available
distributed as: Unit II: III: IV:
Particulars (as (as (as
SG IGS
CGST SGST IGST Total CGST IGST) IGS IGST
ST T
T) )
Input service 27,000 27,000 - 54,000 - - - - 54,0 -
‘A’ – WN 1 00
Input service - - 36,000 36,000 - - 7,3 11,167 17,5 -
‘B’ – WN 2 21 12
Input service 12,600 12,600 - 25,200 1,929 1,9 - 5,884 9,22 6,232
‘C’ 29 7
Input service 1,080 1,080 - 2,160 1,080 1,0 - - - -
‘D’ – WN 3 80
Total credit 3,009 3,0 7,3 17,051 80,7 6,232
distributed 09 21 39
3. Suppose in the above Question No 1 Supplier of Input Service ‚C‛ issued credit note to
Input Service Distributor located in Delhi for services provided in July, 2019 in the month of
August 2019 of Rs 55,000 (CGST & SGST- Rs 9,900 thereon). What would be the treatment of
such credit note in light of the following additional information provided for available input
tax credit to be distributed for the month of August, 2019:
Input CGST SGST IGST
Particulars Total
Service (Rs) (Rs) (Rs)
P Used Exclusively in Unit IV 12,000 12,000 -- 24,000
Q Used in Unit-I and II -- -- 15,000 15,000
R Used in Unit- I,II,III and IV 3,000 3,000 -- 6,000
Total Turnover of the units for the year ending 31st March, 2019 is as under:
Unit Rs
Unit – I 25,00,000
Unit – II 15,00,000
Unit – IV 50,00,000
Total 1,65,00,000
Compute the credit distributable to each unit and show the impact of issuance of credit note
in the month of August, 2019.

Solution:
Computation of ITC to be distributed for month of Aug, 2019 to various units as per Rule 39
of CGST Rules, 2017:

Total credit available Unit
distributed as: II: III:
IV:
Particulars (as (as
(as
CGST SGST IGST Total CGST SGST IGST IGST IGST
IGST)
) )
Input 12,000 12,000 - 24,000 - - - - - 24,000
service ‘P’
Input - - 15,000 15,000 - - 9,375 5,625 - -
service ‘Q’
Input 3,000 3,000 - 6,000 455 455 - 545 2,727 1,818
service ‘R’
Total 15,000 15,000 15,000 45,000 455 455 9,375 6,170 2,727 25,818
amount of
credit
distributed
Less: -4,950 -4,950 - -9,900 -750 -750 - -900 - -3,000
Reduction 4,500
on account
of issuance
of credit
note
(issued by
input
service ‘C’)
in ratio
5:3:15:10 to
Units I, II.
III & IV
Net 10,050 10,505 15,000 35,100 - -295 9,375 5,270 - 22,818
amount of 0 295(a (adde 1,773
credit dded d to (add
distributed to outpu ed to
outpu t tax outp
t tax liabili ut
liabili ty) tax
ty) liabil
ity)

Working note:
As per Rule 39(1)(j) of CGST Rules, 2017, any ITC required to be reduced on account of issuance of a
credit note to the ISD by the supplier shall be apportioned to each recipient in the same ratio in which
ITC contained in the original invoice was distributed in terms of rule 39(1)(d), and the amount so
apportioned shall be –
No Explanation
1 Reduced from the amount to be distributed in the month in which the credit note is included in
the return in FORM GSTR – 6; or
2 Added to the output tax liability of the recipient where the amount so apportioned is in the
negative by virtue of the amount of credit under distribution being less than the amount to be
adjusted.
3 In the given case, credit note has been issued relating to input service ‘C’ so the amount is
required to be reduced in the ratio of 5:3:15:10 among the units – I,II,III & IV (as the ITC in
the original invoice was distributed to these units).
4. PQR Ltd. a registered supplier of goods having Head Office at Rajasthan, also registered as
Input Service Distributor (ISD), furnishes the following information for month of
November, 2020 and asks you to distribute the credit to various units:
Input CGST SGST IGST Total
Particulars
service Rs. Rs. Rs. Rs.
‚M‛ Used in Unit-I (Input service ‚M‛ is availed 1,500 1,500 - 3,000
for employee on vacation during the month
to its Unit I)
‚N‛ Used in Unit- II 18,000 18,000 - 36,000
‚O‛ Used in Unit- I, II & III - - 46,000 46,000
‚P‛ Used in Unit- I, II, III & IV 2,100 2,100 - 4,200

Total turnover of the units for the year ending 31st March, 2020 are as under:
Unit Rs
Unit – I 35,00,000
Unit – II (Not registered as exclusively engaged in supply of exempt goods) 50,00,000
Unit – III 45,00,000
Unit – IV 85,00,000
Total 2,15,00,000

All units are operational during the current year. Unit I is located in Rajasthan whereas
units II, III and IV are located in Delhi, Gujarat and Mumbai respectively.Compute credit
attributable to each of the units in the month of November, 2020.
Solution:
Computation of Input tax credit to be distributed for month of November, 2020 to various
units as per Rule 39 of the CGST Rules, 2017(Amounts in Rs)
Unit
Unit I Unit II Unit III
Total credit available IV
Particulars
Credit to be distributed as:
CGST SGST IGST Total CGST SGST IGST IGST IGST IGST
Input 1,500 1,500 - 3,000 1,500 1,500 - - - -
service ‚M‛
(ineligible
ITC)
[WN]
Input 18,000 18,000 - 36,000 - - - 36,000 - -
service ‚N‛
Input - - 46,000 46,000 - - 12,385 17,692 15,923 -
service ‚O‛
Input 2,100 2,100 - 4,200 342 342 - 977 879 1,660

service ‚P‛
Total
credit 21,600 21,600 46,000 89,200 1,842 1,842 12,385 54,669 16,802 1,660
distributed
Working Note:
1) Given that the service availed for employee on traveling during the month would not be eligible
input services under Section 17(5), the taxes relating to Invoice ‚M‛ should be distributed as
ineligible input tax (Rs. 1,500 + Rs. 1,500), and the distribution must be done separately for
CGST and SGST. Since the service is wholly attributable to Unit I, hence distributed only to
such unit
Note: The ‘turnover in State’ is arrived at a value for the ‘relevant period’. Since all the 4 units
were operational during the preceding financial year, the relevant period would be the
preceding financial year.

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CA FINAL – INDIRECT TAXATION GST

2 PROCEDURE FOR REGISTRATION 25 – 34

AMENDMENT / REVOCATION / CANCELLATION OF

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 1

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 2

PERSON LIABLE FOR REGISTRATION – SECTION 22

Persons liable to Registration

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 3

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 4

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 5

Summary for the Examination

** Persons engaged exclusively in supply of goods.

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 6

EXAMPLES RELATED TO THRESHOLD LIMIT

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 7

TAXABLE SUPPLY / EXEMPTED SUPPLY???

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 8

PERSONS NOT LIABLE FOR REGISTRATION – SECTION 23

Person not liable to be registered

Person Person Agriculturist to

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 9

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 10

1) The aggregate value of such supplies, to be computed on all India basis,

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 11

Exemption available to persons making exempt interstate supplies of

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 12

COMPULSORY REGISTRATION IN CERTAIN CASES – SECTION 24

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 13

INTER STATE SUPPLY - ANALYSIS

Covered u/s Covered u/s Covered u/s Covered u/s

Not. No - 3 / All other Inter Not. No - As of now no

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 14

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 15

QUESTIONS FOR UNDERSTANDING

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 16

Computation of aggregate turnover

No. Particulars Amount

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 17

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 18

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 19

Computation of aggregate turnover of Rishabh Enterprises (amount in Rs)

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 20

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 21

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 22

i. All taxable supplies,

Computation of state-wise aggregate turnover:

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 23

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 24

| BY CA DEEPAK P ANDIAN& CA ANEESH NOOR MOHAMMED 25

Advantages of Voluntary registration is advantageous for the persons which supply

| BY CA DEEPAK P ANDIAN& CA ANEESH NOOR MOHAMMED 27

| BY CA DEEPAK P ANDIAN & CA ANEESH NOOR MOHAMMED 28

Unique Identity Notwithstanding anything contained in Section 25(1) –

| BY CA DEEPAK P ANDIAN& CA ANEESH NOOR MOHAMMED 29

PROCEDURE FOR REGISTRATION – RULE 8

Validation of PAN, Mobile & E - mail ID

1)PAN validated online by common portal from CBDT database

On receipts of such application,