GST Notes

CA INTERMEDIATE (New + Old Course)
GOODS & SERVICES TAX
ान धारा
CA-INTER PAPER 4-PART 2 - GROUP 1
Full Syllabus Coverage
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GST Notes Index
1. GST Basics
2. Charging Sections
3. Supply
4. Registration
5. Valuation
6. Time of Supply
7. Tax Invoice
8. Payment
9. Input Tax Credit
10. Exemptions (PDF will also be provided)
11. Returns (pdf notes will be provided)
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Basics

GST Basics
Constitution of India
It is the mother of every law in India and almost everything or activity which is happening in India. Indian constitution
is the longest written constitution of world. Dr. B.R. Ambedkar was the architect of
indian constitution.
It lays down the basic structure of government and how it will function.
It establishes the main organs of the country popularly known as legislative, executive
and judiciary.
Constitution defines the powers and responsibilities of each organs.
Constitution is divided into 22 parts and each part has articles. Like in acts (laws) we
have section in constitution we have articles. In the end there are 12 schedules in our
constitutions.
What is law ?
Law means rules and regulation to be followed by people of a particular country or a state or sometimes even a
particular state.
Why we need law ?

● To bring uniformity. ( To deal similar situation in similar manner)
● To manage activities such as trade and commerce.
● To ensure peace, harmony
Who makes the law ?

Power to make law is given to the legislative organ of union and state (Union represents the central level and state is for
states).
Federalism
Federalism is the mixed or compound mode of government, combining a general government (the central or ‘Federal’
government ) with regional governments (provincial, state,cantonal, territorial or other sub-unit governments) in a
single political system.
It can be defined as a form of government in which there is a division of powers between two levels of government of
equal status.
In India we two main levels Central level (Union ) & State

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3 organs
● Legislative- Makes the law
● Executive -Implements the law
● Judiciary- Interprets the law
Level Legislative Organ Executive Organ Judicial Organ
Central Parliament President + Prime Minister Court

with Council of Ministers
(Popularly known as Central
Government)
State State legislative Assembly Governor + Chief Minister Courts

with council of ministers

Article 245
This article give power to parliament and state legislative assembly to make law. Parliament will make law and such
laws will be applicable on the entire nation. State legislative assembly will make law and such law will be applicable on
a particulars state only.
Any law which is passed by parliament is applicable to whole of India except the state of _______________________________
REASON (Refer classes or videos)


Article 246
This article divides the power to make law between parliament and state legislative assemblies. As per this article
Parliament can make law on matters which are enumerated in list 1 of schedule 7 of constitution of India.
State legislative assembly can make law on matters which are enumerated in list 2 schedule 7 of constitutions of India.
Schedule 7 has 3 lists

● Union list
● State list
● Concurrent list (will not be discussing it for CA Inter)
Each list has some entries or we can say some matter sand law can be made on these matter as par article 246.


What is tax ?
A Compulsory contribution to state revenue, levied by government on income, profits, value added to the cost of goods
and services and other transaction
How government can collect taxes ?

Article 265- This article of Constitution of India gives power to parliament to levy and collect tax.
Article states that no tax shall be levied or collected except by the authority of law.
Relationship between law, tax and constitution

● For every tax we need a law-Article 246
● For every law we need an entry in one of the list in the 7th schedule of constitution of India.
● Hence we can say that for every tax there must be an entry in one of the list in the 7th schedule of constitution of
India. If there is no entry a law cannot be made and if a law cannot be made on tax can be levied or collected.

Types of taxes
● Taxes can be broadly classified in the following two types
○ Direct taxes
○ Indirect taxes
● Every tax which is levied by any government has the following two effects
○ Immediate effect
■ When a tax is imposed, the immediate effect of the tax is on the person on whom the tax is
imposed
■ and he shall be liable to pay tax.
■ It is also known as impact of tax
○ The next issue involved is who will be ultimately affected by the imposition of tax.
■ Ultimate effect of tax is also known as incidence of tax.
■ If the impact of tax and incidence of tax is on the same person that is to say burden of tax cannot
be shifted then it is known as direct tax and in case of indirect tax the impact and incidence of tax
can be on different persons and we can say that in indirect taxes burden can be shifted.
■ Direct taxes are levied on persons, whereas indirect taxes are generally levied on goods and
services. Direct Taxes are progressive in nature, Indirect taxes are regressive in nature.



Sales Tax, Service Tax, Excise, Custom (Detailed Explanation in
class and videos)
Name of the tax Taxable Event List Entry Levied By Collected By
Central Excise 84
Service Tax 97
Custom 83
Sales Tax - CST
Sales Tax - VAT
Income Tax
Understanding of VAT
1919
1954
1986
2002
2004
2005
2017


● Constitution Amendment Act, 2016

○ 246A
○ 269A
○ 279A
○ 366
■ 366(12)
■ 366(12A)
■ 366(26A)
■ 366(26B)
History of GST
Kelkar task force 2004
GST Proposed 2006
GST revival in 2014 - Constitutional 2014

amendment bill
Constitution Amendment Act 06.05.2015 LS
03.08.2016 RS
08.09.2016 Ratification by States
Centre Legislation 27.03.2017 Introduced CGST, IGST, UTGST
29.03.2017 Passed by Lok Sabha
12.04.2017 President Assent
State GST Diff Dates
Roll out 01.07.2017
08.07.2017 CGST (Extension to J&K) Ordinance,

2017 and IGST (Extension to J&K)
Ordinance, 2017


Article 246A
“246A. Special provision with respect to goods and services tax.—
(1) Notwithstanding anything contained in articles 246 and 254,

● Parliament, and,
○ subject to clause (2),
● the Legislature of every State,
● have power to make laws
● with respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or
of services, or both takes place in the course of inter-State trade or commerce.
Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article
279A, take effect from the date recommended by the Goods and Services Tax Council.”.
279A(5)
The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.


Exam Take Away From Class 1

● Article 245
● Article 246
● Article 265
● Article 246A
○ Parliament and SLA have power to make laws for GST.
○ Parliament has exclusive power to make law w.r.t. GST where supply of goods or services or both in
inter state.
○ For goods mentioned in 279A(5) - GST will be levied from a date to recommended by GST Council.
○ NOTE - Since power is given to both parliament and SLA there are chances of conflicts and to resolve
such conflicts GST council is there.
● VAT - Understanding
○ System in which taxes paid earlier are allowed as credit.
○ No VAT = No Credit. Taxes will form part of cost
○ Earlier CENVAT and VAT (LST) was there credit of CENVAT was not usable for VAT(LST) and vice versa
○ There were taxes without VAT for example CST etc.
○ Free flow of credit was not there.
● GST Basic Understanding -
○ GST is a comprehensive VAT system.
○ The main point is free flow of credit.
○ Under GST the taxable event is SUPPLY OF GOODS OR SERVICES OR BOTH
○ Supply may be Inter state - IGST
○ Supply may be Intra state - CGST + SGST or CGST + UTGST




Intra State Supply Inter State Supply
246A(1) 246(2)
CGST + SGST or UTGST IGST
Parliament , State, UT Parliament only
Taxes subsumed in GST
Central Taxes State Taxes
Central Excise duty State VAT
Additional Excise Duties CST
Service Tax Entertainment and amusement tax (Other than levied by

Local bodies)
Additional Custom duties (CVD) Taxes on advertisements
Special Additional Duty if Custom Octroi and entry tax, Purchase tax
Surcharges and cesses levied by centre on the above Surcharges and cesses levied by State on the above taxes
taxes
NOTE: Basic custom duty is not subsumed in GST. There are some taxes which are also no subsumed in GST but they are
not relevant for CA Inter Syllabus.


How GST Works in Inter State Supply
(we will study this later )
245. Extent of laws made by Parliament and by the

Legislatures of States - Complete Text
1. Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the
territory of India, and the Legislature of a State may make laws for the whole or any part of the State
2. No law made by Parliament shall be deemed to be invalid on the ground that it would have extra
territorial operation


Article 269A
Levy and collection of goods and services tax in course of inter-

State trade or commerce.—
(1) Goods and services tax on supplies
● in the course of inter-State trade or commerce
● shall be levied and collected by the Government of India
● and such tax shall be apportioned between the Union and the States (DBT Principle) in the manner as may be
○ provided by Parliament
○ by law on
○ the recommendations of the Goods and Services Tax Council.
Explanation.—For the purposes of this clause,

● supply of goods, or of services, or both
● in the course of import into the territory of India
● shall be deemed to be supply of goods, or of services, or both
● in the course of inter-State trade or commerce.
(2 ) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India. (Later on
if required)
(3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State
under article 246A, such amount shall not form part of the Consolidated Fund of India. (Later on if required)
(4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied
under clause (1), such amount shall not form part of the Consolidated Fund of the State. (Later on if required)
(5) Parliament may, by law, formulate the principles for determining the
● place of supply, and
● when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.”.
GST Council
The CAB was passed by more than 15 states and thereafter Hon’ble President gave assent to “The Constitution (One
Hundred And First Amendment) Act, 2016” on 8th of September, 2016.
Since then the GST council had been notified bringing into existence the Constitutional body to decide issues relating to
GST.


On September 16, 2016, Government of India issued notifications bringing into effect all the sections of CAB setting
firmly into motion the rolling out of GST.
This notification sets out an outer limit of time of one year, that is till 15-9-2017 for bringing into effect GST.
● Article 279A in Constitution of India makes provision for constitution of GST Council.
● This GST Council will make recommendations to Union and States relating to GST.
● The Union Finance Minister is Chairperson of the GST Council.
● Following are its members -
○ Union Minister of State for revenue or Finance
○ Minister of Finance or any other Minister nominated by each State.
● Vice Chairperson of GST Council will be elected by GST Council from amongst its members.
(IMP) As per Article 279A(4) of Constitution of India , the Goods and Services Tax Council shall make recommendations
to the Union and the States on—
1. the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in
the goods and services tax; (कौन से टै सेज़ स सम ू ह गे)
2. the goods and services that may be subjected to, or exempted from the goods and services tax; ( कस पर टै स
होगा कस पर नह ं होगा )
3. The threshold limit of turnover below which goods and services may be exempted from goods and services tax;
4. the rates including floor rates with bands of goods and services tax;
5. any special rate or rates for a specified period, to raise additional resources during any natural calamity or
disaster;
6. Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand;
7. The date on which GST be levied on petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas, aviation turbine fuel
8. any other matter relating to the goods and services tax, as the Council may decide.
Decision by GST Council
● One half of total number of members of GST Council shall constitute the quorum at the meeting
● Decision in GST Council will be taken with at least 75% of weighted average voting in favour of the decision.
Union Government will have 33.33% voting power and States will have 66.67% voting power.
● Thus, practically, Union Government has veto powers. Any decision in GST Council cannot be taken without
consent of Union Government.
● Provision of decision with 75% voting means a few States cannot be adamant and block any decision by GST
Council. This is a good and sensible provision.


Govt Total Favour Against % in Favour Weight Final %
CG 2 2 0 100 33.33% 33.33
SG 31 31 0 100 66.67% 66.67
Dispute resolution
● The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute arising out of the
recommendations of the Council or implementation thereof -
○ between the Government of India and one or more States; or
○ between the Government of India and any State or States on one side and one or more other States on
the other side; or
○ between two or more States - Article 279A(11) of Constitution of India.
279A(5)
The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
Some Definitions From Constitution

1. GST 366(12A)
2. Goods 366(12)
3. Services 366(26A)
4. State 366(26B)
GST - “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the
alcoholic liquor for human consumption;’
Goods - Goods includes all materials, commodities and articles.


Services - “Services” means anything other than goods
State - “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with
Legislature
List 1 Entry No. 84 (NEW)

84. Duties of excise on the following goods manufactured or produced in India, namely:—
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.”;
List 2 Entry No. 54

Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation
turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or
commerce or sale in the course of international trade or commerce of such goods.”;
Post GST Taxability
Article GST ED VAT CST
Alcoholic Liquor for NO Yes (State) Yes Yes

human consumption
Tobacco and Tobacco YES Yes No No

products
Petroleum etc No Yes Yes Yes
Others Yes No No No
GST Common Portal

● Goods and services tax network | Website - www.gst.gov.in. It is also known as GST Electronic Portal. It is
managed by GSTN
● GSTN is company registered under the provision of Section 8 of the Companies Act, 2013 has been set by
government to establish a uniform interface for the taxpayer and a common and shared IT infrastructure
between centre and states.


Some FAQs
Which are the commodities proposed to be kept outside the purview of GST?
Ans. Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016
defines the Goods and Services tax (GST) as a tax on supply of goods or services or both,
● except supply of alcoholic liquor for human consumption.

○ So alcohol for human consumption is kept out of GST by way of definition of GST in
constitution.
● Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas
and aviation turbine fuel have temporarily been kept out and
● GST Council shall decide the date from which they shall be included in GST. Furthermore, electricity
has been kept out of GST.
What will be the status in respect of taxation of above commodities after introduction of GST?
Ans. The existing taxation system (VAT & Central Excise) will continue in respect of the above
commodities.
What will be status of Tobacco and Tobacco Products?
Ans. Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the power
to levy Central Excise duty on these products.
What type of GST is proposed to be implemented
Ans. It would be a dual GST with the Centre and States simultaneously levying it on a common tax base.


The GST to be levied by the Centre on intra-State supply of goods and / or services would be called the
Central GST (CGST) and that to be levied by the States/ Union territory would be called the State GST
(SGST)/ UTGST. Similarly, Integrated GST (IGST) will be levied and administered by Centre on every
inter-state supply of goods and services.
Why was the Constitution of India amended recently in the context of GST?
Currently, the fiscal powers between the Centre and the States are clearly demarcated in the Constitution
with almost no overlap between the respective domains.
The Centre has the powers to levy tax on the manufacture of goods (except alcoholic liquor for human
consumption, opium, narcotics etc.) while the States have the powers to levy tax on the sale of goods.
In the case of inter-State sales, the Centre has the power to levy a tax (the Central Sales Tax) but, the tax is
collected and retained entirely by the States. As for services, it is the Centre alone that is empowered to
levy service tax.
Introduction of the GST required amendments in the Constitution so as to

simultaneously empower the Centre and the States to levy and collect this tax.
The Constitution of India has been amended by the Constitution (one hundred and first amendment) Act,
2016 for this purpose. Article 246A of the Constitution empowers the Centre and the States to levy
and collect the GST.
Sources of GST Law.

1. Constitution
2. CGST Act
3. SGST Acts
4. IGST Act
5. UTGST Act
6. Goods and Services Tax (Compensation To States) Act, 2017
7. Rules
a. CGST Rules
b. SGST Rules
c. IGST Rules
8. Notifications
9. Circulars
Administration of GST
● Ministry of Finance
● CBIC (Central Board of Indirect taxes and Customs ) (www.cbic.gov.in), Department of Revenue


Article 286 in The Constitution Of India 1949
286. Restrictions as to imposition of tax on the sale or purchase of goods
1. No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods
where such sale or purchase takes place
a. outside the State; or
b. in the course of the import of the goods into, or export of the goods out of, the territory of India.
2. Parliament may by law formulate principles for determining when a sale or purchase of goods takes
place in any of the ways mentioned in clause ( 1 )
3. Any law of a State shall, in so far as it imposes, or authorises the imposition of,
a. a tax on the sale or purchase of goods declared by Parliament by law to be of special importance
in inter State trade or commerce; or
b. a tax on the sale or purchase of goods, being a tax of the nature referred to in sub clause (b), sub
clause (c) or sub clause (d) of clause 29 A of Article 366, be subject to such restrictions and
conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may
by law specify
Amendment by THE CONSTITUTION (ONE HUNDRED AND FIRST AMENDMENT) ACT, 2016
In article 286 of the Constitution,—
(i) in clause (1),—
(A) for the words "the sale or purchase of goods where such sale or purchase takes place", the words "the supply of
goods or of services or both, where such supply takes place" shall be substituted;
(B) in sub-clause (b), for the word “goods”, at both the places where it occurs, the words “goods or services or both”
shall be substituted;
(ii) in clause (2), for the words "sale or purchase of goods takes place", the words "supply of goods or of services or
both" shall be substituted;
(iii) clause (3) shall be omitted.

Charging
Section
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Section 1
Charging Section

LEVY & COLLECTION OF CGST & IGST [SECTION 9 OF THE CGST
ACT & SECTION 5 OF THE IGST ACT
9(1)
● Subject to the provisions of sub-section (2),

● there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or
services or both,
● except on the supply of alcoholic liquor for human consumption,
● on the value determined under section 15
● and at such rates,
○ not exceeding twenty per cent.,
○ as may be notified by the Government on
■ the recommendations of the Council and
● collected in such manner as may be prescribed and shall be paid by the taxable person.
Definition of Goods 2(52)

"goods" means every kind of movable property other than money and securities but includes actionable claim, growing
crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a
contract of supply

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Definition of Service 2 (102)
"services" means anything other than goods, money and securities but includes activities relating to the use of money or
its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged.
Definition of taxable person 2(107)

“taxable person" means a person who is registered or liable to be registered under section 22 or section 24
Definition of India - 2(56)

"India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and
subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in
the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976),
and the air space above its territory and territorial waters;
9(2)
● The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel
● shall be levied with effect from such date as may be notified by the Government on the recommendations of the
Council.
9(3)
The Government may, on the recommendations of the Council,
● by notification,
● specify categories of supply of goods or services or both,
● the tax on which shall be paid on reverse charge basis
○ by the recipient of such goods or services or both and
○ all the provisions of this Act shall apply to such recipient
○ as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
9(4)
The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who
shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the
tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act
shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or
both.
9(4) old
● The central tax in respect of the supply of taxable goods or services or both
○ by a supplier,
○ who is not registered,
■ to a registered person


● shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply
to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services
or both.
9(5)
The Government may, on the recommendations of the Council, by notification,

● specify categories of services
● the tax on intra- State supplies of which shall be paid
● by the electronic commerce operator
● if such services are supplied through it,
● and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable
for paying the tax in relation to the supply of such services.
● Provided that where an electronic commerce operator does not have a physical presence in the taxable
territory, any person representing such electronic commerce operator for any purpose in the taxable territory
shall be liable to pay tax:
● Provided further that where an electronic commerce operator does not have a physical presence in the taxable
territory and also he does not have a representative in the said territory, such electronic commerce operator
shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to
pay tax.
Definition of “electronic commerce operator" 2(45)
ECO means any person who owns, operates or manages digital or electronic facility or platform for electronic
commerce;
Notification
In exercise of the powers conferred by sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 the
Central Government, on the recommendations of the Council, hereby notifies that in case of the following categories of
services, the tax on intra-State supplies shall be paid by the electronic commerce operator—
● services by way of transportation of passengers by a radio-taxi, motor cab, maxi cab and motorcycle;
● services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial
places meant for residential or lodging purposes, except where the person supplying such service through
electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central
Goods and Services Tax Act;
● services by way of housekeeping, such as plumbing, carpentering etc., except where the person supplying such
service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the
said Central Goods and Services Tax Act.


GST Rates prescribed for various goods.

Broadly, six rates of CGST have been notified for goods, viz., 0.125%, 1.5%, 2.5%, 6%, 9% and 14%. Some items have
been kept at Nil rate. SGST/ UTGST at the equivalent rate is also leviable. With regard to IGST, broadly six rates have
been notified for goods, viz., 0.25%, 3%, 5%, 12%, 18% and 28%
GST Rates prescribed for various services

Broadly, four rates of CGST have been notified for services, viz., 2.5%, 6%, 9% and 14%. Equivalent rate of SGST/ UTGST
will also be levied. For IGST, four rates have been notified for services, viz., 5%, 12%, 18% and 28%. For certain
specified goods and services, nil rate of tax has been notified.
Services not covered under any specific heading are taxed at the rate of 18% (CGST @ 9% and SGST @9%).


Reverse Charge
For understanding Reverse Charges we must know
● Section 9(1)
● Section 9(3)
● Definition of Reverse Charge
● Notification No. 13/2017
● Notification No. 12/ 2017
Definition of 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 subsection (3)or subsection (4)of section 9, or under subsection (3)or
subsection (4)of section 5 of the Integrated Goods and Services Tax Act;
NOTIFICATION NO. 13/2017-CENTRAL TAX (RATE), DATED 28-6-2017

In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12
of 2017), the Central Government on the recommendations of the Council hereby notifies that on categories of supply of
services he whole of central tax leviable under section 9 of the Central Goods and Services Tax Act, 2017 shall be paid
on reverse charge basis by the recipient of the such services.
Supply of Services by a goods transport agency
Service
Supply of Services by a goods transport agency (GTA) ,who has not paid central tax at the rate of 6%, in respect of
transportation of goods by road to
a. any factory registered under or governed by the Factories Act, 1948 (63 of 1948); or
b. any s ociety registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the
time being in force in any part of India; or
c. any cooperative society established by or under any law; or
d. any person registered under the Central Goods and Services Tax Act or the Integrated Goods and
Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax
Act; or
e. any body corporate established, by or under any law; or
f. any partnership firm whether registered or not under any law including association of persons; or
g. any casual taxable person:
Supplier of Service
GTA
Recipient of Service


b. any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the
d. any person registered under the Central Goods and Services Tax Act or the Integrated Goods and Services Tax
Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act; or
e. any body corporate established, by or under any law; or
f. any partnership firm whether registered or not under any law including association of persons; or
g. any casual taxable person:
Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of
transport of goods in a goods carriage by road, to
a. Department or Establishment of the Central Government or State Government or Union territory;
b. local authority; or
c. Governmental agencies,
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of
deducting tax under section 51 and not for making a taxable supply of goods or services.
Related Exemption - Entry No. 21B

Services provided by a goods transport agency, by way transport of goods in a goods carriage by road, to
d. Department or Establishment of the Central Government or State Government or Union territory;
e. local authority; or
f. Governmental agencies,
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of
deducting tax under section 51 and not for making a taxable supply of goods or services.
Related Exemption Entry No. 21

Services provided by a goods transport agency, by way of transport in a goods carriage of
a. agricultural produce;
b. goods, where consideration charged for the transportation of goods on a consignment transported in a single
carriage does not exceed one thousand five hundred rupees;
c. goods, where consideration charged for transportation of all such goods for a single consignee does not exceed
rupees seven hundred and fifty;
d. milk, salt and food grain including flour, pulses and rice;
e. organic manure;
f. newspaper or magazines registered with the Registrar of Newspapers;
g. relief materials meant for victims of natural or manmade disasters, calamities, accidents or mishap; or
h. defence or military equipments.
Related Exemption Entry No. 21A

Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable
person, other than the following recipients, namely


b. any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the
d. any body corporate established, by or under any law; or
e. any partnership firm whether registered or not under any law including association of persons; or
f. any casual taxable person registered under the Central Goods and Services Tax Act or the Integrated Goods and
Services Tax Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act.
Who is Recipient ?
the person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the
taxable territory shall be treated as the person who receives the service for the purpose of this notification
What is Body Corporate?

"Body Corporate" has the same meaning as assigned to it in clause (11) of section 2 of the Companies Act, 2013
LLP = Partnership.
a "Limited Liability Partnership" formed and registered under the provisions of the Limited Liability Partnership Act,
2008 (6 of 2009) shall also be considered as a partnership firm or a firm




Service
Services provided by an
● individual advocate
● including a senior advocate or
● firm of advocates
○ by way of legal services,
○ directly or indirectly.
Explanation.—"Legal service" means any service provided in relation to advice, consultancy or assistance in any branch
of law, in any manner and includes representational services before any court, tribunal or authority.
Supplier
An individual advocate including a senior advocate or firm of advocates.
Recipient (Liable to Pay GST)

Any business entity located in the taxable territory.
Business Entity
"business entity" means any person carrying out business;
Related Exemptions
Entry No. 45

Services Provided by
a. an arbitral tribunal to
i. any person other than a business entity;
ii. a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of
special category states) in the preceding financial year; or
iii. the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity;
b. a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal
services to
i. an advocate or partnership firm of advocates providing legal services;
ii. any person other than a business entity;
iii. a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of
iv. the Central Government, State Government, Union territory, local authority, Governmental Authority or
Government Entity;
c. a senior advocate by way of legal services to
i. any person other than a business entity;
ii. a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of


iii. the Central Government, State Government, Union territory, local authority, Governmental Authority or
Government Entity.
An arbitral tribunal (or arbitration tribunal) is a panel of one or more adjudicators which is convened and sits to
resolve a dispute by way of arbitration.
The tribunal may consist of a sole arbitrator, or there may be two or more arbitrators, which might include either a
chairman or an umpire.
Members selected to serve on the tribunal are typically professionals with expertise in law and mediation.
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators
who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution
procedure instead of going to court.
Definition of Taxable Territory 2(109)

"Taxable territory" means the territory to which the provisions of this Act apply;
Reverse Charge - Service 3

Service Services supplied by an arbitral tribunal to a business entity
Supplier An arbitral tribunal.
Recipient Any business entity located in the taxable territory.

Service Services provided by way of sponsorship to any body corporate or partnership firm.
Supplier Any person
Recipient Any body corporate or partnership firm located in the taxable territory.

Service Services supplied by the Central Government, State Government, Union territory or local
authority to a business entity excluding
1. Renting of immovable property, and
2. Services specified below—
i. Services by the Department of Posts by way of speed post, express parcel post,
life insurance, and agency services provided to a person other than Central
Government, State Government or Union territory or local authority;
ii. services in relation to an aircraft or a vessel, inside or outside the precincts of a
port or an airport;
iii. transport of goods or passengers


Supplier Central Government, State Government, Union territory or local authority.
Recipient Any business entity located in the taxable territory.
Reverse Charge - Service 5A

Service Services supplied by the Central Government, State Government, Union territory or local
Government, authority by way of renting of immovable property State to a person registered
under the Central Goods Government, and Services Tax Act,
Supplier Central Government, State Government, Union territory or local authority.
Recipient Any person registered under CGST Act, 2017
Reverse Charge - Service 5B

Service Services supplied by any person by way of transfer of development rights or Floor Space Index
(FSI) (including additional FSI) for construction of a project by a promoter.
Supplier Any person
Recipient Promoter
"Floor space index (FSI)" shall mean the ratio of a building's total floor area (gross floor area) to the size of the piece of
land upon which it is built.]
Reverse Charge - Service 5C

Service Long term lease of land (30 years or more) by any person against consideration in the form of
upfront amount (called as premium, salami, cost, price, development charges or by any other
name) and/or periodic rent for construction of a project by a promoter.
Supplier Any person
Recipient Promoter

Service Services supplied by a director of a company or a body corporate to the said company or the
body corporate.
Supplier A director of a company or a body corporate
Recipient The company or a body corporate located in the taxable territory.


Service Services supplied by an insurance agent to any person carrying on insurance business.
Supplier An insurance agent
Recipient Any person carrying on insurance business, located in the taxable territory.

Service Services supplied by a recovery agent to a banking company or a financial institution or a
non-banking financial company.
Supplier A recovery agent
Recipient A banking company or a financial institution or a non-banking financial company, located in the
taxable territory.

Service Supply of services by an author, music composer, photographer, artist or the like by way of
transfer or permitting the use or enjoyment of a copyright covered under clause (a) of
subsection (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic,
musical or artistic works to a publisher, music company, producer or the like.
Supplier Author or music, composer, photographer, artist, or the like
Recipient Publisher, music company, producer or the like, located in the taxable territory.

Service Supply of services by the members of Overseeing Committee to Reserve Bank of India
Supplier Members of Overseeing Committee constituted by the Reserve Bank of India
Recipient Reserve Bank of India.

Service Services supplied by Individual Direct Selling Agents other than a body corporate, partnership or
limited liability partnership firm to bank or non-banking financial company
Supplier Individual direct selling agents other than a body corporate, partnership or limited liability
partnership firm
Recipient bank or non-banking financial company located in taxable territory


Service Services provided by business facilitator (BF) to a banking company
Supplier Business Facilitator
Recipient Banking company located in TT

Service Services provided by an agent of business correspondent to business correspondent
Supplier An agent of business correspondent
Recipient A business correspondent located in TT

Service Security services (services provided by way of supply of security personnel) provided to a
registered person
Provided that nothing contained in this entry shall apply to,—

1.
● A Department or Establishment of the Central Government or State Government or
Union territory;
● Local authority
● Governmental Agencies
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of
2017) only for the purpose of deducting tax under section 51 of the said Act and not for
making a taxable supply of goods or services; or
2. a registered person paying tax under section 10 of the said Act.
Supplier Any person other than a body corporate
Recipient A registered person, located in the taxable territory.


Composition Scheme / Levy - Section 10 (1)






SCHEDULE II - ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY

OF SERVICES
Clause b of paragraph 6 of Schedule II

Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other
article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply
or service is for cash, deferred payment or other valuable consideration.
Section 2(112) - Turnover In State
● "Turnover in State" or "turnover in Union territory" 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)
○ and exempt supplies made within a State or Union territory by a taxable person,
○ exports of goods or services or both and
○ inter-State supplies of goods or services or both
○ made from the State or Union territory
○ by the said taxable person
○ but excludes central tax, State tax, Union territory tax, integrated tax and cess;


Section 2(6) - Aggregate Turnover
● "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,
○ exports of goods or services or both and
○ inter-State supplies
○ of Persons
■ having the same Permanent Account Number,
■ to be computed on all India basis
■ but excludes central tax, State tax, Union territory tax, integrated tax and cess;
10(2) – Persons not eligible for composition scheme

The registered person shall be eligible to opt composition scheme10, if—
a. he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of
Schedule II and other services within the limits.
b. he is not engaged in making any supply of goods which are not leviable to tax under this Act;
c. he is not engaged in making any inter-State outward supplies of goods;
d. he is not engaged in making any supply of goods through an electronic commerce operator who is required to
collect tax at source under section 52; and
e. he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the
Council:
For Section 10(2)(e) – Notification 8/2017 CT Dated 27.06.2017

● Ice Cream and other edible ice, whether or not containing cocoa
● Pan Masala
● Tobacco and manufactured tobacco substitutes
All registered persons having the same Permanent Account Number (PAN) have to opt for composition scheme. If one
such registered person opts for normal scheme, others become ineligible for composition scheme.
Example
A dealer ‘X’ has two offices in Delhi and is eligible for composition levy. If ‘X’ opts for the composition scheme, both the offices
would pay taxes under composition scheme and abide by all the conditions as may be prescribed for the composition scheme.
Rule 5 Conditions and restrictions for composition levy

The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely:-
a. he is neither a casual taxable person nor a non-resident taxable person;


b. he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or
both;
c. He was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10,
during the preceding financial year;
d. He shall mention the words "composition taxable person, not eligible to collect tax on supplies" at the top of the
bill of supply issued by him; and
e. he shall mention the words "composition taxable person" on every notice or signboard displayed at a prominent
place at his principal place of business and at every additional place or places of business.
Section 10(3), (4), (5)

10 (3)
● The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which
his aggregate turnover during a financial year exceeds the limit specified under sub-section (1).
○ Such person is required to pay normal tax under section 9(1) from the day he ceases to satisfy any of the
conditions prescribed for composition levy.
○ He shall issue tax invoice for every taxable supply made thereafter.
○ Further, he is required to file an intimation for withdrawal from the scheme in prescribed form within 7
days of the occurrence of such event.
○ However, such person shall be allowed to avail the input tax credit in respect of the stock of inputs and
inputs contained in semi-finished or finished goods held in stock by him and on capital goods held by
him on the date of withdrawal and furnish a statement, within 30 days of withdrawal of the option,
containing the details of such stock held in prescribed form on the common portal.
A person availing composition scheme during a financial year crosses the turnover of ₹ 1.5 crore on 9th of
December. The option availed shall lapse from the day on which his aggregate turnover during the financial year
exceeds ₹ 1.5 crore, i.e. on 9 th December in this case.
10(4)
● A taxable person to whom the provisions of sub-section (1) apply shall not collect any tax from the recipient on
supplies made by him nor shall he be entitled to any credit of input tax.


Supply

Supply

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Section 2(31) "Consideration"

Consideration in relation to the supply of goods or services or both includes
PAYMENT FOR SUPPLY

➔ any payment made or to be made,
➤ whether in money or otherwise,
➤ in respect of, in response to, or for the inducement of, the supply of goods or services or both,
➤ whether by the recipient or by any other person
➤ but shall not include any subsidy given by the Central Government or a State Government;
ACT OR FORBEARANCE FOR SUPPLY

➔ the monetary value
➤ of any act or forbearance,
➤ in respect of, in response to, or for the inducement of, the supply of goods or services or both,
➤ whether by the recipient or by any other person
➤ but shall not include any subsidy given by the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as
payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
2(17) - Business
Business Includes
a. any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity,
whether or not it is for a pecuniary benefit;
b. any activity or transaction in connection with or incidental or ancillary to (a) above
c. any activity or transaction in the nature of (a) above, whether or not there is volume, frequency, continuity or
regularity of such transaction
d. supply or acquisition of goods including capital assets and services in connection with commencement or
closure of business
e. provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members, as the case may be
f. admission, for a consideration, of persons to any premises; and
g. services supplied by a person as the holder of an office which has been accepted by him in the course or
furtherance of his trade, profession or vocation
h. services provided by a race club by way of totalisator or a licence to book maker in such club
i. any activity or transaction undertaken by the Central Government, a State Government or any local
authority in which they are engaged as public authorities.


Definition of term business amended [Section 2(17)(h) of the CGST Act]
Section 2(17) of the CGST Act defines “business”. Prior to amendment, as per clause (h) of said sub-section, the term
business included
● services provided by a race club by way of totalisator or a licence to book maker in such club.
Under the amended position, clause (h) of said sub-section has been substituted to provide that business includes
● activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book
maker in such club.
Scope of supply. - Section 7

7(1)
For the purposes of this Act, the expression "supply" includes—
a. all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental,
lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance
of business;
b. import of services for a consideration whether or not in the course or furtherance of business;[and]
c. the activities specified in Schedule I, made or agreed to be made without a consideration.
7(1A) Schedule II
Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1),they
shall be treated either as supply of goods or supply of services as referred to in Schedule II.
7(2) - Schedule III

Notwithstanding anything contained in sub-section (1),—
a. activities or transactions specified in Schedule III; or
b. such activities or transactions undertaken by the Central Government, a State Government or any local authority
in which they are engaged as public authorities, as may be notified by the Government on the recommendations
of the Council,
shall be treated neither as a supply of goods nor a supply of services.
7(3)
Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the
Council, specify, by notification, the transactions that are to be treated as—
a. a supply of goods and not as a supply of services; or
b. a supply of services and not as a supply of goods.


SCHEDULE I
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT

CONSIDERATION
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified in section
25, when made in the course or furtherance of business:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both.
3. Supply of goods—
a. by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
b. by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
4. Import of services by a taxable person from a related person or from any of his other establishments outside
India, in the course or furtherance of business.


Schedule II
ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES
1. Transfer
a. any transfer of the title in goods is a supply of goods;
b. any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a
supply of services;
c. any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a
future date upon payment of full consideration as agreed, is a supply of goods.
2. Land and Building
a. any lease, tenancy, easement, licence to occupy land is a supply of services;
b. any lease or letting out of the building including a commercial, industrial or residential complex for
business or commerce, either wholly or partly, is a supply of services.
3. Treatment or process
a. Any treatment or process which is applied to another person's goods is a supply of services.
4. Transfer of business assets
a. where goods forming part of the assets of a business are transferred or disposed of by or under the
directions of the person carrying on the business so as no longer to form part of those assets, whether or
not for a consideration, such transfer or disposal is a supply of goods by the person;
b. where, by or under the direction of a person carrying on a business, goods held or used for the purposes
of the business are put to any private use or are used, or made available to any person for use, for any
purpose other than a purpose of the business, whether or not for a consideration, the usage or making
available of such goods is a supply of services;
c. where any person ceases to be a taxable person, any goods forming part of the assets of any business
carried on by him shall be deemed to be supplied by him in the course or furtherance of his business
immediately before he ceases to be a taxable person, unless—
i. the business is transferred as a going concern to another person; or
ii. the business is carried on by a personal representative who is deemed to be a taxable person.
5. Supply of services - The following shall be treated as supply of services, namely:—
a. renting of immovable property;
b. construction of a complex, building, civil structure or a part thereof, including a complex or building
intended for sale to a buyer, wholly or partly, except where the entire consideration has been received
after issuance of completion certificate, where required, by the competent authority or after its first
occupation, whichever is earlier.
c. temporary transfer or permitting the use or enjoyment of any intellectual property right;
d. development, design, programming, customisation, adaptation, upgradation, enhancement,
implementation of information technology software;
e. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and
f. transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash,
deferred payment or other valuable consideration.
6. Composite supply - The following composite supplies shall be treated as a supply of services, namely:—
a. works contract as defined in clause (119) of section 2; and


b. supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or
any other article for human consumption or any drink (other than alcoholic liquor for human
consumption), where such supply or service is for cash, deferred payment or other valuable
consideration
Meaning of Works Contract

"Works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out,
improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property
wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such
contract;
2(30) - Meaning of Composite Supply (Detailed Study in Section 8)

● "Composite supply" means a supply
○ made by a taxable person to a recipient
○ consisting of two or more taxable supplies of goods or services or both,
○ or any combination thereof,
○ which are naturally bundled
○ and supplied in conjunction with each other in the ordinary course of business,
○ one of which is a principal supply.
Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport
and insurance is a composite supply and supply of goods is a principal supply;
7. Supply of Goods - The following shall be treated as supply of goods, namely: —
Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred
payment or other valuable consideration.
Explanation for Schedule II Para 5(b)

Explanation.—For the purposes of this clause—
● the expression "competent authority" means the Government or any authority authorised to issue completion
certificate under any law for the time being in force and in case of non-requirement of such certificate from such
authority, from any of the following, namely:—
● an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20
of 1972) ; or
● a chartered engineer registered with the Institution of Engineers (India); or
● a licensed surveyor of the respective local body of the city or town or village or development or
planning authority;
● the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil
structure;


SCHEDULE III
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A
SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services by any court or Tribunal established under any law for the time being in force.
3. Mentioned Below
a. The functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities;
b. The duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
c. The duties performed by any person as a Chairperson or a Member or a Director in a body established
by the Central Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b)of paragraph 5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling.
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without
such goods entering into India.
8. Following
a. Supply of warehoused goods to any person before clearance for home consumption
b. Supply of goods by the consignee to any other person, by endorsement of documents of title to the
goods, after the goods have been dispatched from the port of origin located outside India but before
clearance for home consumption
Explanation.––For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as
assigned to it in the Customs Act, 1962.
Definition of Goods - 2(52)

"goods" means every kind of movable property other than money and securities but includes actionable claim, growing
crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a
contract of supply;
Definition of Service - 2(102)

"services" means anything other than goods, money and securities but includes activities relating to the use of money or
its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged.
Definition of term service amended [Section 2(102) of the CGST Act]
An Explanation has been inserted to the definition of ‘service’ under section 2(102) of the CGST Act to clarify that the
expression “services” includes facilitating or arranging transactions in securities.


Since securities are excluded from the definition of both ‘goods’ and ‘services’ in the CGST Act, they are neither goods
nor services. However, facilitating or arranging transactions in securities is liable to GST. In order to clarify the same,
this explanation has been inserted.
Example: If some service charges or service fees or documentation fees or broking charges or such like fees or charges
are charged in relation to transactions in securities, the same would be a consideration for provision of service and
chargeable to GST.
Actionable Claim
2(1) "actionable claim" shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882
Actionable claim; as defined in Section 3 of the Transfer of Property Act, 1882 comprises two types of claims: (a) a claim
to unsecured debts and (b) a claim to beneficial interest in movable property not in the possession of claimant which
the civil courts recognise as affording grounds of relief whether such debt or beneficial interest be existent, accruing or
conditional or contingent.
Definition of Person
Includes -
a. An individual;
b. A Hindu undivided family;
c. A company;
d. A firm;
e. A Limited Liability Partnership;
f. An association of persons or a body of individuals, whether incorporated or not, in India or outside India;
g. Any corporation established by or under any Central, State or Provincial Act or a Government company as
defined in Section 2(45) of the Companies Act, 2013.
h. Any body corporate incorporated by or under the laws of a country outside India;
i. A local authority;
j. Central or State Government
k. A co-operative society registered under any law relating to cooperative societies;
l. Society as defined under the societies Registration Act, 1860;
m. Trust; and
n. Every artificial juridical person, not falling within any of the above.(Section 2(84))




Article 269A
Levy and collection of goods and services tax in course of inter-
State trade or commerce.—
(1) Goods and services tax on supplies
● in the course of inter-State trade or commerce
● shall be levied and collected by the Government of India
● and such tax shall be apportioned between the Union and the States (DBT Principle) in the manner as may be
○ provided by Parliament
○ by law on
○ the recommendations of the Goods and Services Tax Council.
Explanation.—For the purposes of this clause,

● supply of goods, or of services, or both
● in the course of import into the territory of India
● shall be deemed to be supply of goods, or of services, or both
● in the course of inter-State trade or commerce.
(2 ) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India. (Later on
if required)
(3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State
under article 246A, such amount shall not form part of the Consolidated Fund of India. (Later on if required)
(4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied
under clause (1), such amount shall not form part of the Consolidated Fund of the State. (Later on if required)
(5) Parliament may, by law, formulate the principles for determining the
● place of supply, and
● when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.”.
An individual buys a car for personal use and after 2 years sales to a car dealers will the transaction be a supply in terms of
CGST/SGST act? give reasons for your answers.

No, because supply is not made by the individual in the course or furtherance of business. Further, no input tax credit was
admissible on such car at the time of its acquisition as it was meant for non-business use.


Discussion on Import of Service In India

● Reverse Charge
● 7(1)(b)
● 7(1)(c) - Schedule 1
● Related Person
Section 5(3) of IGST ACT, 2017

The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or
services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or
both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in
relation to the supply of such goods or services or both.
Notification For Reverse Charge - Entry 1
Service
Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable
online recipient.
Supplier
Any person located in a non-taxable territory
Recipient
Any person located in the taxable territory other than non-taxable online recipient.







Question from ICAI Study Material Source (www.icai.org)
Example on Import
Raman is an Electronic Commerce Operator in Chennai. His brother who is settled in London is a well-known lawyer. Raman
has taken legal advice from him free of cost with regard to his family dispute.
Would your answer be different if in the above case, Raman has taken advice in respect of his business unit in Chennai?

ABC Associates received legal consultancy services from its head office located in Malaysia. The head office has rendered such
services free of cost to its branch office. Since ABC Associates and the branch office are related persons, services received by
ABC Associates will qualify as supply even though the head office has not charged anything from it.
Sumendu, a proprietor registered in Delhi, has sought architect services from his son located in US, with respect to his newly
constructed house in Delhi. Although services have been received by Sumendu without consideration from a related person,
yet it will not qualify as supply since the same has not been received in course or furtherance of business.

Definition of Related Person - Section 15 (Explanation)

Explanation.—For the purposes of this Act,—
(a) persons shall be deemed to be "related persons" if such
i. persons are officers or directors of one another's businesses;

ii. such persons are legally recognised partners in business;
iii. such persons are employer and employee;
iv. any person directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding
voting stock or shares of both of them;
v. one of them directly or indirectly controls the other;
vi. both of them are directly or indirectly controlled by a third person;
vii. together they directly or indirectly control a third person; or
viii. they are members of the same family;
(b) the term "person" also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole
concessionaire, howsoever described, of the other, shall be deemed to be related.
Meaning of Family
"family" means,—
● the spouse and children of the person
● the parents, grandparents, brothers and sisters of the person if they are wholly or mainly dependent on the said
person;


ICAI Study Material Example - (www.icai.org)
Example on Related Person
Ms. Priya holds 30% shares of ABC Ltd. and 35% shares of XYZ Ltd. ABC Ltd. and XYZ Ltd. are related.

Q Ltd. has a deciding role in corporate policy, operations management and quality control of R Ltd. It can be said that Q Ltd.
controls R Ltd. Thus, Q Ltd. and R Ltd. are related.

Example on Distinct Person
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. Supply between Delhi office and West Bengal office, in course or furtherance of business even without
consideration will qualify as supply.

Raghubir Fabrics transfers 1000 shirts from his factory located in Lucknow to his retail showroom in Delhi so that the same
can be sold from there. The factory and retail showroom of Raghubir Fabrics are registered in the States where they are
located. Although no consideration is charged, supply of goods from factory to retail showroom constitutes supply.
Example on Disposal and Transfer

XYZ & Co. donates old laptops to Charitable Schools when new laptops are purchased by business will qualify as supply
provided input tax credit has been availed by XYZ & Co. on such laptops.

A cloth retailer gives clothes from his business stock to his friend free of cost. In this case, transfer of business stock would
amount to ‘supply’ if he had claimed input tax credit on his purchase of the business asset.
A dealer of air-conditioners permanently transfers an air conditioner from his stock in trade, for personal use at his residence.
The transaction will constitute a supply as it is a permanent transfer/ disposal of business assets. The only condition is that
input tax credit should have been availed on such assets.
Damodar Charitable Trust, a trust who gets the eye treatment of needy people done free of cost, donates clothes and toys to
children living in slum area.


Section 8
Tax liability on composite and mixed supplies.

The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a
supply of such principal supply; and
(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which
attracts the highest rate of tax.


In order to determine whether the supplies are ‘composite supplies’ or ‘mixed supplies’, one needs to determine
whether the supplies are naturally bundled or not naturally bundled in ordinary course of business.
Composite Supply 2(30)

"Composite supply" means a supply
● made by a taxable person
● to a recipient consisting
● of two or more taxable supplies of goods or services or both, or any combination thereof,
● which are naturally bundled
● and supplied in conjunction with each other in the ordinary course of business,
● one of which is a principal supply.
Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport
and insurance is a composite supply and supply of goods is a principal supply;
Mixed Supply 2(74)

"Mixed supply" means
● two or more individual supplies of goods or services, or any combination thereof,
● made in conjunction with each other
● by a taxable person
● for a single price
● where such supply does not constitute a composite supply:
Illustration : A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and
fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not
dependent on any other. It shall not be a mixed supply if these items are supplied separately;
Principal Supply - 2(90)

"Principal supply" means
● the supply of goods or services
● which constitutes the predominant element of a composite supply
● and to which any other supply forming part of that composite supply is ancillary;
NJA supplied a packet consisting 3 different products

● Hair oil - GST Rate 20%
● Shampoo - GST Rate 18%
● Conditioner - GST Rate 28%
The price of packet is Rs. 1,000 and total 500 Packet were sold
Calculate the GST Payable
Solution Total GST Payable = 1000 x 500 x ____________


Question
Suvarna Manufacturers entered into a contract with XYZ Ltd. for supply of readymade shirts packed in
designer boxes at XYZ Ltd.’s outlet. Further, Suvarna Manufacturers would also get them insured during transit.
In this case, supply of goods, packing materials, transport & insurance is a composite supply wherein supply of
goods is principal supply.
Question
When a consumer buys a television set and he also gets warranty and a maintenance contract with the TV, this
supply is a composite supply. In this example, supply of TV is the principal supply, warranty and maintenance
services are ancillary.
Question
A travel ticket from Mumbai to Delhi may include service of food being served on board, free insurance, and the
use of airport lounge. In this case, the transport of passenger, constitutes the predominant element of the
composite supply, and is treated as the principal supply and all other supplies are ancillary.
Question
A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit
juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is
not dependent on any other. It shall not be a mixed supply if these items are supplied separately.
Question
XYZ Ltd. a manufacturer of cosmetic products supplied a package consisting of hair oil (GST Rate-18%) , sun
screen cream (GST Rate -28%) , shampoo (GST Rate-28%) and hair comb (GST Rate - 12%) . The price per package
is Rs 500 (exclusive of taxes). 10,000 packages were supplied by the company to its dealers. Determine the nature
of supply and its tax liability.
Solution : This supply would be regarded as mixed supply, since in this case each of the goods in the Package
have individual identify and can be supplied separately, but are deliberately supplied conjointly for a single
consolidated price. The tax rates applicable in case of mixed supply would be the rate of tax attributable to that
one supply (goods, or services) which suffers the highest rate of tax from amongst the supplies forming part of
the mixed supply. Therefore, the package will be chargeable to 28% of GST.
The tax liability will be arrived as under :

Value of taxable supply per package Rs 500
No. of packages 10,000
Total Taxable value of supply Rs 50,00,000
Applicable GST Rate 28%
Total tax liability Rs 14,00,000


Question
Examine whether the following activities would amount to supply under section 7 of the CGST Act

1. SAI Charitable Trust, a trust engaged in providing medical relief free of cost, donates books and
stationery to children living in slum area.
2. Raveena manufacturers have a factory in Jaipur and a depot in Delhi. Both these establishments are
registered in respective States. Finished goods are sent from the factory to the depot without
consideration so that the same can be sold.
3. Vicky is an Electronic Commerce Operator In Delhi. His father who is settled in London is a well-known
lawyer. Vicky has taken legal consultancy from him free of cost with regard to his family dispute. Would
your answer be different if in the above case, Vicky has taken advice in respect of his business unit in
Delhi?

Answer
1. Section 7 of the CGST Act provides that supply must be made for a consideration except the activities
specified in Schedule I and in course or furtherance of business. Since, both these elements are missing,
donations of books and stationery to children living in slum area would not amount to supply under
section 7 of the CGST Act.
2. Schedule I of CGST Act provides that supply of goods of services or both between related persons or
between distinct persons as specified in section 25, is supply even without consideration provided it is
made in the course or furtherance of business.

According to section 25(5) of the CGST Act, 2017, where a person who has obtained or is required to obtain
registration in a state in respect of an establishment, has an establishment in another State, then such
establishments shall be treated as establishments of distinct persons for the purposes of this Act. In view
of the same, factory and depot of Raveena Manufacturers are establishment of two distinct person.
Therefore, supply of goods from factory to depot without consideration, but in course of or in
furtherance of business, is supply under section 7 of the CGST Act.
3. Answer to be discussed in class.
Question
XYZ Ltd. Having head office in Mumbai (Maharashtra) supplied goods worth Rs 10,00,000 to its branch office in
Jaipur (Rajasthan). Does it qualify as supply.

Ans : As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, supply of goods or services or both between
distinct persons as specified in section 25, when made in the course or furtherance of business will be treated as
supply even if made without consideration.

As per section 25(5) of CGST Act, 2017, where a person who has obtained or is required to obtain registration in a
State or Union territory in respect of an establishment, has an establishment in another State or Union
territory, then such establishments shall be treated as establishments of distinct persons for the purposes of
this Act.
Hence, branch transfer of goods worth Rs 10,00,000 from Maharashtra to Rajasthan will qualify as supply.


Question
XYZ Ltd. was amalgamated with ABC Ltd. on account of amalgamation Mr. X a shareholder received 10,000
shares of ABC Ltd.e exchange of 5000 shares of XYZ Ltd. Does it qualify as supply.

Ans : Transactions in securities is neither supply of goods nor services. Securities are excluded from the
definition of both goods as well as services. Hence, such transaction will not qualify as supply.
Question
Archean Construction Ltd. (a registered taxable person) receives architectural design supplied by a foreign
architect to design a residential house to be built in Hyderabad for a consideration of Rs 50,00,000. Does it
qualify as supply.

Ans : As per section 7(1)(b) of CGST Act, 2017, Importation of services for a consideration whether or in the course
or furtherance of business is covered under supply. In the above case it will be treated as supply and will be
liable to GST.
Question
ABC Associates received management consultancy services from its head office located in Malaysia. The head
office has rendered such services free of cost to its branch office. Does it qualify as supply.

Ans : As per section 7(1)(c) read with Schedule I of CGST Act, 2017, import of services by a taxable person from a
related person or from any of his other establishments outside India, in the course or furtherance of business
will be treated as supply even is made without consideration. Thus, management consultancy services received
by ABC Associates will qualify as supply even though the head office has not charged anything from it and will
be liable to GST.
Question
ABC motors Ltd. engages Sunshine Cars Ltd. as an agent to sell cars on its behalf. For the purpose, ABC motors
Ltd. has supplied 200 cars to the showroom of Sunshine Cars Ltd. located in Rajasthan. Does it qualify as supply
?

Ans : As per Section 7(1)(c) read with Schedule I of CGST Act, 2017, supply of goods by a principal of his agent
where the agent undertakes to supply such goods on behalf of the principal shall be treated as supply even if
made without consideration. In view of the same supply of cars by ABC Motors Ltd. to Sunshine Cars Ltd. will
qualify as supply.
Question
XYZ Ltd. gives gift worth Rs 5,00,000 to an employee.Does it qualify as a supply? Would your answer be different
if gifts of Rs 45,000 has been given to the employee.

Ans : As per Section 7(1)(c) read with Schedule I of CGST Act, 2017 , supply of goods or services between related
persons is treated as supply even if it is without consideration when made in course or furtherance of business.
As per Explanation to Section 15 of CGST Act, 2017, persons shall be deemed to be , “related persons” if such
persons are employer and employee. Thus, gift to an employee worth Rs 5,00,000 will qualify as supply and such
supply would be leviable to GST.

If gift of Rs 45,000 is given instead of Rs 5,00,000, the same will not qualify as supply it has been specifically
provided that gifts not exceeding Rs 50,000 in value in a financial year by an employer to an employee shall not
be treated as supply of goods or services or both.


Question
Happy Ltd. provides management consultancy services without change to Joy Ltd. in which Happy Ltd. has
controlling rights. The said consultancy has been provided for benefit of entire group. Does it qualify as a
supply?

Ans : Yes, as per section 7(1)(c) read with Schedule I of CGST Act, 2017, supply of goods or services between
related persons is treated as supply even if it is without consideration. As per Explanation to Section 15 of CGST
Act, 2017, persons shall be deemed to be “related persons” if “one of them directly or indirectly controls the
other”. Since Happy Ltd. has controlling rights of Joy Ltd. they will be treated as related person and the said
transaction will qualify as supply.
Question
An electronics dealer sells a laptop for Rs 50,000 to earn a profit, Does it qualify as a supply.

Answer : Yes, As per Section 7(1)(a) of CGST, Act, 2017, Supply includes all forms of supply of goods or services or
both such as sale, transfer, barter, exchange, license, rental , lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business. Hence, in the above case it will be treated as
supply and liable to GST.

Registration

Registration

To get the best out of these notes visit www.neerajaroraclasses.com Registration 1







Aggregate Turnover – 2(6)

“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, exports of goods or services or both and
inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but
excludes Central tax, State tax, Union territory tax, integrated tax and cess;
Aggregate Turnover – Other Points
● Aggregate turnover to include total turnover of all branches with same PAN
● Value of exported goods/services, exempted goods/ services, inter- State supplies between distinct persons
having same PAN to be included in aggregate turnover.
● Aggregate turnover to include all supplies made by the taxable person, whether on his own account or made on
behalf of all his principals.
Section 22 - Persons liable for registration.
22(1)
Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category
States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year
exceeds twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both from any of the special category
States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.
Provided further that the Government may, at the request of a special category State and on the recommendations of
the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not
exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified.
22(2)
Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an
existing law, shall be liable to be registered under this Act with effect from the appointed day.
Section 22(3)
Where a business carried on by a taxable person registered under this Act is transferred, whether on account of
succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be, shall
be liable to be registered with effect from the date of such transfer or succession.
Section 22(4)
Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of a scheme
or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order


of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which
the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal.
Explanation.— For the purposes of this section,—

● the expression "aggregate turnover" shall include all supplies made by the taxable person, whether on his own
account or made on behalf of all his principals;
● 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;
● the expression "special category States" shall mean the States as specified in sub-clause (g) of clause (4) of
article 279A of the Constitution except the State of Jammu and Kashmir and States of Arunachal Pradesh,
Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand
Section 23 - Persons not liable for registration.

23(1)
The following persons shall not be liable to registration, namely:—

(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax
or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
23(2)
The Government may, on the recommendations of the Council, by notification, specify the category of persons who may
be exempted from obtaining registration under this Act.
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 Integrated Goods and Services Tax Act, and includes
nontaxable supply;
NON Taxable Supply

"nontaxable supply" means a supply of goods or services or both which is not leviable to tax under this Act or under the
Integrated Goods and Services Tax Act;
Taxable Supply
"taxable supply" means a supply of goods or services or both which is leviable to tax under this Act
Section 2(7)
"Agriculturist" means an individual or a Hindu Undivided Family 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 personal
supervision of any member of the family;
Compulsory registration in certain cases - Section 24.

Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be
required to be registered under this Act,—
(i) persons making any inter-State taxable supply;

(ii) casual taxable persons making taxable supply; (CTP)
(iii) persons who are required to pay tax under reverse charge;
(iv) persons who are required to pay tax under sub-section (5) of section 9; (ECO)
(v) non-resident taxable persons making taxable supply; (NRTP)
(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;
(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an
agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5)of section 9,
through such electronic commerce operator who is required to collect tax at source under section 52;
(x) every electronic commerce operator [who is required to collect tax at source under section 52];
(xi) every person supplying online information and database access or retrieval services from a place outside India
to a person in India, other than a registered person; and
(xii) such other person or class of persons as may be notified by the Government on the recommendations of the
Council.
NOTIFICATION NO.10/2017-INTEGRATED TAX - Inter-state supplies of

taxable services
In exercise of the powers conferred by section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) read
with sub-section (2) of section 23 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this
notification referred to as the said Act),
● the Central Government,
● on the recommendations of the Council,
● hereby specifies the persons making inter-State supplies of taxable services and
● having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees
in a financial year
○ as the category of persons exempted from obtaining registration under the said Act:
Provided that the aggregate value of such supplies, to be computed on all India basis, should not exceed an amount of
ten lakh rupees in case of "special category States" as specified in the first proviso to sub-section (1) of section 22 of the
said Act, read with clause (iii) of the Explanation to the said section.


In simple words ATO < 10, 20, 40 lakh. = No Registration required even if a person is doing inter state supply of taxable
supplies.
NOTIFICATION NO. 32/2017-CENTRAL TAX - Casual taxable persons making

taxable supplies of handicraft goods
of 2017), the Central Government, on the recommendations of the Council, hereby specifies
● the casual taxable persons
● making taxable supplies of handicraft goods
● as the category of persons exempted from obtaining registration under the aforesaid Act:
Provided that the aggregate value of such supplies, to be computed on all India basis, does not exceed an amount of
twenty lakh rupees in a financial year:
Provided further that the aggregate value of such supplies, to be computed on all India basis, does not exceed an amount
of ten lakh rupees in case of Special Category States, other than the State of Jammu and Kashmir.
Casual taxable person

"Casual taxable person" means a person who occasionally undertakes transactions involving supply of goods or services
or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a
Union territory where he has no fixed place of business
Non-Resident Taxable Person

"Non-resident taxable person" means any person who occasionally undertakes transactions involving supply of goods
or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or
residence in India;
NOTIFICATION NO. 5/2017-CENTRAL TAX - Reverse Charge

of 2017), the Central Government hereby specifies
● the persons who are only engaged in making supplies of taxable goods or services or both,
○ the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or
services or both under sub-section (3) of section 9 of the said Act
● as the category of persons exempted from obtaining registration under the aforesaid Act.
NOTIFICATION NO. 8/2017-INTEGRATED TAX - Interstate taxable supplies of

Handicraft goods by any person.
In exercise of the powers conferred by section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) read
with sub-section (2) of section 23 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this


notification referred to as the "said Act"), the Central Government, on the recommendations of the Council, hereby
specifies
● the persons making inter-State taxable supplies
○ of handicraft goods
○ as the category of persons exempted from obtaining registration under the aforesaid Act:
Provided that the aggregate value of such supplies, to be computed on all India basis, does not exceed an amount of
twenty lakh rupees in a financial year:
Provided further that the aggregate value of such supplies, to be computed on all India basis, does not exceed an amount
of ten lakh rupees in case of Special Category States, other than the State of Jammu and Kashmir.


Procedure for registration. - Section 25

25. (1)
Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every such
State or Union territory in which he is so liable within thirty days from the date on which he becomes liable to
registration, in such manner and subject to such conditions as may be prescribed.
Provided that a casual taxable person or a non-resident taxable person shall apply for registration at least five days
prior to the commencement of business
Explanation.—Every person who makes a supply from the territorial waters of India shall obtain registration in the
coastal State or Union territory where the nearest point of the appropriate base line is located.
Rule 8
Every person, who is liable to be registered under sub-section (1) of section 25 and every person seeking registration
under sub-section (3) of section 25
● shall, before applying for registration,
● declare his
● Permanent Account Number,
● mobile number,


● e-mail address,
● State or Union territory in
● Part A of FORM GST REG-01 on the common portal, either directly or through a Facilitation Centre notified by
the Commissioner:
Provided that a person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer shall
make a separate application for registration as a business vertical distinct from his other units located outside the
Special Economic Zone:
Provided further that every person being an Input Service Distributor shall make a separate application for registration
as such Input Service Distributor.
● The Permanent Account Number shall be validated online by the common portal from the database maintained
by the Central Board of Direct Taxes.
● The mobile number declared under sub-rule (1) shall be verified through a one-time password sent to the said
mobile number; and
● The e-mail address declared under sub-rule (1) shall be verified through a separate one-time password sent to
the said email address.
● On successful verification of the Permanent Account Number, mobile number and e-mail address, a temporary
reference number shall be generated and communicated to the applicant on the said mobile number and e-mail
address.
● Using the reference number the applicant shall electronically submit an application in Part B of FORM GST
REG-01, duly signed or verified through electronic verification code, along with the documents specified in the
said Form at the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
● On receipt of an application , an acknowledgement shall be issued electronically to the applicant in FORM GST
REG-02.
● A person applying for registration as a casual taxable person shall be given a temporary reference number by
the common portal for making advance deposit of tax in accordance with the provisions of section 27 and the
acknowledgement shall be issued electronically only after the said deposit.



Verification of the application and approval – Rule 9
(1) The application shall be forwarded to the proper officer who shall examine the application and the accompanying
documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of
three working days from the date of submission of the application.
(2) Where the application submitted under rule 8 is found to be deficient, either in terms of any information or any
document required to be furnished under the said rule, or where the proper officer requires any clarification with
regard to any information provided in the application or documents furnished therewith, he may issue a notice to the
applicant electronically in FORM GST REG-03 within a period of three working days from the date of submission of the
application and the applicant shall furnish such clarification, information or documents electronically, in FORM GST
REG-04, within a period of seven working days from the date of the receipt of such notice.
Explanation. —For the purposes of this sub-rule, the expression "clarification" includes modification or correction of
particulars declared in the application for registration, other than Permanent Account Number, State, mobile number
and e-mail address declared in Part A of FORM GST REG-01.
(3) Where the proper officer is satisfied with the clarification, information or documents furnished by the applicant, he
may approve the grant of registration to the applicant within a period of seven working days from the date of the
receipt of such clarification or information or documents.
(4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule (2) or where the
proper officer is not satisfied with the clarification, information or documents furnished, he shall, for reasons to be
recorded in writing, reject such application and inform the applicant electronically in FORM GST REG-05.
(5) If the proper officer fails to take any action,

● within a period of three working days from the date of submission of the application; or
● within a period of seven working days from the date of the receipt of the clarification, information or documents
furnished by the applicant under sub-rule (2), the application for grant of registration shall be deemed to have
been approved.




Issue of registration certificate – Rule 10
10. (1) Subject to the provisions of sub-section (12) of section 25, where the application for grant of registration has
been approved under rule 9, a certificate of registration in FORM GST REG-06 showing the principal place of business
and additional place or places of business shall be made available to the applicant on the common portal and a Goods
and Services Tax Identification Number shall be assigned subject to the following characters, namely:-
(a) two characters for the State code;

(b) ten characters for the Permanent Account Number or the Tax Deduction and Collection Account Number;
(c) two characters for the entity code; and
(d) one checksum character.
(2) The registration shall be effective from the date on which the person becomes liable to registration where the
application for registration has been submitted within a period of thirty days from such date
(3) Where an application for registration has been submitted by the applicant after the expiry of thirty days from the
date of his becoming liable to registration, the effective date of registration shall be the date of the grant of registration
under sub-rule (1) or sub-rule (3) or sub-rule (5) of rule 9.
(4) Every certificate of registration shall be duly signed or verified through electronic verification code by the proper
officer under the Act.
(5) Where the registration has been granted under sub-rule (5) of rule 9, the applicant shall be communicated the
registration number, and the certificate of registration under sub-rule (1), duly signed or verified through electronic
verification code, shall be made available to him on the common portal, within a period of three days after the expiry
of the period specified in sub-rule (5) of rule 9.



13th Digit-It indicates the number of registrations as a business entity has within a state for the same PAN. It will be an
alpha-numeric number (first 1-9 and then A-Z) and will be assigned on the basis of the number of registrations a legal
entity (having the same PAN) has within one state.


Let say the company ABC registered in the same state for 5 times for different businesses. In such case, this digit will be
printed as 5. Let us assume, the same company registered for around 15 times, then it should be represented as F (1- 9
numeric and later on 10th registration be named as A and 11th as B and so on up to Z).
Hence, a business entity can register the GSTIN within a single state for the maximum of 35 times (1-9 and later on A-
Z).
14th Digit – By Default it is Z.


Section 25(2) – Multiple Business Vertical
A person seeking registration under this Act shall be granted a single registration in a State or Union territory:
Provided that a person having multiple places of business in a State or Union territory may be granted a separate
registration for each such place of business, subject to such conditions as may be prescribed.
Separate registration for multiple places of business within a State or a Union territory - RULE 11
11. (1) Any person having multiple places of business within a State or a Union territory, requiring a separate
registration for any such place of business under sub-section (2) of section 25 shall be granted separate
registration in respect of each such place of business subject to the following conditions, namely:-
(a) such person has more than one place of business as defined in clause (85) of
section 2;
(b) such person shall not pay tax under section 10 for any of his places of business if
he is paying tax under section 9 for any other place of business;
(c) all separately registered places of business of such person shall pay tax under the
Act on supply of goods or services or both made to another registered place of
business of such person and issue a tax invoice or a bill of supply, as the case may
be, for such supply.
Explanation. - For the purposes of clause (b), it is hereby clarified that where any place of business of a registered
person that has been granted a separate registration becomes ineligible to pay tax under section 10, all other
registered places of business of the said person shall become ineligible to pay tax under the said section.
(2) A registered person opting to obtain separate registration for a place of business shall submit a separate
application in FORM GST REG-01 in respect of such place of business.
(3) The provisions of rule 9 and rule 10 relating to the verification and the grant of registration shall, mutatis
mutandis, apply to an application submitted under this rule.
Place of Business 2 (85)

"place of business" includes—
a. a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any
other place where a taxable person stores his goods, supplies or receives goods or services or both; or
b. a place where a taxable person maintains his books of account; or


c. a place where a taxable person is engaged in business through an agent, by whatever name called;
One more point to be kept in mind

Person having a unit in SEZ or being a SEZ developer shall have to apply for a separate registration, as distinct from his
place of business located outside the SEZ in the same State or Union territory.




Voluntary Registration – Section 25(3)

(3) A person, though not liable to be registered under section 22 or section 24 may get himself registered voluntarily,
and all provisions of this Act, as are applicable to a registered person, shall apply to such person.
NOTES
● Voluntary registration is advantageous for the persons which supply of goods or services or both to registered
persons.
● Thus, voluntary registration enables a supplier of goods or services or both to enhance its B2B [Business to
Business] transactions.
● once a person obtains voluntary registration, he has to pay tax even though his aggregate turnover does not
exceed ₹20 lakh/ ₹10 lakh.
25(4) & 25(5)

A person who
● has obtained or
● is required to obtain
● more than one registration,
● whether in one State or Union territory
● or more than one State or Union territory
● shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.
Where a person who

● has obtained or is required to obtain registration in a State or Union territory in respect of an establishment,
● has an establishment in another State or Union territory,
● then such establishments shall be treated as establishments of distinct persons for the purposes of this Act.
For example - Mr A Selling Shoes in Delhi and Alcohol in Haryana. No registration is required in Haryana but Haryana
shop shall be treated as the establishment of distinct person.
25(6) – PAN Is Must & 25(7)

(6) Every person shall have a Permanent Account Number issued under the Income- tax Act, 1961 (43 of 1961) in
order to be eligible for grant of registration
Provided that a person required to deduct tax under section 51 may have, in lieu of a Permanent Account Number, a
Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for grant of registration.
(7) Notwithstanding anything contained in sub-section (6), a non-resident taxable person may be granted registration
under sub-section (1) on the basis of such other documents as may be prescribed.


25(8)
(8) Where a person who is liable to be registered under this Act fails to obtain registration, the proper officer may,
without prejudice to any action which may be taken under this Act or under any other law for the time being in force,
proceed to register such person in such manner as may be prescribed.
25(9) & Others

(9) Notwithstanding anything contained in sub-section (1),
a. any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or
Embassy of foreign countries; and
b. any other person or class of persons, as may be notified by the Commissioner, shall be granted a Unique Identity
Number in such manner and for such purposes, including refund of taxes on the notified supplies of goods or
services or both received by them, as may be prescribed.
(10) The registration or the Unique Identity Number shall be granted or rejected after due verification in such manner
and within such period as may be prescribed. (Already Covered in Rule 8, 9, 10)
(11) A certificate of registration shall be issued in such form and with effect from such date as may be prescribed.
(Already Covered in Rule 10)
(12) A registration or a Unique Identity Number shall be deemed to have been granted after the expiry of the period
prescribed under sub-section (10), if no deficiency has been communicated to the applicant within that period. (Already
Covered In Rule 9)


Deemed registration – Section 26

26. (1) The grant of registration or the Unique Identity Number under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act shall be deemed to be a grant of registration or the Unique Identity Number
under this Act subject to the condition that the application for registration or the Unique Identity Number has not been
rejected under this Act within the time specified in sub-section (10)of section 25.
(2) Notwithstanding anything contained in sub-section (10)of section 25, any rejection of application for registration or
the Unique Identity Number under the State Goods and Services Tax Act or the Union Territory Goods and Services
Tax Act shall be deemed to be a rejection of application for registration under this Act.


Special provisions relating to casual taxable person and non-

resident taxable person – Section 27
(1) The certificate of registration issued
○ to a casual taxable person
○ or a non- resident taxable person
○ shall be valid for the period specified in the application for registration or ninety days from the effective
date of registration, whichever is earlier
○ and such person shall make taxable supplies only after the issuance of the certificate of registration.
Provided that the

● proper officer may,
● on sufficient cause being shown by the said taxable person,
● extend the said period of ninety days by a further period not exceeding ninety days.
(2) A casual taxable person or a non-resident taxable person shall,

○ at the time of submission of application for registration under sub-section (1) of section 25,
○ make an advance deposit of tax
○ of an amount equivalent to the estimated tax liability of
○ such person for the period for which the registration is sought:
Provided that where any extension of time is sought under sub-section (1), such taxable person shall deposit an
additional amount of tax equivalent to the estimated tax liability of such person for the period for which the extension is
sought.
(3) The amount deposited under sub-section (2) shall be credited to the electronic cash ledger of such person and
shall be utilised in the manner provided under section 49.




Grant of registration to non-resident taxable person – Rule 13

13. (1) A non-resident taxable person shall electronically submit an application, along with a self-attested copy of his
valid passport, for registration, duly signed or verified through electronic verification code, in FORM GST REG-09,
at least five days prior to the commencement of business at the common portal either directly or through a Facilitation
Centre notified by the Commissioner:
Provided that in the case of a business entity incorporated or established outside India, the application for registration
shall be submitted along with its tax identification number or unique number on the basis of which the entity is
identified by the Government of that country or its Permanent Account Number, if available.
(2) A person applying for registration as a non-resident taxable person shall be given a temporary reference number by
the common portal for making an advance deposit of tax in accordance with the provisions of section 27 and the
acknowledgement under sub-rule (5) of rule 8 shall be issued electronically only after the said deposit in his electronic
cash ledger.
(3) The provisions of rule 9 and rule 10 relating to the verification and the grant of registration shall, mutatis mutandis,
apply to an application submitted under this rule.
(4) The application for registration made by a non-resident taxable person shall be duly signed or verified through
electronic verification code by his authorised signatory who shall be a person resident in India having a valid
Permanent Account Number.


Extension in period of operation by casual taxable person and
non-resident taxable person – Rule 15 GST REG 11
15. (1) Where a registered casual taxable person or a non-resident taxable person intends to extend the period of
registration indicated in his application of registration, an application in FORM GST REG-11 shall be submitted
electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner,
by such person before the end of the validity of registration granted to him.


(2) The application under sub-rule (1) shall be acknowledged only on payment of the amount specified in sub-section
(2) of section 27.
Amendment of registration Section 28

28. (1) Every registered person and a person to whom a Unique Identity Number has been assigned shall inform the
proper officer of any changes in the information furnished at the time of registration or subsequent thereto, in such
form and manner and within such period as may be prescribed.
(2) The proper officer may, on the basis of information furnished under sub-section (1) or as ascertained by him,
approve or reject amendments in the registration particulars in such manner and within such period as may be
prescribed:
Provided that approval of the proper officer shall not be required in respect of amendment of such particulars as may
be prescribed
Provided further that the proper officer shall not reject the application for amendment in the registration particulars
without giving the person an opportunity of being heard.
(3) Any rejection or approval of amendments under the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act, as the case may be, shall be deemed to be a rejection or approval under this Act.
Amendment of registration – Rule 19

19. (1) Where there is any change in any of the particulars furnished in the application for registration the registered
person shall, within a period of fifteen days of such change,
➔ submit an application,
➔ duly signed or verified through electronic verification code,
➔ electronically in FORM GST REG-14,
➔ along with the documents relating to such change at the common portal,
➔ either directly or
➔ through a Facilitation Centre notified by the Commissioner:
Provided that—where the change relates to,

● legal name of business;
● address of the principal place of business or any additional place(s) of business; or
● addition, deletion or retirement of partners or directors, Karta, Managing Committee, Board of Trustees, Chief
Executive Officer or equivalent, responsible for the day to day affairs of the business,
which does not warrant cancellation of registration under section 29, the proper officer shall, after due verification,
approve the amendment within a period of fifteen working days from the date of the receipt of the application in FORM
GST REG-14 and issue an order in FORM GST REG-15 electronically and such amendment shall take effect from the
date of the occurrence of the event warranting such amendment;


● where the change relates to any particulars other than those specified in clause (a) (LB/Address/Addition,
Deletion etc), the certificate of registration shall stand amended upon submission of the application in FORM
GST REG-14 on the common portal;
● where a change in the constitution of any business results in the change of the Permanent Account Number of a
registered person, the said person shall apply for fresh registration in FORM GST REG-01:
Provided further that any change in the mobile number or e-mail address of the authorised signatory submitted under
this rule, as amended from time to time, shall be carried out only after online verification through the common portal in
the manner provided under sub-rule (2) of rule 8
(1A). Notwithstanding anything contained in sub-rule (1), any particular of the application for
registration shall not stand amended with effect from a date earlier than the date of submission
of the application in FORM GST REG-14 on the common portal except with the order of the
Commissioner for reasons to be recorded in writing and subject to such conditions as the
Commissioner may, in the said order, specify.
(2) Where the proper officer is of the opinion that the amendment sought under sub-rule (1) is either not warranted or
the documents furnished therewith are incomplete or incorrect, he may, within a period of fifteen working days from
the date of the receipt of the application in FORM GST REG-14, serve a notice in FORM GST REG-03, requiring the
registered person to show cause, within a period of seven working days of the service of the said notice, as to why the
application submitted under sub-rule (1) shall not be rejected.
(3) The registered person shall furnish a reply to the notice to show cause, issued under sub-rule (2), in FORM GST
REG-04, within a period of seven working days from the date of the service of the said notice.
(4) Where the reply furnished under sub-rule (3) is found to be not satisfactory or where no reply is furnished in
response to the notice issued under sub-rule (2) within the period prescribed in sub-rule (3), the proper officer shall
reject the application submitted under sub-rule (1) and pass an order in FORM GST REG-05.
(5) If the proper officer fails to take any action,—

a. within a period of fifteen working days from the date of submission of the application, or
b. within a period of seven working days from the date of the receipt of the reply to the notice to show cause under
sub-rule (3),
the certificate of registration shall stand amended to the extent applied for and the amended certificate shall be
made available to the registered person on the common portal.





Cancellation or Suspension of Registration – Section 29

29(1)
The proper officer may, either on his own motion or on an application filed by the registered person or by his legal
heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be
prescribed having regard to the circumstances where,—
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 sub-section (3)of section 25, is no longer liable to be
registered under section 22 or section 24:
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered
person, the registration may be suspended for such period and in such manner as may be prescribed.
29(2)
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 as may be
prescribed; or
b. a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or
c. any registered person, other than a person specified in clause (b), has not furnished returns for a continuous
period of six months; or
d. any person who has taken voluntary registration under sub-section (3)of section 25 has not commenced
business within six months from the date of registration; or
e. registration has been obtained by means of fraud, wilful misstatement or suppression of facts:
Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being
heard:
Provided further that during pendency of the proceedings relating to cancellation of registration, the proper
officer may suspend the registration for such period and in such manner as may be prescribed.
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax and other dues
under this Act or to discharge any obligation under this Act or the rules made thereunder 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.
(4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and
Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration under this Act.


29(5) & 29(6) will be auto covered after ITC Chapter
(5) Every registered person whose registration is cancelled 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 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,
calculated in such manner as may be prescribed.
Provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input
tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be
prescribed or the tax on the transaction value of such capital goods or plant and machinery under section , whichever is
higher. (Only after ITC chapter)
(6)The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed.
Application for cancellation of registration – Rule 20

20. A registered person, other than a person to whom a registration has been granted under rule 12 or a person to
whom a Unique Identity Number has been granted under rule 17, seeking cancellation of his registration under
sub-section (1) of section 29 shall electronically submit an application in FORM GST REG-16, including therein the
details of inputs held in stock or inputs contained in semi-finished or finished goods held in stock and of capital goods
held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of the
payment, if any, made against such liability and may furnish, along with the application, relevant documents in support
thereof, at the common portal within a period of thirty days of the occurrence of the event warranting the cancellation,
either directly or through a Facilitation Centre notified by the Commissioner:
Provided that no application for the cancellation of registration shall be considered in case of a taxable person, who has
registered voluntarily, before the expiry of a period of one year from the effective date of registration
Registration to be cancelled in certain cases

21. The registration granted to a person is liable to be cancelled, if the said person,—
a. does not conduct any business from the declared place of business; or
b. issues invoice or bill without supply of goods or services in violation of the provisions of the Act, or the rules
made thereunder; or
c. violates the provisions of section 171 of the Act or the rules made thereunder.
Cancellation of registration


22. (1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under
section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of
seven working days from the date of the service of such notice, as to why his registration shall not be cancelled.
(2) The reply to the show cause notice issued under sub-rule (1) shall be furnished in FORM REG-18 within the period
specified in the said sub-rule.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable to be
registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19,
within a period of thirty days from the date of application submitted under rule 20 or, as the case may be, the date of the
reply to the show cause issued under sub-rule (1), cancel the registration, with effect from a date to be determined by
him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount
liable to be paid under sub section (5) of section 29.
(4) Where the reply furnished under sub-rule (2) is found to be satisfactory, the proper officer shall drop the
proceedings and pass an order in FORM GST REG -20:
Provided that where the person instead of replying to the notice served under sub-rule (1) for
contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29,
furnishes all the pending returns and makes full payment of the tax dues along with applicable interest
and late fee, the proper officer shall drop the proceedings and pass an order in FORM GST-REG 20.
Proviso inserted by the Central Goods and Services Tax (Eighth Amendment) Rules, 2018, w.e.f. 4-9-2018.
(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the
application had been submitted by the proprietor himself.
Suspension of registration. - Rule 21A

21A. (1) Where a registered person has applied for cancellation of registration under rule 20, the registration shall be
deemed to be suspended from the date of submission of the application or the date from which the cancellation is
sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule 22.
(2) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under
section 29 or under rule 21, he may, after affording the said person a reasonable opportunity of being heard, suspend
the registration of such person with effect from a date to be determined by him, pending the completion of the
proceedings for cancellation of registration under rule 22.
(3) A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2), shall not make any
taxable supply during the period of suspension and shall not be required to furnish any return under section 39.


(4) The suspension of registration under sub-rule (1) or sub-rule (2) shall be deemed to be revoked upon completion of
the proceedings by the proper officer under rule 22 and such revocation shall be effective from the date on which the
suspension had come into effect.]








Revocation of cancellation of registration. – Section 30
30. (1) Subject to such conditions as may be prescribed , any registered person, whose registration is cancelled by the
proper officer on his own motion, may apply to such officer for revocation of cancellation of the registration in the
prescribed manner within thirty days from the date of service of the cancellation order.
(2) The proper officer may, in such manner and within such period as may be prescribed , by order, either revoke
cancellation of the registration or reject the application:
Provided that the application for revocation of cancellation of registration shall not be rejected unless the applicant has
been given an opportunity of being heard.


(3) The revocation of cancellation of registration under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, as the case may be, shall be deemed to be a revocation of cancellation of registration under
this Act.
Revocation of cancellation of registration – Rule 23

23. (1) A registered person, whose registration is cancelled by the proper officer on his own motion, may submit an
application for revocation of cancellation of registration, in FORM GST REG-21, to such proper officer, within a period of
thirty days from the date of the service of the order of cancellation of registration at the common portal, either directly
or through a Facilitation Centre notified by the Commissioner:
Provided that no application for revocation shall be filed, if the registration has been cancelled for the failure of the
registered person to furnish returns, unless such returns are furnished and any amount due as tax, in terms of such
returns, has been paid along with any amount payable towards interest, penalty and late fee in respect of the said
returns.
(2) (a) Where the proper officer is satisfied, for reasons to be recorded in writing, that there are sufficient grounds for
revocation of cancellation of registration, he shall revoke the cancellation of registration by an order in FORM GST
REG-22 within a period of thirty days from the date of the receipt of the application and communicate the same to the
applicant.
(b) The proper officer may, for reasons to be recorded in writing, under circumstances other than those specified in
clause (a), by an order in FORM GST REG-05, reject the application for revocation of cancellation of registration and
communicate the same to the applicant.
(3) The proper officer shall, before passing the order referred to in clause (b) of sub-rule (2), issue a notice in FORM
GST REG-23 requiring the applicant to show cause as to why the application submitted for revocation under sub-rule
(1) should not be rejected and the applicant shall furnish the reply within a period of seven working days from the date
of the service of the notice in FORM GST REG-24.
(4) Upon receipt of the information or clarification in FORM GST REG-24, the proper officer shall proceed to dispose of
the application in the manner specified in sub-rule (2) within a period of thirty days from the date of the receipt of such
information or clarification from the applicant.


Valuation

Valuation

To get the best out of these notes visit www.neerajaroraclasses.com Valuation 1


Amount incurred by recipient on behalf of the supplier

1. ABC & Co. has placed order for supply of certain goods to Mr. Z . As per the contract, Mr. Z is required to deliver
the goods to the premises of ABC & Co. Mr. Z hires a transporter for transportation of the goods. However, the
lorry receipt indicates that the freight is payable by ABC & Co. In this case, Mr. Z was required to make the
payment to the transporter as it was the obligation of Mr. Z to deliver the goods to the premises of ABC & Co. As
against Mr. Z making the payment of transporter, the payment is made by ABC & Co. therefore, such payment
will form part of transaction value of the goods supplied.
Thus, in a contract, the obligation undertaken by the supplier for supplying goods need to be determined. All the
expenses in respect of such obligation must be incurred by the supplier. In case any amount has been incurred
by the recipient of supply in connection with the supply, the same will be included in the transaction value.
2. XYZ Ltd. a supplier of goods has engaged Mr. X as selling agent. The commission to Mr. X has been paid by the
recipient of supply. In this case the underlying obligations of payment of selling commission is of XYZ Ltd. as it
has engaged the agent to identify prospective customer. If the obligation to pay the agent ( the amount towards
selling commission) is passed on to the recipient, then the price paid to XYZ Ltd. does not reflect the true value
of supply. Had the recipient refused to pay this selling commission to the agent, then XYZ Ltd, would have paid
Mr. X and made a corresponding increase in the price of the supply. Thus, the selling commission paid by the
recipient to Mr. X is to be included in the value of taxable supply.
Computation of value of taxable supply :from the following information determine the value of taxable supply as per provisions
of Section 15 of the CGST Act, 2017?

Contracted value of supply of goods (including GST @ 18%) 11,00,000
The contracted value of supply includes the following:
1. Cost of primary packing 25,000
2. Cost of protective packing at recipient’s request for safe transportation 15,000
3. Design and engineering charges 85,000
Other Information
1. Commision paid to agent by recipient on instruction of supplier 5,000
2. Freight and insurance charges paid by recipient 75,000

Give reasons with suitable assumptions where necessary.

Particulars Working Amount Rs.
Note
Contracted value of supply of goods 11,00,000
1. Cost of primary packing -----


2. Cost of protective packing at recipient’s request for safe -----

transportation
3. Design and engineering charges -----
Add Commission paid to agent by recipient on instruction of supplier 5,000
Freight and insurance charges paid by recipient on behalf of 75,000 80,000
supplier
Cum Tax Value 11,80,000
Less GST @ 18% (Rs 11,80,000*18/118) .1, 80,000
Value of taxable supply 10,00,000

Working Notes : For the purpose of determining the value of taxable supply, the following adjustments shall be made-
1. As per Section 15(2) (c) of CGST Act, 2017, cost of primary packing and protective packing at recipient’s request for safe
transportation charged by supplier from the recipient shall be included for determining the value of taxable supply.
Since it is already included in the value, no treatment is required.
2. As per Section 15(2)(c) of CGST Act, 2017 any amount of charged for anything done by the supplier in respect of the
supply of goods at the time of, or before delivery of goods shall be included in the value of taxable supply. Hence, design
and engineering charges shall also included in the value of taxable supply. Since it is already included in the value, no
treatment is required.

3. As per Section 15(2)(b) of the CGST Act, 2017, any amount that the supplier is liable to pay in 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 shall be included in the value of supply. Thus, commission paid to agent by recipient on instruction of supplier and
freight and insurance incurred by recipient on behalf of supplier shall form part of value of taxable supply.
4. As per section 15(2) (a) of the CGST Act, 2017 value of supply shall not include any taxes or cesses levied under CGST Act,
SGST Act, UTGST Act and the GST (Compensation to States) Act, if charged separately by the supplier.

Time of Supply

Time of Supply
The time of supply indicates when a supply is deemed to have been made. The CGST/SGST Act provides separate time of
supply of goods and services.
Time limit for issuance of invoice in case of supplier of goods

(General Rule - Details will be discussed in the chapter of
“INVOICE”)
A registered person supplying taxable goods shall issue invoice before or at the time of -
● Removal of goods for supply to the recipient, where the supply involves movement of goods; or
● Delivery of goods or making available thereof to the recipient, in any other case.
Issuance of invoice in case of continuous supply of goods

In case of continuous supply of goods, where successive
● statements of accounts or
● successive payments are involved,
● the invoice shall be issued
○ before or at the time each such statement is issued or,
○ each such payment is received.
(Statement or payment whichever is earlier)
Continuous supply of goods (Section 2(32))
“Continuous supply of goods” means a supply of goods-

● Which is provided, or agreed to be provided,
● continuously or on recurrent basis,
● under a contract,
● whether or not by means of a wire, cable, pipeline, or other conduit, and
● for which the supplier
○ invoices the recipient
■ on a regular or periodic basis, and
● Includes supply of such goods as the Government may, subject to such conditions, as it may, by notifications,
specify.

To get the best out of these notes visit www.neerajaroraclasses.com Time of Supply 1

Provisions relating to time of supply (TOS) of goods in case of

forward charge i.e., normal supply of goods.
Time of supply of goods (Section 12)
1. The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the
provisions of this section.
2. The time of supply of goods shall be the earlier of the following dates, namely:-
a) 1. The dates of issue of invoice by the supplier ; or
2. The last date on which he is required, u/s 31 to issue the invoice with respect to the supply; or
b) The date on which the supplier receives the payment with respect to the supply.
Determination of date when supplier receives the payment (Explanation 2) : For the purposes of clause (b), “ the
date on which the supplier receives the payment” shall be-
● The date on which the payment is entered in his books of account; or
● The date on which the payment is credited to his bank account.
Whichever is earlier .
Exemption to all taxpayers from payment of tax on advances received in case of supply of goods - Tax on supply
of goods is to be paid on ‘invoice basis’ and receipt basis is not applicable. Notification No. 66/2017-CT dated
15-11-2017
Determine the Time of supply in each of the following independent cases in accordance with the provisions of Section 12 of the
CGST Act, 2017 in case supply involves movement of goods.

S.No Date of Removal Date of invoice Date when goods made Date of receipt of payment
available to recipient
1. 01-10-2018 02-10-2018 03-10-2018 15-11-2018
2. 03-10-2018 01-10-2018 04-10-2018 25-11-2018
3. 04-11-2018 04-11-2018 06-11-2018 01-10-2018

Time of supply of goods in each of the above cases has been given in following table-

S. No Date of Date of Date when Date of Time of Reason
Removal invoice goods receipt of supply
made payment
available to
recipient


1. 01-10-2018 02-10-2018 03-10-2018 15-11-2018 01-10-2018 Since, invoice is not issued on or before
the date of removal of goods, hence
time of supply is date of removal of
goods.
2. 03-10-2018 01-10-2018 04-10-2018 25-11-2018 01-10-2018 TOS is date of issuance of invoice since
invoices are issued prior to date of
removal of goods.
3. 04-11-2018 04-11-2018 06-11-2018 01-10-2018 04-11-2018 TOS is date of issue of invoice. No GST
will be payable on advances received
for supply of goods vide Notification No.
66/2017-CT dates 15-11-2017.

Determine the Time of supply in each of the following independent cases in accordance with the provisions of Section 12 of CGST
Act, 2017 in case supply does not involve movement of goods.
S.No Date of invoice Date when goods made available to recipient Date of receipt of
payment
1. 02-10-2018 03-10-2018 15-11-2018
2. 04-10-2018 01-10-2018 25-11-2018
3. 04-11-2018 06-11-2018 01-10-2018
S.no Date of invoice Date when goods made Date of receipt of Time of Reason
available to recipient payment supply
1. 02-10-2018 03-10-2018 15-11-2018 02-10-2018 TOS is date of issuance of

invoice since invoice is
issued prior to date when
goods are made available to
recipient.
2. 04-10-2018 01-10-2018 25-11-2018 01-10-2018 TOS is date when goods are
made available to the
recipient and date of
issuance of invoice is after
that date.


3. 04-11-2018 06-11-2018 01-10-2018 04-11-2018 TOS is date of issue of

invoice. No GST will be
payable on advances
received for supply of goods
vide Notifications No.
66/2017 -CT dates
15-11-2017


Question
During the course of search it was found that 500 Boxes of tiles were dispatched on 28th August, 2018. But no invoice was made
and the boxes were not entered in the accounts. There was no evidence of receipt of payment. What is the time of supply of the
500 boxes?
Time of supply of goods is the earlier of the following two dates in terms of section 12(2) :
● Date of issue of invoice/ last date on which the invoice is required to be issued.
● Date of receipt of payment (now not relevant)

In this case since the invoice has not been issued, the time of supply will be the last date on which the invoice is required to be
issued or date of receipt of payment, whichever is earlier.

The invoice for the supply of goods must be issued on or before the despatch of goods i.e,. On 28-08-2018. Since there is no
evidence of receipt of payment, time of supply of the goods will be 28-08-2018, the date when the invoice should have been
issued.
Question
A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling the machines at
site. The details of the various events are :
15-12-2018 Purchase order with advance of Rs 1,25,000 is received for machine worth Rs 25,00,000 and entry
duly made in the seller’s books of account.
25-01-2019 The machine is assembled, tested at site, and accepted by buyer
30-01-2019 Invoice raised.
10-02-2019 Balance payment of Rs 23,75,000 received.
Determine the time of supply (ies) in the above scenario in the above scenario for the purpose of payment of tax.

Solution : As per Notification No. 66/2017 CT dated 15-11-2017, a registered person (excluding composition supplier) has to pay
GST on the outward supply of goods at the time of supply as specified in section 12(2)(a) i.e., date of issue of invoice or the last
date on which invoice ought to have been issued in terms of section 31.
Therefore, the time of supply of goods for the entire amount of Rs. 25,00,000 is 25-01-2019 which is the date on which the goods
were made available to the recipient as per Section 31(1)(b), and the invoice should have been issued on this date (section
12(2)(a)) .
Question
Continuous supply of goods - From the following information determine the time of supply if there is continuous supply of
goods.
S. no Invoice date Removal of goods Statement of goods Receipt of payment


1. 01-12-2018 15-11-2018 05-12-2018 02-12-2018

25-11-2018
2. 21-01-2018 18-01-2019 05-01-2019 10-02-2019

31-01-2019
Solution - time of supply of goods in each of the above cases has been given in following table-
S. no Invoice date Removal of Statement of Receipt of Time of Reason
goods accounts payment supply
1. 01-12-2018 15-11-20182 05-12-2018 02-12-2018 01-12-2018 TOS is date of invoice since
5-11-2018 invoice is issued before
statement of account.
2. 21-01-2019 18-01-2019 05-01-2019 10-02-2019 05-01-2019 TOS is date of statement of
account since invoice is issued
31-01-2019 after the date of statement of
account and payment is also
received after that date.
Question
Continuous supply of goods : LPG is supplied by a pipeline. Monthly payment are made by the recipient as per contract . every
quarter, invoice is issued by the supplier supported by a statement of the goods dispatched and payments made, and the
recipient has to pay the differential amount, if any. The details of the various events are :
03-11-2018, 03-12-2018, 01-01-2019 Payments of Rs 5 lakh made in each month.
02-01-2019 Statement of accounts issued by supplier, with invoice for the quarter
October 2018 to December 2018.
25-01-2019 Differential payment of Rs 78,000 received by supplier for the quarter

October 2018 to December 2018.
Determine the time of supply.


Solution : As per Notification No. 66/2017-CT dated 15-11-2017, a registered person (excluding composition supplier) has to pay
GST on the outward supply of goods at the time of supply as specified in section 12(2)(a) i.e., date of issue of invoice or the last
date on which invoice ought to have been issued in terms of section 31.

As per section 31(4), in the case of continuous supply of goods, where successive statements of accounts or successive
payments are involved, the invoice is issued before or at the time of each such statement is issued or, as the case may monthly
payment of Rs 5 lakh are received.

Thus, time of supply will be 3-11-2018, 03-12-2018 and 01-01-2019 respectively for goods valued at 5 lakh each. Time of supply
of goods valued at Rs 78,000 will be 02-01-2019, the date of issuance of invoice.
Time of supply of goods for supplies taxed under reverse charge

mechanism
Time of supply in case of supplies taxed under reverse charge mechanism (Section 12(3))
In case of supplies in respect of which tax is paid or liable to be paid on reverse charges basis the time of supply shall be
the earliest of the following dates, namely:-
a) The date of receipt of goods; or
b) 1. The date of payment as entered in the books of account of recipient
2. The date on which the payment is debited in his bank account,
Whichever is earlier; or
c) The date immediately following 30 days from the date of issue of invoice or any other document, by whatever
name called, in lieu thereof by the supplier.

Determine the Time of supply in each of the following independent cases in accordance with the provisions of Section 12 of the
CGST Act, 2017 in case recipient of goods is liable to pay tax under reverse charge mechanism.
S.no Date of invoice Date of receipt of goods Date of payment in Date when payment
books debited in bank account
1. 01-10-2018 05-10-2018 10-10-2018 12-10-2018
2. 01-10-2018 15-10-2018 10-10-2018 12-10-2018
3. 01-10-2018 15-10-2018 12-10-2018 10-10-2018
4. 01-10-2018 15-11-2018 18-11-2018 20-11-2018


S.no Date of Date of Date of Date when Time of Reason
invoice receipt of payment in payment supply
goods books debited in
bank account
1. 01-10-2018 05-10-2018 10-10-2018 12-10-2018 05-10-2018 TOS is date of receipt of goods
2. 01-10-2018 15-10-2018 10-10-2018 12-10-2018 10-10-2018 TOS is date of payment in
books
3. 01-10-2018 15-10-2018 12-10-2018 10-10-2018 10-10-2018 TOS is date when payment is
debited in bank account.
4. 01-10-2018 18-11-2018 20-11-2018 01-11-2018 TOS is the date immediately

15-11-2018 following 30 days from the
date of issue of invoice by the
supplier.


Section 12(4)
In case of supply of vouchers by a supplier, the time of supply shall be—
a. the date of issue of voucher, if the supply is identifiable at that point; or
b. the date of redemption of voucher, in all other cases.

ABC. has purchased for its customers 100 vouchers dated 24-01-2019 worth Rs 1,000 each from PQRC. a footwear
manufacturing company. The vouchers were issued by PQRC on 25-01-2019. The vouchers can be encashed at retail outlets
of PQRC. the employees of ABC. encashed the same 01-02-2019. Determine time of supply of vouchers.

In case of supply of vouchers by a supplier, the time of supply shall be date of issue of voucher, if the supply is identifiable at
that point. In this case the supply of goods i.e, footwear is identifiable with the voucher, hence time of supply shall be the date
of issue of such vouchers by PQRC. i.e., 25-01-2019
Ms Saniya Khan purchased a gift voucher from Shoppers Stop (a departmental store) worth Rs 15000 on 30-11-2018 and
gifted it to her friend on the occasion of her birthday on 06-12-2018.
Her friend encashed the same on 01-01-2019 for purchase of a keyboard. Determine the time of supply.

In this case the supply is not identified with the voucher. The holder of voucher can purchase anything from Shoppers Stop.
hence, time of supply is date of redemption of vouchers, i.e., the date of purchase of goods by the holder of the voucher i.e.,
01-01-2019.
12(5)
Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3)or
sub-section (4), the time of supply shall—
a. in a case where a periodical return has to be filed, be the date on which such return is to be filed; or
b. in any other case, be the date on which the tax is paid.
For example :
Investigation reveals clandestine removal of goods by a supplier who is not registered under GST. the evidence is in the form
of noting, often undated, and some corroborative material. The supplier voluntarily pays tax during the investigation, to close
the case. The time of supply will be the date on which the tax is paid, as being unregistered, the supplier is not required to file
periodical returns.
12(6)
The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for
delayed payment of any consideration shall be the date on which the supplier receives such addition in value.


Mr. NP ,a registered supplier supplied certain goods to Mr. DB on 5 months credit with a penalty clause in the agreement
levying a penalty of 10% of the invoice value in case of delayed payment. The invoice was dated 01-12-2018. Mr. DB could not
make the payment on the due date due to unavoidable reasons. He however made the payment of the invoice value on
06-08-2019. Mr. NP raised a debit note for the penalty amount. There being dispute on this, the matter was in arbitration
which was finally resolved with Mr. DB agreeing to pay half of the penalty amount. The amount was paid by Mr.DB on
16-12-2019. Determine the Time of supply in light of the GST law.

With respect to the goods supplied, the time of supply shall be the invoice date (Assuming the delivery of goods on the date of
invoice) i.e., 01-12-2018 with respect to the penalty amount the TOS shall be the date of payment by Mr. DB towards the
penalty charges i.e., 16-12-2019 ( as per section 12(6).


Section 13 - Time of Supply in Case of Service

13. (1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the
provisions of this section.
Section 13(2) - ToS - Service - Forward Charge

The time of supply of services shall be the earliest of the following dates, namely
a. the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31
or the date of receipt of payment, whichever is earlier; or
b. the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the
date of receipt of payment, whichever is earlier; or
c. the date on which the recipient shows the receipt of services in his books of account, in a case where the
provisions of clause (a) or clause (b)do not apply:
Provided that where the supplier of taxable service receives an amount upto one thousand rupees in excess of the
amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said
supplier, be the date of issue of invoice relating to such excess amount.
Explanation.—For the purposes of clauses (a)and (b)—

a. the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be,
the payment;
b. "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the
supplier or the date on which the payment is credited to his bank account, whichever is earlier.


Section 13(3) - ToS - Service - Reverse Charge

In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be
the earlier of the following dates, namely
a. the date of payment as entered in the books of account of the recipient or the date on which the payment is
debited in his bank account, whichever is earlier; or
b. the date immediately following sixty days from the date of issue of invoice or any other document, by whatever
name called, in lieu thereof by the supplier:
Provided that where it is not possible to determine the time of supply under clause (a) or clause (b),the time of supply
shall be the date of entry in the books of account of the recipient of supply:
Provided further that in case of supply by associated enterprises, where the supplier of service is located outside
India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of
payment, whichever is earlier. (DATE OF ENTRY or DATE OF PAYMENT whichever is earlier)
DOP DOI 61st Day TOS
10/8 29/6 29/8 10/8
10/8 1/6 1/8 1/8
Part 30/6 29/6 29/8 30/6
Part 1/9 29/6 29/8 29/8



The limit for issuing tax invoice (Rule 47)
Taxable supply of services - Time limit - 30 days from the date of supply of services : The invoice in case of
taxable supply of services shall be issued within a period of 30 days from the date of supply of service.
Insurers, bank etc. - Time limit-45 days : Where the supplier of services is an insurer or a banking company or a
financial institution, including a non-banking financial company, the invoice or any document in lieu thereof is to be
issued within 45 days from the date of supply of service.
Cessation of supply of services - Invoice to be issued at the time when supply ceases : in case of cessation of
supply of services before completion of supply, the invoice (to the extent of the supply made before such cessation)
should be issued at the time when the supply ceases.
Issuance of invoice in case of continuous supply of services (Section 31(5)) : In case of continuous supply of
services -
1. Where the due date of payment The invoice shall be issued on or before the due date
is ascertainable from the of payment.
contract
2. Where the due date of payment The invoice shall be issued before or at the time
is not ascertainable from the when the supplier of service receives the payment.
contract
3. Where the payment is linked to The invoice shall be issued on or before the date of
the completion of an event completion of that event.
Continuous supply of services (Section 2(33)) : “Continuous supply of services” means-
● A supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a
contract, for a period exceeding 3 months with periodic payment obligations and
● Includes supply of such services as the Government may, subject to such conditions, as it may, by notification,
specify.
Time of Supply In Case of Service (Forward Charge)

Determine the time of supply in each of the following independent cases in accordance with the provisions of CGST Act, 2017 :
S.no Date of actual provision of Time (Date) of Invoice, Bill Date on which payment received
service or Challan as the case may
be
1. 10-11-2018 30-11-2018 15-12-2018


2. 10-11-2018 30-11-2018 15-11-2018
3. 10-11-2018 30-11-2018 15-11-2018 (Part) and 10-12-2018 (remaining)
6. 10-11-2018 12-12-2018 30-04-2019
8. 10-11-2018 22-12-2018 12-12-2018
Solution : Time of supply of services in each of the above cases has been given in following table-
S.no Date of provision Date of invoice Date of receipt Time of Remarks
of service of payment supply
1. 10-11-2018 30-11-2018 15-12-2018 30-11-2018 Invoice issued within 30 days and
before receipt of payment
2. 10-11-2018 30-11-2018 15-11-2018 15-11-2018 Invoice issued within 30 days but
payment received before invoice.
3. 10-11-2018 30-11-2018 15-11-2018 15-11-2018 Invoice issued within 30 days. Part
(Part) and and payment received before invoice and
10-12-2018 30-11-2018 remaining payment after invoice.
(remaining) for respective As per Explanation (i) The supply
amounts shall be deemed to have been made
to the extent it is covered by the
invoice or, as the case may be the
payment,
4. 10-11-2018 30-11-2018 06-11-2018 06-11-2018 Invoice issued within 30 days.

(Part) and and However, the advance has been
09-11-2018 09-11-2018 for received in two installments before
(remaining) the respective the date of completion of service.
amounts Thus, date of receipt of each such
advance shall be treated as TOS.
As per Explanation (i) the supply shall
be deemed to have been made to the
extent it is covered by the invoice or,
as the case may be, the payment.


5. 10-11-2018 30-11-2018 06-11-2018 06-11-2018 Invoice issued within 30 days . part
(Part) and and payment (in the form of advance)
16-11-2018 16-11-2018 for received before issue of invoice and
(remaining) the respective remaining payment received after
amounts completion of service.
As per Explanation (i) The supply
shall be deemed to have been made
to the extent it is covered by the
invoice or, as the case may be, the
payment
6. 10-11-2018 12-12-2018 30-04-2019 10-11-2018 Invoice not issued within 30 days and
payment received after completion
of service.
7. 10-11-2018 12sil-12-2018 05-11-2018 05-11-2018 Invoice not issued within 30 days .
(Part) and and part payment received as advance
25-12-2018 10-11-2018 for before completion of service and
(remaining) respective remaining payment received
amounts subsequently.
As per Explanation (i) the supply shall
be deemed to have been made to the
extent it is covered by the invoice or,
as the case may be the payment.
8. 10-11-2018 22-12-2018 12-12-2018 10-11-2018 Invoice not issued within 30 days and
entire payment received after
completion of service.
Determine the time of supply from the following particulars :
25-07-2018 Booking of convention hall, sum agreed Rs 15,00,000 advance of Rs 1,01,000 received.
10-11-2018 Event held in convention hall
20-12-2018 Invoice issued for Rs 15,00,000 indicating balance of Rs 13,99,000 payable
25-12-2018 Balance payment of Rs 13,99,000 received.
Solution : as per section 31 read with Rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply of service. In
the given case, the invoice is not issued within the prescribed time limit. As per Section 13(2)(b), in a case where the invoice is not
issued within the prescribed time, the time of supply of services is the date of provision of service or receipt of payment,
whichever is earlier.


Therefore, the time of supply of service to the extent of Rs 1,01,000 is 25-07-2018 as the date of payment of Rs 1,01,000 is earlier
than the date of provision of service. The time of supply of service to the extent of the balance Rs 13,99,000 is 10-11-2018 which is
the date of provision of service.
Question
BRIGHT LTD. receives the order and advance payment on 25-08-2019 for carrying out an architectural design job. It delivers the
design on 30-10-2019. By oversight, no invoice is issued at that time, and it is issued much later, after the expiry of prescribed
period for issue of invoice. When is the time of supply of services?
Ans : since the invoices has not been issued within the prescribed time period, time of supply of service will be the earlier of the
following two dates in term of section 13(2)(b) :
➢ Date of provision of service
➢ Date of receipt of payment
The payment was received on 25-08-2019 and the services was provided on 30-10-2019. Therefore, the date of payment, i.e.,
25-08-2019 is the time of supply of the service in this case.
Time of Supply Continuous supply of service

From the following information determine the time of supply of services. The supply is a continuous supply of service where
contract provides for monthly payment upto 15th of the succeeding month.
Entry of provision of Invoice date Due date of payment as per Receipt of payment
services in books contract
30-11-2018 07-12-2018 15-12-2018 20-12-2018
31-12-2018 22-01-2019 15-01-2019 20-01-2019
31-01-2019 15-02-2019 15-02-2019 11-02-2019
Solution : time of supply of services in each of the above cases has been given in following table-
Entry of Invoice date Due date of Receipt of Time of supply Reason
provision of payment as per payment
services in contract
books
30-11-2018 07-12-2018 15-12-2018 20-12-2018 07-12-2018 Since invoice is issued prior to
due date and payment is
received after the date of
invoice.


31-12-2018 22-01-2019 15-01-2019 20-01-2019 15-01-2019 Since invoice is issued after

due of payment and payment
is also received after such
date.
31-01-2019 15-02-2019 15-02-2019 11-02-2019 11-02-2019 Since payment is received

prior to due date of payment.
Time of supply in reverse charge

Pooja Industries Ltd. engaged the services of Mohit transporter for road transport of a consignment on 25-11-2018 and made
advance payment for the transport on the same date, i.e., 25-11-2018. However, the consignment could not be sent immediately
on account of a strike in the factory, and instead was sent on 20-01-2019, invoice was received from the transporter on
22-01-2019. What is the time of supply of the transporter’s service?

NOte : transporter’s service is taxed on reverse charge basis.

Solution : Time of supply of service taxable under reverse charge is the earlier of the following two dates in terms of section 13(3) :

➢ Date of payment
➢ 61st day from the date of issue of invoice

In this case the date of payment precedes 61st day from the date of issue of invoice by the supplier of service. Hence, the date of payment , i.e.,
25-12-2018, will be treated as the time of supply of service
Associated Enterprise
GP Ltd. is located in India and holding 51% of shares of SB Ltd. a Canada based company. SB Ltd. provides Business Auxiliary
services to GP Ltd.

From the following details, determine the time of supply of GPLtd. :
Agreed consideration US $ 1,00,000
Date on which services are provided by SB Ltd. 16-12-2018
Date on which invoices sent by SB Ltd. 19-12-2018
Date of debit in the books of account of GP Ltd. 30-12-2018
Date on which payment is made by GP Ltd. 23-03-2019

Solution : GP. of India and SB Ltd. of US are “associated enterprises” as Section 92A of Income Tax Act, 1961, since Indian
company holds 51% shareholdings of Canada based company. As per Section 13(3) of CGST, Act, 2017, in case of supply by
associated enterprises, where the supplier of service is located outside India, the time of supply shall be -


a) The date of entry in the books of account of the recipient of supply ; or
b) The date of payment,
Whichever is earlier;
Therefore, the time of supply shall be 30-12-2018.

Tax Invoice

Tax Invoice, Credit and Debit Note

● Invoice is the most important document in the GST era. For the purpose of claiming Input tax credit Invoice is
required.
● The provisions relating to tax invoices, debit and credit notes are contained in Chapter VI - Tax Invoice, Credit
and Debit Notes [Sections 31 to 34] of the CGST Act. State GST laws also prescribe identical provisions in
relation to Tax Invoice, Credit and Debit Notes.
● Provisions of Tax invoice, Credit and Debit Notes under CGST Act have also been made applicable to IGST Act
vide section 20 of the IGST Act.
Basics
● No format is prescribed
● Only some mandatory fields are prescribed.
● Electronic invoice is not mandatory (can be issued manually also)
Tax invoice. - Section 31

31. (1) A registered person supplying taxable goods shall, before or at the time of,—
a. removal of goods for supply to the recipient, where the supply involves movement of goods; or
b. delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other
particulars as may be prescribed.
Provided that the Government may, on the recommendation of the Council, by notification, specify the categories of
goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be
prescribed.
(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed
period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be
prescribed.
Provided that the Government may, on the recommendation of the Council, by notification and subject to such
conditions as may be mentioned therein, specify the categories of services in respect of which—
a. any other document issued in relation to the supply shall be deemed to be a tax invoice; or
b. tax invoice may not be issued.
(3) Notwithstanding anything contained in sub-sections (1) and (2)—

a. a registered person may, within one month from the date of issuance of certificate of registration and in such
manner as may be prescribed, issue a revised invoice against the invoice already issued during the period
beginning with the effective date of registration till the date of issuance of certificate of registration to him;
b. a registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than
two hundred rupees subject to such conditions and in such manner as may be prescribed;


c. a registered person supplying exempted goods or services or both or paying tax under the provisions of section
10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be
prescribed.
Provided that the registered person may not issue a bill of supply if the value of the goods or services or both
supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed.
d. a registered person shall, on receipt of advance payment with respect to any supply of goods or services or both,
issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing
receipt of such payment;
e. where, on receipt of advance payment with respect to any supply of goods or services or both the registered
person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance
thereof, the said registered person may issue to the person who had made the payment, a refund voucher
against such payment;
f. a registered person who is liable to pay tax under sub-section (3) or sub-section (4)of section 9 shall issue an
invoice in respect of goods or services or both received by him from the supplier who is not registered on the
date of receipt of goods or services or both;
g. a registered person who is liable to pay tax under sub-section (3) or sub- section (4)of section 9 shall issue a
payment voucher at the time of making payment to the supplier.
(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are
involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such
payment is received.
(5) Subject to the provisions of clause (d)of sub-section (3), in case of continuous supply of services,—
a. where the due date of payment is ascertainable from the contract, the invoice shall be issued on or before the
due date of payment;
b. where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or at the
time when the supplier of service receives the payment;
c. where the payment is linked to the completion of an event, the invoice shall be issued on or before the date of
completion of that event.
(6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall
be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before
such cessation.
(7) Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or
return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six
months from the date of removal, whichever is earlier.
Explanation.—For the purposes of this section, the expression "tax invoice" shall include any revised invoice issued by
the supplier in respect of a supply made earlier.


2(32) - Continuous supply of goods

"continuous supply of goods" means a supply of goods which is provided, or agreed to be provided, continuously or on
recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the
supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may,
subject to such conditions, as it may, by notification, specify;
2(33) - Continuous supply of Service

"Continuous supply of services" means a supply of services which is provided, or agreed to be provided, continuously or
on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and
includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;







Prohibition of unauthorized collection of tax. Section 32

(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any
amount by way of tax under this Act.
(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made
thereunder.
Amount of tax to be indicated in tax invoice and other documents.

Section 33
Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made
for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents
relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at
which such supply is made.
Credit and debit notes – Section 34

34. (1) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or
tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the
goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient,
the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note
containing such particulars as may be prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the
details of such credit note in the return for the month during which such credit note has been issued but not later than
September following the end of the financial year in which such supply was made, or the date of furnishing of the
relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:
Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax on such
supply has been passed on to any other person.
(3) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged
in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered
person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such
particulars as may be prescribed.
(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall declare the
details of such debit note in the return for the month during which such debit note has been issued and the tax liability
shall be adjusted in such manner as may be prescribed.
Explanation— For the purposes of this Act, the expression "debit note" shall include a supplementary invoice.






Credit Note


Payment of GST

Payment of GST
Section Particulars
Section 49 Payment of tax, interest, penalty and other amounts
Section 50 Interest on delayed payment of tax
Section 51 Tax deduction at source
Section 52 Collection of tax at source
Section 53 Transfer of input tax credit
Applicable to IGST vide Section 20 under Chapter IX of the IGST Act,2017
Applicable to UTGST vide Section 21 under Chapter IX of the UTGST Act,2017
Akin to CGST Act,2017, similar provisions are contained under SGST Acts of respective States
Rule Particulars
Rule 85 Electronic Liability Register
Rule 86 Electronic Credit Ledger
Rule 87 Electronic Cash Ledger
Rule 88 Identification number for each transaction
Form Particulars
Form GST PMT-01 Electronic Liability Register of Registered Person (Part-I: Return related liabilities)
Electronic Liability Register of Taxable Person (Part-II: Other than return related
liabilities)
Form GST PMT-02 Electronic Credit Ledger of Registered Person
Form GST PMT-03 Order for re-credit of the amount to cash or credit ledger on rejection of refund claim

To get the best out of these notes visit www.neerajaroraclasses.com Payment of GST 1

Form GST PMT-04 Application for intimation of discrepancy in Electronic Credit Ledger/ Cash Ledger/
Liability Register
Form GST PMT-05 Electronic Cash Ledger
Form GST PMT-06 Challan For deposit of GST
Form GST PMT-07 Application for intimation of discrepancy relating to Payment



Electronic Cash Ledger - Section 49 + Rule 87

49. (1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or
by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement 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.
जब जब आप DEPOSIT करोगे CASH LEDGER े डट होगा
49. (3)
The amount available in the electronic cash ledger may be used for making any payment towards tax, interest,
penalty, fees or any other amount payable under the provisions of this Act or the rules made thereunder in such manner
and subject to such conditions and within such time as may be prescribed.
Rule 87
87. (1)
The electronic cash ledger under sub-section (1) of section 49 shall be maintained in
● FORM GST PMT-05 for each person,
● liable to pay tax, interest, penalty, late fee or any other amount,
● on the common portal for
● crediting the amount deposited and
● debiting the payment therefrom towards tax, interest, penalty, fee or any other amount.
87(2)
Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-06 on the common portal and
enter the details of the amount to be deposited by him towards tax, interest, penalty, fees or any other amount:
Provided that the challan in FORM GST PMT-06 generated at the common portal shall be valid for a period of fifteen
Days:
87(3)
The deposit under sub-rule (2) shall be made through any of the following modes, namely:—
i. Internet Banking through authorised banks;
ii. Credit card or Debit card through the authorised bank;
iii. National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
iv. Over the Counter payment through authorised banks for deposits up to ten thousand rupees per challan per tax
period, by cash, cheque or demand draft:
Provided that the restriction for deposit up to ten thousand rupees per challan in case of an Over the Counter payment
shall not apply to deposit to be made by -


a. Government Departments or any other deposit to be made by persons as may be notified by the Commissioner
in this behalf;
b. Proper officer 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;
c. Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand
draft during any investigation or enforcement activity or any ad hoc deposit:
Explanation.—For the purposes of this sub-rule, it is hereby clarified that for making payment of any amount indicated
in the challan, the commission, if any, payable in respect of such payment shall be borne by the person making such
payment.
(4) Any payment required to be made by a person who is not registered under the Act, shall be made on the basis of
a temporary identification number generated through the common portal.
(5) Where the payment is made by way of National Electronic Fund Transfer or Real Time Gross Settlement mode from
any bank, the mandate form shall be generated along with the challan on the common portal and the same shall be
submitted to the bank from where the payment is to be made:
Provided that the mandate form shall be valid for a period of fifteen days from the date of generation of challan.
(6) On successful credit of the amount to the concerned government account maintained in the authorised bank, a
Challan Identification Number shall be generated by the collecting bank and the same shall be indicated in the
challan.
(7) On receipt of the Challan Identification Number from the collecting bank, the said amount shall be credited to
the electronic cash ledger of the person on whose behalf the deposit has been made and the common portal shall
makeavailable a receipt to this effect.
(8) Where the bank account of the person concerned, or the person making the deposit on his behalf, is debited but
no Challan Identification Number is generated or generated but not communicated to the common portal, the said
person may represent electronically in FORM GST PMT-07 through the common portal to the bank or electronic
gateway through which the deposit was initiated.
(9) Not in our syllabus
(10) Where a person has claimed refund of any amount from the electronic cash ledger, the said amount shall be
debited to the electronic cash ledger.
(11) If the refund so claimed is rejected, either fully or partly, the amount debited under sub-rule (10), to the extent
of rejection, shall be credited to the electronic cash ledger by the proper officer by an order made in FORM GST
PMT-03.
(12) A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same
to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.


Are manual Challans applicable as allowed earlier under the VAT regimes?
Manual or physical Challans are not allowed under the GST regime. It is mandatory to generate Challans online on
the GST Portal.
How many types of Challans are prescribed for various taxes and payments to be paid under the
GST regime?
There is single Challan prescribed for all taxes, fees, penalty, interest, and other payments to be made under the GST
Regime.



Electronic Credit Ledger - Section 49 + Rule 86
Section 49 Relevant Part
49 (2) The input tax credit as self-assessed in the return of the registered person shall be credited to his electronic
credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed.
49 (4) The amount available in the electronic credit ledger may be used for making any payment towards output tax
under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and
within such time as may be prescribed.
Electronic Credit Ledger – Rule 86

86. (1) The electronic credit ledger shall be maintained in
● FORM GST PMT-02 for each registered person eligible for input tax credit under the Act on the common portal
and
● laim of input tax credit under the Act shall be c
every c redited to the said ledger.
(2) The electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with the
provisions of section 49. (To be understood later)
(3) Where a registered person has claimed refund of any unutilized amount from the electronic credit ledger in
accordance with the provisions of section 54, the amount to the extent of the claim shall be debited in the said ledger.
(4) If the refund so filed is rejected, either fully or partly, the amount debited under sub-rule (3), to the extent of
rejection, shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST
PMT-03.
(5) Save as provided in the provisions of this Chapter, no entry shall be made directly in the electronic credit ledger
under any circumstance.
(6) A registered person shall, upon noticing any discrepancy in his electronic credit ledger, communicate the same to
the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.


49(5)
The amount of input tax credit available in the electronic credit ledger of the registered person on account of—
a. integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be
utilised towards the payment of central tax and State tax, or as the case may be, Union territory tax, in that
order;
b. the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may be
utilised towards the payment of integrated tax;
c. the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be
utilised towards payment of integrated tax:
● Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated
tax only where the balance of the input tax credit on account of central tax is not available for payment
of integrated tax; ( IGST के ल ए पहले CGST और जब CGST ख़ म हो जाए तो SGST)
d. the Union territory tax shall first be utilised towards payment of Union territory tax and the amount remaining,
if any, may be utilised towards payment of integrated tax:
● Provided that the input tax credit on account of Union territory tax shall be utilised towards payment of
integrated tax only where the balance of the input tax credit on account of central tax is not available for
payment of integrated tax; ( IGST के ल ए पहले CGST और जब CGST ख़ म हो जाए तो UGST)
e. the central tax shall not be utilised towards payment of State tax or Union territory tax; and
f. the State tax or Union territory tax shall not be utilised towards payment of central tax.
49A - Utilisation of input tax credit subject to certain

conditions.
Notwithstanding anything contained in section 49, the input tax credit on account of
● central tax,
● State tax or Union territory tax
○ shall be utilised 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 towards
such payment.
(In short, we will FIRST exhaust the credit of IGST only then we can use the credit of CGST or SGST)
49B Order of utilisation of input tax credit.

Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of
sub-section (5) of section 49, the Government may, on the recommendation of the Council, prescribe the order and
manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as
the case may be, towards payment of any such taxes.
In short, manner of utilisation can be prescribed by Govt. except CGST cannot be utilised for SGST/UTGST and
Vice versa


Rule 88A Order of utilization of input tax credit.

Input tax credit on account of integrated tax
● shall first be utilised towards payment of integrated tax,
● and the amount remaining, if any,
○ may be utilised towards the payment of central tax and State tax or Union territory tax,
○ as the case may be,
○ in any order:
(IGST Credit First for IGST and then for CGST or SGST in any order)
Provided that the input tax credit on account of

● central tax,
● State tax or Union territory tax
○ shall be utilised 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.
Inserted by Central Goods and Services Tax (Second Amendment) Rules, 2019, w.e.f. 1-4-2019.
Conclusions
1. If you have credit of IGST first that shall be exhausted and that can be used for payment in the following
manner
a. IGST.
b. CGST or S/UTGST (We can use for Partly for CGST or SGST as we want to. “ANY ORDER”)
c. Credit of CGST for CGST and SGST for SGST can used only when Credit of IGST is fully exhausted.
2. If we have credit of CGST it should utilised for payment of CGST only after using IGST
3. Same with SGST or UTGST.
4. If we have credit of CGST and SGST both and IGST Liability is there
a. First we will use CGST for IGST liability
b. Second we will use SGST for IGST liability
ITC of Output IGST Output CGST Output S/UTGST
IGST 1 2
3 ITC of IGST to be completely exhausted mandatorily
CGST 5 4 NOT ALLOWED
S/UTGST 7 NOT ALLOWED 6


49(6)
The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or
any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the
provisions of section 54.
Head Output Tax Liability ITC
IGST 1000 1300
CGST 300 200
S/UTGST 300 200
Total 1600 1700
ITC of Output IGST Output CGST Output SGST Balance of ITC
IGST 1000 200 100 0
CGST 0 100 NA 100
S/UTGST 0 NA 200 0
Total 1000 300 300 100


Electronic Liability Register

49 (7)
All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register
in such manner as may be prescribed.
Rule 85
85. (1)
The electronic liability register specified under sub section (7) of section 49 shall be maintained in FORM GST
PMT-01 for each person liable to pay tax, interest, penalty, late fee or any other amount on the common portal and all
amounts payable by him shall be debited to the said register.
85(2) Electronic Liability Register Debit (IMPORTANT for exams)

The electronic liability register of the person shall be debited by—
a. the amount payable towards tax, interest, late fee or any other amount payable as per the return furnished by
the said person; (TIPFO as per return)
b. the amount of tax, interest, penalty or any other amount payable as determined by a proper officer in
pursuance of any proceedings under the Act or as ascertained by the said person; (TIPFO – Proceedings)
c. the amount of tax and interest payable as a result of mismatch under section 42 or section 43 or section 50;
d. any amount of interest that may accrue from time to time.
85(3) - Electronic Liability Register Credit

Subject to the provisions of section 49
● payment of every liability by a registered person
● as per his return
● shall be made by
● Debiting
○ the electronic credit ledger maintained as per rule 86
○ or the electronic cash ledger maintained as per rule 87
● and the electronic liability register shall be credited accordingly.
85(4) Certain Amounts To Be Debited From Cash Ledger Only.

The amount deducted
● under section 51,
● or the amount collected under section 52,
● or the amount payable on reverse charge basis,
● or the amount payable under section 10,
● any amount payable towards interest, penalty, fee or any other amount under the Act shall be paid by debiting
the electronic cash ledger maintained as per rule 87 and the electronic liability register shall be credited
accordingly.


85(5) Relief Given - Liability register Credit

Any amount of demand debited in the electronic liability register shall stand reduced to the extent of relief given
by the appellate authority or Appellate Tribunal or court and the electronic tax liability register shall be credited
accordingly.
85(6) Penalty Imposed - Taxable Person Makes Payment of T/I/P as per demand Liability register
credit
The amount of penalty imposed or liable to be imposed shall stand reduced partly or fully, as the case may be, if
the taxable person makes the payment of tax, interest and penalty specified in the show cause notice or demand order
and the electronic liability register shall be credited accordingly.
85(7) Discrepancy GST PMT 04

A registered person shall, upon noticing any discrepancy in his electronic liability ledger, communicate the same
to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04.
Remaining Section 49
49 (8) - Order of discharge of dues

Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the
following order, namely:—
a. self-assessed tax, and other dues related to returns of previous tax 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 thereunder including the demand determined
under section 73 or section 74;
49 (9) - Incidence of Tax Deemed to Passed

Every person who has paid the tax on goods or services or both under this Act shall, unless the contrary is proved
by him, be deemed to have passed on the full incidence of such tax to the recipient of such goods or services or both.
NOTE - The date of credit to the account of the Government in the authorised bank shall be deemed to be the date of
deposit in the electronic cash ledger;


Interest on delayed payment of tax - Section 50

50. (1) Every person
➔ who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder,
➔ but fails to pay the tax or any part thereof to the Government within the period prescribed,
➔ shall for the period for which the tax or any part thereof remains unpaid,
➔ Pay,
➔ on his own,
➔ interest at such rate,
➔ not exceeding eighteen per cent,
➔ as may be notified by the Government on the recommendations of the Council.
Notification No. 13/2017 CT dated 28.06.2017 has notified the rate of interest as 18% per annum.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day
succeeding the day on which such tax was due to be paid.
(3) A taxable person

● who makes an undue or excess claim of input tax credit under sub- section (10)of section 42
● or undue or excess reduction in output tax liability under sub-section (10) of section 43,
● shall pay interest
● on such undue or excess claim or
● on such undue or excess reduction
● at such rate not exceeding twenty-four per cent,
● as may be notified by the Government on the recommendations of the Council.
Notification No. 13/2017 CT dated 28.06.2017 has notified the rate of interest as 24% per annum.
NOTES
● The payment of interest in case of belated payment of tax should be made voluntarily i.e. even without a
demand.
● The interest payable under this section shall be debited to the Electronic Liability Register.
● The liability for interest can be settled by adjustment with balance in Electronic Cash Ledger but not with
balance in electronic credit ledger.


Explain the order in which liability of taxable person has to be discharged under GST laws.

Section 49(8) of CGST Act, 2017 prescribes the chronological order in which the liability of a taxable person has to be
discharged:

a. self -assessed tax and other dues for the previous tax periods have to be discharged first.
b. self -assessed tax and other dues for the current tax period have to be discharged next.
c. Once these two steps are exhausted, thereafter any other amount payable including demand determined under
section 73 or section 74 is to be discharged. In other words, the liability if any, arising out of demand notice and
adjudication proceedings comes last. This sequence has to be mandatorily followed.

The expression “other dues” referred above mean interest, penalty, fee or any other amount payable under the Act or the
rules made thereunder.
When shall the interest be payable by the registered person and what is the maximum rate of interest chargeable for the
same ? (5 marks)

Interest is payable in the following cases:-
● failure to pay tax, in full or in part within the prescribed period,
● undue or excess claim of input tax credit ,
● undue or excess reduction in output tax liability.

The maximum rate of interest chargeable for the same is as under
a. 18% p.a. in case of failure to pay full/part tax within the prescribed period
b. 24% p.a. in case of undue or excess claim of input tax credit or undue or excess reduction in output tax liability.
What is CIN? 2 Marks

CIN is Challan Identification Number. It is generated by the banks indicating that the payment has been realized and credited
to the appropriate government account against a generated challan.
How does the new payment system benefit the taxpayer & the Commercial Tax Department? 3 Marks

The new payment system benefits the taxpayer and the commercial tax department in the following ways
Benefits to Taxpayer: -
● No more queues and waiting for making payments as payments can be made online 24 X 7.
● Electronically generated challan from GSTN common portal in all modes of payment and no use of manually
prepared challan. Paperless transactions.
● Instant online receipts for payments made online.
● Tax consultants can make payments on behalf of the clients.
● Single challan form to be created online, replacing the three or four copy Challan.
● Greater transparency.


Benefits to the Commercial Tax Department:-

● Revenue will come earlier into the Government Treasury as compared to the old system.
● Logical tax collection data in electronic format.
● Speedy accounting and reporting.
● Electronic reconciliation of all receipts.
● Warehousing of digital challan.

Input Tax Credit

Input Tax Credit

Brief Background (Only in Videos)
● Chapter V of the CGST Act [Sections 16 to 21] & Chapter V: Input Tax Credit of the CGST Rules [Rules 36-45]
prescribe the provisions relating to ITC.
● State GST laws also prescribe identical provisions in relation to ITC.
● In this Chapter, provisions of sections 16, 17 and 18 have been discussed. (The remaining sections are not in CA
Inter as prescribed by ICAI)
● Provisions of ITC under CGST Act have also been made applicable to IGST Act vide section 20 of the IGST Act.
What is input tax?

● Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union territory tax (UTGST)
paid on supply of goods or services or both.
● It also includes tax paid on reverse charge basis and integrated tax goods and services tax charged on import of
goods.
● It does not include tax paid under composition levy.
2(19) "capital goods" means goods, the value of which is capitalised in the books of account of the person claiming
the input tax credit and which are used or intended to be used in the course or furtherance of business;
2 (59)"input" means any goods other than capital goods used or intended to be used by a supplier in the course or
furtherance of business;
2(60) - "input service" means any service used or intended to be used by a supplier in the course or furtherance of
business;
Eligibility and condition for taking input tax credit. – Section 16
Who can avail Credit - 16. (1)

Every registered person
● Shall,
○ subject to such conditions and restrictions as may be prescribed and
■ in the manner specified in section 49
● be entitled to take credit of i nput t ax 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 and
the said amount shall be credited to the electronic credit ledger of such person.

To get the best out of these notes visit www.neerajaroraclasses.com Input Tax Credit 1

NOTE - 2(94) "registered person" means a person who is registered under section 25 but does not include a person
having a Unique Identity Number;
Conditions for taking credit - 16 (2)

Notwithstanding anything contained in this section,
● no registered person
● shall be entitled to the credit of any input tax
● in respect of any supply of goods or services or both to him unless,—
a. he is in
○ possession of a
1. tax invoice
2. or debit note
○ issued by a supplier registered under this Act,
○ or such other tax paying documents as may be prescribed;
b. he has received the goods or services or both.
Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods or,
as the case may be, services—
➢ where the goods are delivered by the supplier
● to a recipient or any other person
● on the direction of such 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;
➢ where the services are provided by the supplier to any person on the direction of and on account of such
registered person.

c. subject to the provisions of section 41, (Claim of input tax credit and provisional acceptance thereof.)
● the tax charged in respect of such supply has been actually paid to the Government,
● either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
d. he has furnished the return under section 39:
What are the conditions necessary for obtaining ITC?

Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:
(a) he is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both;
(c) the supplier has actually paid the tax charged in respect of the supply to the government; and
(d) he has furnished the return under section 39.
Provided that
● where the goods against an invoice are received (IMP FOR EXAMS)
● in lots or instalments,
● the registered person shall be entitled to take credit


● upon receipt of the last lot or instalment:
Provided further that (IMP for Exams)

● where a recipient fails to pay to the supplier of goods or services or both,
○ other than the supplies on which tax is payable on reverse charge basis,
● the amount towards the value of supply along with tax payable thereon
● within a period of one hundred and eighty 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:
Provided also that

● the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount
● towards the value of supply of goods or services or both along with tax payable thereon.
NOTES - Possession of tax paying document [Section 16(2)(a) read with rule 36 of the CGST Rules]
ITC can be availed on the basis of any of the following documents:
● Invoice issued by a supplier of goods and/or services
● Invoice issued by recipient (receiving goods and/or services from unregistered supplier) along with proof of
payment of tax (in case of reverse charge)
● A debit note issued by supplier
● Bill of entry or similar document prescribed under Customs Act.
● Revised invoice
● Document issued by Input Service Distributor
Who will get the ITC where goods have been delivered to a person other than taxable person (‘bill to’- ‘ship to
’scenarios)?

Ans. It would be deemed that the registered person has received the goods when the goods have been delivered to a
third party on the direction of such taxable person. So ITC will be available to the person on whose order the goods are
delivered to third person.
N is a trader who places an order on P for a consignment of PRODUCT X. N receives a buying order from V for the same
quantity of PRODUCT X. N instructs P to deliver the goods to V, and in turn he raises an invoice on V. Though the goods are not
physically received at the premises of N, the condition of section 16(2)(b) is satisfied, and N is entitled to ITC on the
consignment.
ABC makes an advance payment in September and orders 100 MT of a chemical which is in short supply. The
supplier of the chemical raises a bill for the entire amount in September and collects GST from ABC on the advance
paid. The chemical is delivered in lots over a period of three months and the supply is completed in December.
Though ABC paid some tax in advance as early as September, they can take the ITC only on receipt of last instalment
of the chemical in the month of December.


Due to a quality dispute, PZP 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 PZP on the invoice got added to the output tax liability of PZP. and thus,
it had to pay back the credit.Only after the vendor rectified the machine and PZP released the payment,could PZP take the
credit again.


16(3)
Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant
and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax
component shall not be allowed.
16(4) -(MOST IMP FOR EXAMS)

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 the financial year to which such invoice or invoice relating to such debit note pertains
or furnishing of the relevant annual return, whichever is earlier.
From the following information determine the amount of input tax credit admissible to NPV Ltd. in respect of various inputs
purchased during the month of September, 2018.

Particulars GST (Rs )
1. Goods purchase without invoice 55,000
2. Goods purchased from MS Ltd. (full payment is made by NPV Ltd. to MS Ltd. 1,25,000
against such supply but tax has not been deposited by MSLtd,)
3. Purchase of goods not to be used for business purposes 1,80,000
4. Purchases of goods from MAN Ltd. (Invoice of MAN Ltd. is received in the month of 24,000
September 2018, but goods were received in the month of October 2018)
5. Goods purchased against valid invoice from SE Ltd. Tax has been deposited by SE 66,000
Ltd. NPV Ltd. has made payment of SE Ltd. for such purchases in the month of
October 2018.


N Ltd. a registered manufacturer of faridabad entered in a contract with a supplier for supply of Input ‘X’ in October, 2018 . As
per contract it was agreed that 10,000 kgs of Input ‘X’ will be supplied for Rs 6,72,000 (Inclusive of CGST and SGST @ 6% each)
in 4 lots. Invoice of regarding supply of Input ‘X’. following further information has been provided regarding supply of input
received in subsequent lots.
Briefly explain whether N Ltd. eligible to take credit on proportionate basis.
Input ‘X’ (in lots) Quantity in kgs Date of Receipt of supply
First lot 2,500 19-10-2018
Second lot 3,000 21-10-2018
Third lot 2,500 09-11-2018
Fourth lot 2,000 11-11-2018
Solution : No, N 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 installments, 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 72,000 i.e., (Rs 6,72,000*12/112) paid
on such input shall be taken by N Ltd only after receipt of fourth lot i.e., 11-11-2018.
NPV Ltd. purchased goods valuing Rs 6,00,000 (Exclusive of CGST and SGST @ 9% each) under the cover of invoice dated
25-12-2018. 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 input tax credit at the time of receipt of input. The company
obtained clarification from a legal consultant who opined that he goods were eligible as inputs under tax credit Rules. The
opinion was received on 05-05-2019. The company now wants to avail input tax credit Rules. Can it do so? The company has
filed its annual return for the year 2018-19 on 16-08-2019.
Solution : As per Section 16(4), 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-
a) 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 pertains; or
b) Furnishing of the relevant annual returns;
Whichever is earlier.
In this case the inputs were purchased by invoice dated 25-12-2018, hence Input tax credit in respect of such inputs can be
taken on earlier of following dates -
➔ 20-10-2019 being due date of furnishing return of month of september, 2019; or
➔ 16-08-2019 being the date of furnishing of annual return
Since, NPV Ltd. can avail credit of input tax paid on inputs till 16-08-2019. Therefore, it can avail credit of CGST Rs
54,000 and SGST of Rs 54,000 on 15-05-2019.


Section 17 - Apportionment of credit and blocked credits.
Partly for business purpose and partly for other purpose
17. (1) Where the goods or services or both are used by the registered person
● partly for the purpose of any business
● and partly for other purposes,
○ the amount of credit shall be restricted to
○ so much of the input tax as is attributable to the purposes of his business.
Partly for Taxable Supply Partly for Exempt Supply
(2) Where the goods or services or both are used by the registered person
● partly for effecting taxable supplies
○ including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and
● partly for effecting exempt supplies under the said Acts,
● 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.
Value of exempt supply – 17(3)
17 (3) The value of exempt supply

● under sub-section (2)
● shall be such as may be prescribed,
● and shall include
○ supplies on which the recipient is liable to pay tax on reverse charge basis,
○ transactions in securities,
○ sale of land and,
○ subject to clause (b)of paragraph 5 of Schedule II, sale of building.
Explanation.—For the purposes of this sub-section, the expression "value of exempt supply" shall not include the
value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said
Schedule.
Manner for Attribution of Credit Sub-Section (1) & Sub-Section (2) - 17(6)
(6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be
attributed.


Manner of determination of input tax credit in respect of inputs or input

services and reversal thereof - Rule 42
42. (1) The input tax credit in respect of inputs or input services, which attract the provisions of sub-section (1) or sub-
section (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for
affecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to
the purposes of business or for effecting taxable supplies in the following manner, namely
a. the total input tax involved on inputs and input services in a tax period, be denoted as 'T';
b. the amount of input tax, out of 'T', attributable to inputs and input services intended to be used exclusively for
the purposes other than business, be denoted as 'T1';
c. the amount of input tax, out of 'T', attributable to inputs and input services intended to be used exclusively for
effecting exempt supplies, be denoted as 'T2';
d. the amount of input tax, out of 'T', in respect of inputs and input services on which credit is not available under
sub-section (5) of section 17, be denoted as 'T3';
e. the amount of input tax credit credited to the electronic credit ledger of registered person, be denoted as 'C1'
and calculated as C1 = T- (T1+T2+T3);
f. the amount of input tax credit attributable to inputs and input services intended to be used exclusively for
effecting supplies other than exempted but including zero rated supplies, be denoted as 'T4';
g. 'T1', 'T2', 'T3' and 'T4' shall be determined and declared by the registered person at the invoice level in FORM
GSTR-2 and at the summary level in GSTR 3B
h. Input tax credit left after attribution of input tax credit under clause (f) shall be called common credit, be
denoted as 'C2' and calculated as—C2 = C1 - T4 ;
i. the amount of input tax credit attributable towards exempt supplies, be denoted as 'D1' and calculated as—
○ D1= (E÷F) × C2 where,
○ 'E' is the aggregate value of exempt supplies during the tax period, and
○ F' is the total turnover in the State of the registered person during the tax period:
■ Provided that where
■ the registered person does not have any turnover during the said tax period
■ or the aforesaid information is not available,
■ the value of 'E/F'
■ shall be calculated by taking values of 'E' and '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;
● Explanation : For the purposes of this clause, it is hereby clarified that the aggregate
value of exempt supplies and the total turnover shall exclude the amount of any duty or
tax levied under entry 84 and 92A of List I of the Seventh Schedule to the Constitution
and entry 51 and 54 of List II of the said Schedule;
j. the amount of credit attributable to non-business purposes if common inputs and input services are used partly
for business and partly for non-business purposes, be denoted as 'D2', and shall be equal to five per cent of C2
and
k. and for effecting supplies other than exempted supplies but including zero rated supplies and shall be denoted
as 'C3', where,—


○ C3 = C2 - (D1+D2);
l. the amount 'C3', D1 and D2 shall be computed separately for input tax credit of central tax, State tax, Union
territory tax and integrated tax and should be declared in GSTR 3B or through a prescribed for
m. the amount equal to aggregate of 'D1' and 'D2' should be reversed by the registered person in GSTR 3B or
in the prescribed form
(2) The input tax credit determined under sub-rule (1) shall be calculated finally for the financial year before the due
date for furnishing of the return for the month of September following the end of the financial year to which such credit
relates, in the manner specified in the said sub-rule and-
a. Where
● the aggregate of the amounts calculated finally
● in respect of 'D1' and 'D2'
● exceeds the aggregate of the amounts determined under sub-rule (1) in respect of 'D1' and 'D2',
● such excess shall be reversed by the registered person in GSTR 3B
● in the month not later
● than the month of September following
● the end of the financial year to which such credit relates and
● the said person shall be liable to pay interest on the said excess amount at the rate specified in sub-
section (1) of section 50 for the period starting from the first day of April of the succeeding financial year
till the date of payment; or
b. Where
● the aggregate of the amounts determined under sub-rule (1) in respect of 'D1' and 'D2'
● exceeds the aggregate of the amounts calculated finally in respect of 'D1' and 'D2',
● such excess amount shall be claimed as credit
● by the registered person
● in his return
● for a month
● not later than the month of September
● following the end of the financial year to which such credit relates.



Manner of determination of input tax credit in respect of

capital goods and reversal thereof in certain cases (Rule 43)
Attribution of credit of capital goods used partly for business and partly for non business purposes/ partly for effecting
taxable supply and partly for effecting exempt supplies.
The inputs tax credit in respect of capital goods,being partly used for the purposes of business and partly for other purposes, or
partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed
to the purposes of business or for effecting taxable supplies in the following manner, namely.
STEP 1 - Compute A & Tc

a) Capital goods exclusively used for non-business purposes/for effecting exempt supplies- (GSTR 2 but no Credit)
○ ITC shall not be taken
■ The amount of input tax in respect of capital goods used or intended to be used exclusively for
non-business purposes or used or intended to be 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;
b) Capital goods exclusively used for effecting taxable supplies including zero rated supplies (GSTR 2 as well as Credit)
○ ITC shall be taken
■ The amount of input tax in respect of capital goods used or intended to be used exclusively for effecting
supplies other than exempted supplies but including zero-rated supplies
● shall be indicated in FORM GSTR-2 and GSTR 3B
● and shall be credited to the electronic credit ledger;
c) Other capital goods (A)

○ ITC to be credited in electronic ledger
■ The amount of input tax in respect of capital goods not covered under (a) and (b) above ( i.e, the capital
goods which are used/intended to be used commonly for making taxable as well as exempt supplies &
business & non-business purposes),
■ denoted as ‘A’ shall be
● credited to the electronic credit ledger.
○ The useful life of such capital goods will be taken as 5 years from the date of invoice.
Change from exclusive use for non-business purpose/exempt supplies to common use
Where capital goods which were initially covered under (a) above get subsequently covered under clause ( c), compute ‘A’
by reducing ITC @ 5% per quarter or part thereof.


Such reduced amount will be credited to electronic credit ledger.
Explanation : An item of capital goods declared under clause (a) on its receipt shall not attract the provisions of Section 18(4),
if it is subsequently covered under this clause. (After Section 18)
d) Common credit of capital goods

○ the aggregate of the amount of ‘A’ credited to the electronic credit ledger under (c) above,
○ to be denoted as ‘Tc’ as shall be the common credit in respect of capital goods for a tax period.
Change from exclusive use for taxable including zero rated supplies to common use
Where capital goods which were initially covered under (b) above get subsequently covered under clause ( c), compute
‘A’ by reducing ITC @ 5% per quarter or part thereof add such value of ‘Tc’.



Step 2 - Compute Tm (Tm = TC /60)

Determination of common credit during the useful life of capital goods for a tax period :
The amount of input tax credit attributable to a tax period on common capital goods during their useful their, be
denoted as ‘Tm' and calculated as
Tm= Tc /60
Step 3 - Compute Tr
Determine common credit at the beginning of a tax period for all capital goods whose useful life remains during the tax
period as under :
The amount of input tax credit, at the beginning of a tax period, on all common capital goods whose useful life remains
during the tax period, be denoted as ‘Tc’ and shall be the aggregate of ‘Tm' for all such capital goods.
“Tr’ = ‘ Tm' for such capital goods
Step 4 Apportion common credit attributable to exempt supplies as under

(Compute Te)
The amount of common credit attributable towards exempted supplies, be denoted as ‘Te’ and calculated as -
Te= (E/F) * Tr
E = The aggregate value of exempt supplies during the tax period i.e., “E”


F = The total turnover in the State of the registered person during the tax period i.e., “F”
Step 5 Amount to be added to output tax liability

The amount Te along with the applicable interest shall, during 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.
Turnover details not available

values for the last tax period may be used : where registered person does not have any turnover during the said tax
period or the aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values of ‘E’ and “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 excluded (Explanation )

The aggregate value of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied under
entry 84 of List I of the seventh Schedule to the constitution and entry 51 and 54 of List II of the said Schedule;
❖ Separate computation for CGST/SGST/UTGST and IGST (Rule 43(2) : The amount Te shall be computed
separately for central tax, state tax, union territory and integrated tax.
❖ Exempt supply : Exclusions (Explanation ) : For the purposes of Rule 42 and this rule, it is hereby clarified that
the aggregate vale of exempt supplies shall exclude :-
a) The value of supply of services specified in the notification 42/2017-IT (Rate), (This notification
provides full exemption to supply of service having place of supply in Nepal and bhutan against payment
in Indian Rupees)
b) 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
c) The value of supply of services by way of transportation of goods by a vessel from the customs station of
clearance in India to place outside India.



NPV Ltd. a registered supplier, supplying taxable as well as exempted goods, provides following Turnover details during the
month of August, 2019
Particulars Rs
Value of taxable supply of goods 12,00,000
Value of zero rated taxable supply of goods 5,50,000
Value of exempted supply of goods 5,00,000
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, 2019 are as under (amount in Rs )

Particulars CGST @ 9% SGST @ 9% Total
The input tax on capital goods is as follows:
1 Input tax on capital goods exclusively used for supplying 10,800 10,800 21,600
exempted goods
2 Input tax on capital goods exclusively used for supplying taxable 45,000 45,000 90,000
goods (including Zero rated supplies)
3 Input tax on capital goods exclusively used for supplying goods 11,700 11,700 23,400
for non business use

Capital goods used for both supply of taxable as well as exempt goods :
Capital goods Value of inward supplies (Exclusive of CGST & CGST @ 9% SGST @ 9%
SGST) (Rs) (Rs)
A 5,60,000 50,400 50,400
B 2,56,000 23,040 23,040
C 4,56,000 41,040 41,040
Total 1,14,480 1,14,480
Determine the amount to be added in output tax liability and amount to be credited in the month of August 2019


Solution : Computation of credit on capital goods attributable for tax period of August, 2019 (amount in Rs):
Particulars CGST SGST GSTR 2 Credit ledger
Total tax on capital goods
Tax on capital goods exclusively used for supplying 10,800 10,800 Yes No
exempted goods
Tax on capital goods exclusively used of supplying taxable 45,000 45,000 Yes Yes
supplies (1)
Tax on capital goods exclusively used for supplying goods 11,700 11,700 Yes No
for non business use
Tax on capital goods used for supplying taxable as well as 1,14,480 1,14,480 Yes Yes
exempted supplies (shall be credited to Electronic credit
ledger and the useful life of such goods shall be taken as 5
years. ) Tc. (2)
Amount to be credited to Credit Ledger (1) + (2) 159480 159480
Amount of input tax credit attributable to the month of 1,908 1,908
August 2019, on common capital goods during their residual
life Tm =Tc/ 60 (Rs 1,14,480 /60)
Amount of ITC on capital goods whose residual life remains 1,908 1,908
in beginning of tax period i.e., August,2019 (Tr) (Tr = Sum
total of Tms’ Since there is only one Tm So Tr = Tm)
Amount of common credit attributable towards exempted 456 456

supplies to be added to output tax liability (Te)
Te = Tr * (value of Exempted supply and supply made for
non business used during tax period/ total value of supply
tax period) (Rs 1,908/Rs 23,00,000) * (Rs 5,00,000 + Rs
50,000)

Working Note :
Calculation of ITC on capital goods whose residual life remains during the tax period : Tr = Tm/60

Capital Value of inward CGST @ 9% (Tc) SGST @ 9% (Tc) ITC = Attributable for 1 month
goods supplies (exclusive (Tr = Aggregate of Tm)
of CGST & SGST)
(Rs) CGST @ 9% SGST @ 9%
(Rs) (Rs) (Tm = Tc/60) (Tm=Tc/60)
(Rs) (Rs)
A 5,60,000 50,400 50,400 840 840
B 2,56,000 23,040 23,040 384 384
C 4,56,000 41,060 41,040 684 684
Total 1,14,480 1,14,480 1,908 1,908


Mr. M is manufacturer engaged in supplying exempted as well as taxable goods. On 15th September, 2018 he purchased
capital goods on which IGSt paid Rs 72,000 which he used for making exempted supplies. On 15th April, 2019 he used such
capital goods for purpose of supplying both Taxable as well as exempted supplies (ie., 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 eligible input tax credit shall be arrived at by reducing the input tax at the
rate of 5% points for every quarter or part thereof ie., Rs 57,600 (Rs 72,000- (5% * 4 quarters * Rs 72,000) shall be credited to
the electronic credit ledger.
Amount of input tax credit attributable to April, 2019 on common capital goods during their useful life = (Rs 57,600)/60 i.e., Rs
960.
A
A = Tc
TM = Tc/60
Tr = TM
Te = Tr x E/F

(Note : As per Section 2(92), “quarter” shall means 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 2018, December 2018, March 2019 and quarter beginning from
April 2019.


Champu 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, 2019 was Rs 2,00,000 , Rs 10,00,000 and Rs
12,00,000. Champu Industries is in possession of 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 Champu
Industries and amount of common credit attributable towards exempted supplies, if any, for the month of April, 2019.

Particulars GST paid (Rs)
Machines ‘A’ purchased on 01-04-2019 for being exclusively used for non-business purposes 19,200
Machine ‘B’ purchased on 01-04-2019 for being exclusively used in manufacturing zero-rated 40,000
supplies
Machines ‘C’ purchased on 01-04-2019 for being used in manufacturing all the three products - 96,000
X,Y and Z
Machine ‘D’ purchased on April 1,2 years before 01-04-2019 for being exclusively used in 1,92,000
manufacturing product Z. from 01-04-2019, such machines will also be used for manufacturing
products X and Y.
Machine ‘E’ purchased on April 1,3, years before 01-04-2019 for being exclusively used in 2,88,000
manufacturing products X and Y. from 01-04-2019, such machines 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, 2019 (amount in Rs):
Particulars Ineligible Amount to be

Credit credited to
ECrL
Machine ‘A’ (Since exclusively used for non-business purposes, ITC is 19,200
not available under rule 43(1)(a) of CGST Rules, 2017)
Machine ‘B’ (Since taxable supplies include zero-rated supplies under 40,000
rule 43(1)(b) of CGST Rules, 2017. Hence, full ITC is available .
Machines ‘C’ (Commonly used for taxable and exempt supplies- Rule 96,000 96,000
43(1)(c) of the GST Rules, 2017 ) = A
Machine ‘D’ (Owing to change in use from exclusively exempt to both 1,15,200 1,15,200
taxable and exempt, common credit to be reduced by ITC @ 5% per
quarter or part thereof in terms of proviso to rule 43(1)(c) of CGST
Rules, 2017) = Rs 1,92,000- Rs 76,800 (Rs 1,92,000 * 5% * 8 quarters) = A


Machine ‘E’ (Owing to change in use from exclusively taxable to both 1,15,200
taxable and exempt, common credit to be reduced by ITC @ 5% per
quarter or part thereof in terms of proviso to Rule 43(1)(d) of CGST
Rules, 2017) = Rs 2,88,000- Rs 1,72,800 (Rs 2,88,000 * 5% * 12 quarters)
= A
3,26,400
Total common credit Tc
Common credit for the tax period (in the given case,a month ) under 5,440
rule 43(1)(e) of CGST Rules, 2017 (Rs 3,26,400/60) = TM =TR

Common credit attributable to exempt supplies in April, 2019 u/r 2,720
(Te)
43(1)(g) of the CGST Rules, 2017
= (Turnover of exempt supplies/Total turnover) * Common credit
=(Rs 12,00,000/ Rs 24,00,000) * Rs 5,440
(such credit, along with the applicable interest, shall be added to the
output tax liability of Oberoi Industries
Amount to be credited to the electronic credit ledger of Oberoi 2,51,200

Industries for the month of April, 2019


Banking company or a financial institution – Section 17(4)

(4) 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 sub-section (2),
● or avail of,
● every month,
● an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in
that month and the rest shall lapse:
Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:
Provided further that the restriction

● of fifty per cent
● shall not apply to the tax paid on supplies
● made by one registered person
● to another registered person
● having the same Permanent Account Number.
Crux of Section 17(4)

● First of all Section 17(4) is optional. You can choose between 17(2) and 17(4)
● The option once exercised shall not be withdrawn during the remaining part of the financial year
● Following things need to be done for section 17(4)
Tax paid on I+IS used for Don’t avail credit Don’t claim in GSTR 2
non- business purpose (Ineligible)
Blocked Credits Don’t Avail Don’t claim in GSTR 2

(Ineligible)
Tax Paid on Supplies Avail full credit Claim in GSTR – 2 (Allowed subject to provisional
between separately (100%) principle -Section 41 and matching principle Section
registered establishments 42 and Section 43)
Remaining Input tax Avail 50% Credit Claim 50% Credit in GSTR – 2 (Allowed subject to
provisional principle -Section 41 and matching
principle Section 42 and Section 43)


Dena bank, having a branch in Meerut 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 related u/s 17(4). Its head office is in Delhi and
branch in Ahmedabad. Input tax credit (CGST & SGST) available for the month August, 2018 is Rs 90,000 which includes :
Total input tax Credit includes relating to -

Particulars Input tax (Rs )
(CGST & SGST )
1 Services availed from its distinct establishment i.e., from Delhi Head office 18,000
2 Outdoor catering services received for its employees 14,400
3 Goods that has obsolete and whose value has been written off in books 2,500
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, 2018 that can be availed by Dena bank.
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 and advances which is not opting for
provisions of a Section 17(2), has the option 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 and the rest shall lapse.
Since, Dena bank has availed an option to avail every month, an amount equal to 50% of the eligible input tax credit on inputs,
capital goods and input services in that month and rest shall lapse. Therefore, in given case-

Computation of Eligible Input tax credit for August, 2018 (amount in Rs ) :
Particulars Eligible ITC
Input tax credit available (excluding input tax credit availed from its Delhi Head Office) 72,000
(Rs 90,000 - Rs 18,000)
Less Credit relating to ---
Outdoor catering services received for its employees (credit is not available u/s 17(5)). 14,400
Goods that has obsolete and whose value has been written off in books (credit is not 2,500
available under section 17(5).
Auditing services NIL
Goods received which are used for personal use 6,500
Total eligible Input tax credit available 48,600
50% of eligible input Tax credit shall be availed by Dena bank (A) 24,300


Input tax on supply of services availed from its distinct establishment i.e., from Delhi 18,000
Branch (50% restriction not applicable hence full input tax credit can be availed) (B)
Total eligible Input tax Credit Available in respect of CGST & SGST (A) + (B) 42,300
Amount of Input tax credit lapsed 24,300


Blocked Credit - Section 17(5)

Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax
credit shall not be available in respect of the following, namely


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, is allowed.
4. ITC on cars purchased by a car driving school is allowed.
5. ITC on buses purchased by a company for transportation of its employees 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.


Examples
1. ITC on aircraft purchased by a manufacturing company for official use of its CEO is blocked.
2. ITC on aircraft purchased by an Aviation School providing training on flying aircrafts, is allowed.


Examples
1. ITC on general insurance taken on a car used by employees of a manufacturing company for official purposes,
is blocked.
2. ITC on maintenance & repair services availed by a company for a truck used for transporting its finished
goods, is allowed.
(b) the following supply of goods or services or both—

(i) food and beverages, ou tdoor catering, beauty treatment, health services, cosmetic and plastic surgery,
leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa)
except when used for the purposes specified therein, life insurance and health insurance:
➢ Provided that the input 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:
Provided that 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.
Examples
1. AB & Co., a caterer of Amritsar, has been awarded a contract for catering in a marriage to be held at Ludhiana.
The firm has given the contract for supply of snacks, to be served in the marriage, to CD & Sons, a local caterer
of Ludhiana. ITC on such outdoor catering services availed by AB & Co., is allowed.
2. ITC on outdoor catering services availed by a company, for a team development event organised for its
employees, is blocked.
3. ITC on outdoor catering service availed by a company to run a canteen in its factory. The Factories Act, 1948
requires the company to set up a canteen in its factory. ITC on such outdoor catering is allowed.
(c) works contract services when supplied for construction of an immovable property (other than plant and
machinery) except where it is an input service for further supply of works contract service;
(d) 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 when such goods or services or both are used in the course or
furtherance of business.
Explanation.—For the purposes of clauses (c)and (d), the expression "construction" includes re-construction,
renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
(e) goods or services or both on which tax has been paid under section 10; (Never)
(f) goods or services or both received by a non-resident taxable person except on goods imported by him;


(g) goods or services or both used for personal consumption;(Never)
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and (Never)
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.
Explanation. — For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means
apparatus, equipment, 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 but excludes
i. land, building or any other civil structures;
ii. telecommunication towers; and
iii. pipelines laid outside the factory premises.


X Ltd. a registered manufacturer engaged in taxable supply of goods procured the following goods during the month of
October, 2018. 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.

Inward supplies GST (Rs)
Electrical transformers used in the factory 2,16,000
Moulds and dies used in the factory 26,000
Pollution control equipment used in the factory 2,34,000
Capital goods purchased on which depreciation has been taken on full value including input tax 1,35,000
thereon
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 input tax credit available of X Ltd :
Inward supplies Working Notes GST (Rs)
Electrical transformers used in the factory 1 2,16,000
Moulds and dies used in the factory 1 26,000
Pollution control equipment used in the factory 1 2,34,000
Capital goods purchased on which depreciation has been taken on full value 2 Nil
including input tax thereon
Capital goods used as parts purchased from supplier who paid tax under 4 Nil
composition scheme and the composite tax has not been collected from X Ltd.
Total input tax credit available 4,76,000

Working Notes :
1. As per section 2(19) “Capital goods” means goods, the value of which is capitalized in the books of account of the
person claiming the input tax credit and which 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 provisions of the Income tax Act, 1961.
3. As per Section 17(5), 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 input tax credit shall be allowed of tax paid under composition scheme by the
supplier.


Determine the amount of Input tax credit available to NPV Ltd. in respect of the following items procured by them in the
month of January, 2019:

S.no Inward supplies GST (Rs)
1 Input used for the manufacture of the final product 72,000
2 Food and Beverages procured from Laddu Caterers for being used in dealer’s meet 48,000
3 Goods used for providing services during the warranty period 12,000
4 Goods used for setting up Telecommunication Towers being immovable property 90,000
5 Inputs stolen from the factory store 13,200

Solution : Computation of Input Tax credit available with NPV Ltd. :
Input used for the manufacture of the final product 72,000
Food and Beverages procured from Laddu Caterers for being used in dealer’s 1 Nil
meet
Goods used for providing services during warranty period (Since used in course 12,000
of business hence, input tax credit shall be available)
Goods used for setting up Telecommunication Towers being immovable 2 Nil

property
Inputs stolen from the factory store 3 Nil
Total Input tax credit available 84,000
Working Notes


Determine the amount of input tax credit admissible to P Ltd. in respect of the following items procured by them in the month
of November, 2018:
Inward supplies GST (Rs)
1. Goods supplied for captive consumptions in a factory 9,800
2. Goods purchased for being used in repairing the factory shed and same has been 18,000
capitalized in books
3. Cement used for making foundation and structural support to plant and Machinery 14,000
4.. Inputs used in trial runs 14,560
5. Food and beverages purchased for the employees during office hours . 8,400
Note : (i) All the conditions necessary for availing the ITC has been fulfilled. (ii) Registered Person is not eligible for any
threshold exemption.

Solution : Computation of Input tax credit available with P Ltd. :
Inward supplies Working GST (Rs)

Notes
Goods used for captive consumption (since, used in course of business hence, ITC on 9,800
same shall be admissible)
Goods purchased for being used in repairing the factory shed and same has been 1 Nil
capitalized to the cost of factory shed
Cement used for making foundation and structural support to plant and machinery 2 14,000
Inputs used in trial runs (since used in course of business hence, input tax credit shall be 14,560
available)
Food and beverages purchased for the employees during office hours 3 Nil
Total input tax credit available 38,360

Working Notes :
1. As per Section 17(5), 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 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
immovables 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, equipment 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 respects 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), No input tax credit is available in respect of food and beverages, outdoor catering, beauty
treatment, health services, cosmetic and plastic surgery 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. Hence, no input tax credit is
available on food and beverages for use of employees during office hours.
XYZ Ltd. engaged in supplying taxable goods has availed following services in month of September,2018. Compute the input
tax credit admissible on such input services.
S. no Inward services GST (RS)
1. Sales promotion services 16,200
2. Health care services availed from Physique Club for upkeep of heath of their employees 10,800
3. XYZ Ltd. hired cab on rent for employees (Government has issued a notification for such 4,500
service to be mandatory provided to employees) .
4. Market research services 10,080
5. Quality control services 18,000
6. Work contract services for construction of office building 45,000
Note :
1. All the conditions necessary for availing the ITC have been fulfilled.
2. Registered person is not eligible for any threshold exemption.
Solution : computation of input tax credit available with XYZ Ltd. :
Sales promotion services 1 16,200
Health care services availed from Physique club for upkeep of health of their 2 Nil
employees
XYZ Ltd, hired cab on rent for employees as an obligation by government 3 4,500
notification
Market research services 1 10,080


Quality control services 1 18,000
Work control services for construction of office building (Not considered as eligible Nil
input service)
Total input credit available 48,780
Working Notes :

1. As per section 2(60), “Input Services” means any services used or intended to be used by a supplier in the course or
furtherance of business. So, services 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), No input tax credit is available in respect of food and beverages, outdoor catering, beauty
treatment , health services, cosmetic and plastic surgery except where an inward supply of goods or services or both
of a particular category is used by a registered 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. Thus, no input tax credit shall be
admissible on health care services provided to employees.
3. As per Section 17(5), since the government has notified cab services as obligatory services to be provided to
employees, hence credit of tax paid on such service shall be allowed.


Section 18(1)(a)
Section 18(1)(b)
Section 18(1)(c)
Section 18(1)(d)
Section 18(2)
Section 18(3)
Section 18(4)
Section 18(5)
Section 18(6)
Availability of credit in special circumstances. - Section 18
Liable To Register - 18(1)(a)

Subject to such conditions and restrictions as may be prescribed
a. a person who has applied for registration under this Act within thirty 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;
Rule 40 Manner of claiming credit in special circumstances

40(1) The input tax credit claimed in accordance with the provisions of sub-section (1) of section 18 on the inputs held
in stock or inputs contained in semi-finished or finished goods held in stock, or the credit claimed on capital goods in
accordance with the provisions of clauses (c) and (d) of the said sub-section, shall be subject to the following conditions,
namely,—
a. (STUDY IT LATER) For Capital Goods

the input tax credit on capital goods, in terms of clauses (c) and (d) of sub-section (1) of section 18, shall be
claimed after reducing the tax paid on such capital goods by five percentage points per quarter of a year or part
thereof from the date of the invoice or such other documents on which the capital goods were received
by the taxable person;


b. Declaration / Electronically / Within 30 Days /Common Portal / GST ITC 01
○ the registered person shall within a period of thirty days from the date of becoming eligible to avail the
input tax credit under sub-section (1) of section 18, or within such further period as may be extended by
the Commissioner by a notification in this behalf, shall make a declaration, electronically, on the
common portal in FORM GST ITC-01 to the effect that he is eligible to avail the input tax credit as
aforesaid.
c. Details in the declaration

○ the declaration under clause (b) shall clearly specify the details relating to the inputs held in stock or
inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital
goods—
i. on the day immediately preceding the date from which he becomes liable to pay tax under the
provisions of the Act, in the case of a claim under clause (a) of sub-section (1) of section 18;
ii. on the day immediately preceding the date of the grant of registration, in the case of a claim
under clause (b) of sub-section (1) of section 18;
iii. on the day immediately preceding the date from which he becomes liable to pay tax under
section 9, in the case of a claim under clause (c) of sub-section (1) of section 18;
iv. on the day immediately preceding the date from which the supplies made by the registered
person becomes taxable, in the case of a claim under clause (d) of sub-section (1) of section 18;
d. Certified Details in Declaration

○ the details furnished in the declaration under clause (b) shall be duly certified by a practicing chartered
accountant or a cost accountant if the aggregate value of the claim on account of Central tax, State tax,
Union territory tax and integrated tax exceeds two lakh rupees;
e. For 18(1)(c) & (d) - Verify With GSTR 1 or 4 of suppliers

○ the input tax credit claimed in accordance with the provisions of clauses (c) and (d) of sub-section (1) of
section 18 shall be verified with the corresponding details furnished by the corresponding supplier in
FORM GSTR-1 or as the case may be, in FORM GSTR- 4, on the common portal.
40(2) - For 18(6) - Supply of Capital Goods - Study with 18(6)

The amount of credit in the case of supply of capital goods or plant and machinery, for the purposes of sub-section (6) of
section 18, shall be calculated by reducing the input tax on the said goods at the rate of five percentage points for every
quarter or part thereof from the date of the issue of the invoice for such goods.



Date from which liable to get registered 15/02/2019

Date on which applied for registration 20/02/2019
CGST, SGST and IGST liability for the month of February, 2019 is Rs 20,500, 20500 and Rs 50,500 respectively.
Following are details of stock of input held on 14-02-2019 and tax paid thereon (amt. In Rs)
Particulars CGST SGST
Inputs received on 10-01-2019 (invoices dated 11-01-2019) lying in stock 3,500 3,500
Inputs received on 25-10-2018 (invoice dated 26-10-2018) lying in 7,500 7,500
semi-finished stock
Inputs received on 15-01-2019 (Invoice dated 15-01-2019) contained in 11,500 11,500
Finished Goods
semi-finished stock
Briefly explain the tax payable in cash if any.

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-finished or finished goods in stock on date immediately preceding the date from which he
becomes liable to registration i.e. 14th February, 2019.
As per Section 18(2), 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.

In view of above provisions input tax credit available will be computed as follows (Amount in Rs) :
Particulars CGST @ 6% SGST @ 6%
Inputs received on 10-01-2019 (invoice dated 11-01-2019) lying in stock as 3,500 3,500
on 14-02-2019
semi-finished stock as on 14-02-2019
Inputs received on 15-01-2019 (invoice dated 15-01-2019) contained in 11,500 11,500
Finished Goods as on 14-02-2019
Total eligible input tax credit 22,500 22,500
Computation of Tax Payable in cash for month of February, 2019 (amount in Rs ) :

Particulars CGST @ 6% SGST @ 6% IGST @ 12%
Output tax liability for February 2019 20,500 20,500 50,500
Less Eligible input tax credit available on inputs in respect of --
CGST (See Note) 20,500 --- 2,000


SGST (See Note) -- 20,500 2,000
Output Tax payable in cash Nil Nil 46,500
Note : As per Section 49(5)(b)/(c ) , the central tax shall first be utilised towards payment of central atx and the amount
remaining, if any, may be utilised towards the payment of integrated tax and the state tax shall first be utilised towards
payment of state tax and the amount remaining, if any, may be utilised towards payment of integrated tax.


18(1)(b) - Voluntary Registration

A person who takes registration under sub-section (3) of section 25 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 of grant of registration;


18(1)(c) Ceases to Pay Tax Under Section 10

Where any registered person ceases to pay tax under section 10, 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 under section 9:


Paying tax under composition scheme crosses the threshold and becomes liable to pay tax under regular scheme on
01-04-2019. Can it avail inputs tax credit and if so calculate the amount of ITC available?

Break-up of credit available as on 31-03-2019 : (amount in Rs)
Particulars CGST SGST
Inputs lying in stock (invoice dated 12-02-2019) 5,000 5,000
Capital goods procured on 15-09-2018 invoice dated 15-09-2018 7,500 7,500
Inputs lying in semi finished goods in stock (invoice dated 26-12-2018) 4,400 4,400

Solution : As per Section 18(1)(c), where any registered person ceases to pay tax under-section 10, 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, shall be entitled from 01-04-2019 to avail credit available as on 31-03-2019.
As per Rule, 40 of the CGST Rules, 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 in respect of inputs (amount in Rs ) :

Particulars Input tax (CGST + Eligible Credit
SGST)
Inputs lying in stock 10,000 10,000
Inputs lying in semi finished goods in stock (Invoice dated 12-12-2018) 8,800 8,800
Total input tax credit available 18,800 18,800
Input tax credit available in respect of capital goods (amount in Rs ) :

Date of invoice of capital goods 15-09-2018
Date from which ABC traders are liable to pay tax under Section 9 01-04-2019
No. of quarters from date of invoice 3
CGST and SGST paid on capital goods procured on 15-09-2018 15,000
ITC to be reduced by Rs 15,000 * 5% * 3 quarters 2,250
Credit (CGST and SGST )available on capital goods 12,750
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.


18(1)(d) Exempt Supply Taxable Supply

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:
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed


18(2) - No ITC After expiry of 1 Year from the Date of Invoice

18(2) The registered person shall not be entitled to take input tax credit under sub-section (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.
Capital Goods Declaration Details Certification Verification
18(1)(a) Liable to
register
18(1)(b) Voluntary
registration
18(1)(c) Ceases to pay

tax under
section 10
18(1)(d) Exempt Supply

Taxable Supply
18(3) Change in Constitution

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 provisions for transfer of liabilities, the said registered person shall
be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged,
demerged, amalgamated, leased or transferred business in such manner as may be prescribed
Rule 41
1. Transferor shall request in FORM GST ITC 02
2. Transferor will submit a copy of certificate by CA or CoA to certify transfer of liability
3. Transferee shall accept the details furnished by the transferor
4. Upon acceptance the unutilised credit of transferor shall be credited to the electronic credit ledger of transferee.
5. Input and capital goods so transferred shall be duly accounted by transferee
18(4) Registered Person Opts to pay tax under section 10 or

Supply become wholly exempt
● Where any registered person who has availed of input tax credit opts to pay tax under section 10 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,
○ INPUT
■ 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
○ CAPITAL GOODS


■ and on capital goods, reduced by such percentage points as may be prescribed,
■ on the day immediately preceding the date of exercising of such option or,
■ the date of such exemption:
■ As the case may be
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger
shall lapse.
18(5) - Manner
18(5) The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated in
such manner as may be prescribed


Manner of reversal of credit under special circumstances

Rule 44
44. (1) The amount of input tax credit relating to inputs held in stock, inputs contained in semi-finished and finished
goods held in stock, and capital goods held in stock shall, for the purposes of sub-section (4) of section 18 or sub-section
(5) of section 29, be determined in the following manner, namely
a. for inputs held in stock and inputs contained in semi-finished and finished goods held in stock, the input tax
credit shall be calculated proportionately on the basis of the corresponding invoices on which credit had been
availed by the registered taxable person on such inputs;
b. for capital goods held in stock, the input tax credit involved in the remaining useful life in months shall be
computed on pro rata basis, taking the useful life as five years.
Illustration:
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
Input tax credit taken on such capital goods= C
Input tax credit attributable to remaining useful life= C multiplied by 5/60
(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of central tax, State tax,
Union territory tax and integrated tax.
(3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the
amount under sub-rule (1) based on the prevailing market price of the goods on the effective date of the occurrence of
any of the events specified in sub-section (4) of section 18 or, as the case may be, sub-section (5) of section 29.
(4) The amount determined under sub-rule (1) shall form part of the output tax liability of the registered person and
the details of the amount shall be furnished in FORM GST ITC-03, where such amount relates to any event specified in
sub-section (4) of section 18 and in FORM GSTR-10, where such amount relates to the cancellation of registration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing chartered accountant or
cost accountant.
(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital goods shall be
determined in the same manner as specified in clause (b) of sub- rule (1) and the amount shall be determined
separately for input tax credit of central tax, State tax, Union territory tax and integrated tax


The goods manufactured 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 & SGST @ 6% respectively. Following
information is provided on 31 -05-2019:
1. The inputs costing Rs 1,12,000 (inclusive of CGST & SGST ) are lying in stock.
2. The inputs costing Rs 80,640 (inclusive of CGST & SGST) are held in process.
3. The finished goods valuing Rs 5,60,000 are in stock, the input cost (inclusive of CGST and SGST) is 50% of the value.
4. The input tax credit on capital goods lying in stock is Rs 72,000. CG Purchased on 1-8-2018.
5. The balance in Electronic Credit ledger is Rs 1,52,000.
Compute the amount to be paid.

What would your answer be if the balance in Electronic credit ledger account is Rs 1,00,000 ?
As per Section 18(4), where any registered person who has availed input tax credit and 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 inputs held in stock and inputs contained in semi-finished goods held
in stock on capital goods taking useful life of capital goods 5 years, on the day immediately preceding the date of such
exemption

The balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.
Accordingly an amount computed as follows has to be paid
Inputs lying in stock (Credit = Rs 1,12,000 * 12/ 112) Net purchase price, exclusive of tax) 12,000
Inputs in process ( Rs 80,640 * 12/ 112) 8,640
Inputs contained in finished goods lying in stock ( Rs 5,60,000 * 50% * 12 / 112) 30,000
Input tax on capital goods used for 10 months taking residual life as 5 years ( Rs 72,000 * 60,000
50/60) 50 months being remaining residual life of capital goods) (Rule 44 of CGST Rules,
2017)
Amount to be paid 1,10,640

The aforesaid amount can be paid by utilizing the balance in Electronic credit ledger. The balance credit = Rs 1, 52,000- Rs
1,10,640 = Rs 41,360 shall lapse.

If balance in Electronic credit ledger is Rs 1,00,000 : then following amount will have to paid in cash = Rs 1,10,640 - Rs 1,00,000
= Rs 10,640 .
Compute the amount to be paid 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 and SGST @ 12%) is Rs 89,600.
As per Rule 44(3) of CGST Rules, 2017 where 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.
Inputs contained in finished goods lying in stock ( Rs 89,600 * 12/112) = 9,600


Section 18(6) Read with Rule 40(2) and 44(6) and the
controversy
In case of supply of capital goods or plant and machinery, 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 or plant and machinery reduced
by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and
machinery determined under section 15, whichever is higher:
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may
pay tax on the transaction value of such goods determined under section 15.
Purchased capital goods under cover of invoice dated 25-09-2018 for Rs 4,13,000 (inclusive of CGST @ 9% and SGST @ 9%)
after taking it for the business use, the said capital goods were supplied for Rs 2,85,000 on 24-04-2019. Explain Input tax
credit treatment in this case.
Solution : As per Section 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,
Whichever is higher.
Computation of amount of tax payable

Date of invoice of purchase of capital goods 25-09-2018
Date of supply of capital goods after taking into use 24-04-2019
No. of quarters from the date of issue of invoice for such goods 4
CGST and SGST paid on purchase of Capital goods (Rs 4,13,000* 18 / 118) 63,000
Reduced by Rs 63,000* 5% *4 quarters 12,600
Amount of CGST and SGST (A) 50,400
Transaction Value of supply of Capital Goods u/s 15 2,85,000
CGST and SGST payable on supply of Capital goods @ 18% (B) 51,300
Amount to be payable (higher of A or B) 51,300


ICAI RTP May 2018 (www.icai.org)

Granites Textiles Ltd. purchased a needle detecting machine on 8th July, 2017 from Makhija Engineering Works Ltd. for
₹10,00,000 (excluding GST) paying GST @ 18% on the same. It availed the ITC of the GST paid on the machine and started
using it for manufacture of goods. The machine was sold on 22nd October, 2018 for ₹ 7,50,000 (excluding GST), as second
hand machine to LT. Pvt. Ltd. The GST rate on supply of machine is 18%.

Section 18 of the CGST Act, 2017 read with the CGST Rules, 2017 provides that if capital goods or plant and machinery on which
input tax credit has been taken are supplied outward by the registered person, he must pay an amount that is the higher of
the following

● Input tax credit taken on such goods reduced by 5% per quarter of a year or part thereof from the date of issue of
invoice for such goods (i.e., input tax credit pertaining to remaining useful life of the capital goods), or
● tax on transaction value.

Accordingly, the amount payable on supply of needle detecting machine shall be computed as follows:

Particulars ₹ ₹
Input tax credit taken on the machine (10,00,000 × 18%) 1,80,000
Less: Input tax credit to be reversed @ 5% per quarter for the period of use of
machine (In Class or videos)
Amount required to be paid (A)
GST leviable on transaction value ( 7,50,000 × 18%) (B) 1,35,000
Amount payable towards disposal of machine is higher of (A) and (B)
Purchased refractory bricks under cover of invoice dated 25-09-2018 for Rs 4,13,000 (inclusive of CGST @ 9% and SGST @ 9%)
after taking it for the business use, the said capital goods were sold as scrap for Rs 5,000 on 24-04-2019. Explain Input tax
credit treatment in this case.
Solution (to be discussed in class / videos)


Mr. PK Kohli a famous cricketer furnished you with the following information of the various receipts for the month ended
30-04-2018. You are required to determine his GST liability if all the amounts are exclusive of GST.
Particulars Rs
1 Receipts from Sports Authority of India for Participation in recognised sport 100 lakh
2 Receipts from franchise of Indian Premier league (not a recognised sports body) 75 lakh
3 Receipts from acting as brand ambassador for corporate client 22 lakh
4 Receipts of sports training academy to coach young players 15 lakh
Rate of GST 18%
Solution : Computation of Value of taxable supply and GST liability (amount in Rs ) :
Particulars Rs
1 Receipts from sports authority of India for Participation in recognised sports (Exempt Exempt
vide Entry No. 68 of Exemption Notification No. 12/2017-CT(Rate)
2 Receipts from franchise of Indian Premier league (not a recognised sports body) 75,00,000
(Liable for GST)
3 Receipts from acting as brand ambassador for corporate client (Liable to GST) 22,00,000
4 Receipts of sports training academy to coach young players (liable for GST since 15,00,000
sports training by charitable entities registered under section 12AA of the Income tax
Act is exempt vide Entry No. 80 of Exemption Notification No. 12/2017-CT(Rate)
Value of taxable supply 1,12,00,000
GST payable @ 18% 20,16,000

To get the best out of these notes visit www.neerajaroraclasses.com Exemptions | 17
Exemptions

Exemptions
Power to grant exemption from tax. - Section 11
11. (1) Where the
● Government is satisfied
● that it is necessary in the public interest so to do, it may,
● on the recommendations of the Council,
○ by notification,
○ exempt generally,
■ either absolutely or
■ subject to such conditions as may be specified therein,
■ goods or services or both of any specified description
■ from the whole or any part of the tax leviable thereon
■ with effect from such date as may be specified in such notification.
(2) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be
stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.
(3)The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or
applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an
explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the
notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it
had always been the part of the first such notification or order, as the case may be.
Explanation.—For the purposes of this section, where an exemption in respect of any goods or services or both from the
whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or
services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or services or both.


Notification No. 12/2017-CT (R ) dated 28-06-2017/Notification No. 9/2017 ( R) dated 28-06-2017 unless otherwise
specified, has exempted the following services wholly from the CGST/IGST respectively :
SERVICES BY CHARITABLE INSTITUTION

1. Services by Charitable entity
2. Recreational training or coaching
3. Import of services by Charitable entity
4. Services by an old age home
SERVICES BY CHARITABLE ENTITY (Entry of 1 of Notification No 12/2017-

CT Rate)
Services by an entity registered u/s 12AA of the Income tax Act, 1961 by way of charitable activities are exempt
Charitable activities” means activities relating to -

1. Public health by way of -
a. Care of counseling of -
➢ Terminally ill persons or persons with severe physical or mental disability;
➢ Person afflicted with HIV or AIDS;
➢ Persons addicted to a dependence- forming substance such as narcotics drugs or alcohol; or
b. Public awareness of preventive health, family planning or prevention of HIV infection;
2. Advancement of religion, spirituality or yoga;
3. Advancement of educational programmes or skill development relating, to :-
a. Abandoned, orphaned or homeless children;
b. Physically or mentally abused and traumatized persons;
c. Prisoners; or
d. Persons over the age of 65 years residing in a rural area;
4. Preservation of environment including watershed forests and wildlife. (Para 2(r) of Notification No. 12/2017-CT
(Rate)
Others Aspects
Conditions to be satisfied for exemption : In order to claim exemption under Entry 1 of the Notification, following two
conditions must be satisfied:-
● The entity is registered under section 12AA of the Income tax Act, 1961 and
● The entity carries out one or more of the specified charitable activities.
● There could be many services provided by charitable trusts registered under Section 12AA of the Income tax
Act, 1961 which are not covered by the definition of charitable activities and hence, such services would attract
GST. for instance, grant of advertising rights to a person on the premises of the charitable/religious trust or on
publications of the trust, or granting admission to events, functions, celebrations shows against admission
tickets or fees etc. would attract GST.
● Advancement of any other object of general public utility - Not charitable purpose : In case if any charitable
trust is carrying out any activities relating to advancement of any other object of general public utility the same


shall not be exempt from GST. however, the trust can avail threshold exemption as available to all other taxable
services upto Rs 20 lakh. ( Rs 10 lakhs in special category States excluding Jammu and Kashmir.
● Arranging Yoga and meditation camp by charitable trusts
As discussed above, services provided by entity registered under section 12AA of the Income-tax Act, 1961 by
way of advancement of religion,spirituality or yoga are exempt as such activities are covered in definition of
charitable activities. Fee or consideration charged in any other form from the participants in a religious, yoga
or meditation programme or camp meant for advancement of religion, spirituality or yoga shall be exempt.
Issue Clarification
Is hostel accommodation provided by Hostel accommodation services do not fall within the ambit of
Trusts to students covered within the charitable activities as defined in Para 2(r) of Notification No.
definition of Charitable Activities and 12/2017-CT (Rate).
thus, exempt under SI. No. 1 of However, services by a hotel, inn, guest house, club or campsite
Notification No. 12/2017- CT (Rate). by whatever name called, for residential or lodging purposes.
Having value of supply of a unit of accommodation below Rs
1,00 per day or equivalent are exempt.
Thus, accommodation services in hostels, including by Trusts
having value of supply below Rs 1,000 per day is exempt. ( SI.
No. 14 of Notification No. 12/2017-CT (Rate) refers).
GST on services provided TO charitable trusts

Services, provided to charitable or religious trusts are not outside the ambit of GST. under specifically exempted, all
goods and services supplied to charitable or religious trusts are liable to GST.
RECREATION TRAINING OR COACHING (Entry 80 of Notification No.

12/2017- CT (Rate))
Services by way of training or coaching in recreational activities relating to -

● Arts or culture, or
● Sports by charitable entities registered under Section 12AA of the Income- tax Act.
Are exempt.
IMPORT OF SERVICES BY CHARITABLE ENTITY (Entry 10 of Notification No.

9/2017-IT )
Services received from a provider of service located in a non-taxable territory by an entity registered under Section
12AA of the Income-tax Act, 1961 for the purpose of providing charitable activities are exempt. However, exemption
shall not apply to OIDAR services and import sea freight.


SERVICES BY AN OLD AGE HOME (Entry 9D of Notification No. 12/2017-CT

(Rate)) (Inserted vide Notification No. 14/2018-CT (Rate) dated 26-07-2018
w.e.f. 27-07-2018.
Services by an old age home run by an entity registered under section 12AA of the Income tax Act, 1961 to its residents
(aged 60 years or more) against consideration upto Rs 25,000 per month per Member, provided that the consideration
charged is inclusive of charges for boarding, lodging and maintenance.
An entity registered under section 12AA of the Income- tax Act, 1961, has finished you the following details with respect to the
activities undertaken by it. You are required to compute its GST liability from the information given below :

Particulars Rs
Fees charged for yoga camp conducted by the trust 8,00,000
Amount received for advancement of educational programmes relating to abandoned, 11,50,000

orphaned or homeless children
Amount received for renting for commercial property owned by the trust 45,00,000
Payment made for the services received from a service provider located in California, for 50,00,000
the purposes of providing ‘charitable activities’
Amount received for activities relating to preservation of forests and wildlife. 12,35,000

Note : GST have been charged separately wherever applicable Rate of GST is 18%.
Computation of GST Liability
Particulars Working notes Rs
Fees charged for yoga camp conducted by the trust 1 Nil
Amount received for advancement of educational programmes relating to 1 Nil

abandoned, orphaned or homeless children
Amount received for activities relating to preservation of forests and wildlife. 1 Nil
Amount received for renting of commercial property owned by the trust 3 45,00,000
GST payable @ 18% (A) 8,10,000
Services to be taxed on reverse charge basis :
Payment made for the services received from a service provider located in 2 Nil
England for the purposes of providing ‘charitable activities’ (B)
GST liability (A + B) 8,10,000


Working Notes :
1. Services provided by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable activities
are exempt from GST vide Exemption Notification No. 12/2017-CT(R) dated 28-06-2017. The definition of term
charitable activities, inter alia means activities relating to :
a. Advancement of yoga;
b. Advancement of educational programmes relating to abandoned, orphaned or homeless children.
c. Preservation of environment including watershed, forests and wildlife.
2. Services recipient is liable to pay GST in case of a taxable service provided by an person located in a non-taxable
territory and received by any person located in the taxable territory. However, services received from a provider of
service located in a non-taxable territory by an entity registered under section 12AA of the Income- tax Act, 1961 for the
purposes of providing charitable activities are exempt from GST vide Entry 10 of Notification No. 9/2017-IT (R ) dated
28-06-2017.
3. Renting of commercial property owned by the trust is liable to GST.


RELIGIOUS SERVICES
Religious services Entry 13 of Notification No. 12/2017
Services by a person by way of-
a. Conduct of any religious ceremony;
b. Renting of precincts of a religious place meant for general public, owned or managed by -
● An entity registered as a charitable or religious trust under Section 12AA of the Income-tax Act,
1961; or
● A trust or an institution registered under Section 10(23C)(v) of the Income-tax Act,
● A body or an authority covered under section 10(23 BBA) of the said Income-tax Act,
Are exempt.
However, nothing contained in entry (b) of this exemption shall apply to,-
1. Renting of rooms where charges are Rs 1,000 or more per day;
2. Renting of premises, community halls, kalyanmandapam or open area, and the like where charges are Rs 10,000 or
more per day;
3. Renting of shops or other spaces for business or commerce where charges are Rs 10,000 or more per month.
➢ “ General public” means the body of people at large sufficiently defined by some common quality of public or
impersonal nature. (Para 2(zc) of Notification No. 12/2017-CT(Rate))
➢ “Religious place” means a place which is primarily meant for conduct of payers or worship pertaining to a
religion, mediation, or spirituality. (Para 2(zy) of Notification No. 12/2017-CT (Rate))
Other Aspects
1. Religious ceremonies are life-cycle rituals including special religious poojas conducted in terms of religious
texts by a person so authorized by such religious texts. Occasions like birth, marriage, and death involve
elaborate religious ceremonies.
2. Other Activities liable to GST : Activities other than conduct of religious ceremony and renting of precincts of
religious place will be taxable irrespective of the manner or the name in which the consideration is received.
For example , If donation is received with specific instructions/mutual understanding between the donor and
the receiver that religious place will host an advertisement promoting business of the donor, such donation will
be subject to GST. however, if donation is received without such instructions, or without a quid pro quo in the
form of supply of any goods or services by the receiver to the donor, it shall not be subject to GST.
SERVICES BY A SPECIFIED ORGANISATION IN RESPECT OF A RELIGIOUS

PILGRIMAGE (Entry 60 of Notification No. 12/2017-CT (Rate)):
Services by a specified organisation in respect of a religious Pilgrimage facilitated by the Government of India, under
Bilateral arrangement are exempt.
“Specified organisation” shall mean,-

a. Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or
b. ‘Committee’ or ‘State Committee’ as defined in Section 2 of the Haj Committee Act, 2002. (Para 2(zzg) of
Notification No. 12/2017-CT (Rate))


An entity registered as religious trust u/s 12AA of the Income tax Act, 1961, has furnished you the following details with respect to
the activities undertaken by it. You are required to compute its value of taxable supply from the information given below :

Particulars Rs
1 Renting of room where charges are Rs 500 per day 8,00,000
2 Renting of room where charges are Rs 1,500 per day 10,,00,000
3 Renting of community halls where charges are Rs 25,000 per day 15,00,000
4 Renting of kalyanmandapam where charges are Rs 5,000 per day 9,50,000
5 Renting of shops for business where charges are Rs 15,000 per month 12,50,000

Solution : Computation of value of taxable supply (amount in Rs ) :-
Particulars Rs
1 Renting of room where charges are Rs 500 per day Nil
2 Renting of room where charges are Rs 1,500 per day 10,00,000
3 Renting of community halls where charges are Rs 25,000 per day 15,00,000
4 Renting of kalyanmandapam where charges are Rs 5,000 per day Nil
6 Renting of shops for business where charges are Rs 5,000 per month Nil
Working Notes : services by a person by way of renting of precincts of a religious place meant for general public, owned or
managed by an entity registered as a charitable or religious trust under section 12AA of the Income-tax Ac, 1961 are exempt.
However, this exemption shall not apply to -
1. Renting of rooms where charges are Rs 1,000 or more per day,
2. Renting of premises, community halls, kalyamandapam or open area, and the like where charges are Rs 10,000 or more
per day;
3. Renting of shops or other spaces for business/commerce where charges are Rs. 10,000 or more per month


SERVICES RELATING TO AGRICULTURE OR AGRICULTURAL

PRODUCE
Services Relating To Agriculture Or Agricultural Produce (Entry 54)
Services relating to
● cultivation of plants and
● rearing of all life forms of animals,
○ except the rearing of horses,
● for food, fibre, fuel raw materials or other similar products or agricultural produce by way of-
➢ Agricultural operations
⇨ directly related to
■ production of any agricultural produce including cultivation,
■ harvesting,
■ threshing,
■ plant protection or
■ testing;
➢ Supply of farm labour;
➢ Processes
⇨ carried out at an agricultural farm
⇨ including tending, pruning, cutting, harvesting, drying cleaning, trimming, sun drying,
fumigating, curing, sorting, grading ,cooling or bulk packaging and such like operations
⇨ which do not alter the essential characteristics of agricultural produce but make it only
marketable for the primary market;
➢ Renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
➢ Loading, unloading, packing, storage or warehousing of agricultural produce;
➢ Agricultural extension services;
➢ Services by any
⇨ Agricultural Produce Marketing Committee or
⇨ Board or
⇨ Services provided by a commission agent
■ for a sale or purchase of agricultural produce,
➢ Services by way of
⇨ fumigation in a warehouse of agricultural produce.
● “Agricultural extension” means application of scientific research and knowledge to agricultural practices
through farmer education or training.
● “Agricultural Produce Marketing Committee or Board” Means any committee or board constituted under a State
law for the time being in force for the purpose of regulating the marketing of agricultural produce.
● “ Agriculture produce” means any produce out of cultivation of plants and rearing of all life forms of animals,
except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no


further processing is done or such processing is done as is usually done by a cultivator or producer which does
not alter is essential characteristics but makes it marketable for primary market.
Other Aspects :
● Plantation crops are agricultural produce
○ Plantation crops like rubber, green tea or coffee be also covered under agricultural produce.
● Pisciculture, sericulture, floriculture etc. covered
○ Entry 54 include activities like breeding of fish (pisciculture), rearing of silkworms (sericulture)
cultivation of ornamental flowers (floriculture) and horticulture, forestry etc.
● Potato chips or tomato ketchup etc. do not qualify as agricultural produce
○ In terms of the definition of agricultural produce, only such processing should be carried out as is
usually done by cultivator or producers which does not alter its essential characteristics but makes it
marketable for primary market. Potato chips or tomato ketchup are manufactured through process
which alter the essential characteristic of farm produce. Hence, the same are not agricultural
produce.
● Cleaning of wheat carried outside the farm- Not liable for GST
○ It is a process which does not alter essential characteristics of agricultural produce but makes it only
marketable for the primary market and therefore would be covered in the exemption entry even if the
same is done outside the farm .
● Leasing of vacant land with a green house or a storage shed meant for agricultural produce is covered under
exemption
○ If vacant land has a structure like storage shed or a greenhouse built on it which is incidental to its use
for agriculture then its lease would be covered under the exemption entry.
● Services covered by Agricultural Produce Marketing Committees (APMC) or Boards

○ APMC or Boards provide a variety of support services for facilitating the marketing of agricultural
produce by provision of facilities and amenities like, sheds, water, light, electricity, grading facilities etc.
they also take measures for prevention of sale or purchase of agricultural produce below the minimum
support price. APMCs collect market fees, license fees, rents etc.
○ However, any service provided by such bodies which is not directly related to agriculture or agricultural
produce will be liable to tax e.g., renting of shops or other property.
● Testing activities-Covered in Exemption

○ Under testing of agricultural produce, not only seed testing but also
other testing activities directly related to production of any
agricultural produce like soil testing, animal feed testing, testing of
samples from plants or animals, for pests and disease causing
microbes are covered in the exemption and hence not liable to GST.
● Jaggery- Not agricultural Produce : Similarly, processing of sugarcane into
jaggery changes its essential characteristics. Thus, jaggery is also not an
agricultural produce.


“Sai Agro Limited” registered under GST furnished the following details with respect to the activities undertaken by them in the month of
March, 2019 :
Particulars Rs
1 Receipts from supply of farm labour 85,000
2 Charges for seed testing 65,000
3 Charges for soil testing of farm land 35,000
4 Charges for warehousing of potato chips 85,000
5 Commission received on sale of wheat 75,000
6 Charges for training of farmers on use of new pesticides and fertilizers developed through 10,000
scientific research
7 Renting for vacant land to a stud farm 1,85,000
8 Leasing of vacant land to a cattle farm 83.500
9 Charges for warehousing of rice 1,50,000
10 Charges for warehousing of cotton fabrics 2,00,000
11 Retail packing and labelling of fruits and vegetables 5,00,000
Compute the value of taxable supply of ‘Sai Agro Limited’ for the month of March, 2019 if all the above amounts are exclusive of GST.

Solution : Computation of Value of taxable supply (amount in Rs ) :
S.no Particulars Rs
1 Receipts from supply of farm labour Nil
2 Charges for seed testing Nil
3 Charges for soil testing of farm land Nil
4 Charges for warehousing of potato chips 85,000
5 Commission received on sale of wheat Nil
6 Charges for training of farmers on use of new pesticides and fertilizers developed through Nil
scientific research
7 Renting of vacant land to a stud farm 1,85,000
8 Leasing of vacant land to cattle farm Nil
9 Charges for warehousing of rice Nil
10 Charges for warehousing of cotton fabrics (Liable to GST) 2,00,000
11 Retail packing and labelling of fruits and vegetables (Exempt vide Entry No. 57 of Exemption Nil
Notification No. 12./2017-CT(Rate))
Value of Taxable supply 4,70,000


Carrying Out An Intermediate Production Process In Relation To Cultivation

Of Plants And Rearing Of All Life Forms Of Animals (Entry No. 55)
Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life
forms of animals, except the rearing of horses, for food, fibre fuel, raw material or other similar products or agricultural
produce is exempt.
Other Aspect
Milling of paddy into rice : Not eligible for exemption- Liable to GST @ 5% (CBEC Circular No. 19/19/2017- GST dated
20-11-2017) :
● Milling of paddy is not an intermediate production process in relation to cultivation of plants.
● It is a process carried out after the process of cultivation is over and paddy has been harvested. Further,
processing of paddy into rice is not usually carried out by cultivators but by rice millers.
● Milling of paddy into rice also changes its essential characteristics.
● Therefore, milling of paddy into rice cannot be considered as an intermediate production process in relation to
cultivation of plants for food, fibre or other similar products or agricultural produce.
● Milling of paddy into rice on job work basis, is liable to GST at the rate of 5% on the processing charges (and not
on the entire value of rice.)


Artificial Insemination Of Livestock (Other Than Horses) (Entry 55a)

Services by way of artificial insemination of livestock (other than horses) are exempt.
Loading, Unloading, Packing, Storage Or Warehousing of Rice (Entry 24 )

Services by way of loading, unloading, packing, storage or warehousing of rice are exempt.
Warehousing Of Minor Forest Produce (Entry 24a )

Services by way of warehousing of minor forest produce are exempt.
Services In Relation To Fruits And Vegetables (Entry 57)

Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables
which do not change or alter the essential characteristics of the said fruits or vegetables are exempt.
Services Provided By NCCD By Way Of Cold Chain Knowledge Dissemination

(Entry No. 58)
Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Cooperation
and Farmer’s Welfare by way of cold chain knowledge dissemination are exempt.


Renting Of Residential Dwelling For Use As Residence


Taneja Properties registered under GST as taxable person is engaged in the business of renting various immovable properties owned by it.
During the month ending 31-03-2019, it collected a rent of Rs 10,00,000. The said sum includes rent from :
Particulars Rs
1 Vacant land used for agriculture 1,00,000
2 Land used for Appu Circus 1,60,000
3 Houses let to individuals for residential purposes 1,40,000
4 Building let to M/s Elegant Hotel 1,20,000
5 Vacant land, given on lease to M/s ABC Ltd., for construction of building at a later 80,000
stage for used for furtherance of business or commerce
6 Premises let to a temple trust 80,000
7 Premises let to a coaching centre 1,60,000
8 Building let to a theatre 1,60,000
Compute the amount of GST Payable by the firm, assuming that the rent is exclusive of GST, if any applicable in each case. Rate of GST-18%
Make suitable assumptions.
Solution : computation of GST payable (amount in Rs ) :
Particulars Rs
Total Rent 10,00,000
Less
1 Rent from vacant land used for agriculture (Exempt vide Entry No. 54 of Exemption 1,00,000
Notification No. 12/2017-CT(R))
2 Rent from land used for Appu Circus (Liable to GST) Taxable
3 Properties let for residential purposes (Exempt vide Entry No 12 of Exemption 1,40,000
Notification No. 12/2017-CT(R))
4 Building let to hotel (liable to GST) Taxable
5 Vacant land, given on lease to M/s ABC Ltd. for construction of building at a later Taxable
stage to be used for furtherance of business or commerce (Liable to GST)
6 Premises let to a religious body being temple trust (Liable to GST) Taxable
7 Premises let to a coaching centre(Liable to GST) Taxable
8 Building let to a theatre (Liable to GST) Taxable
Total Taxable value of supply 7,60,000
GST Payable @ 18% 1,36,800t


Services by a hotel, inn, guest house, club or campsite, by whatever name

called, for residential or lodging purposes, having value of supply of a unit of
accommodation below Rs 1,000 per day or equivalent are exempt.
Entry 14


Recognised sports body” means-

1. The Indian Olympic Association;
2. Sports Authority of India;
3. A national sports federation recognised by the Ministry of Sports and Youth Affairs of the Central
Government, and its affiliate federations;
4. National sports promotion organisation recognised by the Ministry of Sports and Youth Affairs of the
Central Government;
5. The international Olympic Association or a federation recognised by the International Olympic
Association; or
6. A federation or o body which regulates a sport at international level and its affiliated federations or
bodies regulating a sport in India. (Para 2(zx) of Notification No. 12/2017-CT(Rate))


Mr. PK Kohli a famous cricketer furnished you with the following information of the various receipts for the month ended
30-04-2018. You are required to determine his GST liability if all the amounts are exclusive of GST.
Particulars Rs
1 Receipts from Sports Authority of India for Participation in recognised sport 100 lakh
2 Receipts from franchise of Indian Premier league (not a recognised sports body) 75 lakh
3 Receipts from acting as brand ambassador for corporate client 22 lakh
4 Receipts of sports training academy to coach young players 15 lakh
Rate of GST 18%
Solution : Computation of Value of taxable supply and GST liability (amount in Rs ) :
Particulars Rs
1 Receipts from sports authority of India for Participation in recognised sports (Exempt Exempt
vide Entry No. 68 of Exemption Notification No. 12/2017-CT(Rate)
2 Receipts from franchise of Indian Premier league (not a recognised sports body) 75,00,000
(Liable for GST)
3 Receipts from acting as brand ambassador for corporate client (Liable to GST) 22,00,000
4 Receipts of sports training academy to coach young players (liable for GST since 15,00,000
sports training by charitable entities registered under section 12AA of the Income tax
Act is exempt vide Entry No. 80 of Exemption Notification No. 12/2017-CT(Rate)
Value of taxable supply 1,12,00,000
GST payable @ 18% 20,16,000


ACCESS TO ROAD OR A BRIDGE ON PAYMENT OF TOLL CHARGES
Service by way of access to a road or a bridge on payment of toll charges is exempt.
SERVICE BY WAY OF ACCESS TO A ROAD OR A BRIDGE ON PAYMENT OF ANNUITY

Service by way of access of road or a bridge on payment of annuity is exempt.
TRANSMISSION OR DISTRIBUTION OF ELECTRICITY BY AN ELECTRICITY TRANSMISSION OR DISTRIBUTION

UTILITY
Transmission or distribution of electricity by an electricity transmission or distribution utility is exempt.
Issue Clarification
Whether the activities carried Services other than service by way of transmission or distribution of
by DISCOMS against recovery of electricity by an electricity transmission or distribution utility such as-
charges from consumers under 1. Application fee for releasing connection of electricity;
State. Electricity Act are exempt 2. Rental charges against metering equipment;
from GST? 3. Testing fee for meters/ transformers, capacitors etc;
4. Labour charges from customers for shifting of meters or shifting
of service lines;
5. Charges for duplicate bill;
Provided by DISCOMS to consumer are taxable.


SERVICES BY THE RESERVE BANK OF INDIA (Entry 26 of Notification No. 12/2017-CT (Rate)):
Services by the Reserve Bank of India are exempt.
All services provided by the Reserve Bank of India are covered under Entry 26 and are thus, exempt from GST. however,
services provided TO the Reserve Bank of India are not covered under said entry and would be taxable unless otherwise
covered in any other entry of the Notification.
SERVICES RECEIVED BY RBI FROM OUTSIDE INDIA IN RELATION TO MANAGEMENT OF FOREIGN EXCHANGE
RESERVES (IGST Exemption)
Services received by the Reserve Bank of India, from outside India in relation to management of foreign exchange
reserves are exempt.
Overseeing Committee to RBI

Reverse charge in respect of Supply of services by the members of Overseeing Committee to RBI In case of supply of
services by the members of Overseeing Committee to Reserve Bank of India, the RBI is liable to pay tax under reverse
charge
SERVICES BY WAY OF EXTENDING DEPOSITS, LOANS OR ADVANCES/INTER SE SALE PURCHASE OR FOREIGN

CURRENCY AMONGST BANKS OR AUTHORIZED DEALERS
Following services are Exempt

Services by way of -
a. 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);
b. Inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or
amongst banks and such dealers.
“Interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a
deposit, claim or other similar right or obligation). But does not include any service fee or other charge in respect
of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
Interest is for 'use of money' and hence is 'service'. However, interest is 'exempted service', as per exemption
notification.
Examples
● Fixed deposits or saving deposits or any other such deposits in a bank or a financial institution for which return
is received by way of interest.
● Providing a loan or overdraft facility or a credit limit facility in consideration for payment of interest.
● Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or
advances are represented by way of interest.
● Corporate deposits are to the extent that the consideration for advancing such loans or advances are
represented by way of interest or discount.
● Services charges or administrative charges or entry charges collected over and above interest on loan, advance
or a deposit are not exempt and thus, represent taxable consideration.
● Invoice discounting/ cheque discounting or any other similar form or discounting is covered only to the extent
consideration is represented by way of discount as such discounting is a manner of extending a credit facility or
a loan.
● Penal charges for delayed payment of EMI is subject to GST
● Cheque Bounce charges collected for dishonour of EMI cheques for repayment of loans by its customers would


be 'tolerating an act or situation' and would be treated as 'supply' as per Sr. No. 5(e) of Schedule II of CGST Act.
● Bank, FI, NBFC liable to pay GST under reverse charge in respect of services received from recovery agent.
● Locker service provided by Banks - Taxable
● Transactions in repos and reverse repos
○ 'repos' is 'an instrument for borrowing funds by selling securities with an agreement to repurchase the
securities on a mutually agreed future date at an agreed price which includes interest for the funds
borrowed'.
● Subscription to or trading in Commercial Paper (CP) or Certificates of Deposit (CD)
● Forward contracts in commodities and currencies
● Chit Fund service (Business Chit Funds)
CREDIT CARD, DEBIT CARD, CHARGE CARD OR OTHER PAYMENT CARD SERVICE-EXEMPT UPTO Rs. 2,000 PER
TRANSACTION.
Services by an acquiring bank, to any person in relation to settlement of an amount upto Rs 2,000 in a single transaction
transacted through credit card, debit card, charge card or other payment card service are exempt.
Education - From ICAI Study Material
UPDATE -
Health Care - From ICAI Study Material


Important Amendment
Earlier, services provided by Indian Institutes of Managements (IIMs) as covered under entry No. 67 of said notification
were exempt.
However, under the amended position, with effect from 01.01.2019, entry No. 67 has been omitted as IIMs are now
covered under the definition of ‘educational institution’ whose services are exempt under entry No. 66 of the said
notification.
In this regard, Circular No. 82/01/2019 GST dated 01.01.2019 has clarified as under:
With effect from 31.01.2018, all the “IIMs are “educational institutions” as defined under Notification No. 12/ 2017
CT (R) dated 28.06.2017 as they provide education as a part of a curriculum for obtaining a qualification recognized by
law for the time being in force.
IIMs also provide various short duration/ short term programs for which they award participation certificate to the
executives/ professionals as they are considered as “participants” of the said programmes.
These participation certificates are not any qualification recognized by law. Such participants are also not considered as
students of IIM.
Services provided by IIMs as an educational institution to such participants is not exempt from GST. Such short duration
executive programs attract standard rate of GST @ 18% (CGST 9% + SGST 9%) [Effective from 01.01.2019].
PERFORMANCE BY ARTIST
Services by an artist by way of performance in folk or classical art forms of -
● Music, or
● Dance, or
● Theatre,
If the consideration charged for such performance is not more than Rs 1,50,000 are exempt.
However, the exemption shall not apply to service provided by such artist as a brand ambassador.
“Brand Ambassador” means a person engaged for promotion or marketing of a brand of goods, service, property or
actionable claim, event or endorsement of name, including a trade name, logo or house mark of any person.
Other Aspects :
The activities by a performing artist in folk or classical art forms of music, dance, or theatre are exempt if consideration
does not exceed Rs 1,50,000. However, if consideration from such activities exceeds Rs 1,50,000 entire consideration is
subject to GST.


Further, all other activities by an artist in other are form e.g., western music or dance, modern theatres, performance of
actors in films or television serials would be taxable. Similarly activities of artists in still art forms e.g. painting,
sculpture making etc. are taxable.


TRANSPORT OF PASSENGERS BY DIFFERENT MODES
Service of transportation of passengers, with or without accompanied belongings, by-

● Railways in a class other than-
○ First class; or
○ An air-conditioned coach;
● Metro, monorail or tramway;
● Inland waterways;
● Public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and
● Metered cabs or auto rickshaws(including e-rickshaws)
Are exempted
● “E-rickshaw” means a special purpose battery powered vehicle of power not exceeding 4000 watts, having
three wheels for carrying goods or passengers, as the case may be, for hire or reward, manufactured,
constructed or adapted, equipped and maintained in accordance with such specifications, as may be prescribed
in this behalf.
● “Metered cab” means any contract carriage on which an automatic device, of the type and make approved under
the relevant rules by the State Transport Authority, is fitted which indicated reading of the fare chargeable at
any moment and that is charged accordingly under the conditions of its permit issued .
Other Aspects:
● Public transport by vessels other than predominantly for tourism purpose- Not taxable : The public transport by
a vessel should not be predominantly for tourism purposes. Normal public ships or other vessels that sail
between places located in India would be covered in exemption entry even if some of the passengers on board
are using the services for tourism as predominantly such service is not for tourism purpose.
○ For example : services by way of transportation of passengers on a vessel, from Chennai to Port Blair
(mainland-island) or Port Blair to Havelock (inter-island), are covered in exemption in case the
transportation is not predominantly for tourism purposes. Such transportation by a vessel (of any size)
is covered in exemption entry since such transportation is between two places located in India.
● Services provided by leisure or charter vessels or a cruise ship- Taxable : Services provided by leisure or
charter vessels or a cruise ship, predominant purpose of which is tourism, would not be covered in exemption
even if some of the passengers in such vessels are not tourists.
● Taxes levied be included : The value of any taxable services will include the taxes levied by any Government on
any passengers travelling by air, as only taxes levied under GST law are excluded. Hence, passengers taxes shall
form part of taxable value of supply. (Section 15(2) of CGST Act, 2017).
● Transport of passengers by ropeway, etc. - Taxable : Transport of passengers, with or without accompanied
belongings, by : (i) ropeway (ii) cable car; or (iii) aerial tramway is liable to GST.


Banking and Financial Services
SERVICES BY THE RESERVE BANK OF INDIA

Services by the Reserve Bank of India are exempt.
● “ Reserve Bank of India” means the bank established under Section 3 of the Reserve Bank of India Act, 1934.
● All services provided by the Reserve Bank of India are covered under Entry 26 and are thus, exempt from GST.
however, services provided TO the Reserve Bank of India are not covered under said entry and would be taxable
unless otherwise covered in any other entry of the Notification.
SERVICES BY WAY OF EXTENDING DEPOSITS, LOANS OR ADVANCES/INTER SE SALE PURCHASE OR

FOREIGN CURRENCY AMONGST BANKS OR AUTHORIZED DEALERS
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);
● Inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or
amongst banks and such dealers.
Are exempt.
Interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a
deposit, claim or other similar right or obligation). But does not include any service fee or other charge in respect of the
moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
Illustrations of services which are exempt are as follows

● Fixed deposits or saving deposits or any other such deposits in a bank or a financial institution for which return
is received by way of interest.
● Providing a loan or overdraft facility or a credit limit facility in consideration for payment of interest.
● Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or
advances are represented by way of interest.
● Corporate deposits are to the extent that the consideration for advancing such loans or advances are
represented by way of interest or discount.
CREDIT CARD, DEBIT CARD, CHARGE CARD OR OTHER PAYMENT CARD SERVICE-EXEMPT UPTO
Rs. 2,000 PER TRANSACTION
Services by an acquiring bank, to any person in relation to settlement of an amount upto Rs 2,000 in a single transaction
transacted through credit card, debit card, charge card or other payment card service are exempt.


SERVICES BY WAY OF ADMISSION TO MUSEUM, NATIONAL PARK ETC.
Services by way of admission of a museum, national park, a wildlife sanctuary, tiger reserve or zoo are exempt.
SERVICES BY WAY OF ADMISSION TO PROTECTED MONUMENT
Services by way of admission to a protecting monument so declared under the Ancient Monuments and Archaeological
Sites and Remains Act, 1958 or any of the State Acts, for the time being in force are exempt.
ADMISSION TO ENTERTAINMENT EVENTS OR ACCESS TO AMUSEMENT FACILITIES

● Services by way of right to admission to-
a. Circus, dance, or theatrical performance including drama or ballet;
b. Award function, concert, pageant, musical performance, or any sporting event other than a
recognised sporting event;
c. Recognised sporting event;
d. Planetarium,
Where the consideration for the right to admission to the events or places as referred to in items (a), (b), (c ) or (d)
above is not more than Rs 500 per person are exempt


Miscellaneous Exemptions
❖ NEWS AGENCY SERVICES

Services by way of collecting or providing news by an independent journalist, Press Trust of India or United
News of India are exempt.
❖ SERVICES OF PUBLIC LIBRARIES

Services of public libraries by way of lending of books, publications or any other knowledge-enhancing content
or material are exempt.
❖ ORGANISING BUSINESS EXHIBITION OUTSIDE INDIA

Services by an organiser to any person in respect of a business exhibition held outside India are exempt.
❖ SLAUGHTERING OF ANIMALS
services by way of slaughtering of animals are exempt.
❖ SERVICES BY FOREIGN DIPLOMATIC MISSION

Services by a foreign diplomatic mission located in India are exempt.
❖ INFORMATION UNDER RTI ACT

Services by way of providing information under the Right to Information Act, 2005 are exempt.
❖ SPORTS RELATED SERVICES

Services provided to a recognised sports body, by-
a) An individual as a player, referee,umpire, coach or team manager for participation in a sporting event
organised by a recognized sports body;
b) Another registered sports body
Are exempt.
❖ Recognised sports body” means-

1. The Indian Olympic Association;
2. Sports Authority of India;
3. A national sports federation recognised by the Ministry of Sports and Youth Affairs of the Central
Government, and its affiliate federations;
4. National sports promotion organisation recognised by the Ministry of Sports and Youth Affairs of
the Central Government;
5. The international Olympic Association or a federation recognised by the International Olympic
Association; or
6. A federation or o body which regulates a sport at international level and its affiliated federations
or bodies regulating a sport in India. (Para 2(zx) of Notification No. 12/2017-CT(Rate))
❖ PUBLIC CONVENiIENCIES
Services by way of public conveniences such as provision of facilities of bathroom, washroom, lavatories, urinal
or toilets are exempt.

Returns

Returns

To get the best out of these notes visit www.neerajaroraclasses.com Returns | 1

Study Guidelines by ICAI

Following topics are to be excluded from CA Intermediate Syllabus
● CGST Act, 2017 read with CGST Rules, 2017
○ Furnishing of GSTR-2, GSTR-1A, GSTR-3
○ Claim of input tax credit and provisional acceptance thereof
○ Matching, reversal & reclaim of input tax credit
○ Matching, reversal & reclaim of reduction in output tax liability
Section 37 - Furnishing details of outward supplies.

37(1)
● Every registered person,
○ other than
■ an Input Service Distributor,
■ a non- resident taxable person and
■ a person paying tax under the provisions of section 10 or section 51 or section 52,
● shall furnish,
● electronically,
● in such form and manner as may be prescribed,
● the details of outward supplies of goods or services or both affected during a tax period on or before the tenth
day of the month succeeding the said tax period and
● such details shall be communicated to the recipient of the said supplies within such time and in such manner as
may be prescribed.
Provided that the registered person shall not be allowed to furnish the details of outward supplies during the period
from the eleventh day to the fifteenth day of the month succeeding the tax period:
Provided further that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit
for furnishing such details for such class of taxable persons as may be specified therein:
Other relevant provision of Section 37

Any registered person, who has furnished the details under sub-section (1) for any tax period and which have remained
unmatched, shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as
may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such
error or omission, in the return to be furnished for such tax period
Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) 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, or furnishing of the relevant annual return, whichever is earlier.


Other Points
GSTR-1 cannot be furnished before the end of tax period
A taxpayer cannot file GSTR-1 Before the end of the current period i.e., to say for the month of November before 30th
November. However, following are the exceptions to this rule :
● Casual taxpayers, after the closure of their business
● Cancellation of GSTIN of a normal taxpayer.
● A taxpayer who has applied for cancellation of registration will be allowed to file GSTR- 1 after confirming
receipt of the application.
Invoice wise and consolidated details

The registered person is required to furnish details of invoice and revised invoices issued in relation to supplies made
by him to registered and unregistered person during a month in GSTR-1 in the following manner :
Invoice -wise details of ALL Consolidated details of ALL
1. Inter-state and Intra-State supplies made Intra-State supplies made to

to registered person i.e., B2B Supplies unregistered persons for each rate of tax
2. Inter- State supplies made to unregistered Inter-State supplies made to

persons with invoice value exceeding Rs unregistered persons with invoice value
2,50,000 i.e., B2C supplies upto Rs 2,50,000 for each rate of
tax-separately for each State.
Thus, uploading of invoices depends on whether the supply is B2B or B2C plus whether the supply is Intra-State or
Interstate.
● B2B means business to business transaction. In such type of transactions, the recipient is also a registered
supplier and hence, takes ITC.
● B2C means business to consumer transactions. In such type of transactions, the recipient is consumer or
unregistered and henc, will not take or cannot take ITC.
● B2B Supplies : For such supplies, all invoices will have to be uploaded irrespective of whether they are
intra-state or inter-state supplies. This is so because the recipient will take ITC and thus, invoice matching is
required to be done.
● B2C Supplies : For B2C supplies, uploading in general may not be required as the buyer will not be taking ITC.
however, still in order to implement the destination based principle, invoices of value more than Rs 2.5 lakh in
inter-State B2C supplies will have to be uploaded.
● For inter-State invoices below Rs 2.5 lakh, State wise summary will be sufficient
● For all intra-State invoices, only consolidated details will have to be given.


Some other Points
➢ GSTR-1 needs to be filed even if there is no business activity (Nil Return) in the tax period.
➢ Filing of GSTR-1 for current month is possible only when GSTR-1 for the previous month has been filed.
➢ Taxpayer opting for voluntary cancellation of GSTIN will have to file GSTR-1 For active period.
➢ In cases where a taxpayer has been converted from a normal taxpayer to composition taxpayer, GSTR-1 will
be available for filing only for the period during which the taxpayer was registered as normal taxpayer. The
GSTR-1 for the said period, even if filed with delay would accept invoices for the period prior to conversion.
Description of each item in the invoice will not be uploaded. Only HSN code in respect of supply of goods and accounting
code in respect of supply of services will have to be fed. The same depends upon the annual turnover of preceding
financial year. As per Notification No. 12/2017-CT dated 28-06-2017, the number of digits of HSN Code to be quoted
are as under:
Annual turnover in the preceding financial year Number of Digits of HSN Code
Upto Rs 1.5 Crore Nil
More than Rs 1.5 crore and upto Rs 5 crore 2
More than Rs 5 crore 4


What is the due date of submission of GSTR-1?
GSTR-1 for a particular month is filed on or before the 10th day of the immediately succeeding month. In other words,
GSTR-1 of a month can be filed any time between 1st and 10th day of the succeeding month. It may be noted that
GSTR-1 cannot be filed during the period from 11 th day to 15 th day of month succeeding the tax period.
As a measure of easing the compliance requirement for small taxpayers, GSTR-1 has been allowed to be filed
quarterly by small taxpayers with aggregate annual turnover up to ₹ 1.5 crore in the preceding financial year or the
current financial year.
As of now this facility has been given till the quarter January-March 2019. Taxpayers with annual aggregate turnover
above ₹1.5 crore will however continue to file GSTR- 1 on a monthly basis.


Section 39


GSTR 3B


39(2) Return of Composition Dealer


Statements/return composition scheme for the period prior to opting for

Composition scheme
● If a registered person opts for composition scheme from the beginning of a financial year, he will, where
required, furnish statements/return relating to the period prior to opting for composition levy till the
○ due date of furnishing the return for the month of September of the succeeding financial year, or
○ furnishing of annual return of the preceding financial year,
■ whichever is earlier.
● The composition supplier will not be eligible to avail of ITC on receipt of invoices or debit notes from the
supplier for the period prior to his opting for the composition scheme.
GSTR-4 for the period prior to exiting from composition scheme
● A registered person opting to withdraw from the composition scheme at his own motion or where option is
withdrawn at the instance of the proper officer will, where required, furnish GSTR-4 relating to the period prior
to his exiting from composition levy till the
○ due date of furnishing the return for the quarter ending September of the succeeding financial year, or
○ furnishing of annual return of the preceding financial year,
■ whichever is earlier.


Section 39(5) - GSTR 5 / NRTP


Extension of Date
(6) The Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing
the returns under this section for such class of registered persons as may be specified therein:
Provided that any extension of time limit notified by the Commissioner of State tax or Union territory tax shall be
deemed to be notified by the Commissioner.
Due date of Payment

(7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section
(3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which
he is required to furnish such return.
No Supply , Still Return to be filed

(8)Every registered person who is required to furnish a return under sub-section (1) or sub-section (2) shall furnish a
return for every tax period whether or not any supplies of goods or services or both have been made during such tax
period.
Rectification
(9) if any registered person after furnishing a return under sub-section
(1) or sub-section (2) or sub-section (3)or sub-section (4)or sub-section (5) discovers 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 incorrect particulars in the return to be furnished for the month or quarter during
which such omission or incorrect particulars are noticed, subject to payment of interest under this Act:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for
furnishing of return for the month of September or second quarter following the end of the financial year, or the actual
date of furnishing of relevant annual return, whichever is earlier.



Annual return. GSTR 9 & 9A (For Composition Dealer) – Section

44
44. (1) Every registered person,
● other than
1. an Input Service Distributor,
2. a person paying tax under section 51 or section 52,
3. a casual taxable person and
4. a non-resident taxable person,
● shall furnish an annual return
● for every financial year
● Electronically
● in such form and manner as may be prescribed
● on or before the thirty-first day of December following the end of such financial year.
44(2) Every registered person

● who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35
shall furnish,
● Electronically,
● the annual return under sub-section (1)
● along with a copy of the audited annual accounts
● and a reconciliation statement,
● reconciling the value of supplies declared in the return furnished for the financial year
● with the audited annual financial statement, and such other particulars as may be prescribed.
Provision of Section 35 and Rules thereunder

Every registered person must get his accounts audited by a Chartered Accountant or a Cost Accountant if his
aggregate turnover during a FY exceeds Rs. 2 crores.


First Return- Section 40

40. Every registered person who has made outward supplies in the period between the date on which he became liable
to registration till the date on which registration has been granted shall declare the same in the first return furnished by
him after grant of registration.
Final return – Section 45
Every registered person
● who is required to furnish a return under sub- section (1) of section 39
● and whose registration has been cancelled shall furnish a final return
○ within three months
■ of the date of cancellation
■ or date of order of cancellation,
● whichever is later,
○ in such form and manner as may be prescribed.
Notice to return defaulters – Section 46

46. Where a registered person
● fails to furnish a return under section 39

○ or section 44 or
○ section 45,
● a notice shall be issued
● requiring him to furnish such return
● within fifteen days in such form and manner as may be prescribed.



Levy of late fee – Section 47
Rationalisation of late fee payable

Late fee upto Rs 10,000 per return [Rs 5,000 under CGST and Rs 5,000 under SGST/UTGST] with late fee of Rs 200 per
day [Rs 5,000 under CGST and Rs 5,000 under SGST/UTGST] is too high, at least for small taxable persons.
Hence, it has been rationalized at Rs 50 per day of delay [Rs 25 CGST and Rs 25 SGST/UTGST].
In case of Nil return, the late fee is Rs 20 per day of delay [Rs 10 CGST and Rs 10 SGST/UTGST]
However, the upper ceiling of Rs 10,000 per return is not changed.

GOODS &
SERVICES TAX
by CA Neeraj Arora
Neeraj Arora
CA, MBA, L.LB M.COM, B.COM
Neeraj Arora is a Chartered Accountant by training and
a Teacher by passion. He started teaching at a very
young age. After qualifying CA, he took up a 9 to 5 job
but realised within a week that this is not for him. Since
then, he has never looked back and is passionately
+91 9810113555 teaching students. He has addressed 1,00,000+ CA, CS,
CMA, BCOM, students and 40,000+ professionals. His
techniques not only help students in gaining

+91 9266816886
understanding of complex topics but also help them in
retaining concepts for a longer period of time.
WWW.EDU91.ORG His favourite line: सीखते रह, यूँ क सीखना बंद तो जीतना बंद
FOLLOW HIM ON SOCIAL MEDIA
CA NEERAJ ARORA
@neerajaroraofficial
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CA INTERMEDIATE (New + Old Course)

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GST Notes Index

How to study from these notes

● Always Keep ICAI Study Material with You

Constitution defines the powers and responsibilities of each organs.

Why we need law ?

Who makes the law ?

In India we two main levels Central level (Union ) & State

Level Legislative Organ Executive Organ Judicial Organ

Central Parliament President + Prime Minister Court

State State legislative Assembly Governor + Chief Minister Courts

Schedule 7 has 3 lists

How government can collect taxes ?

Relationship between law, tax and constitution

Name of the tax Taxable Event List Entry Levied By Collected By

Sales Tax - CST

Sales Tax - VAT

● Constitution Amendment Act, 2016

Kelkar task force 2004

GST Proposed 2006

GST revival in 2014 - Constitutional 2014

Constitution Amendment Act 06.05.2015 LS

08.09.2016 Ratification by States

Centre Legislation 27.03.2017 Introduced CGST, IGST, UTGST

29.03.2017 Passed by Lok Sabha

12.04.2017 President Assent

State GST Diff Dates

Roll out 01.07.2017

08.07.2017 CGST (Extension to J&K) Ordinance,

(1) Notwithstanding anything contained in articles 246 and 254,

Exam Take Away From Class 1

Intra State Supply Inter State Supply

CGST + SGST or UTGST IGST

Parliament , State, UT Parliament only

Taxes subsumed in GST

Central Taxes State Taxes

Central Excise duty State VAT

Additional Excise Duties CST

Service Tax Entertainment and amusement tax (Other than levied by

Additional Custom duties (CVD) Taxes on advertisements

245. Extent of laws made by Parliament and by the

Levy and collection of goods and services tax in course of inter-

Explanation.—For the purposes of this clause,

Decision by GST Council

Govt Total Favour Against % in Favour Weight Final %

CG 2 2 0 100 33.33% 33.33

SG 31 31 0 100 66.67% 66.67

Some Definitions From Constitution

Goods - Goods includes all materials, commodities and articles.

List 1 Entry No. 84 (NEW)

List 2 Entry No. 54

Post GST Taxability

Article GST ED VAT CST

Alcoholic Liquor for NO Yes (State) Yes Yes

Tobacco and Tobacco YES Yes No No

Petroleum etc No Yes Yes Yes

Supplier Members of Overseeing Committee constituted by the Reserve Bank of India