PROGRAM: B.

COM (H)

SEMESTER: VI

SUBJECT: BUSINESS TAXATION

SEMESTER – VI
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Program: B.Com Hons (BAAF) Semester:VI Subject:
BUSINESS TAXATION
Total Lecture Hours: 60 Credits: 04
Course Outcomes
1. Paraphrase the basic principles underlying the GST Act Compute the taxable income of an assessed.
2. Analyse the assessment procedure and representation before appropriate authorities under the law.
3. Distinguish the implications in computing tax liability of an individual.
4. Determine the application of valuation with respect to customs duty.
5. Recommend the rules for adopting and changing an accounting period.

Module – 1. Introduction to GST and GST Act 10 Hours

Constitution amendment-GST council, Structure, powers and functions-GST Network- Objectives and basic
scheme of GST- Meaning-Salient features of GST-Subsuming of taxes-Benefits of implementing GST -
CGST-SGST-IGSTUGST, Definitions.

Module – 2 Time and Value of Supply and Registration of GST 15 Hours

Time of supply of goods, Time of supply of services, Change in rate of tax in respect of supply of goods or
services, Value of taxable supply,
Registration under GST: Procedure for registration, Persons liable for registration, Persons not liable for
registration, Compulsory registration, Deemed registration, Special provisions for Casual taxable persons
and Non-resident taxable persons. Exempted goods and services - Rates of GST.
Self-assessment, Provisional assessment, Scrutiny of Returns, Assessment of non-filers of returns,
Assessment of unregistered persons, Summary assessment in certain special cases
Furnishing details of outward supplies, Furnishing details of inward supplies Returns, First return, Claim of
input tax credit and provisional acceptance thereof, Matching, reversal and reclaim of input tax credit,
Matching, reversal and reclaim of reduction in output tax liability, Annual return, Final return, Advance
ruling. Appeals and revisions, Offences and penalties

Module – 3. Procedure and Levy of GST 10 Hours

Procedure relating to Levy: (CGST & SGST): Scope of supply, Tax liability on Mixed and Composite
supply, Time of supply of goods and services, Value of taxable supply. Computation of taxable value and
tax liability, compensation/ composition, Reverse Charge Mechanism
Procedure relating to Levy: (IGST): Inter-state supply, intra-state supply, Zero rates supply, Value of
taxable supply – Computation of taxable value and tax liability.
Input tax Credit: Eligibility, Apportionment, Inputs on capital goods, Distribution of credit by Input
Service Distributor (ISD) – Transfer of Input tax credit - Simple Problems on utilization of input tax credit.

Module –4 CUSTOMS LAW 15 Hours

Valuation, Customs Procedures, Import and Export Procedures, Baggage, Exemptions, Warehousing,
Demurrage - Project Import and Re-imports - Penalties and Offences - Anti-dumping Duty – Valuation
under Customs Law, application of cost accounting principles in assessment, Impact of tax on GATT ,
WTO, Anti-Dumping processing

Module -INTERNATIONAL TAXATION 10 Hours

Meaning, Features, Intangible assets, Specified Domestic Transaction, Arm’s Length Principle, Transfer
pricing, Issues in Transfer Pricing, Emerging trends in Transfer pricing
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Reference Books:
1. Deloitte: GST Era Beckons, Wolters Kluwer.
2. Madhukar N Hiregange: Goods and Services Tax, Wolters Kluwer.
3. All About GST: V.S Datey - Taxman's.
4. Guide to GST: CA. Rajat Mohan,
5. Goods & Services Tax – Indian Journey: N.K. Gupta & Sunnania Batia, Barat's Publication
6. Goods & Services Tax – CA. Rajat Mohan,
7. Goods & Services Tax: Dr. Sanjiv Agrawal & CA. Sanjeev Malhotra.
8. GST - Law & Practice: Dr. B.G. Bhaskara, Manjunath. N & Naveen Kumar IM,
9. Understanding GST: Kamal Garg, Barat's Publication.

Module -1

Introduction to Goods and Service Tax

Structure:
1.1 Indirect Tax before introduction of GST
1.2 GST in India
1.3 History of GST in India
1.4 Meaning of GST
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1.5 Definition of GST
1.6 Tax Structure in India with GST
1.7 Present Indirect Tax Structure
1.8 Objectives of GST
1.9 Salient Feature of GST
1.10 Benefits of GST in General
1.11 Benefits of GST to its Stake holders
1.12 Constitutional Amendments
1.13 Structure of GST (Dual Model)
1.14 Central Goods and Services Tax
1.15 State or Union Territory GST
1.16 Integrated Goods and Services Tax
1.17 Goods and Service Tax Model
1.18 Commodities kept Outside the Purview of GST
1.19 GST Council
1.20 Powers and Functions of GST Council
1.23 Meaning and Definitions of important terms in GST Act
1.24 Activities or transactions which shall be treated neither as a supply of Goods nor a Supply of
Services: Schedule III
1.25 Import of goods and Services
1.26 Terminal Questions

The first known system of taxation was in Ancient Egypt around 3000 BC - 2800 BC in the first dynasty
of the Old Kingdom. Records from that time show that the pharaoh would conduct a biennial tour of
the kingdom, collecting tax revenues from the people. Other records are granary receipts on
limestone flakes and papyrus. Early taxation is also described in the Bible. In Genesis2, it states "But
when the crop comes in, gives a fifth of it to Pharaoh. The other four-fifths you may keep as seed for
the fields and as food for yourselves and your households and your children.

In India, the tradition of taxation has been in force from ancient times. It finds its references in many
ancient books like 'Manu Smriti '4 and 'Arthasastra'. The Islamic rulers imposed jizya. It was later on
abolished by Akbar. However, Aurangzeb, the last prominent Mughal Emperor, levied jizya on his
mostly Hindu subjects in 1679. Reasons for this are cited to be financial stringency and personal
inclination on the part of the emperor.
1.1 Indirect Tax before introduction of GST:

Before the introduction of GST, State Government were levying and/or collecting taxes such as sales
tax called as VAT, entry tax, Entertainment Tax, Luxury Tax etc. Similarly Union Government were
levying and collecting taxes such as Central Excise Duty, Service Tax, Additional Customs Duty and
various types of cesses in the nature of Excise duties. Among them the major types of taxes charged
on business entity can be tabulated as follows:
Tax Levied on Collected by
State VAT Sales or purchases effected Respective State
within the State Governments
Central Sales Tax Sales or purchases effected State Government from
(CST) in interstate trade or where sales are done.
commerce
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 State Excise Manufacture of Alcoholic State Government where
brewages in the state manufacture happens.
Central Excise Manufacture of Excisable Union government
Goods In India.
Service Tax Providing of taxable service Union government
in taxable territory (India
excluding J & K)
Additional On goods imported into Union government
Customs Duties India.

1.2 GST in India:

GST was first recommended by Kelkar Task Force on implementation of Fiscal Reforms and Budget
Management Act 2004 but the First Discussion Paper on Goods and Services Tax in India was
presented by the Empowered Committee of State Finance Ministers dtd.10th Nov.10th, 2009.

In 2011, the Constitution (115th Amendment) Bill, 2011 was introduced in Parliament to enable the
levy of GST. However, the Bill lapsed with the dissolution of the 15th Lok Sabha. Subsequently, in
December 2014, the Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha. The
Bill was passed by Lok Sabha in May 2015 and referred to a Select Committee of Rajya Sabha for
examination.

Under the GST scheme, no distinction is made between goods and services for levying of tax. In other
words, goods and services attract the same rate of tax. GST is a multi-tier tax where ultimate burden
of tax fall on the consumer of goods/ services. It is called as value added tax because at every stage,
tax is being paid on the value addition. Under the GST scheme, a person who was liable to pay tax on
his output, whether for provision of service or sale of goods, is entitled to get input tax credit (ITC)
on the tax paid on its inputs.

1.3 History of GST in India:

The journey of the GST started in a modest way back in 1986-1987, when the then finance minister
VP Singh introduced Modified Value Added Tax (MODVAT) in 1986 in Parliament. Since then, various
governments at the Centre under the leadership of different finance ministers worked towards the
final shape of the present GST,

The GST, an indirect tax system throughout India, will replace various taxes levied by the central and
state governments. The GST is said to simplify a web of taxes, regulations and border levies by
subsuming an array of central and state levies including excise duty, service tax and VAT. It is
expected to gradually re-shape India's business landscape, making the world's fastest-growing major
economy an easier place to do business.

The following is the list of major chronological events that have led to the launch of the GST in India
on 1st July 2017. The GST was first discussed in the report of the Kelkar Task Force on indirect taxes.
In 2003, the Kelkar Task Force on indirect tax had suggested a comprehensive GST based on VAT
principle.

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1.4 Meaning of GST:

Goods and Services Tax (GST) is a comprehensive, destination based indirect tax levy on supply and
consumption of good and service tax. It extended to whole of India including Jammu and Kashmir.

Tax is levied on value addition on each stage, credit of tax paid on earlier stage will be available on
next stage as input tax credit subject to fulfilment of certain conditions, and input tax credit can be
adjusted against output tax by a Registered Taxable person. The burden of tax to be borne by the final
consumer

1.5 Definition of GST:

As per amended article 366(12A) of the constitution of India, Goods and Service Tax means any tax
on supply of goods or services or both expect taxes on the supply of the alcoholic liquor for human
consumption.

According to Central Goods and Services Tax Act 2017 “Goods” means every kind of movable property
other than money and securities but include actionable claim, growing crops, gross and things
attached to or forming per of the land which are agreed to be severed before supply or under a
contract of supply.

According to Central Goods and Services Tax Act 2017 “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.

1.6 Tax Structure in India with GST:

Direct Tax Income Tax

CGST (Central)

Tax Structure Intra-state

Indirect Tax = SGST (State)

GST (Except
customs)

Inter State IGST (Central)

1.7 Present Indirect Tax Structure:

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 Intra State Taxable Supply Intra State Taxable Supply Import from Outside India

Excise and Service Tax will CST will be replaced by

Custom Duty
be known as CGST Integrated GST (GST)

Local VAT & Other taxes Approx Sum Total of In Place of CVD and SAD,
will be known as GST CGST and SGST IGST will be charged

1.8 Objectives of GST:

1. To achieve One Nation, One Tax and One Market.

2. To Consumption based tax instead of Manufacturing
3. To Uniform GST Registration, payment and Input tax Credit
4. To eliminate the cascading effect of Indirect taxes on single transaction
5. To Subsume all indirect taxes at Centre and State Level under
6. To Reduce tax evasion and corruption
7. To Increase productivity
8. To Increase Tax to GDP Ratio and revenue surplus
9. To Increase Compliance
10. To Reducing economic distortions

1.9 Salient Feature of GST:

a) GST is based on the principle of value added tax and either “input tax method” or “subtraction”
method, with emphasis on voluntary compliance and accounts based system.
b) It is a comprehensive levy and collection on both goods and services at the same rate with benefit
of input tax credit or subtraction of value of penultimate transaction value.
c) Minimum number of floor rates of tax, generally, not exceeding two rates.
d) No scope for levy of cess, re-sale tax, additional tax, special tax, turnover tax etc.
e) Zero rating of exports and inter State sales of goods and supply of services.
f) Taxing of capital goods and inputs whether goods or services relatable to manufacture at lower
rate, so as to reduce inventory carrying cost and cost of production.
g) A common law and procedures throughout the country under a single administration.
h) GST is a destination based tax and levied at single point at the time of consumption of goods or
services by the ultimate consumer.

1.10 Benefits of GST in General:

a) GST would result in abolition of multiple types of taxes on goods and services.
b) It reduces effective rates of tax to one or two floor rates.
c) Minimizes compliance cost and increases voluntary compliance.
d) Eradicates cascading effect of taxation and also distortion in the economy.
e) Enhances manufacturing and distribution efficiency, reduces cost of production of goods and
services, increases demand and production of goods and services.
f) As it is neutral to business processes, business models, organization structure, geographic
location, product substitutes, it promotes economic efficiency and sustainable long term economic
growth.
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g) Decreases litigation, and corruption, with an impact in widening tax base and increased revenue
to the Center and State.
h) Reduces administrative cost for the Government.

GST Stakeholder

Manufacturer

Government Wholesaler

Good
+
Services

Consumer Retailer

1.11 Benefits of GST to its Stake holders:

(a) For Manufacturer, Wholesaler and Retailer

(1) Easy compliance: A robust and comprehensive IT system would be the foundation of the
GST regime in India. Therefore, all tax payer services such as registrations, returns,
payments, etc. would be available to the taxpayers online, which would make compliance
easy and transparent.
(2) Uniformity of tax rates and structures: GST will ensure that indirect tax rates and
structures are common across the country, thereby increasing certainty and ease of doing
business. In other words, GST would make doing business in the country tax neutral,
irrespective of the choice of place of doing business.
(3) Removal of cascading: A system of seamless tax-credits throughout the value-chain, and
across boundaries of States, would ensure that there is minimal cascading of taxes. This
would reduce hidden costs of doing business.
(4) Improved competitiveness: Reduction in transaction costs of doing business would
eventually lead to an improved competitiveness for the trade and industry.
(5) Gain to manufacturers and exporters: The subsuming of major Central and State taxes in
GST, complete and comprehensive set-off of input goods and services and phasing out of
Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services.
This will increase the competitiveness of Indian goods and services in the international
market and give boost to Indian exports. The uniformity in tax rates and procedures across
the country will also go a long way in reducing the compliance cost.

(b) For Central and State Governments

(1) Simple and easy to administer: Multiple indirect taxes at the Central and State levels are
being replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler
and easier to administer than all other indirect taxes of the Centre and State levied so far.
(2) Better controls on leakage: GST will result in better tax compliance due to a robust IT
infrastructure. Due to the seamless transfer of input tax credit from one stage to another in
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 the chain of value addition, there is an inbuilt mechanism in the design of GST that would
incentivize tax compliance by traders.
(3) Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues
of the
(4) Government, and will therefore, lead to higher revenue efficiency.

(c) For the consumer:

(1) Single and transparent tax proportionate to the value of goods and services: Due to
multiple indirect taxes being levied by the Centre and State, with incomplete or no input tax
credits available at progressive stages of value addition, the cost of most goods and services
in the country today are laden with many hidden taxes. Under GST, there would be only one
tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final
consumer.
(2) Relief in overall tax burden: Because of efficiency gains and prevention of leakages, the
overall tax burden on most commodities will come down, which will benefit consumers.

Removal of
cascading
effect of taxes

Wider
Coverage of Free movement
input tax, sale of Goods
tax and service and Service
tax off One Tax
One Nation

Rationalize
Continuous
structure
chain of set-off
of indirect
till the consumer
taxation

Need for GST in India

1.12 Constitutional Amendments:

In order to implement GST there was a requirement of amendment to Constitution whereby the
powers to levy GST concurrently by both Union and States had to be provided for. Accordingly 101st
Constitution Amendment Act was enacted by Presidential assent on 8th of September 2016. With the
changes made in the constitution under the GST regime, concurrent jurisdiction for levy and
collection was given both Centre and State to tax the supply of goods and/or services within the state,
whereas Centre would have jurisdiction to tax inter-state supply of goods and/or services.

After the enactment of the constitution amendment, the same should be given effect to by notification.
On issue of such notification, the constitution would get effectively amended. Accordingly the
notification was issued on 16th of September 2016 whereby the changes were made effective from
that date. On such changes the existing taxes like sales tax, service tax etc., being levied would be out
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of the powers of Union and States. As a transitional measure, the constitution amendment act has
provided a time frame of one year, whereby the existing taxes can be continued to be collected.
Therefore unless further amendment is made or some other legal changes are brought out, the
present system of taxation has to come to an end latest by 15th of September 2017 giving way for
introduction of GST.

Further as a part of the constitutional amendment, for the introduction of GST there was a
requirement of constitution of GST Council wherein all the states along with Union have
representation and the matters relating to GST are discussed and decided therein before being
recommended or implemented. The said GST Council was constituted on 15th September 2017.

The said constitution amendment is only enables the Union and States to enact a law for
implementation of GST. The actual implementation of GST has to happen with the enactment of GST
law (GST Acts) by Union and States along with corresponding rules and regulations to be framed there
under. In that direction, Central Goods and Services Tax Act, 2017, Integrated Goods and Services Tax
Act, 2017, Union Territory Goods and Services Tax are already enacted and it will be enacted and will
come into effect from the notified date.

Similarly all the states are required to enact the respective State Goods and Services Tax Acts in their
respective states. These laws to be enacted by states are based on the model SGST law given by the
GST Council in similar line with CGST Act. As on date except few states all states have passed their
respective SGST Bills in their legislature.

1.13 Structure of GST (Dual Model):

GST in India will be levied on the basis of Dual model, India is a federal country where both the Central
Government and the state Governments have been assigned the powers of levy and collect taxes
thorough appropriate legislation. Both the levels of Governments have distinct responsibilities to
perform according to the division of powers prescribed in the constitution for which they need to
raise resources.
Under the dual GST system the Central Government and State Governments are simultaneously
levying the taxes on supply of goods and services
 SGST and CGST for intrastate transaction: In the GST system, both Central and State taxes will
be collected at the point of sale. Both components (the Central and State GST) will be charged on
the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower
prices will lead to more consumption, thereby helping companies.
 IGST for Interstate transaction: ‘IGST Model’ will be in place for taxation of inter State
transaction of Goods and Services. The scope of IGST Model is that Central would levy IGST which
would be CGST plus SGST on all inter State transactions of taxable goods and services with
appropriate provision for consignment or stock transfer of goods and services.
 The GST paid on the purchase of goods and services, to be paid on the supply of goods and services.
 There should be no distinction between raw materials and capital goods in allowing input tax
credit. The tax base should comprehensively extend over all goods and services up to final
consumption point on value addition.
 Assessable value for all the taxes will be same.

1.14 Central Goods and Services Tax:

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The GST to be levied by the Centre on intra-State supply of goods and/or services is Central GST
(CGST) and that by the States is State GST (SGST).
On inter-state supply of goods and services, Integrated GST (IGST) will be collected by Centre. IGST
will also apply on imports.
GST is a consumption based tax i.e. the tax should be received by the state in which the goods or
services are consumed and not by the state in which such goods are manufactured. IGST is designed
to ensure seamless flow of input tax credit from one state to another. One state has to deal only with
the Centre government to settle the tax amounts and not with every other state, thus making the
process easier.

For e.g.: – Rajesh, a dealer in Karnataka sold goods to Ravi in Karnataka worth ` 10,000. The GST
rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case the dealer collects ` 1800
and ` 900 will go to the central government and ` 900 will go to the Karnataka government.

1.15 State or Union Territory GST:

State GST would replace State VAT, Entry tax, Octroi, Luxury tax, Entertainment tax etc. SGST would
be levied on services as well. To enable taxing of services by the State, the Constitutional Amendment
Act, 2016 contains suitable provisions. SGST is to be administered by the State Governments. SGST
could be at a rate bit higher than CGST as per press reports. The SGST payable could be set off from
the SGST credit or the IGST credit available. The closing input VAT balance available under VAT Act
would also be made available to the dealer, as on the date of transition into GST, and could be set off
towards SGST (State GST) liability. Further it is expected that the duty and tax paid on closing stock
would also be available as credit, which may not have been claimed as set off in the VAT regime.

1.16 Integrated Goods and Services Tax:

Integrated GST (IGST) would be levied and collected by the Centre on inter-State supply of goods and
services. Under Article 269A of the Constitution, the GST 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 in the manner as may be provided by Parliament by
law on the recommendations of the Goods and Services Tax Council.

IGST (expected to be equal to CGST + SGST) would be levied on all supplies of goods and/or services
in the course of inter-state trade or commerce. IGST would be applicable to import of goods or
services from outside country as well, which is indicated in the Constitutional Amendment Act, 2016.
Further it is expected that the duty and tax paid on closing stock would also be available as credit,
which may not have been claimed as set-off.

1.17 Goods and Service Tax Model:

The highlight of the changes considering, GST model would be as follows:

(a) There will be four types of Tax as follows:
Type of Leviable on Supply of Goods or Levied by
Tax Services or both
SGST Supply within the state. Respective State
Government

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 UTGST Supply within the Union Territory. Central Government
CGST Supply within the state. Central Government
IGST Supply in the course of interstate trade Central Government
or commerce.
(b) In other words going by the types of transactions –
Type of Transaction Type of Tax Levied by
(Supply of Goods or Services or both)
Supply within the state (Same transaction will SGST Respective
suffer both types of tax) SG
CGST CG
Supply within the Union Territory (Same UTGST CG
transaction will suffer both types of tax)
CGST
Supply in course of interstate trade or commerce IGST CG
Import of Goods or Services or Both IGST CG
(c) There will be mechanism between the State Government and Central Government for
distribution of the IGST collected by Centre as per the recommendation by GST council
(constitutional body to be created after amendment to constitution). From the business
entity perspective this may not have direct implications.
(d) Subsumed in GST:
Central tax/levies State taxes / levies
▪ Central Excise Duty ▪ VAT/Sales tax
▪ Additional Excise Duties ▪ Entertainment tax
▪ Excise Duty levied under Medicinal ▪ Luxury tax
& Toiletries Preparation Act ▪ Taxes on lottery, betting & gambling
▪ Service Tax ▪ State Cesses& Surcharges in so far as
▪ Additional Customs Duty - CVD they relate to supply of goods and
▪ SAD of Customs – 4% (SAD) services
▪ CST (Administered by states) ▪ Entry tax
▪ Surcharges
▪ Cesses
(e) In addition to the CGST, SGST, UTGST, IGST as the case may be, there is an additional levy in
the form of compensation Cess on the above taxes for providing the compensation to states
for loss of revenue due to implementation of revenue. The said cess is proposed to be levied
on certain goods like aerated waters, pan masala, tobacco and its products including
Cigarettes and few types of Motor Vehicles.
(f) The levy of GST will be based on supply of goods, or of services, or both. This will replace the
levy and its concepts like manufacture and removal of goods; sale of goods; provision of
service; luxuries; betting and gambling, entertainment etc., by the concept of ‘Supply’ of
goods or services or both.

1.18 Commodities kept Outside the Purview of GST:

As per definition of Goods and Services Tax given only alcohol for human consumption will be out of
purview of GST but due to lack of consent between Central and State Governments, the following
commodities are proposed to be kept outside of the purview of GST:
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 • Alcohol for human consumption
• Petroleum products, Petroleum crude, motor spirit, high speed diesel, natural gas and aviation
turbine fuel,
• Electricity

GST related to Specific Products:

Though GST is to consolidate tax code on all products considering various political aspects of our
country, certain specific products are dealt separately. The highlights of the same are as follows:
(a) Manufacture of alcoholic beverages for human consumption are kept out of GST. State Excise duty
and Sales Tax/VAT would continue to be levied by the respective state Government.
(b) On the other hand on Tobacco and Tobacco products Central Government would continue to levy
Central Excise Duty (or under some other name) in addition to GST.
(c) Levy of GST on specified Petroleum products are postponed till that time the GST council
recommends for its inclusion in GST. Till then States would continue to levy Sales tax and Centre
would continue to levy Central Excise duty. The specified petroleum products are as follows :–
(a) Crude petroleum;
(b) Diesel (HSD);
(c) Petrol (motor spirit);
(d) Natural gas; and
(e) Aviation turbine fuel

Note: All other fuels and petroleum products other than these five would be covered under GST.

Enactments under GST

As per the proposed scheme law for levy of CGST and IGST will be formulated by Parliament for levy
and collection of CGST and IGST respectively. The tax also will be levied and collected by the Central
Government. There will be common enactment of CGST, IGST, UTGST and Compensation Cess for
entire country. However from administration perspective the CGST or IGST credits of the states is
said to be maintained separately registration wise (which will be one per state unless a person opts
to have more than one registration if he has separate business vertical).

As regards to levy of SGST each state has to enact law for the respective states based on the law
formulated by GST council. The levy and collection will be by the respective state legislation. Unless
the states follow the GST law in its true spirit, it may create disparities in the laws of different states,
leading to different treatment of tax in different states.

Rate of GST and threshold exemption limit

One of the essential aspects of GST is rate of GST. As per the present status, tentative rates for majority
products are announced subject to minor changes based on four digits HS Coding System. The rate
(both SGST & CGST together and IGST, as the case may be) are Nil, 5%, 12%, 18%, 28% plus
compensation cess on certain goods. For exports and supply to SEZ the same are called as zero rated
whereby no tax is payable however the benefit of input tax and refund of accumulated credit will be
available in those cases.

As regards to thresh old exemption limit, it would be 20 Lakhs on all India basis and for the states of
Arunachal Pradesh, Assam, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal
Pradesh & Uttarakhand it is fixed as10 Lakhs. In cases where an entity has a business both under

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those specific states and others, they will be getting only 10 lakhs exemption.

Composition Scheme:
For the person who has taxable turnover equal or less than fifty lakhs is proposed to be given a
composition scheme wherein the composition tax rate as may be prescribed, which shall not be more
than 2% in case of a manufacturer (1% of CGST & 1% of SGST) and 5% (2.5 + 2.5) in case if supply of
foods and beverages 1% (0.5+0.5) in any other case(other than supply of service) of the turnover in
State or turnover in Union territory . The scheme will be subject to conditions which the law will
provide for the same.
Following are important points to be kept in mind in respect of composition scheme:
(a) who affects any inter-state supplies is not entitled for the scheme;
(b) Person having business in different places and separately registered all of them should opt for
composition scheme. In other words a person cannot be in composition in one registration and
outside composition in another registration.
(c) person opting for composition scheme cannot collect tax;
(d) Person opting for composition scheme is not entitled to any input tax credit.

1.19 GST Council:

A Council set up by Government of India named as ‘GST Council’. GST Council constituted w.e.f.
12.09.2016 to monitor the entire GST regime and the council is also empowered with statutory
powers to make recommendations from time to time to make GST implementation more effective.
Composition of the Council
a) The Union Finance Minister is the Chairman/Chairperson for the Council.
b) The Union Minister of State in-charge of Revenue will be a member.
c) The Council will have a total of 33 members (29 state ministers, two representatives from two
union Territories, and two Union ministers).
d) The Centre will have one-third vote, states together will have a two-third say. To adopt a
resolution, three-fourth majority would be required.

Responsibilities of the GST Council

a. It will finalize the tax base by recommending the goods and services to be exempted, the threshold
for taxation, the revenue-neutral rate (RNR) and the rate structure. These are far reaching issues
which will impact the economic interest of all the States and the Centre.
b. It will also have to finalize the number of slabs the GST will be pegged at for different categories
of goods and services. Besides the standard rate, there could be a lower rate for wage goods
consumed by the poor and another one for demerit or luxury goods, also called ‘sin goods’.
c. Parliament has to make a law to provide for compensation for revenue losses to state
governments, based on the recommendations of the Council.
d. The Council will finalize the model Central, State and Integrated GST laws for their
recommendation to and enactment by the Parliament and State Legislatures.
e. Article 269A mandates the Council to make recommendations on three issues. These are:
1. Special rates to deal with natural disasters.
2. Special provisions for the North-Eastern States.
3. The date on which petroleum products will be subjected to GST.

Sectoral Groups under GST Council

GST Council has set up 18 Sectoral Groups to look into the issues of specific sectors of the economy.
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These Sectoral grouping is made for the effective administration of the GST in India.
1. Banking, Financial and Insurance
2. Exports (Including Export Oriented Undertakings and Special Economic Zones)
3. Transport and Logistics
4. Micro, Small and Medium Enterprises (Including Job work)
5. Food Processing
6. Media and Entertainment
7. Drugs and Pharmaceuticals
8. Oil and Gas (Upstream and Downstream)
9. Services received and provided by Government
10. Telecom
11. Information Technology and Information Technology enabled Services
12. Textiles
13. Gems and Jewellery
14. e-Commerce
15. Travel and Tourism
16. Handicrafts
17. Mining
18. Big Infrastructure (Airport, Sea Ports including Maintenance, Repair and Overhaul, Power Sector,
Housing and Construction)

1.20 Powers and Functions of GST Council:

The Council has legislative, executive and judicial powers. It will recommend GST legislation, oversee
implementation of the GST in the country, and set up a mechanism to adjudicate disputes between its
members. As per Article 279A (4), the Council will make recommendations to the Union and the States
on important issues related to GST, like
a) Taxes, cesses, and surcharges to be subsumed under the GST;
b) Goods and services which may be subject to, or exempt from GST;
c) The threshold limit of turnover for application of GST;
d) Rates of GST;
e) Model GST laws, principles of levy, apportionment of IGST and principles related to place of
supply;
f) Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and
Kashmir, and Uttarakhand; and
g) Other related matters.

Provisions for amendments

Any change in the given Act, if made it is called as Amendments to the concerned Act. In GST Act,
which is just introduced in the Indian economy may undergo many amendments in the days to come
as and when new unexplored situation arises while executing the Act.

Integrated Goods and Services (IGST)

IGST shall mean the tax levied under the IGST Act on the supply of any goods and services in the
course of Inter-State Trade or Commerce. IGST Act shall apply to whole of India. Central government
would levy IGST (which would be CGST + SGST) on all Inter-State transactions of taxable goods and
services with appropriate provisions for consignment or stock transfer of goods and services. The
Inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST and
Private circulation only 15
SGST on his purchases. The exporting state will transfer to the centre the credit of IGST while
discharging his output tax liability in his own state. The centre will transfer to the importing state the
credit of IGST used in payment of SGST.

The scope of IGST model is that centre would levy IGST which would be CGST plus SGST on all inter-
state transactions of taxable goods and services. The inter-state on his purchases. The exporting state
will transfer to the centre the credit of SGST used in the payments of IGST. The importing dealer will
claim credit of IGST while discharging his output tax liability in his own state. The centre will transfer
to the importing state the credit of IGST used in the payment of SGST. The relevant information is also
submitted to the central agency which will act as a clearing house mechanism, verify the claims and
inform the respective government to the transfer the funds.

The inter-state adjustment will be made by central clearing agency and the assesses will not be
concerned with such adjustment at all. Under IGST, a dealer can establish hub and spoke approach
for distribution of his final products. He can maintain depots at few strategic locations in country and
from those locations; he can distribute goods to nearby states. This will be very cost effective
distribution network for assesses. Revenue from IGST will be apportioned among Union and States
by the parliament on basis of recommendation of Goods and Service Tax Council.

Features of IGST
a) Central Government would administer and levy taxes on IGST
b) Seller in the origin state will charge IGST on Inter – State supply of goods and services
c) Inter - state seller shall use his input CGST and input SGST for payment of IGST.
d) Interstate buyer shall avail input tax credit on the basis of tax invoice for payment of his own
IGST, CGST or SGST.
e) Both, the seller and buyer shall report these transaction in their respective e-returns
f) Exporting state will transfer the SGST porting to Central Government and Central Government
will transfer that SGST to importing State.
g) Stock transfer / to branch/depot will attract IGST.
h) On inter-state and cross border transactions.
i) Centre would levy and collect IGST in lieu of CGST and SGST;
j) To be shared between centre/states
k) Single IGST rate.
l) IGST would be levied on all inter-state transactions of taxable goods and services with
appropriate provisions for consignment or stock transfer of goods and services.
m) Inter-state dealer will pay IGST after adjusting available, input IGST, CGST and SGST on
purchases.

The major advantages of IGST Model are as follows.

a) Maintenance of uninterrupted ITC chain on inter-state transactions.
b) No upfront payment of tax or substantial blockage of funds for the interstate seller or buyer.
c) No refund claim in exporting state, as ITC is used up while paying the tax.
d) Self-monitoring model.
e) Level of computerization is limited to inter-state dealers and central and state government
should be able to computerize their process expeditiously.
f) As all inter-state dealers will be e-registered and correspondence with them will be by e-mail
the compliance level will improve substantially.
g) Model can take business to business as well as business to consumer transactions into account.
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CGST – Central Goods and Service Tax Act.
CGST is the tax levied and collected by the central government on every supply of goods and services
within the state. Under GST, there are three components, namely
1. CSGT or Central Goods and Service Tax
2. SGST or State Goods and Service Tax
3. IGST or Integrated Goods and Service Tax
CGST and SGST are applicable on the supply of goods and service within the state. Further, IGST is
applicable on the supply of goods and services outside the state. The combined rate of CGST and SGST
is equal to IGST rate.

Features of the CGST Act

1. It is levied by Central government to replace the existing tax like Service Tax, Excise, etc.
2. It is applicable only within the state.
3. The credit of CGST is available only against CGST and IGST.
4. The exemption limit of `20 Lakhs is applicable.
5. The dealer can use the benefit of composition scheme up to turnover of 50 lakhs.

The present GST model have been amended with various articles in constitution of India under 122nd
constitutional amendment to provide power to both the central government and state government to
levy tax on supply which include Sales of goods and Service. The GST Act provides for levy of central
goods and service tax on Intra-State supply of goods or services. The state GST act provides for levy
of state GST on Intra–state supply of goods or services. The integrated GST act provides for levy of
IGST on inter-state supply of goods and services. In other words CGST and SGST will be levied on
intrastate supply of goods or services where as IGST will be levied Inter-state supply of goods and
service. Each state government will enact statute for levy on supply of goods and services.

Karnataka GST (K-SGST)

Karnataka GST act is passed on 16th June 2017. Karnataka GST Act an Act to make a provision for levy
and collection of tax on intra-State supply of goods or services or both by the State of Karnataka and
the matters connected therewith or incidental thereto. This Act may be called the Karnataka Goods
and Services Tax Act, 2017. It extends to the whole of the State of Karnataka.
Classes of officers under the State Goods and Services Tax Act
(1)There shall be the following classes of officers and persons under the State Goods and Services Tax
Act namely.
a) Commissioner of SGST,
b) Special Commissioners of SGST,
c) Additional Commissioners of SGST,
d) Joint Commissioners of SGST,
e) Deputy Commissioners of SGST,
f) Assistant Commissioners of SGST, and
g) Such other class of officers and persons as may be appointed for the purposes of this
Act.
(2)The Commissioner shall have jurisdiction over the whole of the State of Karnataka All other Officers
shall have jurisdiction over the whole of the State or over such areas as the Commissioner may, by
notification as specified.

1.23 Meaning and Definitions of important terms in GST Act:

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Aggregate turnover U/S 2(6)
Aggregate turnover means the aggregate value of all taxable supplies (excluding the value of inwards
supplies on which tax is payable by a person on reverse charge basis), exempt supplies export of
goods or services or both and interstate supplies of persons having the same permanent account
number to be computed on all India basis but excludes Central Tax (CGST), State Tax (SGST) , Union
Territory Tax (UTGST), Integrated tax (IGST) and Cess i.e., except GST tax all other taxes will be
included in turnover for computing aggregate turnover.

Adjudicating authority U/S 2(4)

Adjudicating authority Means any authority appointed or authorized to pass any order or decision
under this Act, but does not include the central board of excise and customs ,the provisional authority,
Authority for advance ruling ,Appellate authority for Advance ruling ,the first appellate Authority and
the appellate tribunal.

Agent U/S 2 (5)

Agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an
auctioneer or any other mercantile agent, by whatever name called, who carries on the business of
supply or receipt of good or service or services on behalf of another. Example – Government ration
distribution by ration dealers. Where dealer act as a agent on behalf of Govt.

Business U/S 2(17)

According to sec 2(17) a trade commerce, manufacturer, profession, vocation or any other similar
activities whether or not it is for a pecuniary benefit. In other words any trade, Manufacturing,
professional service which are done on receipt of cash or free will be considered as business.

Capital goods U/S 2(19)

“Capital goods” means: Goods, the value of which is capitalized in the books of accounts of the person
claiming input tax credit and which are used or intended to be used in the course or furtherance of
business.

Taxable person U/S 2(107)

Taxable person means a person who is registered or liable to be registered U/S 22 or 24 of CGST Act.
A person who carries a business in India or in any state of India, he would be taxable person or he is
required to take registration in terms of liability to be registered. He could be taxable person. Or a
person who is already registered under excise, service tax & vat, they are taxable person too. Even
Central Government, State Government and local authorities are taxable person except for the
activities which are specified in schedule 4.
Casual taxable person U/S 2(20)
“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. Example-
Selling of crackers by putting temporary sheds at the time of Diwali who doesn’t have permanent
shop in the state.

Composite supply U/S 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
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and in conjunction with each in the ordinary course of business, one of which is a principal supply.
For example 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 U/S 2(74)
Mixed supply means two or more individuals supplies of goods or services or any combinations
thereof, made in conjunction with each by a taxable person for a single price where such supply does
not constitute a composite supply. For example, getting meals in hotel is a mixed supply where you
will get roti, rice, sweet together in a fixed price and roti rice are not depend each other can purchase
and eat separately.

Exempt supply U/S 2(47)

Exemption supply means supply of any goods and services or both which attracts nil rates of tax or
which may be wholly exempted from tax under sec11 or under sec of the integrated good and service
tax act and includes nontaxable supply.

Intermediary
Intermediary means a broker, an agent or any other person, by whatever name called, who arranges
or facilitates the supply of goods or services or both, or securities, between two or more persons, but
does not include a person who supplies such goods or services or both or securities on his own
account.

Outward supply U/S 2(83)

In relation to taxable person, means supply of goods or services or both, whether by sales, transfer,
barter, exchange, license, rental, lease or disposal or any other mode, made or agreed to be such
persons in the course or furtherance of business.

Principle supply U/S 2(90)

The supply means the supply of goods or service which constitutes the predominant elements of a
composite supply and to which any other supply forming part of that composite supply is ancillary.
Example- In foreign air travel supply of food is not principle supply but travelling to destination will
be the principle supply.
a) Supply of goods or services includes all forms of supply made or agreed to be made for a
consideration by a person in the course of business, Sale, transfer, barter, exchange, license,
rental, lease or disposal.
b) Importation of services for a consideration, whether or not in the course of business.
c) Supply specified in schedule I, made or agreed to be made without consideration.
d) Schedule II defines specified transactions as supply of services.

1.24 Activities or transactions which shall be treated neither as a supply of Goods nor a Supply
of Services: Schedule III:

a) Government to specify activities or transactions undertaken by the Central Government, a state

Government or any local authority in which they are engaged as public authorities will be neither
supply of goods nor supply of services, as may be notifies by the Government on the
recommendations of the Council, shall be treated neither as a supply of goods nor a supply of
services.
b) Government to notify transactions which will be treated as supply of goods and not a supply of
service and vice versa.
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c) Permanent transfer or disposal of business assets where input tax credit has been availed o such
assets.
d) Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, when made in the course business
e) Gifts of Employees by Employer exceeding `50,000 treated as supply of goods or services or both
f) Supply of Goods
(i) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal
(ii) by agent to this principal where the agent undertakes to receive such goods on behalf of the
principal

Place of supply U/S 2(86)

For goods except import or export place of supply will be whether by the supplier or the recipient or
by any other person, the place of supply of such goods shall be the location of the goods at the time at
which the movement of goods terminates for delivery to the recipient;

Supplier U/S 2(105)

In relation to any goods or service or both, shall mean the person supplying the said goods or service
or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or
services or both supplied. The person who sells the goods or giving service is called supplier.

Goods U/S 2(52)

Goods means every kind of moveable property other than money and securities but includes
actionable claims ,growing of crops ,grass and thing attached to or forming part of the land which are
agreed to served before supply or under a contract of supply.

Input service distributor U/S 2(61)

It a means an officer of the supplier of goods or services or both which receives tax invoice issued
under section 31 towards the receipt of input services and issues a prescribed documents for the
purpose of distributing the credit of central tax ,state tax ,integrated tax or union territory paid on the
said services to a supplier of taxable goods or services or both having the same permanent account
number as that of the said office. Input tax credit (CGST, SGST, IGST, UGST) accumulated in one state
can be distributed to the other sates branches of the same company. Example – Advertisement
expenses paid to BABA Ramdev will increase in all India sales, Hence tax paid on the above
advertisement will be distributed to other locations by booking same in corporate office.

Job Work U/S 2(68)

Job work means any treatment or process undertaken by a person on goods belonging to another
registered person is called Job Work. In CCR it only covers processing on goods supplied to job
worker. This definition is different from existing definition in CCR as it now specifies job work on
goods of registered taxable person. Unregistered persons sending goods for job work would not to be
considered as job work under GST.

Manufacture U/S 2(72)

It means processing of raw material or inputs in any manner that results in emergency of a new
product having a distinct name ,character and use and term “manufacturer “shall be constructed
accordingly. Example – Getting saree from silk. The input is raw silk and we get saree.
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Input tax U/S 2(62)
“Input tax “ in relation to a registered person ,means the central tax ,state tax, integrated tax or union
territory tax charged on any supply or goods or services or both made to him. OR "Input tax" in
relation to a taxable person, means the IGST, including that on import of goods, CGST and SGST or
UTGST charged on any supply of goods or services or both to him and includes.
a) IGST charged on import of goods
b) the tax payable under sub-section (3) and (4) of section 9;
c) the tax payable under sub-section (3) and (4) of section 5 of IGST Act;
d) the tax payable under sub-section (3) and (4) of section 9 of SGST Act; or
e) the tax payable under sub-section (3) and (4) of section 7 of UTIGST Act
f) ,but does not include the tax paid under composition levy;

Input Tax Credit Section U/S 2(63)

“Input tax credit” means credit of ‘input tax’ Section 2(17) - Business is defined in inclusive manner
as under:
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 sub-clause (a);
c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction
d) supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
e) provision by a club, association, society, or any such body (for subscription or any other
consideration) of the facilities or benefits to its members;
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 to talisator or a license to book maker in such club;
and
i) any activity or transactions undertaken by Central Government , a State Government or any
local authority in which they are engaged as public authorities;

Person U/S 2(73)

“Person” includes
a) An individual
b) A Hindu undivided family
c) A company
d) A firm
e) A limited company
f) Government
g) A local authority
h) An association of persons or a body of individual ,whether incorporated or not ,in India or
outside India
i) Anybody corporate incorporated by or under the laws of a country outside India,
j) A co-operative society registered under any laws relating to co-operative society
k) Society as defined under the societies registration act ,1860(21 of 1860)
l) Trust
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 m) 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. etc.
n) Every artificial juridical person ,not falling within any of the preceding sub-clauses

Place of business U/S 2(85)

A place from where the business 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 “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, provides or receives goods
and/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.
Reverse charge U/S 2(98)
The liability to pay tax by the person receiving goods or services instead of the supplier of such goods
or services under section 9 (3) or (4). Normally tax is payable by the supplier of goods or services or
both. However in some cases, the recipients are made liable to pay tax. This is termed as Reverse
Charge.

Works contract U/S 2(119)

Work 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 where in transfer of property in goods is involved in the
execution of such contract.

Non- resident taxable person U/S 2(77)

Any person who occasionally undertakes transactions involving supply of goods or services or both,
whether as principal or agent in any other capacity, but has no fixed place of business or residence in
India.

Export of goods under GST Section U/S 2(5)

“Export of goods” with its grammatical variations and cognate expressions, means taking goods out
of India to a place outside India;
a) The Concept of Export of Goods under GST is similar to concept of Export of Goods under Present
law also.
b) Export will not be liable to tax under GST law.
c) There is no requirement for receipt of foreign exchange currency in case of export of goods.
d) Input Credit related to Export of Goods can be availed and also can go for refund or rebate to the
extent credit utilized, also on deemed exports.

1.25 Import of goods and Services:

Import of goods U/S 2(10)

Import of goods with its grammatical variations and cognate expressions, means bringing goods into
India from a place outside India. Under GST law, supply of goods or services in the course of import
Private circulation only 22
into India shall be deemed to be a supply of goods or services in the course of inter-State trade or
commerce.

Import of Services
Under present service tax law, in respect of any taxable services provided or agreed to be provided
by any person located in a non-taxable territory and received by any person who is located in taxable
territory, the service receiver is liable to make payment of service tax. Service tax is payable by
recipient of service in respect of services received in taxable territory of India. We determine location
of place of provision of service, whether within or outside India, by referring to the Place of Provision
of service Rules.

Applying the principles laid down in the said rules, if the place of provision of service happens to be
outside the taxable territory. Then there is no taxability in hands of service receiver on the
payments/remittances done to outside India, under reverse charge mechanism.

Import of Services under GST

Supply of services in the course of import into the territory of India shall be deemed to be a supply of
services in the course of inter-State trade or commerce.

Section 2(11) of IGST act: “import of service” means the supply of any service, where
a) the supplier of service is located outside India,
b) the recipient of service is located in India, and
c) the place of supply of service is in India;

The fundamental principle is that tax is payable on the supply of services which is supplied to
recipient in India. The establishment of a person in India and any of his other establishment outside
India shall be treated as establishments of distinct persons. The effect is that though two persons
may not be different, yet by this fiction they are recognized as separate person and any transaction
between them, if it satisfies elements of taxability would be liable to service tax. For example,
transaction of supply of service between branch located in non-taxable territory, say Singapore and
Indian HO is treated as transaction between 2 persons.

Under GST, tax under reverse charge on services provided from outside and received in India cannot
be paid out of input tax credit. Tax to be paid by e-payment on services supplied from outside India
and received in India. After making payment of GST, the credit can be availed to extent attributed to
taxable supply of goods or services

Supply of goods /services in the course of imports or exports shall be considered as inter-state trade
or commerce ant taxes shall be levied under Integrated Goods and Services Tax” (IGST) of this Act.
The provisions of IGST act shall be applicable to supply of goods/services in the course of import and
export. Inter-State supply of goods shall be subjected to the levy of IGST. However, the import of goods
shall continue to attract Basic Customs Duty (BCD) in addition to IGST. The manufacturer, service
provider and trader of goods who imports goods/services shall be eligible to set off the IGST paid on
import of goods/services against his output liability. However, the credit of BCD will not be available
under proposed GST law as well.

Section 2(15) of IGST Act “location of supplier of services” means:

i. Where a supply is made from a place of business for which registration has been obtained, the
Private circulation only 23
 location of such place of business;
ii. Where a supply is made from a place other than the place of business for which registration has
been obtained, a fixed establishment elsewhere, the location of such fixed establishment;
iii. Where a supply is made from more than one establishment, whether the place of business or fixed
establishment, the location of the establishment most directly concerned with the provision of
the supply; and
iv. In absence of such places, the location of the usual place of residence of the supplier
Section 2(14) of IGST Act “location of recipient of services” means:
i. Where a supply is received at a place of business for which registration has been obtained, the
location of such place of business.
ii. Where a supply is received at a place other than the place of business for which registration has
been obtained,, a fixed establishment elsewhere, the location of such fixed establishment.
iii. Where a supply is received at more than one establishment, whether the place of business or fixed
establishment, the location of the establishment most directly concerned with the receipt of the
supply and
iv. In absence of such places, the location of the usual place of residence of the recipient;

Section 2(15) of IGST Act “location of supplier of services” means

(i) Where a supply is made from a place of business for which registration has been obtained, the
location of such place of business.
(ii) Where a supply is made from a place other than the place of business for which registration has
been obtained, a fixed establishment elsewhere, the location of such fixed establishment.
(iii) Where a supply is made from more than one establishment, whether the place of business or fixed
establishment, the location of the establishment most directly concerned with the provision of
the supply and
(iv) In absence of such places, the location of the usual place of residence of the supplier

Example:
Sl. No. Scenario Place of Location of
Service Provider
1 Supply of Consulting Services from Bangalore Bangalore
location of CA firm
2 Supply of Consulting Services made from Hyderabad
Hyderabad location of CA firm
3 Where consulting services assignment Gurgaon[the location
obtained by Gurgaon location of multi-location most directly
CA firm, but part of consulting services concerned with the
provided from Vizag [where a supply is made provision of the
from more than one establishment] supply]

General points to consider:

➢ As per Section 2(23) of IGST Act, definition of Zero Rated Supply assigned in section 16.
➢ It has been clarified that the Export shall be treated as “Zero Rated Supply” and credit related
to same can be availed or alternately go for refund.
Section 16 of the Draft IGST Act contains the provisions relating to zero-rated supplies:
➢ “Zero rated supply” means any of the following supplies of goods or services, namely
• Export of goods or services or both or

Private circulation only 24

 • Supply of goods or services to a SEZ developer or an SEZ unit.
➢ Subject to provisions of section 17(5) of CGST Act credit of input tax may be availed for making
zero-rated supplies, notwithstanding that such supply may be an exempt supply.
➢ A registered person making zero rated shall be eligible to claim refund under one of the
following two options, namely –
(a) A registered person may supply goods or services under bond or Letter of Undertaking,
subject to such conditions, safeguards and procedure as may be prescribed in this regard,
without payment of IGST and claim refund of unutilized input tax credit in accordance
with provisions of section 54 of the CGST Act, 2017 read with rules made there under;
(b) A registered person may supply goods or services, subject to such conditions, safeguards
and procedure as may be prescribed in this regard, on payment of IGST and claim refund
of IGST paid on goods or services supplied in accordance with provisions of section 54 of
the CGST Act, 2017 read with rules made there under.
Thus, GST shall not be charged on goods/services exported from India. In case the supply of goods
qualifies as export out of India as per the Place of Supply Rules the transaction shall be treated as
“zero-rated supply”. The supplier shall be allowed to export the goods/services without charging any
tax and can avail the CGST/SGST and IGST credits paid on inputs and input services. If he is unable to
utilize the credit then he can go for refund of credits as per section 54 of Central GST Act, 2016. In a
nutshell, imports and exports are going to be covered in IGST. Exports will be zero rated and refund
of ITC shall be allowed. IGST as well as Basic Custom Duty shall be leviable on imports of goods and
or services.

Goods and Services Tax Network (GSTN)

Goods and Services Tax Network (GSTN) is a non-Government, private limited company. It was
incorporated on March 28, 2013. The Government of India holds 24.5% equity in GSTN and all States
of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State
Finance Ministers (EC), together hold another 24.5%. Balance 51% equity is with non-Government
financial institutions. The Company has been set up primarily to provide IT infrastructure and
services to the Central and State Governments, tax payers and other stakeholders for implementation
of the Goods and Services Tax (GST). The Authorized Capital of the Company is ` 10 Crores.

Design and Implementation of GST

Tax payer's convenience will be a key in success of GST regime. The tax payer should have a choice to
use third party applications which can provide varied interfaces on desktops, laptops and mobiles
and can connect with GST System. The GSP developed apps will connect with the GST system via
secure GST system APIs. Majority of GST system functionalities related to taxpayer's GST compliance
requirements shall be available to the GSP through APIs. GSPs may use GST APIs and enrich and
enhance the tax payer's experience. GST System will not be available over the Internet for security
reasons. The production API end points can only be consumed via MPLS lines. All APIs will be
accessed over HTTPS protocol.
The benefits of API based integration are:
(a) Consumption across technologies and platforms (mobile, tablets, desktops, etc.) based on the
individual requirements
(b) Automated upload and download of data
(c) Ability to adapt to changing taxation and other business rules and end user usage models.
(d) Integration with customer software (ERP, Accounting systems) that tax payers and others
are already using for their day to day activities

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Selected GST Suvidha Providers
The list of GST Suvidha Provider (GSP) already selected and enlisted by GSTN is given below. Tax
payers who need to avail of the services of GSPs may contact them. GSTN has on-boarded these GSP
basis a selection process that involved evaluating their financial ability and IT capability to deliver
the necessary services to tax payers for becoming GST compliant in the new GST regime. Businesses
may avail of the services of the GSP as per their need.

Guidelines for GSPs and ISPs to Integrate with GST System

GSP will need to connect to GST System through telecom service providers (ISP). The GSP may choose
and partner with one or more ISP to integrate with GST System. Please refer the guidelines and
methodology for the integration document for further details.

GST Compliance requirements by the Tax Payer

The taxpayer under GST Regime will have to provide following information at regular intervals:
a) Invoice data upload (B2B and large value B2C)
b) Upload GSTR-1 (return containing supply data) which will be created based on invoice data
and some other data provided by the taxpayer.
c) Download data on inward supplies (receipts or purchase) in the form of Draft GSTR-2 from
GST Portal created by the Portal based on GSTR-1 filed by corresponding suppliers.
d) Do matching of purchases made and that downloaded from GST portal. Finalize the same
based on his own purchase (inward supply data) and upload GSTR-2
e) File GSTR-3 created by GST Portal based on GSTR-1 and 2 and other info and tax paid.
f) Similarly there are other returns for other categories of taxpayers like casual taxpayer or
composition taxpayers.

Goods and Service Tax Suvidha Providers (GSP)

The Goods and Services Tax constitutional amendment having been promulgated by the Government
of India, the rollout of the GST Bill will be a collective effort of the Central and State Governments, the
tax payers and the IT platform provider i.e. GSTN, CBEC and State Tax Departments. Besides these
main participants there are going to be other stakeholders e.g. Central and States tax authorities, RBI,
the Banks, the tax professionals (tax return preparers, Chartered Accountants, Tax Advocates, STPs
etc.), financial services providing companies like ERP companies and Tax Accounting Software
Providers etc.

Overview of GSP Ecosystem

GST System is following a platform approach for providing services to Tax Payers.
a) All GST System functionalities like registration of entities, uploading of invoices, filing of returns
will all be available through APIs.
b) GSTN believes in creating an ecosystem of Service Providers viz GST Suvidha Provider (GSP)
providing innovative solutions (Portal, Mobile App, Enriched API) either themselves or through
its third party partners for making tax filing more easy and convenient to tax payers.
c) GSTN envisages a very important role of GSPs in making GST rollout easy and convenient for tax
payers.

1.26 Terminal Questions:

Section – A
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 1. What is GST?
2. Define GST.
3. Expand GST and IGST.
4. What is Job Work?
5. What is Manufacture?
6. Who is an Intermediary?
7. What is Input Tax? Give an example.
8. State any objectives of GST.
9. Write any two features of GST..
10. What is GST Council?

Section – B
1. Write a brief note of Recent Developments of GST in India.
2. What is the present Tax structure in India with GST?
3. What is the present Indirect Tax structure in India?
4. Write the objectives of GST.
5. Write the salient features of GST.
6. Write the benefits of GST to manufacturers.
7. Write the benefits of GST to Consumers and Governments.
8. Write a note on composition scheme of taxation in GST.

Section – C
1. Write the benefits of GST to its stake holders.
2. Write short notes on CGST, SGST, UGST and IGST.
3. What is GST Council, What are its Structure, responsibilities and functions?
4. Explain the impact of GST on Indian Economy
5. What is GST? What are its objectives and benefits?

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