GST Basic Concepts, Levy, Collection & Time of Supply

GST Basic Concepts,
Levy & Time of Supply

CA R. Murali Krishnan
M/s Krishna Moorthy & Co.
Chartered Accountants, Kollam
CURRENT TAX STRUCTURE
TAX COMPONENTS OF GST
TAXES SUBSUMED UNDER GST
GOODS [SEC.2(52)]
Means every kind of movable property
INCLUDES EXCLUDES
actionable
claim growing crops money
grass securities
things attached to or forming
part of the land which are agreed to
severed before supply or under the
contract of supply
Services [sec.2(102)]
means anything other than goods, money and Securities
includes: activities relating to the

a) use of money or
b) 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;

Supply
Supply Includes Without
Import of Services consideration
for a Schedule I
consideration
whether in the
course of
furtherance of Activities treated
business or not as Supply of goods
or Supply of
Supply with services
Consideration Schedule II
and in course
of
furtherance
of Business Activities treated
neither as Supply of
goods nor Supply of
Services
Schedule III
Supply Includes…..
1. With Consideration and used in the course of
furtherance of Business

1. With Consideration and used in the course of furtherance of
Business
Any sale of goods or services which broadly result in the transfer
SALE of title in case of goods, and transfer of right to use in case of
services.
Any transfers between branches form a part of supply and are taxable.
TRANSFER However, GST paid on branch transfers are fully available as Input
Tax Credit.
When the consideration is paid through goods instead of money. For

example: a seller has supplied goods and the buyer, supplies goods to
BARTER/EXCHANGE
the extent of payment. Or when one product is exchanged with
another product.
1. With Consideration and used in the course of furtherance of
Business
Any grant of license to use forms part of supply. For example: online
LICENCE
subscriptions
RENTAL Renting of property fully or partially is a supply under GST
LEASE Letting out the building or property on lease is a supply under GST
DISPOSAL Disposal of business assets forms part of supply

2 Import of services with Consideration and used in the course of
furtherance of Business or not
Under GST, a supply will be considered as an import of service when-
The supplier of the service is located outside India.
The recipient of the service is located in India and
The place of supply of the service is in India.
 For example: Renjith Apparels in Hyderabad, Telengana, avails fashion designing services of
INR40,00,000 from Kumari Designs in London, UK
 Location of supplier: London, UK Location of recipient: Hyderabad, Telengana
 Place of supply: Place of supply will be the location of the recipient, i.e. Hyderabad, Telengana.
 Hence, this import is supply .
 IMP :If the an architect located outside India provides services to an individual for the construction
of his residential house, it is supply even though it not in course of furtherance of Business.
3. Without Consideration and used in the course of
furtherance of Business Schedule I

3. Without Consideration and used in the course of furtherance of Business Sch I
1. Permanent transfer/disposal of business assets on which Input Tax Credit has been availed
In the event of sale or transfer of business assets i.e. capital goods on which Input Tax Credit was availed –
the transaction shall be treated as supply even when these are cleared or transferred without consideration,
and the business is liable to pay GST.
Example
Super Cars Ltd purchased 15 computers worth Rs.3,00,000 and paid GST of Rs.54,000. Super Cars Ltd availed
Input Tax Credit of Rs.54,000. These computers were used for maintaining the records and accounts of the
business.
After years of usage, Super Cars Ltd decided to give these computers away to the employees without any
cost.
Though the computers were disposed without any consideration, Super Cars Ltd is liable to pay GST.

2. Supply of goods or services of both between related parties or distinct persons when
made in the course of furtherance of business
a. Finished goods are transferred from the manufacturing unit to a depot, from where the goods
are to be sold
Example
Rose Polymers, a registered manufacturer in Delhi, transferred finished goods to their depot
located in Noida, UP. At the time of transfer, the open market value of the finished goods was
Rs.20,000. Also, the depot supplied goods of like kind and quality at price of Rs.22,000.
Meaning of Related parties & Distinct persons is not being covered now

3. Supply of goods between Principal and his Agent
Supply of goods under the following scenarios is considered as taxable supply even without consideration.
 Supply by the Principal to his Agent: When the agent undertakes to supply goods on behalf of the
principal
 Supply by the Agent to the Principal: When the Agent undertakes to receive such goods on behalf of
the Principal
Example
Super Car Ltd appoints Sharma Agency as an agent. They will store the spare parts supplied by Super Cars
Ltd, and as and when an order is received by Super Cars Ltd from his dealers, instruction will be sent to
Sharma Agency to supply the consignment.
Also, Sharma Agency is entrusted to receive the supply of raw material from manufacturers on behalf of
Super Cars Ltd.
Super Cars Ltd is the principal and Sharma Agency is the agent. Supply of spare parts by Super
Cars Ltd to Sharma Agency is a taxable supply. The receipt of raw material by Sharma Agency on
behalf ofMoorthy
M/s Krishna Super & Co. Cars Ltd and the subsequent supply by Sharma Agency to Super Cars Ltd is a
taxable supply The liability on the above will be either shared jointly by Super Cars Ltd and
4. Import of services by a taxable person from a related person or from any of his other establishments
outside India, in the course of or for furtherance of business.
This implies that services imported without consideration from related persons situated outside India will
be subject to levy of GST only if it is in the course of or for furtherance of business.
Example 1
Interior design service received by a branch from its Head office, located in Singapore. The interior service is
taxable and liable for GST on reverse charge.
Hence, service imported without consideration from unrelated persons for the furtherance of business, and
import of service without consideration for personal use is not a supply, and consequently, not subject to
GST.
Example 2
Interior design service from its head office, located in Singapore for personal residence without any
consideration. Since the service is free and for personal use, it is not subject to GST.
4. Supply of Goods or Supply of Services Sch II
Treated
as
Sl.No Forms of supply Example
supply
of ?
Furniture House sold furniture to Mr. Ganesh.
Any transfer of the title This will be treated as supply of goods, because
1 Goods
in goods on sale, the title of the furniture is transferred
to Mr. Ganesh.
Furniture House supplied furniture to Mr.
Rakesh, on rental basis, for a period of 3
months.
Any transfer of goods
2 Services This amounts supply of service because
without transfer of title
furniture is transferred for Mr. Rakesh’s usage,
and the title of the furniture is still with
Furniture House.
Any transfer of title Furniture House supplied furniture to

of goods under an Mr. Ramesh in an agreement to receive
agreement which payments in 6 instalments.
stipulates that This amounts supply of goods, because
3 property in goods Goods the title of the furniture will pass on to
will pass at a future Mr. Ramesh on completing the payment
date upon payment of 6 instalments.
of full consideration Typically, all hire purchase will qualify
as agreed. under this section.
Mr. Suresh lets out land on lease to

Any lease, easement,
Furniture House. The letting out of land
4 tenancy, and licence Services
on lease is considered as supply of
to occupy land
services.
Any lease or letting

out of the building
including a Mr. Suresh lets out a building to Furniture
commercial, industrial House. Furniture House used the building
5 Services
or residential complex for display and sale of furniture.
for business or This is a supply of services.
commerce, either
wholly or partly
Job work – Any Furniture House also undertakes repair works

treatment or process and polishing of the furniture of their
6 which is being applied Services customers.
to another person’s The repair and polishing activity will be
goods
M/s Krishna Moorthy & Co. treated as supply of service.
Business assets put to

private use or non-
Car used for business is put to private
7 business use whether Services
use. This is a supply of services.
or not for a
consideration
Renting of immovable Renting of shop premises is considered as

8 Services
property supply of services.

Development, design,
programming,
customisation,
Max Technologies Ltd developed a payroll
adaptation, up-
software for Furniture House. The
9 gradation, Services
development of software is a supply of
enhancement,
services.
implementation of
information
technology software
Works contract,
including transfer of
property in goods
Murali Construction Ltd constructed a
(whether as goods or in
commercial complex involving material and
10 some other form) Services
labour.
involved in the
This is a supply of services.
execution of a works
contract of immovable
property
SUPPLY SEC.7 OF CGST
Schedule III- Transactions not treated as supply

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. Function of MP, MLA etc.
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
Question Time
Q1. What are different types of supplies covered under the scope of
Supply?
(a) Supplies made with consideration
(b) Supplies made without consideration
(c) Both of the above
(d) None of the above
Ans. (c) Both of the above

A 5-star hotel in Mumbai provides a 4 days/3 nights package, with breakfast.
This is a composite supply as the package of accommodation facilities and

breakfast is natural combination in the ordinary course of business for a hotel. In
this case, the hotel accommodation is the principal supply, and breakfast is
ancillary to the hotel accommodation.

2. Sale of laptop with bag -this is a composite supply because laptop bag is natural requisite to
carry the laptop. But if the customers opts for a multipurpose bag like backpack bag, it is not a
composite supply since it is not naturally bundled.
3. A 5-star hotel in Mumbai provides a 4 day/3 nights package with the breakfast and one day
Mumbai Darshan.
The inclusion of Mumbai Darshan in this package is not a natural requisite to accommodation in
the hotel. Hence, this does not amount to composite supply. This is a mixed supply.

For purpose of calculating tax liability, the rate of tax applicable on the principal supply
of such goods and services will be effected on the composite supply. Let us consider the
same example,
A 5-star hotel in Mumbai provides a 4 days/3 nights package with the breakfast. Let us
assume, the hotel accommodation attracts 18% tax and the restaurant service attracts
12% tax.
As per the example, hotel accommodation is the principal supply, and the entire supply
will be taxed at 18%.

As per the example,
 Tie, watch, wallet, and pen are bundled as a kit
 The supply of a tie does not naturally necessitate the supply of other elements
(watch, wallet, pen) and vice versa.
 The kit is supplied for a single price.
Hence, the supply of this kit is a mixed supply.

Tax liability on mixed supply
To calculate the tax liability on mixed supply, the tax rate applicable on the goods or
services attracting the highest rate of tax, in the combination of goods and services,
will be considered.
Let us consider the example of the kit again.
Product Rate of Tax*
Tie 12%
Watch 18%
Wallet 12%
Pen 5%
*Indicative rates
In this case, the watch attracts the highest rate of tax in the mixed supply i.e., 18%.
Hence, the mixed supply will be taxed at 18%.

Question Time
Q2. What are the factors differentiating Composite Supply & Mixed Supply?
(a) Nature of bundling i.e. artificial or natural
(b) Existence of Principal Supply

LEVY SEC. 9 OF CGST SEC. 5 OF IGST SEC. 7 OF UTGST
What is the levy on Supply of goods and/or services

At what rate To be notified – but shall not exceed 20%
On what value Value determined in terms of Section 15 of
CGST
When CGST+SGST/UTGST On intra- state supply of goods &/Services
would apply
When IGST would apply On interstate supply of goods &/Services
How to determine place of Refer to Sections 7 to 14 of IGST
supply
Other aspects
Central /State Govts to notify supplies on which reverse charge would apply
Central /State Govts to specify supplies on which the electronic commerce
operator would be liable to pay tax

LEVY SEC. 9 OF CGST SEC. 5 OF IGST SEC. 7 OF UTGST
Other aspects
GST on Diesel, Petrol etc to be levied w.e.f. from the date to be notified.
Central /State Govt to notify supplies on which reverse charge would apply
Supply of goods or services by person unregistered to registered, levy is on
the recipient
Government may notify services, which are supplied through E-Commerce
operator, which the E-Commerce operator shall be liable to pay GST

Question Time
Q3. What are the taxes levied on an intra-State Supply?
(a) CGST
(b) SGST *
(c) CGST and SGST
(d) IGST
Ans. (c) CGST and SGST

Question Time
Q4. What is the maximum rate prescribed under CGST?
(a) 12%
(b) 28%
(c) 20%
(d) 18%
Ans. (c) 20%

Question Time
Q5. Who will notify the rate of tax to be levied under CGST?
(a) Central Government suo moto
(b) State Government suo moto
(c) GST Council suo moto
(d) Central Government as per the recommendations of the GST
Council
Ans. (d) Central Government as per the recommendations of the GST

Council

Question Time
Q6. What are the supplies on which reverse charge mechanism would
apply?
(a) Notified categories of goods or services or both
(b) Inward supply of goods or services or both from an unregistered
dealer

Question Time
Q7. Which of the following taxes will be levied on Imports?
(a) CGST
(b) SGST
(c) IGST
(d) Exempt
Ans. (c) IGST

COMPOSITION

COMPOSITION SEC.10 OF CGST
COMPOSITION
Who is eligible All taxable persons other than service providers (except service
provider on supply of food articles)
Conditions a) Previous year’s aggregate turnover shall be less than 75 Lakhs
b) Should not engage in interstate supply
c) Should not engage in supply of goods exempt /not leviable to
tax
d) Should not be supplying goods through e-comm operator
e) Not engaged in manufacture of goods which are notified by
Govt.
f) All the taxable persons under same PAN shall opt for
composition
a) Option shall lapse on exceeding Rs. 75 Lakhs limit in any year

a) Not to collect tax from recipients
COMPOSITION SEC.10 OF CGST
COMPOSITION Rates
A. Manufacturer- 1% of the Turnover
B. Supply of food- 2.5% of the Turnover
C. Other supply of goods- 0.5% of the Turnover
In terms of Sec. 20 of IGST Act and Section 21 of UGST Act, provisions relating
to Composition in Sec. 10 of CGST Act shall mutatis mutandis be applicable
to IGST and UTGST provisions

Question Time
Q10. Which of the following persons can opt for composition scheme?
(a) Person making any supply of goods which are not leviable to tax under
this Act;
(b) Person making any inter-State outward supplies of goods;
(c) Person effecting supply of goods through an e-commerce operator liable
to collect tax at source
Ans. (d) None of the above

Question Time
Q11. What is the threshold limit of turnover in the preceding financial
year for opting to pay tax under composition scheme?
(a) Rs.20 lacs

(b) Rs.10 lacs
(c) Rs.75 lacs
Ans. (c) Rs.75 lacs

Question Time
Q12. What is the rate applicable under CGST to a registered person being a
manufacturer opting to pay taxes under composition scheme?
(a) 2.5%
(b) 1%
(c) 0%
(d) No composition for manufacturer
Ans. (b) 1%

Question Time
Q13. What is the rate applicable under CGST to a registered person
being a hotelier opting to pay taxes under composition scheme?
(a) 1%
(b) 0.5%
(c) 2.5%
Ans. (c) 2.5%

Question Time
Q15. Can a registered person opt for composition scheme only
for one out of his 3 business verticals having same Permanent
Account Number?
(a) Yes
(b) No
(c) Yes, subject to prior approval of the Central Government
(d) Yes, subject to prior approval of the concerned State
Government
Ans. (b) No

Question Time
Q16. Can Composition scheme be availed if the registered person
effects interstate supplies?
(a) Yes
(b) No
(c) Yes, subject to prior approval of the Central Government
(d) Yes, subject to prior approval of the concerned State Government
Ans. (b) No

TIME OF SUPPLY

TIME OF SUPPLY - SEC. 12 OF CGST
Goods
Regular charge: Earliest of the below event is Time of supply of goods
a) Date of invoice
b) Date of removal of goods for supply to the recipient (when the supply
involves movement of goods) or Date of delivery of goods in other cases
c) Date of receipt of payment with respect to the supply [earliest of date of
accounting of payment or date when the amounts are credited to bank
account]
In terms of Sec. 20 of IGST Act and Section 21 of UGST Act, provisions

contained in Sec. 12-14 of CGST Act relating to Time of Supply shall mutatis
mutandis be applicable to IGST and UTGST provisions

TIME OF SUPPLY - Goods SEC. 12 OF CGST
Reverse charge: Earliest of the below event is Time of supply of goods

a) Date of receipt of the goods
b) Date of accounting of payment with respect to the supply
c) date when the amounts are debited to bank account
d) 30 days from date of invoice

Vouchers:
(a) the date of issue of voucher, if the supply is identifiable at that point;
(b) the date of redemption of voucher, in all other cases
2(118) :Voucher: means an instrument where there is an obligation to
accept it as consideration or part consideration for a supply of goods or
services or both and where the goods or services or both to be supplied or
the identities of their potential suppliers are either indicated on the
instrument itself or in related documentation, including the terms and
conditions of use of such instrument

Residuary:
(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.
Time of supply for addition in the value of supply by way of interest, late fee
or penalty for delayed payment of any consideration :
Date on which the supplier receives such addition in value.

TIME OF SUPPLY - Services SEC. 13 OF CGST
Regular charge: Earliest of the below event is Time of supply of Service

a) Date of invoice (if issued within the period of 30days from supply of
service)
b)Date of provision of service(if invoice is not issued within 30days of the
said date)
c) Date of receipt of payment with respect to the supply [earliest of date of
accounting of payment or date when the amounts are credited to bank
account]

TIME OF SUPPLY - Services SEC. 13 OF CGST
Reverse charge: Earliest of the below event is Time of supply of Services

a) Date of accounting of payment with respect to the supply
b) date when the amounts are debited to bank account
c) 60 days from date of invoice
In case of supply by Associated Enterprise located outside India, Time of

Supply shall be date of entry in the books of accounts of the recipient or
date of payment whichever is earlier

TIME OF SUPPLY - Service SEC. 13 OF CGST
Vouchers:
(a) the date of issue of voucher, if the supply is identifiable at that point;
(b) the date of redemption of voucher, in all other cases
2(118) :Voucher: means an instrument where there is an obligation to
accept it as consideration or part consideration for a supply of goods or
services or both and where the goods or services or both to be supplied or
the identities of their potential suppliers are either indicated on the
instrument itself or in related documentation, including the terms and
conditions of use of such instrument

TIME OF SUPPLY - Service SEC. 13 OF CGST
Residuary:
(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.
Time of supply for addition in the value of supply by way of interest, late fee
or penalty for delayed payment of any consideration :
Date on which the supplier receives such addition in value.
TIME OF SUPPLY – change in rate of SEC. 14 OF CGST
tax
Supply Invoice &/or payment Rate applicable Time of supply
Before If both invoice and payment New RATE Date of invoice or

rate are received after rate payment whichever
change change is earlier
After rate If both invoice as well as OLD RATE

change payment is received before
rate change
In all other cases NEW RATE Date of invoice or

payment whichever
is later
Time of Supply of Services-Forward Charge
Date of
Date of Time of
Receipt of Explanation
Invoice Supply
Payment
10th In this case, the date of invoice is earlier than the

20th October, 20th October,
November, date of receipt of payment. Hence, The time of
2017 2017
2017 supply will be 20th October, 2017.
5th 25th 25th In this case, the date of receipt of payment (advance
December, November, November, receipt) is earlier than the date of invoice. Hence, the
2017 2017 2017 time of supply will be 25th November, 2017

Date of
Date of Time of
Invoice Supply
Payment
The time of supply will be the earliest of
Date of
date of invoice or receipt of payment. The
Entry in
date of receipt of payment will be the
Books: 20th
earliest of:
November,
•The date on which the payment is entered
5th 2017 20th
in the books of accounts or
December, Date of November,
•The date on which the payment is credited
2017 Payment 2017
to the bank account.
credited to
In this case, the date on which the receipt
Bank: 25th
of payment is entered in the books of
November,
account is earlier than the date on which
2017
payment is credited to the bank account.
Date of
Date of Time of
Invoice Supply
Payment
Date of The time of supply will be the earliest of date

Entry in of invoice or receipt of payment. The date of
Books: 15th receipt of payment will be the earliest of:
November, •The date on which the payment is entered in
5th 2017 10th the books of accounts or
December, Date of November, •The date on which the payment is credited to
2017 Payment 2017 the bank account.
credited to In this case, the date on which payment is
Bank: 10th credited to the bank account is earlier than the
November, date on which payment is entered in the books
2017 of account.
Questions-Time of Supply of Goods
Q 1. When does the liability to pay GST arise in case of
supply of goods?
(a) On raising of invoice
(b) At the time of supply of goods
(c) On receipt of payment
(d) Earliest of a ,b or c
Ans. (b) Earliest of a, b or c

Questions-Time of Supply of Services
 Q 8. What is the time of supply of service if the invoice is
issued within 30 days from the date of provision of
service?
 (a) Date of issue of invoice
 (b) Date on which the supplier receives payment
 (c) Date of provision of service
 (d) Earlier of (a) & (b)
Ans. (d) Earlier of (a) & (b)

Questions-Time of Supply-change in rates
 Q 1. There was increase in tax rate from 20% to 24% w.e.f. 1.6.2018.
Which of the following rate is applicable when services are provided
after change in rate of tax in June 2017 but invoice issued and payment
received, both in April 2017
 (a) 20% as it is lower of the two
 (b) 24% as it is higher of the two
 (c) 20% as invoice and payment were received prior to rate change
 (d) 24% as the supply was completed after rate change
Ans. (c) 20% as invoice and payment were received prior to rate change
Thank you

GST Basic Concepts, Levy, Collection & Time of Supply

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GST Basic Concepts,

Levy & Time of Supply

includes: activities relating to the

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

When the consideration is paid through goods instead of money. For

RENTAL Renting of property fully or partially is a supply under GST

DISPOSAL Disposal of business assets forms part of supply

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

Any transfer of title Furniture House supplied furniture to

Mr. Suresh lets out land on lease to

Any lease or letting

Job work – Any Furniture House also undertakes repair works

Business assets put to

Renting of immovable Renting of shop premises is considered as

M/s Krishna Moorthy & Co.

Schedule III- Transactions not treated as supply

Ans. (c) Both of the above

M/s Krishna Moorthy & Co.

This is a composite supply as the package of accommodation facilities and

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

Product Rate of Tax*

M/s Krishna Moorthy & Co.

Ans. (c) Both of the above

M/s Krishna Moorthy & Co.

What is the levy on Supply of goods and/or services

operator would be liable to pay tax

M/s Krishna Moorthy & Co.

Ans. (c) CGST and SGST

M/s Krishna Moorthy & Co.

Ans. (c) 20%

M/s Krishna Moorthy & Co.

Ans. (d) Central Government as per the recommendations of the GST

M/s Krishna Moorthy & Co.

Ans. (c) Both of the above

M/s Krishna Moorthy & Co.

Ans. (c) IGST

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

B. Supply of food- 2.5% of the Turnover

C. Other supply of goods- 0.5% of the Turnover

to IGST and UTGST provisions

Ans. (d) None of the above

M/s Krishna Moorthy & Co.

(a) Rs.20 lacs

Ans. (c) Rs.75 lacs

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

Ans. (c) 2.5%

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

M/s Krishna Moorthy & Co.

In terms of Sec. 20 of IGST Act and Section 21 of UGST Act, provisions

mutandis be applicable to IGST and UTGST provisions

Reverse charge: Earliest of the below event is Time of supply of goods