GST

KNOWLEDGE
SERIES
 Goods and Services Tax (GST) is an indirect tax which was
introduced in India on 1 July 2017 and was applicable throughout
India which replaced multiple cascading taxes levied by
the central and state governments. It was introduced as The
Constitution (One Hundred and First Amendment) Act 2017,
following the passage of Constitution 122nd Amendment Bill.
The GST is governed by a GST Council and its Chairman is
the Finance Minister of India. Under GST, goods and services are
taxed at the following rates, 0, 5%, 12% ,18% and 28%. There is a
special rate of 0.25% on rough precious and semi-precious stones
and 3% on gold.[2] In addition a cess of 15% or other rates on top
of 28% GST applies on few items like aerated drinks, luxury cars
and tobacco products.[3] GST was initially proposed to replace a
slew of indirect taxes with a unified tax and was therefore set to
dramatically reshape the country's 2 trillion dollar economy. The
rate of GST in India is between double to four times that levied
in other countries like Singapore
Tax Subsumed in GST
Concept Changes in GST
 Indirect Tax : Present vs GST

Municipal Central Govt. +State

Central
State Govt. Corp./ Local Govt.+ MC/ LB
Govt. Bodies.

1. Excise
Duty Within State Outside
2. Service Tax 1. VAT 1. Octroi State
3. CST 2. Entry Tax 2. LBT 1. CGST
4. CVD 3. Entertainmen 2. SGST 1. IGST
5. SAD t Tax
GST TYPE
01
Central Goods & Service Tax
Tax on goods and services to be collected by
the Central Government for supplies within
the State

02
State Goods & Service Tax
Tax on goods and services to be collected by
the State Government for supplies within the
State

03
Integrated Goods & Service Tax
Tax on Inter-state supply of goods and services
Imports at par with Inter-State supply
Power to levy tax by Centre
Revenue distribution to State
Place of supply becomes relevant
 Understanding CGST, SGST, UTGST & IGST

State 1
Foreign Territory

State 2
Union territory

IGST Credit can be used for payment of IGST, CGST, SGST / UTGST in that order
Tower/ Cable Sales From Factory

Sales from
Factory

Within
Out side State
State

CGST -9%
SGST 9% IGST -18%
 Bought Out Items
Purchase Purchase
Within from Out
State side State
CGST -9% IGST -18%
SGST 9%

Billing / Sales
from Project
State

Within
State

CGST -9%
SGST 9%
 Civil & Erection Works : Services
Purchase /
Purchase /
Services
Services
Outside
Within State
State
CGST -9% IGST 18%
SGST 9%

Billing / Sales
from Project
State

Within
State

CGST -9%
SGST 9%
 Current vs GST : Input
System for a seamless flow of credit
Extends to inter-State supplies
Credit utilization would be as follows:
Allowed for Payment of
Credit of:
IGST CGST SGST
IGST (1) (2) (3)
CGST (2) (1)
SGST (2) (1)

*The numbers represent the order of utilization of credit

Expectation: Accumulation of unutilized GST credits would be
avoided except in cases of exports
Current vs GST : Input
Current vs GST : Output
Current vs GST : Output
 Critical impact areas to watch out for
No C Forms in GST.

Expedite collection of pending Statutory Forms (F, C, H etc.) as the credit to be

carried forward will be reduced to the extent of the differential liability on account of
pending forms.

Way Bill will be continue in all States.

Purchase from Unregistered Vendors to be discontinue.

Migration of Existing Vendors / Sub Contractors in GST

GST on Movement of Machinery / Tools from one state to another State.

GST on Excess Inventory movement from one state to another state.

Input GST reversal on FOC material supply to customer due to RFL.

All Hotel and other travelling Expenses should be in Name of KEC International Ltd to
avail the input credit of GST.

Any Revision in Invoice through Debit / Credit Note: Any revision of prices under GST
regime shall be effected through a credit note / debit note including the purchase and sales
return/shortage or deficiency etc.
 Critical impact areas to watch out for
Track aging of inventory lying in stock at the warehouse/traded stock as on appointed day
(GST implementation day) as any inventory which is older than 12 months (as per date of
invoice), the excise duty credit will not be permissible

Co-relate such inventory with the corresponding tax/excise invoices so that the duty paid
on such purchases can be availed as credit

Expedite the Assessment : As the states are expediting the sales tax assessments, there is a
higher probability of demand materializing if pending forms are not collected within prescribed time
limit including forms for earlier years

Collate all information for pending assessments : Due to re-organization of point of

supply chain, it is critical to collate all information for pending assessments as any closure or
movement of depot/warehouse can create challenges

Ensure that all invoices for transactions of purchases during transition period is received and booked
within 30 days, else the credit of such taxes will lapse unless the period is extended by Commissioner

In case of sales return/purchase return of goods sold in earlier regime, the registered person is liable
to charge GST. The seller can claim set off of the same
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