INDIRECT TAXATION

40MBAFM403
SYLLABUS
Module-1: Introduction to Goods and Services Tax
(GST)
Goods and Services Tax Act & Rules, Need for GST in
India, Dual GST Model - Central Goods and Services
Tax Act, 2017 (CGST) State Goods and Services Tax
Act, 2017 (SGST) Union Territory Goods and Services
Tax Act, 2017 (UTGST) Integrated Goods and Services
Tax Act, 2017 (IGST) Goods and Services Tax Network
(GSTN), GST Council Guiding principle and Functions
of the GST Council. (Theory).
EVOLUTION OF GST
 CONCEPT OF GST
 Value added tax
 Continuous chain of tax credit

 Burden borne by final consumer

 No cascading of taxes
FRAMEWORK OF GST
 Dual GST
 Classification of goods and services – HSN (Harmonised System of
Nomenclature)
 Registration

 Composition scheme

 Exemptions

 Input tax credit

 CGST/ SGST/ IGST/ UTGST

Note: Andaman and Nicobar Islands, Lakshadweep, Ladakh, Dadra

and Nagar Haveli & Daman and Diu and Chandigarh are governed by
UTGST Act, 2017 for levying UTGST. States and Union territories
with their own legislatures [i.e. Delhi, Jammu and Kashmir and
Puducherry] have their own GST legislation for levying SGST.
 GST common portal
 Tax on goods and services

Alcoholic liquor for human consumption: Is outside the

realm of GST. The manufacture/ production of alcoholic
liquor continues to be subjected to State excise duty and
inter-State/intra-State sale of the same is subject to
CST/VAT respectively.
Petroleum crude, diesel, petrol and natural gas: As
regards petroleum crude, diesel, petrol and natural gas
are concerned they are not presently leviable to GST.
GST will be levied on these products from a date to be
notified on the recommendations of the GST Council.
Tobacco: Tobacco is within the purview of GST, i.e. GST is
leviable on tobacco. However, Union Government has also
retained the power to levy excise duties on tobacco and
tobacco products manufactured in India. Resultantly, tobacco
is subject to GST as well as central excise duty.
Opium, Indian hemp and other narcotic drugs and narcotics:
Opium, Indian hemp and other narcotic drugs and narcotics
are within the purview of GST, i.e. GST is leviable on them.
However, State Governments have also retained the power to
levy excise duties on such products manufactured in India.
Resultantly, Opium, Indian hemp and other narcotic drugs and
narcotics are subject to GST as well as State excise duties.
Further, real estate sector has been kept out of ambit of GST,
i.e. GST will not be levied on sale/purchase of immovable
property.
BENEFITS OF GST
 Creation of unified national market
 Boost to make in India initiatives

 Enhanced investment and employment

 Ease of doing business

 Mitigation of ill effect of cascading

 Benefits to small traders and entrepreneur

GOODS AND SERVICES TAX NETWORK
(GSTN):
GSTN is a Technology backbone for GST in India. GST
being a destination based tax, inter- state trade of goods
and services (IGST) would need a robust settlement
mechanism amongst the States and the Centre. This is
possible only when there is a strong IT Infrastructure and
Service back bone which enables capture, processing and
exchange of information amongst the stakeholders
(including tax payers, States and Central Governments,
Accounting Offices, Banks and RBI). As a result Goods
and Services Tax Network (GSTN) has been set up.
FUNCTIONS OF THE GSTN:
 Filing of registration application
 Filing of return

 Creation of challan for tax payment

 Settlement of IGST payment (like a clearing house)

 Generation of business intelligence and analytics etc.

Harmonization of Business Autonomy of back-end systems
Processes and Formats of States and Centre

Non – Statutory Statutory

Functions Functions

1. Core Services 1. Approval of registration

Registration 2. Assessments
Returns 3. Refunds
Payments 4. Audit and enforcement
2. Helpdesk support 5. Adjudication
3. Information on inter-state 6. Internal workflow and
supply and cross credit support above functions
utilization
7. Recovery
4. Analytics
8. Analytics and BI
5. IGST settlement
GST COUNCIL
As per Article 279A of the Constitution of India, the
President of India is empowered to constitute Goods and
Services Tax Council. The President of India constituted
the GST Council on 15th September, 2016. The GST
Council shall consist of Union Finance Minster as a
Chairperson, Union Minister of State in charge of
Finance as a member, the State Finance Minister or State
Revenue Minister or any other Minister nominated by
each State as a member of the Council. The GST Council
shall select one of them as Vice Chairperson of Council.
FUNCTIONS OF THE GST COUNCIL
 Tax rates
 Exemptions

 Threshold limits

 Dispute resolution

 GST legislations including rules and notifications etc

GOODS AND SERVICES TAX ACT & RULES:
Acts:
 Finance Act, 2020 Finance (No.2) Act, 2019

 CGST Amendment Act, 2018

 IGST Amendment Act, 2018

 UGST Amendment Act, 2018

 Compensation Cess Amendment Act, 2018

 CGST Act

 IGST Act

 UTGST Act

 GST (Compensation to States) Act

 101st Constitution Amendment Act, 2016

Rules:
 CGST Rules, 2017 as amended upto 03.04.2020 (Part-A Rules)

 CGST Rules, 2017 as amended upto 03.04.2020 (Part-B Rules)

 IGST Rules, 2017 as amended upto 15.11.2020

 COMPOSITION SCHEME
The Government of India provides for simplified and
easy of doing business scheme for payment of taxes and
filling of returns to certain categories of taxable person.
As a result such taxable person is not required to
maintain elaborate records and filing detailed returns.
Section 10 of the CGST Act, provides for composition
levy to such person

Note:
1. Composition scheme assessee is not eligible to avail
Input Tax Credit.
2. Casual Taxable Person and Non-Resident taxable
person are not eligible for composition scheme
 COMPOSITION SCHEME
A composition levy
assessee can have value Composition Levy u/s
of service: <10% of 10
turnover in a state in the
PY or 5 lakhs whichever
is higher NO
Supply of service other than restaurant
and outdoor caterer
YES
NO
Supply of non taxable goods
YES

NO Option to pay
Inter state outward supply of goods YES tax at
composition
levy is not
YES applicable
Supply of goods through ECO

NO

Person is eligible to opt composition levy provided PY turnover < 1.50 Cr

 COMPOSITION SCHEME
A composition levy
assessee can have value Composition Levy
of service (other than
restaurant service): < Supplier is
NO
10% of turnover in a state YES -Manufacturer
in the PY or 5 lakhs -Trader
whichever is higher -Restaurant
u/s 10(2A) supplier of service
has option to claim
Supply of non taxable composite provided:
goods 1. PY aggregate turnover
NO <50 lakh
YES 2. Should not deal with non
taxable goods, inter state
Inter state outward
outward supply and /or
NO supply of goods
ECO
YES

Supply of goods
through ECO YES Option to pay tax at composition levy is
NO
not applicable

Person is eligible to opt composition levy provided PY turnover < 1.50 Cr

 COMPOSITION SCHEME
The Central Government vide Notification No. 14/2019-Central Tax,
dated 07th March, 2019 notified that an eligible registered person,
whose aggregate turnover in the preceding financial year did not
exceed 1.5 Crores, may opt to pay tax under Composition scheme.
However, the said aggregate turnover shall be 75 lakh in case of
persons registered under following States:
1. Arunachal Pradesh
2. Manipur
3. Meghalaya
4. Mizoram
5. Nagaland
6. Sikkim
7. Tripura
8. Uttarakhand
 PERSONS NOT ENTITLED TO AVAIL COMPOSITION
SCHEME
The Section 10(2) of the CGST Act, 2017 specifies the benefit of
composition scheme shall not be granted if a taxable person is:
a. engaged in the supply of services (other than restaurant and outdoor
catering service), except supply services (other than those referred to
in clause (b) of paragraph 6 of Schedule II), of value not exceeding
10% of turnover in a State or Union territory in the preceding
financial year or 5,00,000, whichever is higher;
b. engaged in making any supply of goods which are not leviable to tax
under this Act;
c. engaged in making any inter-state outward supplies of goods;
d. engaged in making any supply of goods through an electronic
commerce operator who is required to collect tax at source under
section 52; and
e. a manufacturer of such goods as may be notified by the Government
on the recommendations of the Council
 COMPOSITION RATE OF TAX
Sl. No. Category Rate
1. Manufacturers other than manufacturers of notified 1% of the
goods, i.e., ice cream, pan masala, tobacco and aerated turnover in the
water state / UT
2. Restaurant services and outdoor catering services 5% of the
turnover in the
state / UT
3. Any other supplier eligible for composition levy under 1% of turnover
Section 10 and the provisions of this chapter of taxable
supplies of goods
& services in the
state / UT
 COMPOSITION RATE OF TAX

Composition levy Scheme

Manufacturer Restaurant Trader

Aggregate Turnover in the

Aggregate Turnover Aggregate Turnover in preceding FY
in the preceding FY the preceding FY Only taxable services.
Taxable + exempted Taxable + exempted Any exempted services
goods & services goods & services w.e.f. including services by way
w.e.f. 2019 exempted 2019 exempted of extending deposits,
services does not services does not loans or advances in so far
include interest or include interest or as the consideration is
discount on deposit, discount on deposit, represented by way of
loans or advances loans or advances discount, shall not be
considered
 COMPOSITION RATE OF TAX

Composition levy Scheme

Manufacturer Restaurant Trader

Turnover for GST Turnover for GST Turnover for GST

Taxable + exempted Taxable goods and Taxable + exempted
goods & services taxable services only supply