Goods and Services Tax

(GST)
 Introduction
• Goods and Services Tax (GST) is a comprehensive indirect tax levied on the
supply of goods and services at each stage of the supply chain. It is designed to
replace multiple cascading taxes, such as excise duty, service tax, VAT (Value
Added Tax), and various other local taxes that were prevalent in many countries.
• The GST system operates on the principle of value addition, wherein tax is
levied on the value added at each stage of the production and distribution
process. It ensures that the tax burden is borne by the end consumer, while
businesses act as intermediaries and collect the tax from the buyers and remit it
to the government.
 What is GST?
• GST stands for Goods and Services Tax. It is an indirect tax levied on the supply
of goods and services at each stage of the supply chain. The GST system aims to
replace multiple cascading taxes, streamline the tax structure, and create a more
transparent and efficient tax regime.
• In a GST system, taxes are levied on the value added at each stage of production
or service provision. This means that businesses collect tax on their sales and
deduct the tax they have already paid on the inputs they purchased. Ultimately,
the burden of the tax falls on the end consumer, as the final price of goods or
services includes the applicable GST.
 Types Of GST Registration
• There are typically different types of GST registrations based on various factors
• Regular GST Registration: This type of registration is for businesses whose turnover exceeds a certain
threshold specified by the tax authorities. They are required to register under GST and comply with the
regular GST rules and regulations.
• Composition Scheme Registration: The composition scheme is an optional scheme for small businesses
with a turnover below a certain threshold. Businesses registered under this scheme pay tax at a lower rate
and have reduced compliance requirements. However, they are not eligible to claim input tax credits.
• Non-Resident Taxable Person Registration: This registration is applicable to non-resident individuals or
foreign companies that supply goods or services in a country but do not have a permanent establishment
there. They are required to register under GST before commencing their business operations.
• Please note that the specific types of GST registration, turnover thresholds
 Compulsory Registration in GST
In the Goods and Services Tax (GST) system in India, certain businesses are
required to register for GST mandatorily, regardless of their turnover. The
mandatory or compulsory registration criteria are specified in the GST law to
ensure wider tax compliance and effective tax administration. As of my last update
in September 2021, the following are the key scenarios where GST registration is
compulsory:
1. Aggregate Turnover Threshold: All businesses whose aggregate turnover (combined value of all taxable supplies, exempt
supplies, and exports) in a financial year exceeds the prescribed threshold limit are required to register for GST. The
threshold limit for regular GST registration was Rs. 20 lakhs for most states and Rs. 10 lakhs for some special category
states. However, certain categories of businesses, like those engaged in the supply of goods through e-commerce platforms
or those opting for the Composition Scheme, have different threshold limits.
2. Inter-State Supply: Any business making taxable supplies of goods or services from one state to another (inter-state
supply) is required to register for GST, regardless of its turnover. In other words, inter-state suppliers cannot avail the
threshold exemption and must register under GST irrespective of their turnover.
3. Casual Taxable Person: A casual taxable person, as defined in GST law, is someone who occasionally undertakes taxable
transactions in a state or union territory where they do not have a fixed place of business. Such persons are required to
register for GST before commencing business activities.
4. Non-Resident Taxable Person: A non-resident taxable person refers to a person who does not have a fixed place of
business in India but occasionally undertakes taxable supplies in the country. Non-resident taxable persons are required to
obtain GST registration before starting any business activities.
5. E-commerce Operators: E-commerce operators that facilitate the supply of goods or services through their platforms are
required to register for GST, irrespective of their turnover. Additionally, certain specified e-commerce operators are also
required to collect Tax Collection at Source (TCS) on supplies made by sellers through their platform.
6. TDS (Tax Deduction at Source) Deductors: Certain specified authorities and government organizations are required to
deduct TDS while making payments to suppliers under GST. These entities must register as TDS deductors.
7. Input Service Distributor (ISD): Input Service Distributors, i.e., offices of a company that receive invoices for services
and distribute the input tax credit (ITC) to their branches, are required to register for GST.
 Input Service Distributor (ISD)
In the Goods and Services Tax (GST) system in India, an Input Service Distributor
(ISD) is a unique concept that allows certain businesses to distribute input tax credit
(ITC) to their various branches or units. An ISD is essentially an office or
establishment of a company that receives tax invoices for input services and then
distributes the eligible ITC to its eligible recipients, who are typically other
business units or branches of the same company.
Explanation of Input Service Distributor (ISD) with Examples:
Let's understand the concept of ISD and how it works with the help of examples:
Example 1: Company with Multiple Units: Consider a company, ABC Pvt. Ltd., that operates in multiple locations or states. It
has a central head office from where various support services such as accounting, legal, IT, and marketing are provided to its
different units or branches located in different states. In this scenario, the head office of ABC Pvt. Ltd. can register as an Input
Service Distributor (ISD). The head office receives tax invoices for input services like legal consultation, IT services,
advertising, etc., that are utilized for the benefit of various units spread across different states.
Example 2: IT Company with Divisional Offices: Suppose there is an IT company, XYZ Technologies, with multiple
divisional offices in different cities. The head office of XYZ Technologies provides common services such as HR, finance, and
administrative support to all the divisional offices. In this case, the head office can register as an ISD. It will receive tax invoices
for the input services (like recruitment agency fees, legal services, etc.) utilized for the benefit of the various divisional offices.
The ITC available with the ISD can then be distributed to the respective divisional offices based on their proportionate
consumption of input services.
 Casual Taxable Person (CTP):
A Casual Taxable Person (CTP) is an individual or business entity that
occasionally undertakes taxable supplies of goods or services in a state or
union territory where they do not have a fixed place of business. CTPs are
not regular taxpayers in that particular state and conduct business
temporarily for a limited period.
Example 1: Food Vendor at a Festival
Suppose there is a food vendor named Alice who runs a restaurant in Delhi. Alice receives an invitation to participate in a
popular food festival organized in Mumbai, Maharashtra, which will last for 5 days. As Alice does not have a permanent
establishment in Maharashtra and is operating there only for the food festival, she qualifies as a Casual Taxable Person for the
duration of the event.
CTP Registration Process:
1. Before the food festival begins, Alice needs to apply for CTP registration in Maharashtra. Even though she is already
registered under GST as a regular taxpayer in Delhi, she requires separate registration as a Casual Taxable Person for the
temporary business activity in Maharashtra.
2. Alice will submit the CTP registration application through the GST portal by filling Form GST REG-01 and providing
relevant information, such as her personal details, nature of business, details of the food festival, and the expected duration
of her business activities in Maharashtra (which will be 5 days in this case).
3. As part of the registration process, Alice may be required to deposit a security amount as specified by the tax authorities to
cover potential tax liabilities during her registration period.
Valid Period of CTP Registration: The tax authorities will grant Alice CTP registration for the specific duration of the food
festival, which is 5 days. Once the festival is over, her CTP registration in Maharashtra ceases to be valid.
Tax Payment and Compliance: During the 5-day food festival in Maharashtra, Alice sells food items to visitors, and she
charges GST on the taxable supplies as per the applicable rates for the food items. Alice issues tax invoices to the customers for
the food items sold during the festival. After the festival concludes, Alice must file the required GST returns, such as GSTR-3B
and GSTR-1, within the prescribed time frame.
 How to Calculate Aggregate Turnover for GST Registration?

A business whose aggregate turnover in a financial year exceeds Rs.40

lakhs (or Rs.20 lakh for special category states, Puducherry, and Telangana)
has to mandatorily register under Goods and Service Tax. For service
providers, this limit is set at Rs.20 lakhs for normal category states and
Rs.10 lakh for special category states.
 What is Annual Aggregate Turnover?

As per GST law, “aggregate turnover” refers to the aggregate value of all taxable supplies
(excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis), exempt supplies, exports of goods or services or both and inter-state supplies.
The aggregate turnover computed for the entire financial year between April of a year up to
March of next year is called annual aggregate turnover. In other words, it is the total turnover
calculated at a PAN level (all GSTINs put together) being sum of the following:
• Taxable sales value
• Exempt sales value
• Export of goods and services
 Advantages of GST
Goods and Services Tax (GST) offers several advantages to both the government and businesses, as well as to the overall economy. Some of
the key advantages of GST include
1. Streamlined Tax Structure: GST replaces a complex web of multiple indirect taxes with a single, unified tax system. It simplifies the tax
structure and makes it easier for businesses to understand and comply with the tax laws.
2. Elimination of Cascading Effect: GST operates on the principle of value addition, allowing businesses to claim input tax credit on the
GST paid for their purchases.
3. Broadening of Tax Base: GST brings more businesses into the formal tax system.
4. Boost to Investment and Economic Growth: The simplified and transparent tax structure under GST attracts more domestic and foreign
investments. It improves the ease of doing business, fosters entrepreneurship, and contributes to economic growth.
5. Simpler Compliance: GST has a standardized tax return format and online procedures, making compliance easier for businesses.
6. Transparent and Accountable Tax System: GST brings transparency to the taxation system, making it easier for the government to track
tax transactions and collections.
Overall, GST is considered a significant reform in the tax landscape, providing numerous benefits to the economy, businesses, and consumers.
 GST Structure
The structure of Goods and Services Tax (GST) varies from country to country, and the specific details of the GST structure
depend on the laws and regulations of the respective country.
• Multiple Tax Rates: GST usually has multiple tax rates to classify different goods and services based on their nature and
essentiality. Common tax rate categories include standard rates, reduced rates for essential goods, and higher rates for luxury
or demerit goods.
• Central GST (CGST) : The tax collected by the central government is known as Central GST (CGST)
• State GST (SGST) : the tax collected by the state government is called State GST (SGST)
These components are levied on the same transaction but are kept separate to ensure that the revenue is shared between the
central and state governments.
• Integrated GST (IGST): In cases of interstate transactions or imports, an Integrated GST (IGST) is levied. The IGST is
collected by the central government but is later distributed to the destination state where the goods or services are consumed.
It's essential to note that each country's GST structure can have its unique features and complexities.
Central Goods and Services Tax (CGST):
CGST is a component of the Goods and Services Tax (GST) that is levied by
the Central Government of India on intra-state supplies of goods and
services. "Intra-state supplies" refer to transactions involving the movement
of goods or provision of services within the boundaries of a single state or
union territory of India. When a registered business or supplier makes a
taxable supply to a buyer within the same state, they charge CGST on the
transaction. The CGST rate is set by the Central Government and is uniform
across all states and union territories in India. The revenue collected from
CGST goes to the Central Government.
 State Goods and Services Tax (SGST):
SGST is the other component of GST, which is levied by the State
Government on intra-state supplies of goods and services. Each state and
union territory in India has its own SGST law, and the SGST rate may vary
from one state to another. When a registered business or supplier makes a
taxable supply to a buyer within the same state, they charge SGST on the
transaction. The SGST rate is set by the respective State Government. The
revenue collected from SGST goes to the State Government.
Let's take an example to understand how CGST and SGST are levied on
an intra-state transaction:
Suppose there is a mobile phone shop in Maharashtra (a state in India) that sells a smartphone to a customer within Maharashtra
for Rs. 20,000.
• CGST: The shop will charge CGST on the transaction, and let's assume the CGST rate is 9%. CGST levied on the transaction
will be Rs. 20,000 * 9% = Rs. 1,800. This amount of Rs. 1,800 will go to the Central Government.
• SGST: The shop will also charge SGST on the transaction, and let's assume the SGST rate is also 9%. SGST levied on the
transaction will be Rs. 20,000 * 9% = Rs. 1,800. This amount of Rs. 1,800 will go to the Maharashtra State Government.
The total tax amount collected from the customer will be Rs. 3,600 (Rs. 1,800 as CGST and Rs. 1,800 as SGST). The shop will
then file their GST returns and deposit the CGST and SGST amounts with the respective authorities (Central Government and
Maharashtra State Government).
Integrated Goods and Services Tax (IGST):
IGST is the component of GST that is levied on inter-state supplies of goods
and services. "Inter-state supplies" refer to transactions involving the
movement of goods or provision of services between two different states or
union territories within India. When a registered business or supplier makes
a taxable supply to a buyer in a different state, they charge IGST on the
transaction. The IGST rate is also set by the Central Government. The
revenue collected from IGST goes to the Central Government.
Let's take an example to understand how IGST levied on an inter-state
transaction:
Suppose the same furniture shop in Tamil Nadu sells a table to a customer in Karnataka (another state in India) for Rs. 10,000.
• IGST: The shop will charge IGST on the transaction, and let's assume the IGST rate is 18%. IGST levied on the transaction
will be Rs. 10,000 * 18% = Rs. 1,800. This amount of Rs. 1,800 will go to the Central Government.
In this case, the shop does not need to charge CGST and SGST separately because it's an inter-state transaction. The total tax
amount collected from the customer will be Rs. 1,800 as IGST. The shop will then file their GST returns and deposit the IGST
amount with the Central Government.
To summarize:
• CGST and SGST are levied on intra-state supplies, with revenue going to the Central Government and State Government,
respectively.
• IGST is levied on inter-state supplies, and the revenue goes entirely to the Central Government.
 Input Tax Credit (ITC)
Input Tax Credit (ITC) is a significant feature of the Goods and Services Tax
(GST) system. It is a mechanism that allows businesses to claim credit for
the tax paid on their purchases of goods and services, which are used for
furtherance of their business activities. In simpler terms, it enables
businesses to set off the GST they have paid on inputs against the GST they
collect on their output supplies.
 How Input Tax Credit works?
• Eligible Inputs: To claim Input Tax Credit, the inputs or input services on which GST has been
paid must be used for business purposes. These can include raw materials, goods for resale,
capital goods, services utilized for business operations, etc.
• Applicability: ITC is available throughout the supply chain, from the manufacturer to the
retailer. Each registered taxpayer involved in the supply of goods or services can claim credit
for the GST paid on their purchases.
• Set-off Mechanism: When a business makes an outward supply (sales), the GST collected on the
supply is referred to as the Output Tax. Simultaneously, the business can claim credit for the
GST paid on its purchases (inputs), known as Input Tax. The business can set off the Input Tax
against the Output Tax, and the balance, if any, is the GST liability to be paid to the government.
• Cross-utilization: ITC can be cross-utilized between CGST and SGST or IGST. For
example, if a business has paid more CGST on its purchases than its CGST liability
on sales, the excess credit can be used to set off its SGST or IGST liability.
• Time Limit for Claim: There is a time limit for claiming Input Tax Credit.
Generally, a taxpayer can claim ITC up to the due date of filing the annual return
for the respective financial year or the date of filing the relevant GST return for the
month of September following the end of the financial year, whichever is earlier.
• Conditions for Claiming ITC: To be eligible for claiming ITC, businesses must
meet certain conditions, such as proper documentation, compliance with GST rules,
and ensuring that the suppliers have actually deposited the GST with the
government.
Input Tax Credit is a crucial element of GST as it eliminates the cascading effect of
taxes and ensures that taxes are levied only on the value added at each stage of the
supply chain. This leads to a more efficient and transparent tax system, reduces the
tax burden on businesses, and promotes economic growth.
 Blocked credits and exceptions in GST
In the Goods and Services Tax (GST) system, certain input tax credits are
blocked or restricted, meaning businesses cannot claim credit for the GST
paid on specific inputs or expenses. These blocked credits are intended to
prevent misuse and ensure that the GST system operates smoothly.
1. Blocked Credits:
• Motor Vehicles: Input tax credit on motor vehicles (except for those
used for specific taxable activities) is generally blocked to prevent a
surge in credit claims for luxury vehicles.
• Food and Beverages: Input tax credit is blocked for food and beverages,
except when they are used for making further taxable supplies (e.g., in a
restaurant business).
• Staff Welfare: Credits related to certain staff welfare expenses, such as
free meals, health insurance, and personal use of facilities, might be
blocked.
• Rent-a-Cab: Input tax credit on renting motor vehicles is often blocked,
except when used for specified purposes like transporting employees or
passengers.
2. Exceptions:
• Capital Goods: Input tax credit on capital goods, such as machinery and
equipment, is allowed, but it may be claimed over a period of time
through depreciation.
• Works Contract: In some cases, works contract services may have
specific rules for claiming input tax credit.
• Non-Resident Taxable Person: Non-resident taxable persons may face
certain exceptions or conditions for claiming input tax credit.
• Composition Scheme: Businesses registered under the composition
scheme usually cannot claim input tax credit.
 GST Returns
Goods and Services Tax (GST) returns are periodic forms filed by registered
taxpayers to report their business activities, tax liabilities, and claim input
tax credit (ITC). GST returns play a crucial role in the GST system, as they
facilitate tax compliance and help the tax authorities monitor tax collections
and assess the taxpayer's correctness in filing.
The frequency and types of GST returns that a business must file depend on
factors such as the type of taxpayer, turnover, and the country's GST laws.
 Types of GST returns
1. GSTR-1: This return is used to report outward supplies of goods and services made by the taxpayer during
a specific period. It includes details of sales made to registered and unregistered persons, exports, and any
amendments to previous GSTR-1 filings.
2. GSTR-3B: This return is a summary of outward and inward supplies, along with the tax liability for a
particular tax period. GSTR-3B is typically filed on a monthly basis by regular taxpayers and is a self-
assessed return.
3. GSTR-2A and GSTR-2B: These are auto-populated returns that provide details of inward supplies based
on the information furnished by the supplier in their GSTR-1 and GSTR-5 returns, respectively. The
taxpayer can reconcile these details with their own records before filing their GSTR-3B.
4. GSTR-9 and GSTR-9C: These are annual returns filed by regular taxpayers and include details of the
annual financials and GST reconciliation. GSTR-9C also requires certification by a Chartered Accountant
or a Cost Accountant.
 Due dates for filing GST returns
GSTR-3B (Monthly) 20th Of Next Month GSTR-3B (Quaterly) 22nd Of Next month

GSTR-1 (Monthly) 11th Of Next Month GSTR-1 (Quaterly) 13th Of Next Month

IFF (Optional) NA CMP-08 (Quaterly) 18th Of Next Month

Others

GSTR-5 13th Of Next Month GSTR-5A 20th Of Next Month

GSTR-6 13th Of Next Month GSTR-7 Jul 10th Of Next Month

GSTR-8 10th Of Next Month RFD-10 18 Months after the end of

quarter for which refund is
to be claimed
 Late fees and penalties for non-compliance
Late fees and penalties are imposed in the Goods and Services Tax (GST) system to encourage timely
compliance by taxpayers. These charges are levied on businesses that fail to meet the GST return filing deadlines
or do not fulfill other compliance requirements.
1. Late Fee for GSTR-3B: If a taxpayer does not file their GSTR-3B return by the due date, a late fee is
charged at Rs 50 per day (Rs 25 for CGST and Rs 25 for SGST) for each day of delay. This penalty is
subject to a maximum of Rs 5,000 per return. There is no late fee applicable for IGST.
2. Late Fee for GSTR-1: If a taxpayer does not file their GSTR-1 return by the due date, a late fee is charged
at Rs 50 per day (Rs 25 for CGST and Rs 25 for SGST) for each day of delay, subject to a maximum of Rs
5,000 per return.
3. Late Fee for GSTR-9: If a taxpayer does not file their GSTR-9 (annual return) by the due date, a late fee is
charged at Rs 200 per day (Rs 100 for CGST and Rs 100 for SGST) for each day of delay, subject to a
maximum of 0.25% of the taxpayer's turnover in the respective state or union territory.
Apart from late fees, there are penalties for other non-compliances as well. These penalties
can include:
1. Penalty for Non-Filing of GST Returns: If a taxpayer fails to file GST returns for a
specific period, there may be a penalty for non-filing.
2. Penalty for Incorrect Information: If a taxpayer provides incorrect information in their
GST returns, there may be a penalty for such inaccuracies.
3. Revocation of Registration: In case of severe non-compliance, tax authorities may
revoke the GST registration of a taxpayer.
for businesses to adhere to the GST compliance requirements, including timely filing of
returns, to avoid incurring late fees and penalties. Non-compliance can lead to financial
consequences and impact the reputation of the business with the tax authorities.
 GST Rates
Goods and Services Tax (GST) rates vary from country to country and can be different for
different types of goods and services within the same country. The GST Council determines
the GST rate slabs. The GST Council reviews the rate slabs for goods and services on a
regular basis. GST rates in India for various goods and services are divided into four slabs:
5% GST, 12% GST, 18% GST, and 28% GST. Since the inception of the Goods and Services
Tax, the GST council has revised the GST rates for various products several times (GST).
The primary GST slabs for regular taxpayers are currently 0% (nil-rated), 5%, 12%, 18%,
and 28%. There are a few GST rates that are less commonly used, such as 3% and 0.25%.
These are the total IGST rates for interstate supplies or the sum of CGST and SGST for
intrastate supplies. To calculate the GST amounts on a tax invoice, multiply the GST rates by
the assessable value of the supply.
 The GST Rates in 2023 Products Tax Rates
Products Tax Rates
The following are some of the changes that were made- Sugar 5%
Small cars (+1% or 3% cess) 28%
Tax Tea 5%
Products Tax Rates Products Tax Rates Products Rates High-end motorcycles (+15% cess) 28%
Milk 0% Packed Paneer 5%
Butter 12% Hair Oil 18%
Eggs 0% Consumer durables such as AC and
Coal 5% 28%
Curd 0% Ghee 12% Capital goods 18% fridge

Lassi 0% Edible Oils 5%

Computers 12% Toothpaste 18% Beedis are NOT included here 28%
Kajal 0% Raisin 5%
Processed food 12% Industrial Luxury & sin items like BMWs,
Educations Services 0% 18% 28%
Intermediaries cigarettes
Almonds 12% Domestic LPG 5%
Health Services 0%
Soap 18% and aerated drinks (+15% cess) 28%
Children's Drawing & Mobiles 12% Roasted Coffee
0% 5%
Coloring Books Ice-cream 18% Beans
Fruit Juice 12%
Unpacked Foodgrains 0% Pasta 18% PDS Kerosene 5%
Unpacked Paneer 0% Preparations of
Vegetables, Nuts 12% Toiletries 18%
Gur 0% Skimmed Milk
Fruits, or other parts 5%
Corn Flakes 18% Powder
Unbranded Natural
0% Packed Coconut
Honey 12% Soups 18% Cashew Nuts 5%
Water
Fresh Vegetables 0%
Computers 18% Footwear (<
Salt 0% Umbrella 12% 5%
Rs.500)
Printers 18%
 Reverse Charge Mechanism (RCM)
Reverse Charge Mechanism (RCM) is a tax collection mechanism used in the context of
Goods and Services Tax (GST) Under normal circumstances, the supplier of goods or services
is responsible for collecting and remitting the GST to the government. However, in specific
situations, the liability to pay the GST shifts from the supplier to the recipient of the goods or
services. This reversal of the tax liability is known as the Reverse Charge Mechanism.
• Liability for RCM : Under RCM, the liability to pay the GST shifts from the supplier to
the recipient of goods or services. The recipient becomes responsible for calculating the
applicable GST, paying it to the government, and complying with the necessary tax
regulations. The liability arises when specific transactions or scenarios specified by the tax
authorities trigger the application of RCM.
 Determining the place of supply for goods
and services
Determining the place of supply for goods and services under the Goods and
Services Tax (GST) in India follows specific rules laid out in the GST law.
The place of supply is critical for determining the appropriate tax rate and
the jurisdiction in which the GST is to be paid. The rules for determining the
place of supply for goods and services in India are as follows:
 1. Place of Supply for Goods:

1. Supply within the Same State (Intra-State Supply):The place of supply for goods
within the same state (intra-state supply) is the location of the recipient's address where
the goods are delivered. The GST rate applicable will be the rate applicable within that
state.
Example: Company A, located in Karnataka, sells electronic goods to Company B, also
located in Karnataka. The goods are physically transported from Company A's
warehouse in Karnataka to Company B's office in Karnataka. In this case, it is an intra-
state supply, and the Place of Supply for goods will be Karnataka, where the delivery
of goods takes place. GST Applicable For intra-state supplies Central Goods and
Services Tax (CGST) And State Goods and Services Tax (SGST)
2. Inter-state Supply (Across different states): The Place of Supply for goods in the case of an
inter-state supply involves two possibilities:
a) If the supply involves movement of goods: When the goods are physically moved from one
state to another as part of the supply, the Place of Supply for goods is the location where the
movement of goods terminates, and the buyer receives the goods.
Example: Company X, located in Maharashtra, sells machinery to Company Y, located in Gujarat.
Company X ships the machinery from Maharashtra to Gujarat, where Company Y receives it. In this
case, it is an inter-state supply, and the Place of Supply for goods will be Gujarat, where the movement
of goods (machinery) terminates and Company Y receives the goods. GST Applicable For inter-state
supplies involving movement of goods Integrated Goods and Services Tax (IGST).
b) If the supply does not involve movement of goods: In certain cases, the supply of goods
may not require physical movement, and the goods may be delivered directly to the buyer's location
without crossing state borders. In such scenarios, the Place of Supply for goods is determined based on
the location of the buyer's address as per the records of the supplier.
Example: Company P, located in Tamil Nadu, manufactures customized furniture and delivers it
directly to Company Q, located in Kerala, without physically moving the furniture. In this case, it is an
inter-state supply, and the Place of Supply for goods will be Kerala, where Company Q is located.
GST Applicable for inter-state supplies not involving movement of goods Integrated Goods and
Services Tax (IGST)
 Example For place of supply :
1.The transaction involves a seller in Mumbai (Maharashtra) selling goods to a buyer in Gujarat. The seller has
arranged for the goods in Gujarat and delivered them from there itself.
Nature of Supply: Since the seller (Company) is located in Mumbai (Maharashtra) and the delivery of goods takes
place in Gujarat, it is an inter-state supply. The movement of goods from Gujarat to Gujarat (delivery location) is
considered as an inter-state movement.
Place of Supply for Goods: The place of supply for goods, in this case, will be Gujarat, where the movement of
goods terminates, and the buyer receives the goods.
GST Applicable: Since it is an inter-state supply, the applicable GST is the Integrated Goods and Services Tax
(IGST).
Implications: The seller, located in Mumbai (Maharashtra), will need to raise an invoice for the supply of goods to
the buyer in Gujarat. The seller will charge IGST on the invoice for the value of goods supplied. The IGST amount
collected from the buyer.
2. The buyer is located in Mumbai (Maharashtra) and requires goods to be delivered in Gujarat. The buyer finds a seller in
Mumbai and requests the seller to send the goods directly to Gujarat.
Nature of Supply: Since the movement of goods is from Mumbai (Maharashtra) to Gujarat, it is an inter-state supply. The goods
are physically moving across state borders for delivery.
Place of Supply for Goods: The place of supply for goods, in this case, will be Gujarat, where the movement of goods
terminates, and the buyer receives the goods.
GST Applicable: As it is an inter-state supply, the applicable GST is the Integrated Goods and Services Tax (IGST)
Implications:The seller, located in Mumbai (Maharashtra), will need to raise an invoice for the supply of goods to the buyer in
Gujarat. The seller will charge IGST on the invoice for the value of goods supplied. The IGST amount collected from the buyer
3. The buyer is located in Mumbai (Maharashtra) and needs goods to be delivered to his site in Gujarat. The buyer sourced the
goods from Gujarat and arranged for the transportation of the goods to his site in Gujarat.
Nature of Supply: Since the buyer is located in Mumbai (Maharashtra), and the goods are required to be delivered to Gujarat, it
is an inter-state supply. The goods are moving from one state (Gujarat) to another state (Gujarat) for delivery.
Place of Supply for Goods: The place of supply for goods, in this case, will be Gujarat, where the movement of goods
terminates, and the buyer receives the goods.
GST Applicable: As it is an inter-state supply, the applicable GST is the Integrated Goods and Services Tax (IGST)
Implications: The goods are sourced from Gujarat and delivered to the buyer's site in Gujarat, the place of supply for goods is
Gujarat, even though the bill is made to Mumbai. As a result, IGST will be applicable on this transaction.
 2. Place of Supply for Services:
• B2B (Business-to-Business) Services:For B2B services, i.e., services provided to a
registered person, the place of supply is the location of the recipient of services. The GST
rate applicable will be based on the location of the recipient.
• B2C (Business-to-Consumer) Services:For B2C services, i.e., services provided to an
unregistered person or a non-business entity, the place of supply is the location of the
supplier. The GST rate applicable will be based on the location of the supplier.
• Services Provided to Unregistered Persons in Other States:In certain cases, where
services are provided to unregistered persons in other states, the place of supply may be
the location of the recipient, and the supplier may have to comply with the reverse charge
mechanism.
 Conclusion

Understanding Goods and Services Tax (GST) is essential for both

businesses and individuals due to its significant impact on the economy,
taxation, and daily transactions. In conclusion, understanding GST is crucial
for businesses to comply with tax regulations, manage costs, and operate
efficiently. For individuals, it helps in making informed purchasing decisions
and being aware of the indirect taxes they pay. A sound understanding of
GST benefits both the economy and taxpayers by fostering a transparent and
fair tax system.