Goods and Services Tax

Knowledge Base - Goods & Services

01. What is Goods and Services tax (GST) and who pays this tax?

It is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

02.Which of the existing taxes are proposed to be subsumed under GST?

The GST would replace the following taxes:
(i) Taxes currently levied and collected by the Centre:
a. Central Excise duty
b. Duties of Excise (Medicinal and Toilet
c. Additional Duties of Excise (Goods of Special
d. Additional Duties of Excise (Textiles and Textile
e. Additional Duties of Customs (commonly known
as CVD)
f. Special Additional Duty of Customs (SAD)
g. Service Tax
h. Central Surcharges and Cesses so far as they relate to supply of goods and services
(ii) State taxes that would be subsumed under the GST
a. State VAT
b. Central Sales Tax c. Luxury Tax
d. Entry Tax (all forms)
e. Entertainment and Amusement Tax (except when
levied by the local bodies)
f. Taxes on advertisements
g. Purchase Tax
h. Taxes on lotteries, betting and gambling
i. State Surcharges and Cesses so far as they relate to supply of goods and services

The GST Council shall make recommendations to the Union and States on the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed in the GST.

03. Which are the commodities proposed to be kept outside the purview of GST?

 Goods and Services tax (GST) is a tax on supply of goods or services or both, except supply of alcoholic liquor for human consumption. So alcohol for human consumption is kept out of GST by way of definition of GST on constitution. Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out and GST Council shall decide the date from which they shall be included in GST. Furthermore, electricity has been kept out of GST.

04. Which authority will levy and administer GST?

Centre will levy and administer CGST & IGST while respective states /UTs will levy and administer SGST/ UTGST.

05. Who is liable to pay GST under the proposed GST regime?

Under the GST regime, tax is payable by the taxable person on the supply of goods and/or services. Liability to pay tax arises when the taxable person crosses the turnover threshold of Rs.20 lakhs (Rs. 10 lakhs for NE & Special Category States) except in certain specified cases where the taxable person is liable to pay GST even though he has not crossed the threshold limit. The CGST / SGST is payable on all intra-State supply of goods and/or services and IGST is payable on all inter- State supply of goods and/or services. The CGST /SGST and IGST are payable at the rates specified in the Schedules to the respective Acts.

06.What are the benefits available to small tax payers under the GST regime?

Tax payers with an aggregate turnover in a financial year up to [Rs.20 lakhs & Rs.10 Lakhs for NE and special category states] would be exempt from tax. Further, a person whose aggregate turnover in the preceding financial year is less than Rs.50 Lakhs can opt for a simplified composition scheme where tax will payable at a concessional rate on the turnover in a state.

07.What is the scope of composition scheme under GST?

Small taxpayers with an aggregate turnover in a preceding financial year up to [Rs. 50 lakhs] shall be eligible for composition levy. Under the scheme, a taxpayer shall pay tax as a percentage of his turnover in a state during the year without the benefit of ITC. The floor rate of tax for CGST and SGST/UTGST shall not be less than [1% for manufacturer & 0.5% in other cases; 2.5% for specific services as mentioned in para 6(b) of Schedule II viz Serving of food or any other article for human consumption]. A tax payer opting for composition levy shall not collect any tax from his customers. The government may increase the above said limit of 50 lakhs rupees to up to one crore rupees, on the recommendation of GST Council.

Tax payers making inter- state supplies or making supplies through ecommerce operators who are required to collect tax at source shall not be eligible for composition scheme.

08. What is the taxable event under GST?

Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be levied on intra-State supplies. IGST will be levied on inter-State supplies.

09. Whether supplies made without consideration will also come within the purview of supply under GST?

Yes, but only those activities which are specified in Schedule I to the CGST Act / SGST Act. The said provision has been adopted in IGST Act as well as in UTGST Act also.

10. What are composite supply and mixed supply? How are these two different from each other?

Composite supply is a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof, which are bundled in natural course and are supplied in conjunction with each other in the ordinary course of business and where one of which is a principal supply. For example, when a consumer buys a television set and he also gets warranty and a maintenance contract with the TV, this supply is a composite supply. In this example, supply of TV is the principal supply, warranty and maintenance service are ancillary.

Mixed supply is combination of more than one individual supplies of goods or services or any combination thereof made in conjunction with each other for a single price, which can ordinarily be supplied separately. For example, a shopkeeper selling storage water bottles along with refrigerator. Bottles and the refrigerator can easily be priced and sold separately.

11. What is meant by Reverse Charge?

It means the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of such goods or services in respect of notified categories of supply.

12. Can any person other than the supplier or recipient be liable to pay tax under GST?

Yes, the Central/State government can specify categories of services the tax on which shall be paid by the electronic commerce operator, if such services are supplied through it and all the provisions of the Act shall apply to such electronic commerce operator as if he is the person liable to pay tax in relation to supply of such services.

13. Can the registered person under composition scheme claim input tax credit?

No, registered person under composition scheme is not eligible to claim input tax credit.

14. What is aggregate turnover?

As per section 2(6) of the CGST/SGST Act “aggregate turnover” includes the aggregate value of:
(i) all taxable supplies,
(ii) all exempt supplies,
(iii) exports of goods and/or service, and,
(iv) all inter-state supplies
of a person having the same PAN.
The above shall be computed on all India basis and excludes taxes charged under the CGST Act, SGST Act, UTGST Act, and the IGST Act. Aggregate turnover shall include all supplies made by the Taxable person, whether on his own account or made on behalf of all his principals.
Aggregate turnover does not include value of supplies on which tax is levied on reverse charge basis, and value of inward supplies.

The value of goods after completion of job work is not includible in the turnover of the job-worker. It will be treated as supply of goods by the principal and will accordingly be includible in the turnover of the Principal.

15.Who is a Casual Taxable Person?

Casual Taxable Person has been defined in Section 2 (20) of the CGST/SGST Act meaning a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business, whether as principal, or agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.

16.Is there any facility for digital signature in the GSTN registration?

Tax payers would have the option to sign the submitted application using valid digital signatures. There will be two options for electronically signing the application or other submissions- by e-signing through Aadhar number, or through DSC i.e. by registering the tax payer’s digital signature certificate with GST portal. However, companies or limited liability partnership entities will have to sign mandatorily through DSC only. Only level 2 and level 3 DSC certificates will be acceptable for signature purpose.

17.What are the necessary elements that constitute supply under CGST/SGST Act?

In order to constitute a ‘supply’, the following elements are required to be satisfied, i.e.-
(i) the activity involves supply of goods or services or both;
(ii) the supply is for a consideration unless otherwise specifically provided for;
(iii) the supply is made in the course or furtherance of business;
(iv) the supply is made in the taxable territory;
(v) the supply is a taxable supply; and
(vi) the supply is made by a taxable person.

18. Are self-supplies taxable under GST?

Inter-state self-supplies such as stock transfers, branch transfers or consignment sales shall be taxable under IGST even though such transactions may not involve payment of consideration. Every supplier is liable to register under the GST law in the State or Union territory
from where he makes a taxable supply of goods or services or both in terms of Section 22 of the model GST law. However, intra-state self-supplies are not taxable subject to not opting for registration as business vertical.

19. Whether transfer of title and/or possession is necessary for a transaction to constitute supply of goods?

Title as well as possession both have to be transferred for a transaction to be considered as a supply of goods. In case title is not transferred, the transaction would be treated as supply of service in terms of Schedule II (1) (b). In some cases, possession may be transferred immediately but title may be transferred at a future date like in case of sale on approval basis or hire purchase arrangement. Such transactions will also be termed as supply of goods.

20.Whether Works contracts and Catering services will be treated as supply of goods or supply of services? Why?

Works contracts and catering services shall be treated
as supply of services as both are specified under Sl. No. 6 (a) and (b) in Schedule-II of the model GST law.

21. Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of services? Why?

Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title, albeit at a future date.

22. What is a Composite Supply under CGST/ SGST/UTGST Act?

Composite Supply means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other 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 the principal supply.

23.What are E-Ledgers?


Electronic Ledgers or E-Ledgers are statements of cash and input tax credit in respect of each registered taxpayer. In addition, each taxpayer shall also have an electronic tax liability register. Once a taxpayer is registered on Common Portal (GSTN), two e-ledgers (Cash &Input Tax Credit ledger) and an electronic tax liability register will be automatically opened and displayed on his dash board at all times

24. What is an ITC Ledger?

Input Tax Credit as self-assessed in monthly returns will be reflected in the ITC Ledger. The credit in this ledger can be used to make payment of TAX ONLY and not other amounts such as interest, penalty, fees etc.

25. Can a challan generated online be modified?

No. After logging into GSTN portal for generation of challan, payment particulars have to be fed in by the tax payer or his authorized person. He can save the challan midway for future updation. However once the challan is finalized and CPIN generated, no further changes can be made to it by the taxpayer.

26.What is TDS?

TDS stands for Tax Deducted at Source (TDS). As per section 51, this provision is meant for Government and Government undertakings and other notified entities making contractual payments where total value of such supply under a contract exceeds Rs. 2.5 Lakhs to suppliers. While making any

payments under such contracts, the concerned Government/authority shall deduct 1% of the total payment made and remit it into the appropriate GST account.

27.How will the TDS Deductor account for suchTDS?

TDS Deductor will account for such TDS in the following ways:
1. Such deductors needs to get compulsorily registered under section 24 of the CGST/SGST Act.
2. They need to remit such TDS collected by the 10th day of the month succeeding the month in which TDS was collected and reported in GSTR 7.
3. The amount deposited as TDS will be reflected in the
electronic cash ledger of the supplier.

4. They need to issue certificate of such TDS to the deductee within 5 days of deducting TDS failing which fees of Rs. 100 per day subject to maximum of Rs. 5000/- will be payable by such deductor

28. Is it compulsory that inputs/ capital goods are to be purchased only from manufacturers for the purpose of availment of credit ?

No. The inputs/capital goods can be procured from the First stage and Second stage dealers also. Those dealers should have registered themselves with the Central Excise Department. The invoices issued by them should contain proper details about the payment of duty on those goods. (Refer Rule 9 of CENVAT Credit Rules, 2004.)

29. What are the documents prescribed for availment of the CENVAT Credit?

The documents on which CENVAT credit can be availed are as follows:-

30. What is Tax Collected at Source (TCS)?

This provision is applicable only for E-Commerce Operator under section 52 of CGST/SGST Act. Every E-Commerce Operator, not being an agent, needs to

withhold an amount calculated at the rate not exceeding one percent of the “net value of taxable supplies” made through it where the consideration with respect to such supplies is to be collected by the operator. Such withheld amount is to be deposited by such E-Commerce Operator to the appropriate GST account by the 10th of the next month. The amount deposited as TCS will be reflected in the electronic cash ledger of the supplier.

31. Is it mandatory for e-commerce operator to obtain registration?

Yes. The benefit of threshold exemption is not available to e-commerce operators and they would be liable to be registered irrespective of the value of supply made by them.

32. Whether a supplier of goods or services supplying through e-commerce operator would be entitled to threshold exemption?

No. The threshold exemption is not available to such suppliers and they would be liable to be registered irrespective of the value of supply made by them. This requirement, however, is applicable only if the supply is made through such electronic commerce operator who is required to collect tax at source.

33.Will threshold exemption be available to electronic commerce operators liable to pay tax on notified services?

No. Threshold exemption is not available to e-commerce operator who are require to pay tax on notified services provided through them.

34.What are the provisions concerning taking of ITC in respect of inputs/capital goods sent to a job worker?

Principal shall be entitled to take credit of taxes paid on inputs or capital goods sent to a job worker whether sent after receiving them at his place of business or even when such the inputs or capital goods are directly sent to a job worker without their being first brought to his place of business. However, the inputs or capital goods, after completion of job work, are required to be received back or supplied from job worker’s premises, as the case may be, within a period of one year or three years of their being sent out.

35. Whether Cancellation of Registration Certificate is permissible?

Any Registration granted under this Act may be cancelled by the Proper Officer, on
various circumstances and the provisions of the law on this subject have been outlined
under Section 29 of the ACT. The proper officer may, either on his own motion or on an
application filed, in the prescribed manner, by the registered taxable person or by his
legal heirs, in case of death of such person, cancel the registration, in such manner and
within such period as may be prescribed

Q 36. What will be the implications in case of purchase of goods from unregistered dealers?

 The receiver of goods will not be able to get ITC. Further, the recipients who are registered under composition schemes would be liable to pay tax under reverse charge.

Q 37.What will be the composition of Authority for advance rulings (AAR) under GST?

 ‘Authority for advance ruling’ (AAR) shall comprise one member CGST and one member SGST. They will be appointed by the Central and State government respectively. Their qualification and eligibility condition for appointment will be prescribed in the Model GST Rules.

Q38.What if the dealer migrated with wrong PAN as the status of firm was changed from proprietorship to partnership?

New registration would be required as partnership firm would have new PAN.

Q 39.Can we use provisional GSTIN or do we get new GSTIN? Can we start using provisional GSTIN till new one is issued?

Provisional GSTIN (PID) should be converted into final GSTIN within 90 days. Yes, provisional GSTIN can be used till final GSTIN is issued. PID & final GSTIN would be same.

Q40. Whether trader of country liquor is required to migrate to GST from VAT as liquor is out of GST law?

If the person is involved in 100% supply of goods which are not liable for GST, then no registration is required.

Q41. Not liable to tax as mentioned u/s 23 of CGST means nil rated supply or abated value of supply?

Not liable to tax means supplies which is not leviable to tax under the CGST/SGST/IGST Act. Please refer to definition under Section 2(78) of the CGST Act.

Q42.Whether civil contractor doing projects in various states requires separate registration for all states or a single registration at state of head office will suffice?

A supplier of service will have to register at the location from where he is supplying services. 

Q43.Whether aggregate turnover includes turnover of supplies on which tax is payable by the recipient under reverse charge?

Outward supplies on which tax is paid on reverse charge basis by the recipient will be included in the aggregate turnover of the supplier.

Q44.If there are two SEZ units within same state, whether two registrations are required to be obtained?

SEZs under same PAN in a state require one registration. Please see proviso to rule 8(1) of CGST Rules.

Q45.Is an advocate providing interstate supply chargeable under Reverse Charge liable for registration? Exemption from registration has been provided to such suppliers who are making only those supplies on which recipient is liable to discharge GST under RCM.

Q46.When is registration in other state required? Will giving service from Nasik to other state require registration in other state?

If services are being provided from Nasik then registration is required to be taken only in Maharashtra and IGST to be paid on inter-state supplies.

Q47. I have migrated under GST but want to register as ISD. Whether I can apply now & what is the procedure?

A separate & new registration is required for ISD. New registrations are being opened from 0800 hrs. on 25.06.2017.

Q48. I have enrolled in GST but I forgot to enter SAC codes. What should I do?

The status is migrated. The same can be filled while filing FORM REG-26 for converting provisional ID to final registration.

Q49. I have ST number on individual name and have migrated to GST.I wish to transfer this on my proprietorship firm.

This conversion may be done while filling FORM REG-26 for converting provisional ID to final registration.

Q50.Whether a separate GSTIN would be allotted to a registered person for deducting TDS (he has PAN and TAN as well)?

Separate registration as tax deductor is required.

Q51.Is separate registration required for trading and manufacturing by same entity in one state? 

There will be only one registration per State for all activities.

Q52. I am registered in TN and getting the service from unregistered dealer of AP, should I take registration in AP to discharge GST under RCM?

Any person who makes make interstate taxable supply is required to take registration. Therefore in this case AP dealer shall take registration and pay tax.

Q53.Is there any concept of area based exemption under GST?

There will be no area based exemptions in GST

Q54.Suppose I am in composition scheme in GST. If I purchase goods from unregistered person, then GST will be paid to Government by me or not?

Yes, you will be liable to pay tax on reverse charge basis for supplies from unregistered person.

Q55.A shop sells taxable & exempt products to the same person (B2C), is it required to issue tax invoice and bill of supply separately?

In such a case the person can issue one tax invoice for the taxable invoice and also declare exempted supply in the same invoice.

Q56. Do registered dealers have to record Aadhaar/PAN while selling goods to unregistered dealers?

There is no requirement to take Aadhaar / PAN details of the customer under the GST Act.

Q57. What would be done on tax paid on advance receipt if advance has to be refunded in any circumstance?

Advance refunded can be adjusted in return.

Q58. Do registered dealers have to upload sale details of unregistered dealers also in GST?

Generally not. But required in case of inter-State supplies having invoice value of more than Rs 2.50 Lakhs.

Q59.How to incorporate two supplies in return for Pharma with same HSN code of four digits but having different tax rates? 

Returns provide for furnishing rate wise details.



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