Goods and Services Tax

Chapter 1: Understanding Goods and Services Tax 2

Chapter 2: GST Registration 4

Chapter 3: GST Rates 8

Chapter 4: Taxes to be subsumed by GST 11

Chapter 5: Levy of CGST, SGST, IGST, and UTGST as per transactions 12

Chapter 6: Place of Supply of Goods and Services 15

Chapter 7: Availing Input Tax Credit under GST 17

Chapter 8: Reverse Charge under GST 23

Chapter 9: TDS System under GST 26

Chapter 10 : TCS System under GST 28

Chapter 11: E Way Bill 30

Chapter 12: Filing GST Returns 32

Chapter 13: GST Penalties and Interest 38

Chapter 14: GST Practical Case Study 40

Chapter 15: GST Process 40

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Chapter 1: Understanding Goods and Services Tax

What is GST?
GST the goods and service tax is a reformative financial taxation scheme introduced in
Indian constitution recently for structuring all the business units into the database of tax
paying organization with equal consideration. The goods and service tax are
implemented to subsume all the indirect taxes. Here we are explaining about all the
related aspects of taxation and GST. There are three main components of taxation that
are CGST, SGST, and IGST. A brief introduction for the beginners, as exactly what are all
these components means and what role they play in the taxation economy of the GST.
GST bill has been passed, Goods and service tax law will comprise of CGST, SGST, and
IGST. CGST and IGST will be levied by Central Government and SGST will be levied by
State Government.
When learning about the GST, the first question comes in mind of almost every person is,
What is IGST, CGST, SGST & UTGST? On one hand it is said that almost all indirect taxes are
merged into a single tax called Goods and Service Tax and on other hand it is stated that
there will be four taxes as IGST, CGST, SGST & UTGST.

What is IGST,CGST, SGST & UTGST

IGST stands for Integrated Goods and Service Tax

CGST stands for Central Goods and Service Tax
SGST stands for State Goods and Service Tax
UTGST stands for Union Territory Goods and Service Tax

What is CGST?
CGST means Central Goods and Service Tax. CGST is a part of goods and service tax. It is
covered under Central Goods and Service Tax Act 2016. Taxes collected under Central
Goods and Service tax will be the revenue for central Government. Present Central taxes
like Central excise duty, Additional Excise duty, Special Excise Duty, Central Sales Tax,
Service Tax etc. will be subsumed under Central Goods And Service Tax.

What is SGST?
SGST means State Goods and Service Tax. It is covered under State Goods and service
Tax Act 2016. A collection of SGST will be the revenue for State Government. After the
introduction of SGST all the state taxes like Value Added Tax, Entertainment Tax , Luxury
Tax , Entry Tax etc. will be merged under SGST. For example, if goods are sold or services
are provided within the State then SGST will be levied on such transaction.

What is IGST?

IGST means Integrated Goods and Service Tax. IGST falls under Integrated Goods and
Service Tax Act 2016. Revenue collected from IGST will be divided between Central
Government and State Government as per the rates specified by the government. IGST
will be charged on transfer of goods and services from one state to another state. Import
of Goods and Services will also be deemed to be covered under Inter State transactions
so IGST will be levied on such transactions. For example, if Goods or services are
transferred from Rajasthan to Maharashtra then the transaction will attract IGST.

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What is UTGST?

What is UTGST, what is the purpose of UTGST Act in India? how does UTGST work in India?
What are the states covering under UTGST?
The full form of UTGST is Union Territory Goods and Service Tax. UTGST is a part of Goods
and Service Tax in India.We have already discussed about CGST, IGST and SGST. As you
know, in India, duel GST is implemented. CGST and SGST against intra state supply (within
the state) of goods and services and IGST for interstate supply.
GST under supply of goods and services takes place in Union Territories like Andaman and
Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Delhi (National
Capital Territory of Delhi), Lakshadweep, Puducherry etc. is accounted under UTGST.
A separate Act is being implemented for Union Territory states to impose and administer
GST in India in the name of UTGST Act. Under UTGST Act, the details of GST rates payable
against the movement of goods and services in Union territories are explained.The UTGST
bill is presented in respective states government to implement as UTGST Act.
Hence with UTGST, there are going to be two combinations of taxes in GST as under:-
For Intra-State (including Union Territory) Supply of goods and/or services: CGST + SGST OR
CGST + UTGST;
For Inter-State Supply of goods and/or services: IGST;
As UTGST will be at par with SGST, order of utilization of Input Tax Credit of UTGST would be
the same like SGST.

Notes :

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Chapter 2 : GST Registration

When one needs to do GST Registration?

Every business carrying out a taxable supply of goods or services under GST regime and
whose turnover exceeds the threshold limit of Rs 40 lakh/20 lakhs (North east states) for
goods supplier and Rs. 20 lakh/10 lakh (North east states) for service provider as
applicable will be required to register as a normal taxable person. This process is of
registration is referred as GST registration.

Registration as Composition Dealer:

This is an option available to small businesses and taxpayers having a turnover less than Rs.
1.5 Crore.

They will be required to maintain much less detailed records and file only 1 quarterly
return instead of three monthly returns. However, they cannot issue taxable invoices, i.e.,
collect tax from customers, but are required to pay the tax out of their own pocket. They
cannot also claim any input tax credit.

Composition levy is available to only small businesses. It is not available to interstate sellers,
e-commerce traders, and operators.

Q1. Who can opt for Composition Scheme?

Ans. Businesses dealing only in goods can only opt for composition scheme. Services
providers have been kept outside the scope of this scheme. However, restaurant sector
taxpayers may also opt for the scheme.

This holds true if your annual turnover is below Rs 1.5 Crore for Goods and 50 Lakhs for
Services.

Q2. What is the tax rate applicable on a composition dealer?

Ans. A registered taxpayer, who is registered under the Composite Scheme will pay tax at
a rate not more than 1% for manufacturer, 5% for restaurant sector and 1% for other
suppliers,6% for Services of turnover.
Q3. Must a Composition Dealer maintain detailed records?

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Ans. No, a dealer registered under composition scheme is not required to maintain
detailed records as in the case of a normal taxpayer.

Q4. Do Composition Dealers have the option to avail Input Tax Credit?

Ans. No, a Composition Dealer is not allowed to avail input tax credit of GST paid to their
supplier.

Q5. Can a Composition Dealer issue Tax Invoice?

Ans. No. Since a Composition Dealer is not allowed to avail input tax credit, such a dealer
cannot issue a tax invoice as well. A buyer from composition dealer will not be able to
claim input tax on such goods.

Q6. Which returns are required to be filed by a taxable person registered under
Composite Scheme?

Ans. The taxable person is required to furnish only one return i.e. GSTR-4 on a quarterly
basis and an annual return in FORM GSTR-9A.

Migration to GST
All existing Central Excise and Service Tax assessees and VAT dealers will be migrated to
GST. To migrate to GST, assessees would be provided a Provisional ID and Password by
CBEC/State Commercial Tax Departments.

Provisional IDs would be issued to only those assessees who have a valid PAN associated
with their registration. An assessee may not be provided a Provisional ID in the following
cases:
The PAN associated with the registration is not valid
The PAN is registered with a State Tax authority and Provisional ID has been supplied by
the said State Tax authority.
There are multiple CE/ST registrations on the same PAN in a State. In this case, only 1
Provisional ID would be issued for the 1st registration in the alphabetical order provided
any of the above 2 conditions are not met.
The assessees need to use this Provisional ID and Password to login to the GST Common
Portal (https://www.gst.gov.in) where they would be required to fill and submit the Form
20 along with necessary supporting documents.

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Penalties for Not Registering Under GST
An offender not paying tax or making short payments has to pay a penalty of 10% of the
tax amount due subject to a minimum of Rs.10,000. The penalty will be high at 100% of the
tax amount when the offender has evaded i.e., where there is a deliberate fraud.
However, for other genuine errors, the penalty is 10% of the tax due.

Multiple Registrations Under GST

A person with multiple business verticals in a state may obtain a separate registration for
each business vertical.

PAN is mandatory to apply for GST registration (except for a non-resident person who can
get GST registration on the basis of other documents).

What is GST Identification Number (GSTIN)?

All the business entities registering under GST will be provided a unique identification
number known as GSTIN or GST Identification Number.

Currently any dealer registered under state VAT law has a unique TIN number assigned to
him by state tax authorities. Similarly, service tax registration number is assigned to a
service provider by Central Board of Excise and Customs (CBEC).

Under GST regime, all these parties will come under one single authority and the different
identification numbers will be replaced by a single type of registration number for
everyone (GSTIN). This will ensure better administration by the authority and greater
compliance by taxpayers and hopefully improve tax collection.

Let’s understand the structure of GST Identification Number:

Every taxpayer will be assigned a state-wise PAN-based Goods and Services Taxpayer
Identification Number (GSTIN) which will be 15 digit long.
The first two digits of GSTIN will represent the state code according to Indian Census 2011.
Each state has a unique two digit code like “27” for Maharashtra and “10” for Bihar.
The next ten digits of GSTIN will be the PAN number of the taxpayer.
13th digit indicates the number of registrations an entity has within a state for the same
PAN.

It will be an alpha-numeric number (first 1-9 and then A-Z) and will be assigned on the
basis of number of registrations a legal entity (having the same PAN) has within one state.

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For example, if a legal entity has single or one registration only within a state then it will be
assigned the number “1” as 13th digit of the GSTIN. If the same legal entity gets another or
second registration for a second business vertical within the same state, then the 13th digit
of GSTIN assigned to this entity will become “2”. Similarly, if an entity has 11 registrations in
the same state then it will be assigned letter “B” in the 13th place. This way up to 35
business verticals of any legal entity can be registered within a state using this system.
The fourteenth digit currently has no use and therefore will be “Z” by default.
The last digit will be a check code which will be used for detection of errors.

27 AAAAA0000A 1 Z 5
State Code PAN Entity Alphabet Z Check
Number by default Code

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Chapter 3 : GST rates

Finalized GST Tax Slabs in India for 2017 by GST Council:

Rates Commodity/Services
0% Goods:
Essential Items Including Food,
Poultry Products: Fresh Meat, Fish, Chicken,eggs
Dairy Products – Milk, Curd, Butter Milk, Jaggery (Gur), Lassi, unpacked
Paneer
Fresh Fruits & Vegetables
Food Items – Natural Honey, Flour (Atta & Maida), Pulses, Basmati Rice,
Gram Flour (Besan), Bread, Vegetable Oil, Religious Sweets (Prasad),
Common Salt
Services:
Education Services,Healthcare Services
5% Goods
Dairy Products – Skimmed Milk Powder, Milk food for babies,
Condensed milk, Packaged Paneer, Cream
Frozen Vegetables
Food Items – Sugar, Spices, Edible Oil, Pizza Bread, Rusk, Sweets, Fish
Fillets, Tapioca (sabu daana)
Beverages – Coffee, Tea, Juices
Fuel – Kerosene, LPG, Coal
Common Utilities – Broom
Medical Goods – Medicines, Stents
Newsprint
Lifeboats
Services
Railway Travel
Economy Class Air Travel
Cab Services
12% Goods
Dairy Products – Butter, Cheese, Ghee
Packaged Dry Fruits
Food Items – Snacks (Namkeen &Bhujia), Packaged Chicken,
Sausages

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 Beverages – Fruit Juices, Packed Coconut Water
Personal Hygiene – Tooth Powder
Stationery – Colouring Books, Picture Books
Common Utilities – Sewing Machine, Umbrella
Ayurvedic Medicine
Incense Sticks (Agarbatti)
Mobile Phones
Services
Non-AC Hotels & Restaurants
Business Class Air Travel
Work Contracts
18% Goods
Dairy Products – Ice Cream
Preserved Vegetables
Food Items – Flavoured refined sugar, Pasta, Corn Flakes, Pastries,
Cakes, Jams, Sauces, Soups, Instant Food Mixes, Processed Foods
Beverages – Mineral Water
Personal Hygiene – Tissues, Toilet Paper, Hair Oil, Soap Bars, Toothpaste
Stationery – Note Books, Envelopes, Fountain Pens
Electronic Equipment – Printed Circuits, Speakers, Monitors
Camera
Iron & Steel Products
Services
AC Hotels & Restaurants that serve liquor
Telecom Services
IT Services
Financial Services
28% Goods
Food Items – Chocolates, Chewing Gum, Custard Powder
Beverages – Aerated Water
Personal Hygiene – Deodorants, Shaving Cream, After Shave, Hair
Shampoo, Dye, Sunscreen, Perfume, Face Creams, Detergents
White Goods – Vacuum Cleaner, Shavers, Hair Clippers, Washing
Machines, Dish Washers, Water Heaters & other Home Appliances
Automobiles & Motor Vehicles*
Housing Materials – Paint, Wallpaper, Ceramic Tiles, Cement

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 Weighing Machines, Vending Machines, ATM
Fireworks
Luxury / Demerit Goods* – Pan Masala, Tobacco, Aerated Drinks &
Motor Vehicles
Services
Rooms and Restaurants in 5-star hotels
Race course betting
Cinema etc.

As the GST council also sorted the draft model GST law to impose a cap on the currently
finalized rates of taxes i.e. 5%, 12%, 18% and 28% up to the level of 40%. The decision to
take the tax rate to the new height is being considered in the case of revenue loss to the
states and also to give some extra permission and flexibility to the government on both
ends (Centre and States) for increasing the CGST and SGST rates after the Cess intertwine
with the rates structure in future. Although the slab rates are not changed and will
continue to be what finalized but the 40 percent capping will give an sharing of 20–20
percent to the center and state GST after the saturation.
Notes:

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Chapter 4: Taxes to be subsumed by GST

Central Taxes State Taxes

•Central Excise duty •State VAT / Sales Tax

•Additional duties of excise •Central Sales Tax
•Excise duty levied under Medicinal •Purchase Tax
& Toiletries Preparation Act •Entertainment Tax (other than
•Additional duties of customs those levied by local bodies)
(CVD & SAD) •Luxury Tax
•Service Tax •Entry Tax (All forms)
•Surcharges &Cesses •Taxes on lottery, betting &
gambling
•Surcharges &Cesses

GST

Taxes at the Centre and State level are being subsumed into GST:
At the Central level, the following taxes are being subsumed:
a. Central Excise Duty,
b. Additional Excise Duty,
c. Service Tax,
d. Additional Customs Duty commonly known as Countervailing Duty, and
e. Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:

a. Subsuming of State Value Added Tax/Sales Tax,
b. Entertainment Tax (other than the tax levied by the local bodies), Central Sales
Tax (levied by the Centre and collected by the States),
c. Octroi and Entry tax,
d. Purchase Tax,
e. Luxury tax, and
f. Taxes on lottery, betting and gambling.

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Chapter 5: Levy of CGST, SGST, IGST, and UTGST as per transactions

State 1 CGST
Foreign +SGST
Territory IGST

IGST IGST

State 2 CGST
CGST +
Union
Territory +SGST
UTGST
IGST

Case 1: Levy of GST within state supply of Goods:

When goods are supplied within state CGST and SGST will be levied.

Example:

Rohan Enterprises located in Maharashtra Supplies Goods of Rs 50000 and GST rate is 18%
to Vision Corporation also located in Maharashtra.

CGST @ 9% and SGST@ 9% will be levied i.e Amount of CGST will be 9% of 50,000 equal to
4500 and SGST will 4500.

Case 2: Levy of GST on interstate supply of Goods:

When goods are supplied to the other state (Interstate) then IGST will be levied.

Example:

Rohan Enterprises located in Maharashtra Supplies Goods of Rs 50000 and GST rate is 18%
to Vision Corporation located in Karnataka.

IGST @ 18% will be levied i.e Amount of IGST will be 18% of 50,000 equal to 9000.

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Case 3: Levy of GST when goods are supplied within Union territory:

When goods are supplied within Union territory CGST and UTGST will be levied.

Example:

Virat Enterprises located in Pondichery Supplies Goods of Rs 40000 and GST rate is 18% to
Maxwell Corporation also located in Pondicherry.

CGST @ 9% and UTGST@ 9% will be levied i.e Amount of CGST will be 9% of 40,000 equal to
3600 and UTGST will 3600.

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Sample GST Tax Invoice:

Hmart India Pvt Ltd Issues invoice to Anand Innovations Ltd.

1. GSTIN :27AVWPD2406P1Z5
2. Name :Hmart India Pvt Ltd
3. Address : 24,Mudra,Bibavewadi,Pune
4. Serial No. of Invoice : HM/17-18/Sales/102
5. Date of Invoice: 22/07/2017
Details of Receiver:
Anand Innovations Ltd
Survey No.27/2,Bhosari,Pimpri Chinchwad,Pune
GSTIN :27AVWPK1542P2Z5
Details of Consignee (Shipped to)
Name Address State State Code
GSTIN/Unique ID

CGST SGST IGST

H Rate(per Disc
Description Qt Taxablev
Sr.No S Unit item Total oun
of Goods y alue R
N ) t Rat
Amt Rate Amt at Amt
e
e

1 Weighing 4 Nos 4000 16000 16000 14 2240 14 2240 - -

Machine % %

FreightInsurance
Packing and Forwarding Charges

Total 16000 16000 2240 2240

Total Invoice Value (In figure) :20480/-Total Invoice Value (In

Words):Twenty Thousand four eighty only.
Amount of Tax subject to Reverse Charges:NA

Declaration:
Signature:
Signatory: Ashok Chavan
Designation / Status : Finance manager
Electronic Reference Number
Date -

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Chapter 6: Place of Supply of Goods and Services

Place of Supply of Goods:

In GST determining place of Supply is very important as levy of GST depends on place of
supply.

Case 1: Within state Supply of Goods(Movement of Goods)

Ramesh Enterprises registered in Nagpur, Maharashtra Supplied goods to Vijay

Technologies Ltd registered in Kolhapur,Maharastra and delivery of goods taken at
Kolhapur,Maharastra.

CGST and SGST will be levied.

Case 2: Interstate Supply of Goods (Movement of Goods)

Ramesh Enterprises registered in Nagpur, Maharashtra Supplied goods to Niranjan Works

Ltd registered in Indore, Madhya Pradesh and delivery of goods taken at Indore, Madhya
Pradesh.

IGST will be levied.

Case 3: Supply of Goods at Factory premises

Ramesh Enterprises registered in Nagpur, Maharashtra Supplied goods to Niranjan Works

Ltd registered in Indore, Madhya Pradesh and delivery of goods taken at factory premises
Ramesh Enterprises registered in Nagpur, Maharashtra

CGST and SGST will be levied.

Case 4: No Movement of Goods (Assembly)

Ramesh Enterprises registered in Nagpur, Maharashtra opensbranch in Bangalore

Karnataka and purchased water treatment plant from Genesis Manufacturers Ltd
registered in Bangalore Karnataka which was assembled on site in Bangalore Karnataka.

CGST and SGST will be levied.

Place of Supply of Services:

Case 1: Service is provided to the person registered in same state.

Admark Designs registered in Pune, Maharashtra delivers web designing services to Vijay
Technologies Ltd registered in Kolhapur,Maharastra.

CGST and SGST will be levied.

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Case 2: Service is provided to the person registered in other state.

Admark Designs registered in Pune, Maharashtra delivers web designing services to

Devine Reality Ltd registered in Ahmedabad,Gujarat.

IGST will be levied.

Case 3: Service is provided to the unregistered person registered.

Subcase 1: Address is available in records and is within state.

CGST and SGST will be levied.

Subcase 2: Address is available in records and is from other state.

IGST will be levied.

Subcase 3: Address is not available in records.

CGST and SGST will be levied.

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Chapter 7: Availing Input Tax Credit under GST
What is input credit?
Input credit means at the time of paying tax on output, you can reduce the tax you have
already paid on inputs.
Say, you are a manufacturer –
tax payable on output (FINAL PRODUCT) is Rs 450
tax paid on input (PURCHASES) is Rs 300
You can claim INPUT CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.

GST is a dual concept system. On every transaction (within a state), there will be
component of Central GST (CGST) and State GST (SGST). Integrated GST (IGST) is for
interstate transactions. Therefore, it is important for businesses to know how to set off the
input credit against each of these components in the order as prescribed by the Law.

The order in which credit needs to be set off is explained in the table below:

Input Tax Credit Set off against liability

CGST (Central GST) CGST and IGST (in that order)

SGST (State GST) SGST and IGST (in that order)

IGST (integrated GST) IGST, CGST, SGST (in that order)

Conditions to avail Input Credit in GST :

Input Credit Mechanism is available to you when you are covered under the GST Act.
Which means if you are a manufacturer, supplier, agent, e-commerce operator,
aggregator or any of the persons mentioned here, registered under GST, You are eligible
to claim INPUT CREDIT for tax paid by you on your PURCHASES.
How to claim input credit under GST?
To claim input credit under GST –

Condition 1:You must have a tax invoice(of purchase) or debit note issued by
registered dealer

Note: Where goods are received in lots/installments, credit will be available against the
tax invoice upon receipt of last lot or installment.

Condition 2:You should have received the goods/services

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Note: Where recipient does not pay the value of service or tax thereon within 3 months of
issue of invoice and he has already availed input credit based on the invoice, the said
credit will be added to his output tax liability along with interest.

Condition 3:The tax charged on your purchases has been deposited/paid to the
government by the supplier in cash or via claiming input credit

Condition 4:Supplier has filed GST returns

Possibly the most path breaking reform of GST is that input credit is ONLY allowed if your
supplier has deposited the tax he collected from you. So every input credit you are
claiming shall be matched and validated before you can claim it.
Therefore, to allow you to claim input credit on Purchases all your suppliers must be GST
compliant as well.
There’s more you should know about input credit –

• It is possible to have unclaimed input credit. Due to tax on purchases being higher
than tax on sale. In such a case, you are allowed to carry forward or claim a
refund.

If tax on inputs > tax on output –> carry forward input tax or claim refund
If tax on output > tax on inputs –> pay balance
No interest is paid on input tax balance by the government

• Input tax credit cannot be taken on purchase invoices which are more than one
year old. Period is calculated from the date of the tax invoice.
• Since GST is charged on both goods and services, input credit can be availed on
both goods and services (except those which are on the exempted/negative list).
• Input tax credit is allowed on capital goods.
• Input tax is not allowed for goods and services for personal use.
• No input tax credit shall be allowed after GST return has been filed for September
following the end of the financial year to which such invoice pertains or filing of
relevant annual return, whichever is earlier.

Let us discuss with an example to understand how this works.

Example 1 – How can CGST and SGST ITC be used?

Super Cars Ltd. is a car manufacturer located in Karnataka. The details of transactions
effected by Super Cars Ltd. are furnished below along with the tax component:

Input Credit Tax Liability

Destination Transaction
Party Name Product
State Type
CGST SGST CGST SGST

Purchase
Ratna Steels Karnataka (Inward Steel 1,20,000 1,20,000 — —
Supply)

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 Sale
Ravindra
Karnataka (Outward Car — — 36,000 36,000
Automobiles
Supply)

Sale
Ravindra Spare
Karnataka (Outward — — 90,000 90,000
Automobiles parts
Supply)

At the end of the month, Super Cars Ltd. adjusts available input credit against
their tax liability.
In the example, Super Cars Ltd. has a tax liability of 12,000. Here is how it happens:

1. Super Cars Ltd. have Input tax credit of 1,20,000 each against CGST and SGST.
2. As prescribed by Law, Super Cars Ltd. first utilized ITC of CGST 1,20,000 to set off CGST
liability of 1,26,000 (36,000+90,000). After this adjustment, CGST liability is 6,000 (1,26,000
– 1,20,000).
3. Later, SGST input credit of 1,20,000 is set off against SGST liability of 1,26,000
(36,000+90,000). After setting off SGST input credit, 6,000 (1,26,000 – 1,20,000) is the SGST
liability.
4. After utilizing the available input credit of both CGST and SGST, the tax liability of Super
Cars Ltd. is 12,000 (CGST liability 6,000 + SGST liability 6,000).
5. Any input credit balance of CGST, after setting off tax liability towards CGST, cannot be
used to set off against SGST. The balance of ITC under CGST (post set off of CGST
liability) will be carried over to the next period.
6. Similarly, the SGST balance after set off of SGST liability will be carried over to the next
period.
Example 2 – How can IGST ITC be utilized?
Consider another set of transactions for Super Cars Ltd.

Input Credit Tax Liability

Party Destinatio Transacti
Product
Name n State on Type CG SGS CGS
IGST SGST IGST
ST T T

Shine
Aluminiu Purchase
Tamil Aluminiu 30,00
m (Inward — — — — —
Nadu m Bars 0
Industrie Supply)
s Ltd.

Lakshmi
Purchase
Rubber Tamil 10,00
(Inward Tyres — — — — —
Industrie Nadu 0
Supply)
s Ltd.

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 Sale
A-1 Maharash Spare 12,00
(Outwar — — — — —
Spares tra Parts 0
d Supply)

Johnson Sale
Spare
Auto Karnataka (Outwar — — — 24,00 24,00 —
Parts
Parts d Supply) 0 0

At the end of the month, Super Cars Ltd. utilized IGST Input tax credit to set off their tax
liability.As illustrated above,

1. Super Cars Ltd. have IGST Input tax credit of 40,000 and tax liabilities of IGST 12,000,
CGST 24,000 and SGST 24,000.
2. As prescribed by Law, IGST Input credit needs to be utilized first to set off IGST tax
liability. The remaining ITC can be used to set off CGST and then against the SGST
liability, in that order.
3. Super Cars Ltd. first utilized IGST ITC to set off IGST liability of 12,000.
4. Remaining IGST ITC credit 28,000 (40,000 – 12,000) is used to set off CGST liability of
24,000.
5. Post this adjustment, the remaining IGST ITC of 4,000 is used to set off SGST liability to the
extent of 4,000.
6. Now, after utilization of Input credit available, the SGST liability of Super Cars Ltd. is
20,000.

Example 3 – CGST ITC cannot be used for SGST liability

Let us consider another scenario of Super Cars Ltd. to illustrate non-utilization of CGST ITC
against SGST liability.

Super Cars Ltd. had a carry forward balance of CGST Input credit 15,000.

CGST SGST
Input Credit balance Amount
Liability LIability

CGST Input Credit 15,000 11000 3000

During the month, outward supply details of Super Cars Ltd. are furnished below:
As illustrated,
1. Super Cars Ltd. utilized CGST Input Credit of previous period 15,000 to set off CGST
liability of current period 11,000.
2. After this set off, Super Cars Ltd. has a balance CGST input credit of 4,000.
3. As prescribed by the Law, excess CGST Input Credit for the period cannot be set off
against SGST liability of current period. Similarly, SGST Input Credit cannot set off against
CGST liability.
4. Thus, the balance CGST credit was not utilized, and the SGST liability for Super Cars Ltd.
for the months is 3,000.

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Items Not Eligible for Input Tax Credit under GST :

GST input tax credit mechanism allows persons registered under GST to set-off their GST tax
liability. Since GST is a consumption based tax, the input tax credit mechanism ensures that
the ultimate GST liability is passed on to the consumer. Though input tax credit can be
claimed by a person registered under GST for most inputs, some types of goods and
services are not eligible for input tax credit claim. In this article, we look at such goods and
services, which are not eligible for input tax credit under GST.

Motor Vehicles or Conveyances:

Input tax credit can be claimed for motor vehicles or conveyance only when they are
used for making a further supply of such vehicles or conveyances or transportation of
passengers or imparting training or for transportation of goods. Hence, expenses related to
the normal use of motor vehicles for office purposes cannot be claimed as an input tax
credit.

Food, Beverages and Outdoor Catering:

Expenses relating to food, beverages and outdoor catering can be claimed as input tax
credit only when inward supply of goods or services or both of a particular category is
used by a registered person for making an outward taxable supply of the same category
of goods or services or both or as an element of a taxable composite or mixed supply.
Hence, regular taxpayers would not be eligible for claiming input tax credit on expenses
relating to food, beverages and catering.

Beauty Treatment, Health Services & Cosmetic and Plastic Surgery:

Beauty treatment, health services, cosmetic and plastic surgery related expenses cannot
be claimed as input except when inward supply of goods or services or both of a
particular category is used by a registered person for making an outward taxable supply
of the same category of goods or services or as an element of a taxable composite or
mixed supply.

Similarly, expenses relating to membership of a club, health and fitness centre is not eligible
for input tax credit.

Life and Health Insurance:

Expenses relating to rent-a-cab facilities, life or health insurance can be claimed as input
tax credit only when the Government notifies it as services which are obligatory for an
employer to provide to its employees under law. Else, to claim input tax credit, the inward
supply must have been used for making an outward taxable supply of the same category
or as part of a taxable mixed supply.

Travel Benefits for Employees:

Travel benefits extended to employees on vacation such as leave or home travel
concession cannot be claimed as input tax credit.

Works Contract Services:

Works contract services, when supplied for construction of an immovable property (other
than plant and machinery), cannot be claimed as input tax credit. However, work
contract services can be claimed as an input tax credit when it is an input service for the
further supply of works contract service.

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Construction of Immovable Property:
Goods or services received by a taxable person for construction of an immovable
property (other than plant or machinery) on his own account or even when it’s used in the
course or furtherance of business cannot be claimed as input tax credit. Under GST Act,
construction includes re-construction, renovation, additions or alterations or repairs.

Non-Resident Taxable Person:

Goods or services received by a non-resident taxable person except on goods imported
by him is not eligible for input tax credit.

Personal Consumption:
Goods or services used for personal consumption is not eligible for input tax credit.

Lost or Stolen or Damaged Goods:

Input tax credit is not available for goods lost, stolen, destroyed, written off or disposed of
by way of gift or free samples.

Composition Supply:
Goods or services or both on which tax has been paid under the Composition Scheme will
not be eligible for input tax credit. Also, tax paid as interest, penalty or fine will not be
eligible for input tax credit.

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Chapter 8: Reverse Charge under GST

Reverse charge means the liability to pay tax is by the recipient of goods/services instead
of the supplier.

Reverse charge may be applicable for both services as well as goods.

Situations where reverse charge will apply:

1.Unregistered dealer selling to a registered dealer

In such a case, the registered dealer has to pay GST on the supply.

2. Services through an e-commerce operator

If an e-commerce operator supplies services then reverse charge will apply on the e-
commerce operator. He will be liable to pay GST.
For example, E-commerceoperator provides services of plumbers, electricians, teachers,
beauticians etc. E-commerce operator is liable to pay GST and collect it from the
customers instead of the registered service providers.

All provisions of GST will apply on the recipient (i.e., the buyer).

Registration

All persons who are required to pay tax under reverse charge have to register for GST
irrespective of the threshold

[Threshold:- turnover in a financial year exceeds Rs 20lakhs (Rs 10 lakhs for North eastern
and hill states)]

Time of supply for goods and Services under reverse charge

In case of reverse charge, the time of supply shall be the earliest of the following dates—
(a) the date of receipt of goods OR
(b) the date of payment OR
(c) the date immediately after THIRTY days from the date of issue of invoice by the
supplier (60 days for services)
If it is not possible to determine the time of supply under (a), (b) or (c), the time of supply
shall be the date of entry in the books of account of the recipient.

For clause (b)- the date of payment shall be earlier of-

1. The date on which the recipient entered the payment in his books
OR
2. The date on which the payment is debited from his bank account

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 CBEC has notified a list of 12 services on which GST paid by the recipient on 100% reverse
charge basis:

• Non-resident service provider

• Goods Transport Agencies
• Legal service by an Advocate/ Firm of Advocates
• Arbitral Tribunal
• Sponsorship Services
• Specified Services provided by Government or Local Authority to Business entity
• Services of a director to a company
• Insurance agent
• Recovery Agent of Bank/FI/ NBFC
• Transportation Services on Import
• Permitting use of Copyright
• Radio Taxi services to E-commerce aggregator (eg: Ola, Uber, etc.)

List of Goods Notified by CBEC:

• Cashew nuts not peeled, supplied by agriculturist.

• Tobacco Leaves supplied by agriculturist.
• Silk Yarn
• Supply of Lottery by Government.

Section 9(4)of CGST Act, 2017 or Sec 5(4) of IGST Act, 2017 provides as follows “The tax in
respect of the supply of taxable goods or services or both by a supplier, who is not
registered, to a registered person shall be paid by such person on reverse charge basis as
the recipient and all the provisions of this Act shall apply to such recipient as if he is the
person liable for paying the tax in relation to the supply of such goods or services or both.”
However Notification No. 8/2017- Central Tax (Rate) dated 28.06.2017, gives an
exemption to the aforesaid provision by providing that “the Central Government, on
being satisfied that it is necessary in the public interest so to do, on the recommendations
of the Council, hereby exempts intra-State supplies of goods or services or both received
by a registered person from any supplier, who is not registered, from the whole of the
central tax leviable thereon under sub-section (4) of section 9 of the Central Goods and
Services Tax Act, 2017.

Provided that the said exemption shall not be applicable where the aggregate value of
such supplies of goods or service or both received by a registered person from any or all
the suppliers, who is or are not registered, exceeds five thousand rupees in a day.”

Thus if supply is intra-state, supplier of goods is an un-registered person and recipient is

registered, and the aggregate value of all such supplies in a day exceeds Rs. 5,000 then
GST on such supply will needs to be paid by the recipient under reverse charge.
However there is no such monetary threshold notified under IGST Act, 2017 meaning
thereby in case of Inter-state supplies, even supplies of less than Rs. 5000 will attract tax on
reverse charge if supplier is un-registered and recipient is registered.
Section 9(4)of CGST Act, 2017 or Sec 5(4) of IGST Act, 2017 provides as follows “The tax in
respect of the supply of taxable goods or services or both by a supplier, who is not

24 | P a g e
registered, to a registered person shall be paid by such person on reverse charge basis as
the recipient and all the provisions of this Act shall apply to such recipient as if he is the
person liable for paying the tax in relation to the supply of such goods or services or both.”

However Notification No. 8/2017- Central Tax (Rate) dated 28.06.2017, gives an
exemption to the aforesaid provision by providing that “the Central Government, on
being satisfied that it is necessary in the public interest so to do, on the recommendations
of the Council, hereby exempts intra-State supplies of goods or services or both received
by a registered person from any supplier, who is not registered, from the whole of the
central tax leviable thereon under sub-section (4) of section 9 of the Central Goods and
Services Tax Act, 2017.

Provided that the said exemption shall not be applicable where the aggregate value of
such supplies of goods or service or both received by a registered person from any or all
the suppliers, who is or are not registered, exceeds five thousand rupees in a day.”

Thus if supply is intra-state, supplier of goods is an un-registered person and recipient is

registered, and the aggregate value of all such supplies in a day exceeds Rs. 5,000 then
GST on such supply will needs to be paid by the recipient under reverse charge. However
there is no such monetary threshold notified under IGST Act, 2017 meaning thereby in
case of Inter-state supplies, even supplies of less than Rs. 5000 will attract tax on reverse
charge if supplier is un-registered and recipient is registered.

Input tax credit on reverse charge

Tax paid on reverse charge basis will be available for input tax credit if such goods
and/or services are used, or will be used, for business. The service recipient (i.e., who pays
reverse tax) can avail input tax credit.

Tax Invoice

The supplier must mention in his tax invoice whether the tax is payable on reverse charge

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Chapter 9: TDS System Under GST

Tax Deduction at Source (TDS) is a system, initially introduced by the Income Tax
Department. It is one of the modes/methods to collect tax, under which, certain
percentage of amount is deducted by a recipient at the time of making payment to the
supplier. It is similar to “pay as you earn” scheme also known as Withholding Tax, in many
other countries. It facilitates sharing of responsibility of tax collection between the
deductor and the tax administration. It also ensures regular inflow of cash resources to the
Government. It acts as a powerful instrument to prevent tax evasion and expands the tax
net, as it provides for the creation of an audit trail.

Under the GST regime, section 51 of the CGST Act,2017 prescribes the authority and
procedure for ‘Tax Deduction at Source’.

The Government may order the following persons (the deductor) to deduct tax at source:

(a) A department or an establishment of the Central

Government or State Government; or
(b) Local authority; or
(c) Governmental agencies; or
(d) Such persons or category of persons as
may be notified by the Government on the
recommendations of the Council.

The tax would be deducted @1% of the payment made to the supplier (the deductee) of
taxable goods or services or both, where the total value of such supply, under a contract,
exceeds two lakh fifty thousand rupees (excluding the amount of Central tax, State tax,
Union Territory tax, Integrated tax and cess indicated in the invoice). Thus, individual
supplies may be less than
Rs. 2,50,000/-, but if contract value is more than Rs. 2,50,000/-, TDS will have to be
deducted. However, no deduction shall be made if the location of the supplier and the
place of supply is in a State or Union territory, which is different from the State, or as the
case may be, Union Territory of registration of the recipient.

The earlier statement can be explained in the following situations:

(a) Supplier, place of supply and recipient are in the same state. It would be intra-State
supply and TDS (Central plus State tax) shall be deducted. It would be possible for the
supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.
(b) Supplier as well as the place of supply are in different states. In such cases, Integrated
tax would be levied. TDS to be deducted would be TDS (Integrated tax) and it would be
possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash
ledger.
(c) Supplier as well as the place of supply are in State A and the recipient is located in
State B. The supply would be intra-State supply and Central tax and State tax would be
levied. In such case, transfer of TDS (Central tax + State tax of State B) to the cash ledger
of the supplier (Central tax + State tax of State A) would be difficult. So in such cases, TDS
would not be deducted. Thus, when both the supplier as well as the place of supply are
different from that of the recipient, no tax deduction at source would be made.

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Registration of TDS deductors:
A TDS deductor has to compulsorily register without any threshold limit. The deductor has
a privilege of obtaining registration under GST without requiring PAN. He can obtain
registration using his Tax Deduction and Collection Account Number (TAN) issued under
the Income Tax Act, 1961.

Deposit of TDS with the Government:

The amount of tax deducted at source should be deposited to the Government account
by the deductor by 10th of the succeeding month. The deductor would be liable to pay
interest if the tax deducted is not deposited within the prescribed time limit.

TDS Certificate:
A TDS certificate is required to be issued by deductor (the person who is deducting tax) in
Form GSTR-7A to the deductee (the supplier from whose payment TDS is deducted), within
5 days of crediting the amount to the Government, failing which the deductor would be
liable to pay a late fee of Rs. 100/- per day from the expiry of the 5th day till the certificate
is issued. This late fee would not be more than Rs. 5000/-. For the purpose of deduction of
tax specified above, the value of supply shall be taken as the amount excluding the
Central tax, State tax, Union territory tax, Integrated tax and cess indicated in the invoice.
For instance, suppose a supplier makes a supply worth Rs. 1000/- to a recipient and the
GST @ rate of 18% is required to be paid. The recipient, while making the payment of Rs.
1000/- to the supplier, shall deduct 1% viz Rs. 10/- as TDS. The value for TDS purpose shall
not include 18% GST. The TDS, so deducted, shall be deposited in the account of
Government by 10th of the succeeding month. The TDS so deposited in the Government
account shall be reflected in the electronic cash ledger of the supplier (i.e. deductee)
who would be able to use the same for payment of tax or any other amount. The purpose
of TDS is just to enable the Government to have a trail of transactions and to monitor and
verify the compliances.

TDS Return:
The deductor is also required to file a return in Form GSTR-7 within 10 days from the end of
the month. If the supplier is unregistered, name of the supplier rather than GSTIN shall be
mentioned in the return. The details of tax deducted at source furnished by the deductor
in FORM GSTR-7 shall be made available to each of the suppliers in Part C of FORM GSTR-
2A electronically through the Common Portal and the said supplier may include the same
in FORM GSTR-2. The amounts deducted by the deductor get reflected in the GSTR-2 of
the supplier (deductee). The supplier can take this amount as credit in his electronic cash
register and use the same for payment of tax or any other liability.

Consequences of not complying with TDS provisions:

1. TDS not deducted Interest to be paid along with the TDS amount; else the amount shall
be determined and recovered as per the law.
2. TDS certificate not issued or delayed beyond the prescribed period of five days Late
fee of Rs. 100/- per day subject to a maximum of Rs. 5000/-.
3. TDS deducted but not paid to the Government or paid later than 10th of the
succeeding month Interest to be paid along with the TDS amount; else the amount shall
be determined and recovered as per the law.
4. Late filing of TDS returns Late fee of Rs. 100/- for every day during which such failure
continues, subject to a maximum amount of five thousand rupees. 426

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Chapter 10: TCS system under GST

Tax Collection at Source (TCS) has similarities with TDS as well as has distinctive features
also. TDS refers to tax which is deducted when recipient of goods or services makes some
payments under a contract etc. while TCS refers to tax which is collected by the
electronic commerce operator when a supplier supplies some goods or services through
its portal and the payment for that supply is collected by the electronic commerce
operator. We will discuss the exact nature of TCS with an example. There are many e-
Commerce operators [hereinafter referred to as an Operator like Amazon, Flipkart,
Jabong, etc. operating in India. These operators displays / lists on their portal products as
well as services which are actually supplied by some other person to the consumer. The
goods or services belonging to other suppliers are displayed on the portals of the
operators and consumers buy such goods/services through these portals. On placing the
order for a particular product/ services the actual supplier supplies the selected
product/services to the consumer. The price/consideration for the product/services is
collected by the Operator from the consumer and passed on to the actual supplier after
deducting his commission by the Operator. The Government has placed the responsibility
on the Operator to collect the ‘tax’ at a rate of 1% from the supplier. This shall be done by
the Operator by paying the supplier the price of the product/services, less the tax,
calculated at the rate of 1%. The said amount will be calculated on the net value of the
goods/services supplied through the portal of the operator. Suppose a certain product is
sold at Rs. 1000/- through an Operator by a seller. The Operator would deduct tax @ 1%
of the net value of Rs. 1000/- i.e. Rs. 100/-.Let us have a look at the statutory provisions
relating to TCS.

Registration:
The ecommerce operator as well as the supplier supplying goods or services through an
operator need to compulsorily register under GST. The threshold limit of Rs. 20 lakhs (10
lakhs for special category states) is not applicable to them. Section 24(x) of the CGST Act,
2017 makes it mandatory for every e-Commerce Operator to get registered under GST.
Similarly, section 24(ix) of the CGST Act, 2017 makes it mandatory for every person who
supplies goods/services through an Operator to get registered under GST.

Power to collect tax:

Section 52 of the CGST Act, 2017 provides for Tax Collection at source, by e-Commerce
operator in respect of the taxable supplies made through it by other suppliers, where the
consideration in respect of such supplies is collected by him.

TCS Statement:
The amount of tax so collected by the operator is required to be deposited by the 10th of
the following month, during which such collection is made. The operator is also required
to furnish a monthly statement in Form GSTR-8 by the 10th of the following month. The
Operator is also required to file an Annual statement in prescribed form by the 31st of
December following the end of every financial year. The Operator can rectify errors in
statements filed, if any, latest by the return to be filed for the month of September,
following the end of every financial year.The details furnished by the operator in GSTR-8
shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A
on the Common Portal after the due date of filing of FORM GSTR-8.

28 | P a g e
Credit of tax collected:
The tax collected by the operator shall be credited to the cash ledger of the supplier who
has supplied the goods/services through the Operator. The supplier can claim credit of
tax collected and reflected in the return by the Operator in his [supplier’s] electronic cash
ledger.

Matching of details of supplies:

The details of the supplies, including the value of supplies, submitted by every operator in
the statements will be matched with the details of supplies submitted by all such suppliers
in their returns. If there is any discrepancy in the value of supplies, the same would be
communicated to both of them. If such discrepancy in value is not rectified within the
given time, then such amount would be added to the output tax liability of such suppler.
The supplier will have to pay the differential amount of output tax along with interest.

Notice to the Operator:

An officer not below the rank of Deputy Commissioner can issue notice to an Operator
asking him to furnish details relating to volume of goods/services supplied, stock of goods
lying in warehouses/godowns, etc. The Operator is required to furnish such details within
15 working days. In case an Operator fails to furnish the information, besides being liable
for penal action under section 122 shall also be liable for penalty upto Rs. 25,000/-.

29 | P a g e
Chapter 11: E Way Bill

1. What is an eWay Bill?

EWay Bill is an electronic way bill for movement of goods which can be generated on the
eWay Bill Portal. Transport of goods of more than Rs. 50,000 (Single Invoice/bill/delivery
challan) in value in a vehicle cannot be made by a registered person without an eway
bill.

Alternatively, Eway bill can also be generated or cancelled through SMS, Android App
and by Site-to-Site Integration(through API).

When an eway bill is generated a unique eway bill number (EBN) is allocated and is
available to the supplier, recipient, and the transporter.

eWay bill will be generated when there is a movement of goods in a vehicle/

conveyance of value more than Rs. 50,000( either each Invoice or in (aggregate of all
Invoices in a vehicle/ Conveyance)# ) –

2.When Should eWay Bill be issued?

In relation to a ‘supply’
For reasons other than a ‘supply’ ( say a return)
Due to inward ‘supply’ from an unregistered person
For this purpose, a supply may be either of the following:

A supply made for a consideration (payment) in the course of business

A supply made for a consideration (payment) which may not be in the course of business
A supply without consideration (without payment)In simpler terms, the term ‘supply’
usually means a:
Sale – sale of goods and payment made
Transfer – branch transfers for instance
Barter/Exchange – where the payment is by goods instead of in money
Therefore, eWay Bills must be generated on the common portal for all these types of
movements.

For certain specified Goods, the eway bill needs to be generated mandatorily even if the
Value of the consignment of Goods is less than Rs. 50,000:

Inter-State movement of Goods by the Principal to the Job-worker by Principal/ registered

Job-worker***,
Inter-State Transport of Handicraft goods by a dealer exempted from GST registration.

3. Who should Generate an eWay Bill?

Registered Person – Eway bill must be generated when there is a movement of goods of
more than Rs 50,000 in value to or from a Registered Person. A Registered person or the
transporter may choose to generate and carry eway bill even if the value of goods is less
than Rs 50,000.
Unregistered Persons – Unregistered persons are also required to generate e-Way Bill.
However, where a supply is made by an unregistered person to a registered person, the
receiver will have to ensure all the compliances are met as if they were the supplier.
Transporter – Transporters carrying goods by road, air, rail, etc. also need to generate e-
Way Bill if the supplier has not generated an e-Way Bill.
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4. Validity of eWay Bill
An e-way bill is valid for periods as listed below, which is based on the distance travelled
by the goods. Validity is calculated from the date and time of generation of e-way bill-

Other than Over dimensional cargo and Less Than 100 Kms:1 Day
For every additional 100 Kms or part thereof : additional 1 Day

For Over dimensional cargo and Less Than 20 Kms: 1 Day

For every additional 20 Kms or part thereof : additional 1 Day

31 | P a g e
Chapter 12: Filing GST Returns

Who has to file a return?

In the tax parlance, a return is a statement of specified particulars related to any business
activity undertaken by a registered person to pay his taxes during a prescribed period.
Every registered person is mandated by law to file a tax return, even in case no business
activity has taken place during the prescribed tax period. However, UN agencies do not
need to file a GST return on regular period, but for the specified month in which purchases
were made. Government entities and PSUs who do not engage in any supplies for which
GST is charged or persons exclusively who engage in nil rated / non –GST goods or
services would neither be required to obtain any registration for GST nor required to file
any tax returns. However, as per the draft law, state tax authorities may assign
departmental ID to such organizations or individual persons and can mandate suppliers to
quote this ID in the supply invoices for all inter-state supplies being made to them.

Benefits of Tax Return Filing:

The submission and processing of tax returns is a vital link between the taxpayer and the
tax administration. Some of the key benefits of a detailed mechanism of the tax returns to
be filed under GST are:

• It helps the government and tax administration authorities keep a track on compliance
verification programs.

• Finalization of the tax liabilities of the taxpayer for a specific period of time.

• Management of audit and programs to minimize tax evasion practices.

Key Aspects:

Some of the salient features of filing tax returns under GST are:

• All filing of GST returns can only be done through online mode. However, facility of
offline generation and preparation of returns are available. The returns once furnished
in the offline mode will have to be subsequently uploaded to be valid.

• There will be a common e-return for CGST, SGST, and IGST.

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• A registered person liable to pay tax shall file GST Return at GST Common Portal either
by himself or through his authorized representative.

• The periodicity of return filing differs for different categories of taxpayers: normal/
regular taxpayers, compounding taxpayers, foreign non-resident taxpayers,
government departments, UN agencies, input service distributors (ISD) and
ecommerce operators.

The frequencies of filing returns for different types of GST forms along with the
details to be furnished are summarized below:

CATEGORY OF
FORM DUE DATE/FREQUENCY DETAILS TO BE FURNIHSED TAXPAYER
TYPE

GSTR-1 10th of the next Outward supplies made by Normal/regular

month taxpayers for all goods/services taxpayer

GSTR- 15th of the Details of outward supplies as Normal/regular

1A succeeding month added, corrected or deleted by the taxpayer
recipient and made available to
supplier

GSTR-2 On 15th of Details of the inward supplies Normal/regular

succeeding Month received by a taxpayer claiming taxpayer
input tax credit

GSTR- 11th of succeeding Details of inward supplies made Normal/regular

2A month available to the recipient on the taxpayer
basis of FORM GSTR-1 furnished by
the supplier. Addition (Claims) or
modification in Form GSTR-2A will be
submitted in Form GSTR-2

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GST-3 20th of the next Monthly return on the basis of Normal/regular
month finalization of details of outward taxpayer
supplies and inward supplies which is
auto-populated along with the
payment of amount of tax

GST-3A Notice to a registered taxable Normal/regular

person who fails to furnish return taxpayer
under section 27 and section 31

Form 18th of the month Furnish all outward supply of goods Composite
GSTR-4 next to quarter and services taxpayer

GSTR- Quarterly Details of inward supplies made Composite

4A available to the recipient registered taxpayer
under composition scheme on the
basis of Form GSTR-1 furnished by the
supplier

GSTR-5 20th of succeeding Furnish details of imports, outward Foreign non-

month or within 7 supplies, ITC availed, tax paid, and resident
days after the expiry closing stock taxpayer
of registration,
whichever is earlier

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GSTR-6 13th of succeeding Furnish the details of input credit Input Service
month distributed Distributor (ISD)

Form 0n 11th of Details of inward supplies made Input Service

GSTR- succeeding month available to the ISD recipient on the Distributor (ISD)
6A basis of Form GSTR-1 furnished by the
supplier

GSTR-7 Monthly- Return for Tax Deducted at Source Any registered

taxable person

10th of succeeding required to

month deduct tax at

source

GSTR- Monthly TDS Certificate which can be Any registered

7A downloaded taxable person
required to
deduct tax at
source

GSTR-8 Annual- By Details of supplies effected through E-commerce

31stDecember of next e-commerce operator and the operators
financial year. amount of tax collected on supplies

GSTR-9 Annually- 31st Dec of Furnish the details of ITC availed and Normal/regular
next financial year GST paid which includes local, taxpayer
interstate and import/exports.

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GSTR- Annually- 31st Dec of Furnish the consolidated details of Composite
9A next fiscal quarterly returns filed along with tax taxpayer
payment details.

GSTR- Annually- 31st Dec of Reconciliation Statement – audited Composite

9B next fiscal annual accounts and a taxpayer
reconciliation statement, duly
certified.

Form Monthly, Within 3 Furnish details of inputs and capital Any registered
GSTR- months of goods held, tax paid and payable. taxpayer
10 cancellation of
registration

Form 28th of succeeding Details of inward supplies to be Government

GSTR- month furnished by a person having Unique departments
11 Identity Number (UIN) and United
Nation bodies

GSTR Monthly Final acceptance of input tax credit Any registered

ITC-1 (ITC)and communication to be taxable person
made available electronically to the
registered taxable person making
ITC claim.

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How to file Monthly GST Return: Explained with Example
Outwards and Inwards Supply Details of Hmart India Pvt Ltd August 17

Outward Supply Bills Inward Supply Bills

Bill 1 Ashok Enterprises Pvt Ltd Bill 201 Anand Innovations Ltd

Bill 2 Vijay Electronics Bill 305 Rishabh Associates

Bill 3 Mahendra Agencies Bill 402 Ronak Enterprises Pvt Ltd

Bill 4 Ritz Consultancy Services Ltd Bill 222 Angel Agencies

On 10thSeptember :Hmart India Pvt Ltd Uploads Outwards Supply Details in GSTR 1.(Anand
Innovations Ltd, Rishabh Associates, Ronak Enterprises Pvt Ltd, Angel Agencies also
upload their Outwards Supply Details in GSTR1)

On 11th September : Hmart India Pvt Ltd can see Inward Supply Details uploaded by
Anand Innovations Ltd, Rishabh Associates, Ronak Enterprises Pvt Ltd, Angel Agencies also
upload their Outwards Supply Details in GSTR1 in GSTR 2A which will be autopopulated.

Between 11th and 14th September: Hmart India Pvt Ltd reconciles Inwards supply details in
GSTR 2A and Finds Bill 222 of Angel Agencies has mismatch in Invoice amount.

On 15thSeptember :Hmart India Pvt Ltd upload corrected Bill 222 in GSTR 2.

On 16thSeptember : Bill 222 is available to Angel Agencies in GSTR 1A.Angel Agencies

verifies it, finds correct and accepts it.

On 20thSeptember : Automated GSTR 3 is available to Hmart India Pvt Ltd for submission
and payment.

37 | P a g e
Chapter 13: GST Penalties and Interest

When a Registered Dealer misses filing GST Returns within due date late fees is levied by the
government.

GSTR-1 due date for the months of July to Nov 2017 (monthly) and July to Sept 2017 (quarterly)
was 10th Jan 2018. If GSTR-1 is not filed within this due date you will be liable to pay late fees of Rs.
200* for every day of delay.

Also, non-payment or late payment of GST attracts Interest.

* Subject to change via CBEC notifications

Late Fees on GST Returns

When a GST Return is filed after the due date, late fees to be applicable.

Latest Updates

CBEC withdraws the reduction in Late fees for GSTR-5A charged for delay in return filing with effect
from 7th March 2018.

This means that the late fees to be paid by taxpayers for late-filing of GSTR-5A now stands at a
total of Rs. 200 per day of delay (Rs. 100 per day of delay for NIL return) subject to the maximum
cap in the late fees at Rs. 5,000

As on 7th March 2018, the reduced late fees for other returns such as GSTR-1, GSTR-3B(October
2017 onwards), GSTR-4, GSTR-5 & GSTR-6 continue to apply.

Earlier Notifications: The government has reduced the late fees for GSTR-1, GSTR-3B(October 2017
onwards), GSTR-4, GSTR-5, GSTR-5A and GSTR-6 as follows (until further notifications late fees will
remain the same):late fees

Note that the maximum late fees that can be charged cannot exceed Rs 5,000.

For example, a Taxpayer has filed GSTR-3B for the month of December 2017 (due date 20th Jan
2018) on 23rd January 2018.

Amount of late fees to be paid:

Rs. 50 per day * 3 days = Rs. 150 (Rs. 75 CGST + Rs. 75 SGST)

If the above return was a return with ‘Zero’ tax liability then late fees will be:

Rs. 20 per day * 3 days = Rs. 60 (Rs. 30 CGST + Rs. 30 SGST)

Late Fees for GSTR-3B of July to September Waived

The government has waived late fees for GSTR-3B from July to September 2017. Any late fees paid
for these months will be credited back to Electronic Cash Ledger under Tax. This can be later
utilized for payment of GST Liability.

For example, a taxpayer files his GSTR-3B for the month of July, 3 days after due. He had to pay a
late fee of Rs. 600 (Rs 200 per day * 3 days). This amount will be refunded in the taxpayers
Electronic Cash Ledger

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Late Fees for GST Return as per GST Act*

All returns except Annual Returns: Rs. 200 per day (Rs. 100 CGST + Rs. 100 SGST) of default up to a
maximum of Rs 5,000.

Annual Returns: Rs. 200 per day (Rs. 100 CGST + Rs. 100 SGST) of default up to a maximum of 0.25%
of Turnover.

Interest on Late Payment of GST Due

Interest has to be paid by every taxpayer who:

Makes a delayed GST payment i.e. pays GST after the due date.

Claims excess Input Tax Credit

Reduces excess Output Tax Liability

Currently, GST has to be paid at the time of filing GSTR-3B and GSTR-4.

If GST is not paid within the due dates of filing return Interest at following rates has to be paid:

Interest
Tax paid after due date 18% p.a.

Excess ITC Claimed or excess reduction in Output Tax 24% p.a.

The Interest has to be calculated from the next day on which tax was due.

For example, a taxpayer fails to make a tax payment of Rs. 10,000 for the month of December
2017 (due date -20th Jan 2018). He makes the payment on 20th Feb 2018. Interest will be
calculated as follows:

Rs. 10,000 * 31 days/365 * 18% = Rs. 153

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Chapter 14 : GST Practical Case Study
GST Computation and Return Filing for Gmart Stores Pvt. Ltd for Month of July.

Gmart has Head Office in Pune, Branch at Mumbai and Bangalore, Karnataka.

(Pune Head Office: GSTN: 27AAJFG2290H1ZB)

1) Good Purchased from Great Wood Traders Pvt. Ltd.(Gujarat) as per details given below:
(Invoice No.756) (GSTN: 24AAACD3069K1ZP)

Sr. Particulars Quantity Rate

No.
1 Conference Table: Round (HSN : 15 8000/-
94033090)
2 Conference Table: Square(HSN : 10 6000/-
94033090)
Taxes: IGST Rate 28%

2) Goods Purchased from Cool Furniture Pvt. Ltd. (Maharashtra) as per details given in
table(Invoice No.142)(GSTN: 27AACCA8432H1ZQ)
Sr. Particulars Quantity Rate
No.
1 Office Table Steel 4’6” × 2” 20 4000/-
(HSN:94031010)
2 Office Chair Plastic- 60 400/-
Green(HSN:94037000)
Taxes: IGST Rate 28% (CGST: 14% &
SGST: 14%)

3) Goods Returned to Cool Furniture Pvt. Ltd. (Maharashtra) as per details given in table:(Invoice
No.142)
Sr. Particulars Quantity Rate
No.
1 Office Table Steel 4’6” × 2” 2 4000/-
(HSN:94031010)
2 Office Chair Plastic- 4 400/-
Green(HSN:94037000)
Taxes: IGST Rate 28% (CGST: 14% &
SGST: 14%)

4) Goods purchased from Renuka Milk Pvt. Ltd (Maharashtra) as per details given below:(Invoice
No.152)(GSTN: 27AADCB2230M1ZT)
Sr. Particulars Quantity Rate
No.
1 Cow Milk 500 ml (HSN: 04011000) 4000 21/-
2 Cow Milk 1000 ml (HSN: 04011000) 2000 42/-
GST Rate 0% ( Nil Rated)

5) Goods Purchased from Oxyrich India Pvt. Ltd.(Maharashtra) as per given below:(Invoice
No.250)(GSTN: 27AAKCS6568G1ZT)
Sr. Particulars Quantity Rate
No.
1 Oxyrich Mineral Water 1Ltr (HSN : 22011010) 5000 20/-

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2 Oxyrich Mineral Water 2Ltr (HSN : 22011010) 5000 30/-
Taxes: IGST Rate 12% (CGST 6% & SGST: 6%)

6) Good Sold to Tata Retail Pvt. Ltd. (Maharashtra)as per details given in Table:(GSTN:
27AAACM9011C1ZX)
Sr. Particulars Quantity Rate
No.
1 Conference Table: Round (HSN : 94033090) 6 32,000/-
2 Conference Table: Square(HSN : 94033090) 5 30,000/-
3 Office Table Steel 4’6” × 2” (HSN:94031010) 10 15000/-
4 Office Chair Plastic- Green(HSN:94037000) 40 1500/-
Taxes: GST Rate 28% ( CGST : 14 & SGST :
14)

7) Good Sold to Balaji Traders in Karnataka. as per details given in Table:(GSTN:

29AAFCD6883Q2ZL)
Sr. Particulars Quantity Rate
No.
1 Office Table Steel 4’6” × 2” 4 15000/-
(HSN:94031010)
2 Office Chair Plastic- 10 1200/-
Green(HSN:94037000)
Taxes: GST Rate 28% ( CGST : 14 & SGST : 14)

8) Good Returned by to Balaji Traders in Karnataka. as per details given in

Table:(GSTN:29AAFCD6883Q2ZL)
Sr. Particulars Quantity Rate
No.
1 Office Table Steel 4’6” × 2” 1 15000/-
(HSN:94031010)
2 Office Chair Plastic- 2 1200/-
Green(HSN:94037000)
Taxes: GST Rate 28% ( CGST : 14 & SGST : 14)

9) Goods sold to Karma Enterprises (Maharashtra) as per given bellow: ( GSTN:

27AABFM9358E1Z4)
Sr. Particulars Quantity Rate
No.
1 Oxyrich Mineral Water 1Ltr (HSN : 3500 25/-
22011010)
2 Oxyrich Mineral Water 2Ltr (HSN : 3600 35/-
22011010)
Taxes: IGST Rate 12% (CGST 6% & SGST: 6%)

10) Goods sold to Avinash Jadhav (Ultimate Consumer) Maharashtra as per given bellow:
Sr. Particulars Quantity Rate
No.
1 Oxyrich Mineral l Water 1Ltr (HSN : 1000 28/-
22011010)
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2 Oxyrich Mineral Water 2Ltr (HSN : 400 40/-
22011010)
Taxes: GST Rate 12% (CGST 6% & SGST: 6%)

11) Goods transfer to Mumbai Branch (Maharashtra/Same Registration)as per given below:
Sr. Particulars Quantity Rate
No.
1 Conference Table: Round (HSN : 5 18000/-
94033090)
2 Conference Table: Square(HSN : 2 16000/-
94033090)

Advance receipt
12) Advance amount received from Universal India Pvt. Ltd, Maharashtra ( GSTN:
27AABFM9358E1Z4)
Rs.25000/- against Conference Table: Round

Service Indusries

13) Cab Service purchased from VLR Cab Services( Maharashtra ) of Rs.20000/- (SAC:00440048)

(Tax Rate: CGST: 2.5% & SGST: 2.5%) (Invoice No.251) (GSTN: 27ABNPD6384J1Z7)

14) Installation service provide to Tata Retail Pvt. Ltd. (Maharashtra) of Rs.150000/-

(Tax Rate CGST: 9% & SGST: 9%) (Invoice No.252)(SAC: 00440233)

Reverse Charge Mechanism

15) Legal service (R.C.M.)purchased from Adv. Dheshmukh& Co. Service (Maharashtra )of
Rs.300000/-

(Tax Rate CGST:9% & SGST:9%) (Invoice No.234) (SAC: 00441480)

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GSTR9 Computation
OUTWARD SUPPLY

Details of Advances, Inward Supply and Outward Supply Liable for Tax
Ref Rate Intrastate Interstate Total
No.
Nature of Supply Taxable Value CGST SGST IGST
1 Supplies made to un-registered 12 500000 0 500000 30000 30000 0
persons (B2C)
2 28 300000 0 300000 42000 42000 0
3 SubTotal (1to2) 800000 0 800000 72000 72000 0
4 Supplies made to registered persons 5 500000 300000 800000 12500 12500 15000
(B2B)
5 12 2200000 1000000 3200000 132000 132000 120000
6 28 800000 400000 1200000 112000 112000 112000
7 SubTotal (4to6) 3500000 1700000 5200000 256500 256500 247000
8 Advances on which tax is paid but 28 19532 0 19532 2734 2734 0
invoices not issued
9 Inward supplies on which tax is to be 18 300000 0 300000 27000 27000 0
paid on reverse charge basis
10 SubTotal (7to9) 4619532 1700000 6319532 358234 358234 247000
11 Credit Notes 18 100000 120000 220000 9000 9000 21600
12 28 80000 40000 120000 11200 11200 11200
13 SubTotal (10-(11+12)) 180000 160000 340000 20200 20200 32800
14 Turnover in which tax is paid (10-13) 4439532 1540000 5979532 338034 338034 214200
Details of Outward Supply Not Liable for Tax
15 Exempted Supply (Branch Transfer) 700000 0 700000 0 0 0
16 Nil Rated Supply 400000 0 400000 0 0 0
17 Turnover on which tax is not paid 1100000 0 1100000 0 0 0
(15+16)
18 Total Turnover (14+17) 5539532 1540000 7079532 338034 338034 214200
19 Total Turnover - Reverse Charge (18-9) 6779532 311034 311034 214200
INPUT TAX CREDIT

Details of ITC availed during Financial Year

Ref No. Rate Intrastate Interstate Total
Nature of Supply Taxable Value CGST SGST IGST
1 12 1200000 800000 2000000 72000 72000 96000
Inputs
2 28 1000000 400000 1400000 140000 140000 112000
3 SubTotal (1to2) 2200000 1200000 3400000 212000 212000 208000

4 Input Services 18 400000 0 400000 36000 36000 0

5 Ineligile ITC Under Section 17(5) 5 60000 0 60000 1500 1500 0
6 SubTotal (4+5) 460000 0 460000 37500 37500 0

7 ITC on reverse charge 18 300000 0 300000 27000 27000 0

8 Total ITC (3+6+7) 2960000 1200000 4160000 276500 276500 208000
9 Total Eligilbe ITC (8-5) 2900000 1200000 4100000 275000 275000 208000

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TAX PAID

Paid Paid through ITC (₹)

Description Tax Payable (₹) through State Tax / Integrated
cash (₹) Central Tax Cess
UT Tax Tax
Integrated
A 214200 6200 0 0 208000 0
Tax
B Central Tax 338034 63034 275000 0 0 0
C State/UT Tax 338034 63034 0 275000 0 0
D Cess 0 0 0 0 0 0
E Interest 0 0 0 0 0 0
F Late fee 0 0 0 0 0 0
G Penalty 0 0 0 0 0 0
H Other 0 0 0 0 0 0

HSN SUMMARY OUTWARD SUPPLY

Total Rate
HSN Total Integrated Central State/UT
Description UQC * Taxable of Tax
Code* quantity* Tax (₹) Tax (₹) Tax (₹)
value (₹)* (%)*
04011000 Milk NOS 500 400000 0 0 0 0
04061000 Paneer NOS 200 800000 5 15000 12500 12500
22011010 Mineral Water NOS 300 3700000 12 120000 162000 162000
998399 Professional Services NOS 1 300000 18 0 27000 27000
94033090 Steel furniture NOS 360 1519532 28 112000 156734 156734

HSN SUMMARY INWARD SUPPLY

Total
Rate of
HSN Total Taxable Integrated Central Tax State/UT
Description UQC * Tax
Code* quantity* value Tax (₹) (₹) Tax (₹)
(%)*
(₹)*
04011000 Milk NOS 800 300000 0 0 0 0
9966 Cab Services NOS 1 60000 5 0 1500 1500
22011010 Mineral Water NOS 310 2000000 12 96000 72000 72000
998399 Professional Services NOS 4 400000 18 0 37500 37500
94033090 Steel furniture NOS 370 1700000 28 112000 167000 167000

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Chapter 15: Process to do GST Computation and File GST
Returns:

Step 1: Create Ledgers

Step 2: Pass correct transactions

Step 3: Export or Create GSTR1,GSRT2,GSTR3B and ITC reports in excel

Step 4: Download GSTR1,GSRT2,GSTR3B offline utilities in GST.GOV.IN

Step 5: Import Excel GSTR1,GSRT2 Reports in Offline Utilities, Check all

Imported transactions

Step 6: Create JSON file of GSTR1 and GSTR2

Step 7: Fill GSTR3B Data in offline Utility

Step 8: Create GSRTR3B file

Step 9: Make GST payment

Step 10: Upload Json files of GSTR1,2 and 3B files on GST Portal.

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