GST law & Practice

GST
GST, which stands for Goods and Services Tax, is an indirect tax system in India. It replaced
several previous taxes like excise duty, VAT, and services tax. The Goods and Services Tax Act
was passed in Parliament on March 29, 2017, and it became effective on July 1, 2017.
In simple terms, GST is a tax imposed on the supply of goods and services. It is a comprehensive
and multi-stage tax that is applied at each step of the supply chain. Unlike the previous tax
system, GST is a single tax law that applies to the entire country, making it a unified tax system
for all states and union territories in India.
Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales,
Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated
GST.

Multi-stage Taxation
When a product is created and sold, it goes through several stages in its supply chain. These
stages include the purchase of raw materials, production or manufacturing, warehousing of
finished goods, selling to wholesalers, selling to retailers, and finally, selling to end consumers.
GST is levied at each of these stages, making it a multi-stage tax. The tax is applied to the value
added at each stage to achieve the final sale to the end customer.

Destination-Based Tax
Under GST, the tax is levied at the point of consumption. For example, if goods are
manufactured in Maharashtra and sold to the final consumer in Karnataka, the tax revenue will
go to Karnataka and not Maharashtra. This makes GST a destination-based tax.

The Journey of GST in India

The journey of GST in India started in the year 2000 when a committee was formed to draft the
law. It took 17 years for the law to evolve. In 2017, the GST Bill was passed in the Lok Sabha
and Rajya Sabha, and on July 1, 2017, the GST Law came into force.

Objectives of GST
1. To achieve the ideology of 'One Nation, One Tax': GST replaces multiple indirect taxes,
creating a unified tax system across the country.
2. To subsume a majority of the indirect taxes in India: GST combines various indirect taxes
into one, reducing the compliance burden for taxpayers and simplifying tax
administration for the government.
3. To eliminate the cascading effect of taxes: GST allows for the set-off of tax credits,
eliminating the tax-on-tax effect and promoting a seamless flow of credits.
4. To curb tax evasion: GST has stringent laws and a centralized surveillance system,
reducing the chances of tax evasion and fraud.
5. To increase the taxpayer base: GST widens the tax base by bringing more businesses
under the tax net.
6. To introduce online procedures for ease of doing business: GST simplifies taxpayer
compliance through online processes, such as registration, return filing, and refunds.
7. To improve the logistics and distribution system: GST reduces documentation
requirements, improves supply chain efficiency, and lowers logistics costs.
8. To promote competitive pricing and increase consumption: GST facilitates competitive
pricing and boosts consumption by eliminating price imbalances across states and
globally.

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Advantages of GST
GST has several advantages, including the removal of the cascading effect of taxes and the use
of technology for streamlined processes such as registration, return filing, and refunds.

Components of GST
Under GST, there are three types of taxes: CGST (Central GST), SGST (State GST), and IGST
(Integrated GST). CGST is levied by the Central Government on intra-state sales, SGST is levied
by the state government on intra-state sales, and IGST is levied by the Central Government on
inter-state sales.

Tax Laws before GST

Before GST, India had multiple indirect taxes levied by both the state and central governments.
Each state had its own set of rules and regulations, leading to overlapping and cascading taxes.
The previous tax regime included taxes such as central excise duty, state VAT, central sales tax,
and various local taxes.

How GST has helped in price reduction?

GST has helped in reducing prices by eliminating the cascading effect of taxes. Under the
previous regime, taxes were levied at each stage of the supply chain, leading

CONSTITUTIONAL PROVISIONS OF GST

The Indian Constitution divides the power to levy taxes between the Central Government and
State Governments through the Union List and the State List. To implement the Goods and
Services Tax (GST) and ensure consistency across the country, a constitutional amendment was
required.

The Constitution (101st Amendment) Act, 2016 introduced changes to the Constitution by
inserting, deleting, and amending certain Articles. These changes addressed various aspects
related to GST:
1. Powers and laws related to GST: The Act clarified the powers of the Central and State
Governments to levy and make laws on GST.
2. Applicability and scope of GST: The Act defined the scope and applicability of GST,
determining which goods and services are subject to the tax.
3. Revenue sharing: It established rules for the apportionment of GST revenue between the
Central Government and the State Governments.
4. Creation of the GST Council: The Act authorized the President to establish the GST
Council, a joint forum comprising representatives from the Centre and the States. The
Council is responsible for making recommendations on various aspects of GST.
5. Discontinuation of existing taxes: The Act paved the way for the discontinuation of
previous taxes to make room for GST.
6. Compensation to States: It included provisions for compensating the States for any
revenue loss they might experience due to the implementation of GST. This led to the
enactment of the Goods and Services Tax (Compensation to States) Act, 2017.

The Act introduced several new Articles and amended existing ones:
● Article 246A: This new Article grants the Parliament and the State/Union Legislatures
the power to make laws on GST. However, the Parliament has exclusive authority over

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inter-state supplies. It also temporarily excludes certain products from the scope of GST,
subject to the recommendation of the GST Council.
● Article 269A: This Article addresses the levy and collection of GST for inter-state
supplies. It empowers the GST Council to frame rules on revenue distribution. It also
enables the Central Government to levy Integrated GST (IGST) on imports, replacing the
previous Countervailing Duty (CVD) system.
● Article 279A: This Article authorizes the President to establish the GST Council as a
joint forum for Centre-State cooperation on GST-related matters.
● Article 286: This existing Article was amended to restrict the states from imposing taxes
on the supply of goods and services outside their boundaries. The term 'supply' replaced
'sale or purchase'.
● Article 366: This existing Article was amended to include definitions related to GST,
such as the definition of Goods and Services Tax and Services.

The Act also includes provisions for compensating the States for any revenue loss resulting from
the implementation of GST. The Seventh Schedule of the Constitution contains three lists (Union
List, State List, and Concurrent List) that specify the areas in which the Centre and State
Governments have the authority to make laws.

Overall, the Constitution (101st Amendment) Act, 2016 laid the foundation for the
implementation of GST in India, defining the powers, scope, and procedures related to the tax
system and establishing the GST Council as a key decision-making body.

COMPOSITION LEVY
The Composition Scheme is a simplified and hassle-free option for small taxpayers under GST.
It allows them to avoid complicated GST procedures and pay tax at a fixed rate based on their
turnover. Any taxpayer with a turnover below Rs. 1.5 crore* can choose to opt for this scheme.

Who can opt for the Composition Scheme

1. Businesses with a turnover below Rs 1.5 crore* have the option to choose the
Composition Scheme. However, for North-Eastern states and Himachal Pradesh, the limit
is now Rs 75* lakh.
2. According to the CGST (Amendment) Act, 2018, composition dealers can also provide
services up to ten percent of their turnover or Rs. 5 lakhs, whichever is higher. This
amendment will be effective from February 1, 2019. Additionally, in its 32nd meeting,
the GST Council proposed an increase in this limit for service providers on January 10,
2019*.
3. When calculating the turnover, all businesses registered under the same PAN should be
considered.
4. *The Central Board of Indirect Taxes and Customs (CBIC) has notified an increase in the
threshold limit from Rs 1.0 crore to Rs. 1.5 crores.

Who cannot opt for the Composition Scheme (Section 10)

Certain individuals or businesses are not eligible to opt for the Composition Scheme. This
includes:
1. Manufacturers of ice cream, pan masala, or tobacco products.
2. Individuals or businesses involved in making inter-state supplies, meaning they supply
goods or services from one state to another.

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3. Casual taxable persons or non-resident taxable persons, who are individuals or businesses
that occasionally engage in taxable activities in a particular state without having a fixed
place of business.
4. If you are making supplies of goods that are not taxable under this Act, you cannot opt
for the Composition Levy.
5. If you are selling goods through electronic commerce operators who are required to
collect tax under section 52, you cannot opt for the Composition Levy.
6. If you are a Non-Resident Foreign Taxpayer who is not a resident of India, you cannot
choose the Composition Levy.
7. If you are registered as an Input Service Distributor (ISD), responsible for distributing
input tax credit, you cannot opt for the Composition Levy.
8. If you are registered as a TDS Deductor/Tax Collector, responsible for deducting or
collecting tax at source, you cannot choose the Composition Levy.
These categories of people cannot avail themselves of the benefits provided by the Composition
Scheme.

Conditions for availing the Composition Scheme

1. No Input Tax Credit: Dealers opting for the composition scheme cannot claim Input
Tax Credit.
2. Taxable Goods: The dealer cannot supply goods that are not taxable under GST, such as
alcohol.
3. Reverse Charge Mechanism: The dealer must pay tax at normal rates for transactions
under the Reverse Charge Mechanism.
4. Business Segments: If a taxable person has multiple businesses under the same PAN,
they must register all those businesses collectively under the composition scheme or opt
out of the scheme.
5. Mention 'Composition Taxable Person': The taxpayer must prominently display the
words 'composition taxable person' on every notice, signboard, and bill of supply issued
by them.
6. Service Provision: As per the CGST (Amendment) Act, 2018, manufacturers or traders
can provide services up to ten percent of their turnover or Rs. 5 lakhs, whichever is
higher. This amendment is applicable from February 1, 2019.

Advantages
● Lesser compliance burden, including fewer returns, record-keeping, and invoice issuance.
● Limited tax liability.
● Improved liquidity due to lower tax rates.

Disadvantages
● Limited business territory as inter-state transactions are not allowed.
● No availability of Input Tax Credit for composition dealers.
● Ineligibility to supply non-taxable goods like alcohol and goods through an e-commerce
platform under GST.

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TAXABLE PERSON
A "taxable person" under GST is someone who does business in India and is registered or should
be registered under the GST Act. This includes individuals, companies, partnerships, trusts,
government entities, and other organizations engaged in economic activities like trade and
commerce. In simple terms, anyone involved in business or economic activities is considered a
taxable person under GST.

Liable to get registered under GST

Under GST, the following entities are required to register:
1. Businesses involved in supplying goods with a turnover exceeding Rs. 40 lakhs (Rs. 20
lakhs for certain states).
2. Businesses involved in supplying services with a turnover exceeding Rs. 20 lakhs (Rs. 10
lakhs for certain states).
3. Individuals or entities registered under previous tax laws (such as Excise, VAT, Service
Tax) must also register under GST.
4. When a registered business is transferred or demerged, the new owner must register from
the transfer date.
5. Persons making inter-state supplies.
6. Casual taxable persons and non-resident taxable persons.
7. Agents of a supplier, reverse charge mechanism taxpayers, and input service distributors.
8. E-commerce operators or aggregators.
9. Persons supplying online information and database access or retrieval (OIDAR) services
from outside India to customers in India.
10. Exempted goods or services suppliers with no other taxable supplies are exempt from
registration.

Who is a Casual Taxable Person under GST?

A casual taxable person is someone who occasionally sells goods or provides services in a place
where GST applies but doesn't have a fixed business location there. For example, if a person has
a business in Bangalore but provides taxable consulting services in Pune where they don't have a
business location, they would be considered a casual taxable person in Pune.

Who is a Non-Resident Taxable person under GST?

A non-resident taxable person is someone who occasionally sells goods or provides services in a
place where GST applies but doesn't have a fixed business location in India. It's similar to a
casual taxable person, but in this case, the person is not a resident of India and has no business
location in the country.

Who is an Input Service Distributor?

An Input Service Distributor is an office of a supplier of goods or services that receives tax
invoices for input services and issues tax invoices to distribute the credit of CGST/SGST/IGST
paid on those services to their branches with the same PAN. This concept allows the distribution
of credit only for input services and not for input goods or capital goods. It is an optional facility
for eligible taxpayers.

Who is a composition taxpayer?

A composition taxpayer is someone registered under the composition scheme, where they don't
collect GST from their customers at normal rates. Instead, they pay tax at a lower nominal rate

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based on their turnover or receipts on a quarterly basis. Initially, only suppliers of goods were
eligible for the composition scheme with an annual turnover up to Rs.1.5 crore. From April 1,
2019, service providers with an annual turnover up to Rs.50 lakh can also opt for this scheme.

GST Registration by Type of Taxable Person

● Every person liable for GST registration must apply within 30 days of becoming liable.
Casual/non-resident taxable persons should apply at least five days before starting their
business activities.
● A PAN is required for GST registration.
● Separate registration is needed for each state or business vertical. Special provisions
apply for casual taxable persons and non-resident taxable persons, including temporary
registration for a period of 90 days (extendable for another 90 days) and an advance
deposit of GST based on estimated tax liability.

SUPPLY

Meaning
Section 7 of the CGST Act defines Supply as:
● Various types of transactions involving the exchange of goods or services, such as sale,
transfer, barter, exchange, license, rental, lease, or disposal, etc., that are made for a
payment by a person as part of their business activities.
● Importing services for a payment, whether or not it is part of a business activity.
● Activities listed in Schedule I that are performed without any payment.
● Activities that are considered as the supply of goods or services as mentioned in Schedule
II.
However, there are exceptions:
● Activities or transactions mentioned in Schedule III, and
● Activities or transactions carried out by the Central Government, State Governments, or
local authorities in their capacity as public authorities, as notified by the Government
based on the recommendations of the Council, will not be treated as supplies of goods or
services.
The Government, based on the recommendations of the Council, can specify through a
notification which transactions should be treated as either the supply of goods or the supply of
services, considering the provisions of subsections (1) and (2).

Supply in the context of GST includes various types of transactions like selling, transferring,
exchanging, bartering, licensing, renting, leasing, and disposing of goods or services. If a person
engages in any of these activities as part of their business and receives something in return, it is
considered a supply under GST.

Elements of Supply
Supply has two important elements that need to be present:
● There should be a consideration: This means that there is an exchange of goods or
services for payment or any other form of value.
● It should be done in the course of furthering a business: The supply should be a part
of the activities carried out in the course of running a business or any commercial
activity.

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If these two elements are not met, then it is not considered a sale or supply under the CGST Act.
Examples:
● Mr. A purchases a table for Rs.10,000 for his personal use and later sells it to a dealer
after 10 months. This transaction is not considered a supply under CGST because Mr. A
is not carrying out this activity for the purpose of furthering his business.
● Mrs. B provides free coaching to students in her neighbourhood as a hobby. This is not
considered a supply because there is no consideration involved in the form of payment or
value received.

Classification of Supply and Types

There are different types of supplies based on how they are made:
● Composite Supply: This type of supply involves two or more goods or services that are
always supplied together. They cannot be sold individually because they are typically
used or consumed together. In a composite supply, there is a main item or service
(principal supply) and other supporting items or services (secondary supply). The tax rate
applicable to the principal supply is applied to the entire supply. For example, buying a
Diwali gift box that includes dry fruits, a box, and a wrapper. The box and wrapper
cannot be sold separately without the main content, which is the dry fruit.
● Mixed Supply: In a mixed supply, two or more goods or services are supplied
independently of each other and are not necessarily sold together. Unlike composite
supply, these items can be sold separately. The tax rate applicable to the highest-taxed
item in the mixed supply is applied to the entire supply. For instance, buying a Christmas
package that includes cakes, aerated drinks, chocolates, Santa caps, and other gift items.
Each of these items can be sold separately and is not dependent on the others.
● Import of Services: When goods or services are imported into a country and payment is
made for them, it is considered as a supply. It doesn't matter if the goods or services are
for personal or business use, they are still treated as a supply for the purpose of taxation.

Under GST, there are three types of taxes that can be included in an invoice. For intra-state
transactions (within the same state), SGST (State Goods and Services Tax) and CGST (Central
Goods and Services Tax) are charged. For interstate transactions (between different states), IGST
(Integrated Goods and Services Tax) is charged. However, determining whether a transaction is
inter or intrastate can be complex.
To handle such situations, the IGST act provides certain rules called "place of supply rules."
These rules help define whether a transaction is considered inter or intrastate, which then
determines the applicable tax (SGST, CGST, or IGST). These rules help ensure that the correct
taxes are levied based on the location and nature of the transaction.

Time of Supply (Sections 12 to 14 of CGST Act, 2017)

● Time of supply refers to the specific moment when goods or services are considered to be
supplied. Knowing the exact time helps the seller determine the due date for paying taxes.
● Under GST, the liability to pay CGST/SGST on goods and services arises at the time of
supply.
● The specific rules for determining the time of supply are mentioned in section 12 (for
goods) and section 13 (for services) of the CGST Act.

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Time of Supply of Goods

When it comes to the time of supply for goods, it is determined by the earliest of the following:
● The date when the invoice is issued.
● The last date by which the invoice should have been issued.
● The date when the advance payment is received.

For example, let's consider a situation where Mr. X sold goods worth Rs 1,00,000 to Mr. Y. The
invoice was issued on 15th January, the payment was received on 31st January, and the goods
were supplied on 20th January. In this case, the time of supply would be determined as follows:
● Date of issue of invoice: 15th January.
● Last date on which the invoice should have been issued: 20th January. Therefore, the
time of supply would be 15th January, as it is the earliest date.

Now, let's consider a scenario where Mr. X received an advance payment of Rs 50,000 on 1st
January in the same example.
In this case, the time of supply for the advance payment of Rs 50,000 would be 1st January
because the date of receipt of advance is before the invoice is issued. For the remaining Rs
50,000, the time of supply would be 15th January, which is when the invoice is issued.

Time of Supply of Services

When it comes to the time of supply for services, it is determined by the earliest of the following:
● The date when the invoice is issued.
● The date when the advance payment is received.
● The date when the services are provided (if the invoice is not issued within the prescribed
period).
Let's understand this with an example:
Mr. A provided services worth Rs 20,000 to Mr. B on 1st January. The invoice for the services
was issued on 20th January, and the payment for the services was received on 1st February.
In this case, we first need to check if the invoice was issued within the prescribed time. The
prescribed time is 30 days from the date of service, which in this case is 31st January. Since the
invoice was issued on 20th January, it was issued within the prescribed time limit.
The time of supply will be determined as follows:
● Date of issue of invoice: 20th January.
● Date of payment: 1st February.
Therefore, the time of supply for the services will be 20th January, as it is the earliest date
considering the issuance of the invoice.

Time of Supply under Reverse Charge [Section 12(3) of CGST Act, 2017]
Under reverse charge, the time of supply for the service receiver is determined by the earliest of
the following:
● Date of payment: This applies to services only. It means the day when the payment is
made for the services.
● 30 days from the date of issue of the invoice: This applies to goods. It means that if the
invoice is not issued within 30 days of the supply, the time of supply is considered to be
30 days from the date of the invoice.

For services, the time of supply can also be determined within 60 days from the date of the
invoice.

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For example, let's say M/s ABC Pvt. Ltd availed the service of a director, Mr. X, worth Rs.
50,000 on 15th January. The invoice for this service was raised on 1st February, and M/s ABC
Pvt. Ltd made the payment on 1st May.
In this case, the time of supply will be the earliest date among the two options:
● Date of payment: 1st May
● 60 days from the date of the invoice: 2nd April
Therefore, the time of supply for the services is considered to be 2nd April.

PLACE OF SUPPLY FOR GOODS

Normally, when it comes to goods, the place of supply is where the goods are delivered.
In other words, the place of supply for goods is where the ownership of the goods changes hands.
But what happens if there is no physical movement of the goods? In such cases, the place of
supply is determined based on the location of the goods at the time of delivery to the recipient.
For example, when goods are sold in a supermarket, the place of supply is considered to be the
supermarket itself.
In situations where goods are assembled and installed, the place of supply will be the location
where the installation takes place.
For instance, let's say a supplier from Kolkata delivers machinery to a recipient in Delhi. The
machinery is then installed at the recipient's factory in Kanpur. In this case, the place of supply
for the machinery will be Kanpur.

Place of Supply for Services

In general, the place of supply for services is determined by the location of the service recipient.
It means that the place where the service is provided to the customer is considered the place of
supply.
However, there are some special rules for certain services to determine their place of supply:
1. Services related to immovable property: The place of provision of services is determined
by the location of the property itself.
For example, if Mr. Anil from Delhi provides interior designing services to Mr. Ajay in
Mumbai, but the property where the services are being provided is located in Ooty, Tamil
Nadu, then the place of supply will be Ooty.
2. Restaurant services: The place of supply for restaurant services is the location of the
restaurant where the services are rendered.
3. Admission to events: The place of supply is the location where the event takes place.
4. Transportation of goods and passengers: The place of supply depends on the place from
where the transportation service commences.
For instance, if a registered taxpayer offers passenger transport services from Bangalore
to Hampi, and the passengers do not have GST registration, the place of supply in this
case will be Bangalore, as that is the place of departure.
5. Telecom services, banking, financial, and insurance services: Special rules apply to
determine the place of supply for these services.

By following these guidelines, the correct place of supply for different types of services can be
determined under GST.

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Value of Supply of Goods or services

1. The value of supply refers to the amount of money that a seller expects to receive for the
goods or services provided.
2. In simple terms, it is the price that the buyer pays to the seller for the goods or services.
3. However, there are certain situations where the parties involved have a close relationship,
or the transaction may involve bartering or exchanging of goods or services. In such
cases, the GST law states that the value on which GST is calculated should be the
"transactional value". This means that the value should be based on what unrelated
parties would normally agree upon in a similar business transaction.
4. By using the transactional value, GST can be properly charged and collected, even if the
full value of the transaction has not been paid. This ensures that the correct amount of
GST is applied, maintaining fairness and accuracy in the taxation process.

Continuous Supply
Continuous supply refers to the ongoing provision of goods or services periodically, usually on a
monthly basis. It involves regular supply over an extended period. Examples of continuous
supply include providing bricks to builders or telecom and internet services offered by telecom
companies.

Continuous Supply of Goods

● It involves the supply of goods that are provided continuously or periodically under a
contract.
● The supply can be made through wires, cables, pipelines, or other conduits.
● The supplier sends invoices to the recipient periodically, such as with each batch of
bricks supplied.

Time of Issuing Invoice for Continuous Supply of Goods:

● Invoices are issued before or at the time of each statement of accounts or payment
received.
● For example, the brick supplier issues an invoice along with each batch of bricks sent.

Continuous Supply of Services:

● It refers to the provision of services continuously or periodically for a period exceeding
three months under a contract.
● There are periodic payment obligations associated with the service.

Time of Issuing Tax Invoice for Continuous Supply of Services:

● When the due date of payment can be identified from the contract:
● The invoice is issued before or after the payment is due, but within a specified time.
● The invoice is issued whether or not payment has been received.
● For example, a telecom service provider sends a monthly telephone bill as mentioned in
the contract.

When the due date of payment cannot be identified from the contract:
● The invoice is issued before or after each payment is received, but within a specified
time.
● When the payment is linked to the completion of an event:

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● The invoice is issued before or after the completion of that event, but within a specified
time.
● When the supply of services ceases under a contract before completion:
● The invoice is issued at the time when the supply stops, only for the service provided
before cessation.
● For example, if a works contract was stopped before completion, an invoice is issued for
the work performed until the stoppage date.

Specified Time:
● The invoice must be issued within 30 days from the completion date of each event that
requires the recipient to make a payment, as specified in the contract.

Special Provision for Banks/Financial Institutions/NBFCs:

● Invoices must be issued within 45 days from the date of service supply.

Note:
The government may notify certain supplies of goods or services to be treated as continuous
supply based on their nature.

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INPUT TAX CREDIT

1. Input tax credit is the tax paid by a business on the purchase of goods or services. It is
used to reduce the tax liability when making a sale. The Goods and Services Tax (GST)
is based on the principle of value addition, and input tax credit helps to avoid the
duplication of taxes paid on raw materials, consumables, machinery, etc.
2. Every business involved in the supply chain collects and remits GST. Input tax credit
allows businesses to offset the tax paid on their purchases against the tax collected on
their sales. This ensures that taxes are not levied multiple times and helps prevent the tax
burden from becoming a part of the production or supply costs.
3. By utilizing input tax credit, businesses can achieve a balanced taxation system and
ensure that the tax paid on inputs does not increase the overall cost of production or the
price of goods and services.

Conditions to claim ITC

To claim Input Tax Credit (ITC) under GST, certain conditions must be met:
1. The dealer should have a valid tax invoice for the goods or services.
2. The dealer should have actually received the goods or services.
3. The dealer should have filed the necessary returns.
4. The supplier of the goods or services should have paid the tax charged to the government.
5. If the goods are received in multiple installments, ITC can only be claimed when the final
installment is received.
6. ITC cannot be claimed if the dealer has already claimed depreciation on the tax
component of a capital good.
7. Only when all these conditions are fulfilled, a person registered under GST can claim
Input Tax Credit.

What can be claimed under ITC

Input Tax Credit (ITC) can be claimed for business purposes, but there are certain restrictions on
what can be claimed:
● ITC cannot be claimed for goods or services used exclusively for personal use.
● ITC cannot be claimed for goods or services used for making exempt supplies, which are
supplies that are not subject to GST.
● ITC cannot be claimed for supplies for which ITC is specifically not available as per GST
rules and regulations.

Reversal of Input Tax Credit

ITC can be availed only on goods and services for business purposes. If they are used for non-
business (personal) purposes, or for making exempt supplies ITC cannot be claimed. Apart from
these, there are certain other situations where ITC will be reversed.

ITC will be reversed (not allowed) in the following cases:

● If invoices are not paid within 180 days of issue.
● If a credit note is issued to the Input Service Distributor (ISD) by the seller.
● If inputs are used partly for business and partly for exempt supplies or personal use.
● If capital goods are used partly for business and partly for exempt supplies or personal
use.

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● If the reversed ITC is less than what is required, the difference will be added to the output
liability with interest.
Items on which ITC is not allowed:
a) Motor vehicles (except in specific cases).
b) Services like food and beverages, outdoor catering, beauty treatment, health services, etc.
(except when used to deliver the same category of services or as part of a composite
supply).
c) Membership in a club, health, and fitness centre.
d) Rent-a-cab, health insurance, life insurance (except in specific cases).
e) Works contract service for the construction of an immovable property.
f) Goods and/or services used for personal use.
g) Goods or services received by a non-resident taxable person (except imported goods).
h) Goods lost, stolen, destroyed, disposed of as gifts or free samples.
i) ITC claimed on tax due to fraud or other specified reasons.
j) Standalone restaurants cannot claim ITC on inputs but charge a lower GST rate.
k) Expenditure on Corporate Social Responsibility (CSR) initiatives.

REGISTRATION

Benefit of Registering the GST

The GST is an indirect tax in India that replaces many other indirect taxes. It offers several
benefits:
a) No double taxation: GST eliminates the cascading effect, which means goods are not
taxed multiple times, reducing the tax burden on businesses.
b) Simplified compliance: GST combines multiple indirect taxes into a single tax regime,
reducing the number of filings and making compliance easier.
c) Easy registration: Registration can be done online through the GST portal, saving time
and effort.
d) Legal recognition: Registering for GST establishes a person as a recognized supplier of
goods and services in the eyes of the law.
e) Input Tax Credit: Registered individuals can claim and utilize input tax credits for taxes
paid on inputs, promoting transparency in the tax collection system.

Documents required to register

To register for GST, you need to provide certain documents:
a) PAN Card: You need to provide your Permanent Account Number (PAN) details.
b) Aadhar Card: You need to submit a copy of your Aadhar card.
c) Business Address Proof: You need to provide proof of the address where your business
is located or where you plan to set it up.
d) Bank Account Statement: You need to submit your bank account statement or a
cancelled cheque.
e) Digital Signature: You need to have a digital signature for the registration process.
f) Letter of Authorization: You may need to provide a letter of authorization or board
resolution if someone else will be signing on behalf of your business.
g) Incorporation Certificate: If you have formed a company, you need to submit the
incorporation certificate.

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h) Directors' Identity and Address Proof: If there are directors in your company, you need
to provide their identity and address proof.

Person liable for Registration (Section 22)

a) According to Section 22(1) of the CGST Act, if a supplier's taxable supply exceeds
twenty lakh rupees in a financial year, they must register for GST.
b) The aggregate turnover, as defined in Section 2(6), includes the total value of taxable
supplies, exempt supplies, exports of goods or services, and inter-state supplies by
persons with the same PAN, excluding certain taxes. It represents the total turnover of all
branches of the supplier across India.
c) For example, if a supplier has two showrooms in Delhi and Haryana and their total sales
exceed twenty lakh rupees, they need to register in both states. However, if they only
make exempt supplies in Haryana and their total sales exceed twenty lakh rupees, they
only need to register in Delhi because they have taxable supplies there.
d) In special category states, the threshold for aggregate turnover is ten lakh rupees instead
of twenty lakh rupees. Special category states exclude Jammu and Kashmir, Arunachal
Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand.

Persons not liable for Registration (Section 23)

● According to Section 23 of the CGST Act, certain people are not required to register for
GST.
● If a person is involved in the business of selling goods or providing services and they are
not liable to pay tax or completely exempted from tax under the CGST Act or the
Integrated Goods and Services Tax Act, they do not need to register.
● Agriculture income is already exempted under the Income Tax Act, 1961. Therefore,
farmers who are involved in the supply or production of crops do not need to register for
GST.
● The government, based on the recommendations of the GST Council, can issue
notifications specifying individuals who are not liable for registration or are exempted
from registering under this Act.

Compulsory Registration in certain cases (Section 24)

According to Section 24 of the CGST Act, certain categories of persons are required to register
under the act. These categories include:
1. Inter-State taxable supply: If a person is supplying goods and services from one state to
another state, they must register.
2. Casual taxable person: When a person conducts business occasionally in a state or
union territory where they have no fixed place of business, they are considered a casual
taxable person and must register.
3. Reverse charge mechanism: If a person is liable to pay taxes under the reverse charge
mechanism, they must register.
4. Electronic commerce operator: If an electronic commerce operator is involved in
specified services where the tax on intra-state supplies is to be paid by them, they must
register.
5. Non-resident taxable person: A non-resident person who occasionally supplies goods
and services in India without a fixed place of business or residence must register.

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6. Person required to deduct tax: Any person required to deduct tax under Section 51 of
CGST, regardless of separate registration, must register.
7. Taxable supply on behalf of another person: If a person makes taxable supplies on
behalf of other taxable people as an agent or otherwise, they must register.
8. Input Service Distributor: Businesses that receive invoices for services used by their
branches and distribute the tax by issuing ISD invoices must register as an Input Service
Distributor.
9. Collection of tax at source: Electronic commerce operators who are required to collect
tax at source under Section 52 of CGST must register.
10. Supplying online information outside India: Persons supplying online information and
database access or retrieval services outside India must register.
The government may also issue notifications specifying other persons who are liable for
compulsory registration based on the recommendations of the GST council.

Procedure for Registration (Section 25)

According to Section 25 of the CGST Act, the procedure for registration is as follows:
1. Application for registration: If a person meets the criteria for registration under Section
22 or 24 of the CGST Act, they must apply for registration within 30 days from the date
they become liable for registration in every state or union territory.
2. Approval of application: Once the application is submitted, the proper officer must take
action within 3 days of submission or within 7 days of receiving any requested
clarifications. If no response is received within this time, the application is deemed to be
approved.
3. Registration for casual or non-resident taxable person: Casual taxable persons or non-
resident taxable persons must apply for registration at least 5 days before commencing
business.
4. Registration in coastal states: If a person supplies goods and services from the
territorial waters of India, they must obtain registration in the coastal state or union
territory nearest to the appropriate baseline.
5. Separate registration for multiple businesses: A person engaged in multiple businesses
in a state or union territory must apply for separate registrations.
6. Voluntary registration: If a person is not liable to register under Section 22 or 24, they
may still choose to register voluntarily. All applicable provisions for registered persons
will apply to them.
7. Treatment as a distinct person: If a person is registered in multiple states or union
territories, they will be treated as a distinct person.
8. Permanent Account Number (PAN): To be eligible for registration, a person must have
a PAN issued under the Income Tax Act, 1961.
9. Verification and Unique Identity Number (UIN): The authority will verify the
registration details and issue a Unique Identity Number (UIN). If any errors are found
during verification, the authority has the power to reject the registration.
10. Certificate of registration: A certificate of registration will be issued in the prescribed
form and with effect from the prescribed date.

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TAX INVOICE
Under the GST regime, an "invoice" or "tax invoice" refers to the tax invoice mentioned in
section 31 of the CGST Act, 2017. This section requires the issuance of an invoice or a bill of
supply for every supply of goods or services or both. It is necessary for a person providing goods
or services to issue an invoice.
The type of invoice to be issued depends on the category of the registered person making the
supply. For instance, if a registered person is making taxable supplies, they need to issue a tax
invoice. However, if a registered person deals only in exempted supplies or is under the
composition scheme (composition dealer), they need to issue a bill of supply instead of a tax
invoice.
The invoice should include details such as description, quantity, value, and other prescribed
particulars as per rule 46 of the CGST Rules, 2017. An invoice or bill of supply is not required to
be issued if the value of the supply is less than Rs. 200, subject to specified conditions.

Importance of Tax Invoice

● It serves as proof of the supply of goods or services, allowing the recipient to claim Input
Tax Credit (ITC). Without a tax invoice or debit note, a registered person cannot avail
themselves of the input tax credit.
● GST is charged at the time of supply, and the invoice plays a crucial role in determining
the timing. For goods, the time of supply is the date of invoice issuance, while for
services, it is the date of invoice issuance or receipt of payment, whichever comes earlier.
● It is the primary document that demonstrates the supply made by the supplier and is
essential for the recipient to claim input tax credit.

When a Tax Invoice or a Bill of Supply should be issued by a Registered Person: Goods
● When a registered person is supplying taxable goods, they must issue a tax invoice before
or at the time of removing the goods (if they involve movement) or delivering/making
them available to the recipient. This tax invoice should include details such as the
description, quantity, value of goods, tax charged, and other prescribed particulars as per
the CGST Rules.
● The government has the authority to specify through notification, based on the
recommendations of the Council, the categories of goods or supplies for which a tax
invoice must be issued. The notification will also define the time frame and manner in
which the tax invoice should be issued.

Contents of Invoice
An invoice must contain certain fields as per the Invoice rules, although there is no specific
format prescribed. The following fields (only applicable ones) need to be filled in an invoice:
a) Name, address, and GSTIN of the supplier
b) A consecutive serial number unique for a financial year
c) Date of issue
d) Name, address, and GSTIN or UIN of the recipient if registered.
e) Name, address, and delivery address of the recipient if unregistered and the value of
taxable supply is ₹50,000 or more.
f) HSN code for goods or Accounting Code for services
g) Description of goods or services
h) Quantity for goods or unit/Unique Quantity Code
i) Total value of the supply of goods or services
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j) Taxable value considering any discount or abatement.

k) Rate of tax (central tax, state tax, integrated tax, union territory tax, or cess).
l) Amount of tax charged (central tax, state tax, integrated tax, union territory tax, or cess).
m) Place of supply for inter-state trade or commerce.
n) Delivery address if different from the place of supply.
o) Indication if tax is payable on a reverse charge basis
p) Signature or digital signature of the supplier or authorized representative.
However, in the case of electronic invoices, bills of supply, tickets, or similar documents issued
in accordance with the provisions of the Information Technology Act, 2000, the signature or
digital signature of the supplier or authorized representative is not required.

Credit and Debit Notes

Credit Note
● When a tax invoice has been issued for the supply of goods or services, but it is later
discovered that the value or tax charged in the invoice is incorrect or there is a return of
goods, the supplier can issue a credit note to the recipient.
● The supplier needs to declare the details of the credit note in the return for the relevant
month. This declaration should be made no later than September following the end of the
financial year in which the supply was made or the date of furnishing the annual return,
whichever is earlier.
● The tax liability of the supplier will be adjusted based on the credit note issued.
● However, if the tax and interest on such supply have been passed on to another person,
the supplier cannot reduce their output tax liability.
Debit Note
● On the other hand, if a tax invoice has been issued for the supply of goods or services, but
it is later discovered that the value or tax charged in the invoice is less than what is
actually payable, the supplier can issue a debit note to the recipient. The registered person
who issues a debit note needs to declare the details of the debit note in the return for the
relevant month, and the tax liability will be adjusted as prescribed.
● These credit and debit notes serve as adjustments to the original tax invoice when there
are changes in the value or tax charged for the supply of goods or services.

ACCOUNTS AND AUDIT

GST audit involves reviewing and checking the records, returns, and documents of a taxable
person. The goal is to ensure that the declared turnover, taxes paid, refund claims, and input tax
credit availed are accurate and in line with GST regulations. The audit also assesses whether the
taxable person has complied with the provisions of GST. Overall, the audit process helps ensure
transparency and accountability in the GST system.
Audit under GST law is a process of reviewing the records maintained by a taxable person to
ensure the accuracy of information provided, taxes paid, refund claims, and input tax credit
taken.
It helps analyze the taxpayer's compliance with the provisions of the GST Act.
The definition of audit is provided in section 2(13) of the Central Goods and Services Tax Act,
2017.

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Types of Audit under GST There are three types of audits prescribed under GST:
● Audit by Chartered Accountant (mandatory if turnover exceeds Rs. 2 Crores)
● Normal Audit by the Commissioner (Tax Authority)
● Special Audit by Chartered Accountant (directed by the GST Officer)

Circumstances Requiring GST Audit

GST audit is required under the following three circumstances:
● Audit by Chartered Accountant (mandatory if turnover exceeds Rs. 2 Crores)
● Normal Audit by the Commissioner (Tax Authority)
● Special Audit by Chartered Accountant (directed by the GST Officer)

Audit Limit under GST for a Financial Year

● The audit limit for GST is Rs. 2 Crores.
● Every registered person whose turnover exceeds this limit must get their accounts audited
by a Chartered Accountant (CA) or a Cost Accountant.
● They must furnish a copy of the audited annual accounts and reconciliation statement,
certified in Form GSTR 9C.

Documents to be Maintained under GST

● Section 35 of the CGST Act 2017 specifies the documents that a registered person must
maintain.
● The registered person must keep and maintain accurate accounts of the following at their
principal place of business
o Production or manufacture of goods
o Inward and outward supply of goods or services
o Stock of goods
o Input tax credit availed.
o Output tax payable and paid.
● These records can be maintained electronically.
● If supplies are made from different business places, each place must maintain its
accounting records.

Records for Warehouse, Godown, and Transporter

● Owners or operators of warehouses, godowns, or any other places used for storing goods,
as well as transporters, must maintain records of consigners, consignees, and relevant
details of the goods in the prescribed manner.

Consequences of Not Maintaining Accounting Records

● If accounting records are not maintained as specified or if the registered person fails to
account for goods or services in accordance with the provisions, the proper officer can
determine the amount of tax payable on the unaccounted goods or services.
● The provisions of section 73 or section 74, as applicable, will be applied to determine the
tax.

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Duration for Maintaining Accounting Records under GST

● Every registered person must keep accounting books for up to 72 months from the due
date of filing the annual return for a particular year.
● For example, for the financial year 2017-18, accounting records must be kept until
December 2024.
● In case of disputes, appeals, revisions, or ongoing investigations, the records must be
retained for one year after the final disposal of such proceedings or for the period
specified above, whichever is later.

Maintenance of Records for Multiple Places of Business

● If a registered person has multiple places of business specified in the certificate of
registration, they must maintain accounts and records separately for each place of
business.

Audit of Accounts by Chartered Accountant

● A registered person whose turnover exceeds the prescribed "GST audit turnover limit"
(currently Rs. 2 Crores) must get their accounts audited by a Chartered Accountant (CA)
or a Cost and Management Accountant (CMA).
● They must submit the audited annual accounts, reconciliation statement, and the Annual
Return (Form GSTR-9C) electronically.
● The audit report should cover all necessary information to determine the tax compliance
of the registered taxable person.
● The auditor must review all inward and outward supplies, taxable or not, and explain the
treatment of input tax paid.

Audit by Tax Authorities

● The Commissioner or an authorized officer can undertake an audit of any registered
person for a prescribed period, frequency, and manner.
● The audit can be conducted at the place of business or in the office of the registered
person.
● The registered person must be given at least fifteen working days' notice before the audit.
● The audit must be completed within three months from the start date, with a possible
extension of up to six months if necessary.
● During the audit, the authorized officer may request necessary facilities, verification of
books of accounts, and submission of required information to ensure timely completion.

Findings and Report of Audit by Tax Authorities

● After the audit, the proper officer must inform the registered person within 30 days about
the findings, their rights, obligations, and reasons for such findings in Form ADT-02.
● The officer and their team will verify various aspects such as documents, turnover
correctness, exemptions, deductions claimed, tax rates applied, input tax credit, and
refund claims.

Special Audit
● If an officer believes that the declared value or credit availed is incorrect, they may direct
a registered person to get their records, including books of account, examined and audited
by a Chartered Accountant or Cost Accountant nominated by the Commissioner.

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● The nominated auditor must submit a report within 90 days (extendable by another 90
days).
● The special audit can be conducted even if the registered person's accounts have been
audited under other provisions.
● The expenses of the special audit, including the auditor's remuneration, will be
determined and paid by the Commissioner.

OFFENCES AND PENALTIES

An offence under GST refers to breaking the rules and laws outlined in the GST Act. There are
21 different offences categorized as follows:

Fake or wrong invoices:

● Supplying goods/services without an invoice or issuing a false invoice.
● Issuing invoices without actually supplying goods/services or violating GST provisions.
● Using someone else's identification number to issue invoices.

Fraud:
● Submitting fake financial records/documents or filing fake returns to evade tax.
● Providing false information or not providing information during proceedings.

Tax evasion:
● Collecting GST but not submitting it to the government within three months.
● Failing to deposit collected GST to the government within three months, contrary to
provisions.
● Obtaining a fraudulent refund of CGST/SGST.
● Taking or utilizing input tax credit without actually receiving goods/services.
● Deliberately suppressing sales to evade tax.

Supply/transport of goods:
● Transporting goods without proper documents.
● Supplying or transporting goods that are known to be confiscated.
● Destroying or tampering with seized goods.

Others:
● Failing to register under GST when required by law.
● Not deducting or deducting a lesser amount of TDS where applicable.
● Not collecting or collecting a lesser amount of TCS where applicable.
● Violating rules as an Input Service Distributor while taking or distributing input tax
credit.
● For fraud cases, the penalty is 100% of the tax due or a minimum of Rs. 10,000. For
cases under fake invoicing and other heads, the penalty is equal to the tax evaded or the
input tax credit availed or passed on.

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Penalties for different offences under GST include:

a) Delay in filing GSTR: Late fee of Rs. 200 per day (Rs. 100 each under CGST and SGST)
with a maximum of Rs. 5,000 (no late fee for IGST).
b) Not filing GSTR: Penalty of 10% of the tax due or Rs. 10,000, whichever is higher.
c) Committing fraud: Penalty of 100% of the tax due or Rs. 10,000, whichever is higher
(high-value fraud cases may also involve jail term).
d) Assisting in committing fraud: Penalty up to Rs. 25,000.
e) Opting for composition scheme when ineligible: Demand and recovery provisions apply.
f) Wrongfully charging higher GST rate: Penalty of 100% of the tax due or Rs. 10,000,
whichever is higher (if additional GST collected is not submitted).
g) Not issuing an invoice: Penalty of 100% of the tax due or Rs. 10,000, whichever is
higher.
h) Not registering under GST: Penalty of 100% of the tax due or Rs. 10,000, whichever is
higher.
i) Incorrect invoicing: Penalty of Rs. 25,000.
j) For minor breaches (where the tax amount is less than Rs. 5,000), penalties are reduced,
and warnings may be issued by the tax authority.

GST COUNCIL
The GST Council is a significant body to streamline India's goods and services tax structure. It
supersedes the previous complex tax system and introduces new methods to simplify taxation for
taxpayers. Additionally, it oversees the entire taxation process to assist relevant departments and
prevent fraudulent activities.
The GST Council comprises vital members such as the Union Finance Minister as the Chairman,
the Union Minister of State (who is in charge of Revenue or Finance), and nominated ministers
from each State Government. The Council also includes an Ex-officio Secretary and a permanent
invitee from the Central Board of Excise and Customs.

Composition of the Goods and Services Tax Council

The GST Council is a joint platform for both the Central as well as the State Government and it
includes the following members:
 The Union Finance Minister, who is the Council’s Chairperson
 The Union Minister of State in charge of Revenue or Finance
 The Minister handling finance, taxation, or any other nominated Minister from each state
government
 The members of the state are expected to select a Vice-chairperson and decide on his/her
term.
 As per the Union Cabinet’s decision, the Chairperson of the Central Board of Excise and
Customs (CBEC) is appointed as a permanent invitee for all the proceedings that take
place within the Council

Functions of the Goods and Services Tax Council

The prime function of the Council is to make recommendations to both the central and state
governments on different aspects of GST:
a) To consolidate taxes, cesses, and surcharges levied by the central, state, and local bodies
to be merged into GST.
b) To decide the goods and services that need to be subjected to or exempted from GST.

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c) To Formulate model GST laws, principles of levy, and apportionment of GST on inter-
state transactions.
d) To establish threshold turnover limits for GST exemptions.
e) To set GST rates, including floor rates with bands.
f) To propose special rates during natural calamities or disasters.
g) To address certain state-specific provisions.
h) To recommend the GST implementation date for specific petroleum products.
i) To recommend compensation to states for revenue loss due to GST implementation, for
five years. Based on these recommendations, the Parliament determines the compensation
for the states.
The GST Council has played an important role in streamlining India's tax system. The decisions
that it has made have significantly benefited businesses across the country.

Some of the advantages include:

a) Predictability: Consistent tax rates and clear guidelines help businesses plan and budget
more effectively.
b) Simplified Compliance: A streamlined processes reduces the administrative burden on
businesses.
c) Transparency: Open decision-making nurtures trust and ensures businesses understand
the rationale behind tax policies.
d) Global Alignment: GST's alignment with international standards improves India's
competitiveness.

Conclusion
The GST Council serves as a pivotal decision-making body in India's taxation landscape, striving
to streamline and regulate the GST system to benefit taxpayers and the economy. Its proactive
approach to addressing taxation challenges reflects the government's commitment to fostering a
transparent and efficient tax regime.

TYPES OF ASSESSMENT UNDER GST

a) Self-assessment
b) Provisional assessment
c) Scrutiny assessment
d) Best judgment assessment
e) Assessment of non-filers of returns
f) Assessment of unregistered persons
g) Summary assessment

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Types of Assessment under GST

There are six types of assessment under GST:
1. Self-Assessment: This is the first level of assessment, which is done by the taxpayers
themselves. In self-assessment, the taxpayer calculates and pays their own tax
liability, and files the returns accordingly. This is done on a monthly, quarterly or
annual basis, depending on the turnover of the taxpayer.
2. Provisional Assessment: Provision assessment can be resorted to only in two
possible scenarios 1st is when the registered person is unable to determine the value
of supply and 2nd is when registered person is unable to determine the rate of tax.
Apart from the above two scenarios, provisional assessment cannot be applied by the
taxable person for any other purpose.
Within the 90 days from the receipt of such request the proper office shall pass an order,
allowing payment of tax on a provisional basis at such rate or on such value as may be
specified by him. The final assessment order should be passed within six months from the
date of communication of provisional assessment order.
3. Scrutiny Assessment: Scrutiny assessment is done by the tax authorities to verify the
correctness of the returns filed by taxpayers. This is applicable for
onlyregisteredpersonsandnottounregisteredpersons.Noticeundersection 61 can be issued
only if return has been filed by the registered persons. The tax authorities can issue a
notice to the taxpayer, asking them to provide additional information or documents to
support their returns. The tax authorities can also conduct an audit of the taxpayer’s
records. Based on the information obtained, the tax authorities can issue an assessment
order, which specifies the final amount of tax to be paid by the taxpayer.
4. Best Judgment Assessment: Best judgment assessment is done when the taxpayer fails
to furnish the return under Section 39or Section 45, even after the service of a notice
under Section46, the proper office may assess the tax liability of the said person to the
best of his judgment taking into account all the material which is available or he has
gathered and issue an assessment order within a period of five years from the date
specified under section 44 for furnishing of the annual return for the financial year to
which the tax not paid relates.
5. Assessment of Unregistered Persons: When a taxable person fails to obtain registration
even though liable to do so or whose registration has been cancelled under sub section (2)
of Section 29 but who was liable to pay tax, the proper officer may proceed to assess the
tax liability of such taxable person to the best of his judgement for the relevant tax
periods. He will issue an assessment order within a period of five years from the date
specified under section 44 for furnishing of the annual return for the financial year to
which the tax not paid relates. No such assessment order shall be passed without giving
the person an opportunity of being heard.

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6. Summary Assessment: Summary assessment is done in certain special cases,

such as when the tax authorities believe that the taxpayer is trying to evade tax or
when there is a threat to revenue. There should be evidence available with the
proper officer that tax is payable and remains unpaid. Prior permission is required
from the Additional Commissioner and Joint Commissioner. It is believed that any
delay in assessment would harm the revenue’s interest. If the taxpayer to whom the
liability pertains is not ascertainable, then such liability is fastened to the person in
charge of such goods. Generally summary assessment is resorted to in cases of
absconding and defaulting taxpayers. There is no time limit prescribed for passing
of order. The section does not mention that the said person should be given an
opportunity of being heard

The procedure for assessment under GST is as follows:

1. Issue of Notice:
The tax authorities can issue a notice to the taxpayer, asking them to provide
additional information or documents to support their returns. The notice must specify
the reason for the assessment, the period under assessment, and the nature of the
information or documents required.
2. Conduct of Audit:
The tax authorities can conduct an audit of the taxpayer’s records to verify the
correctness of their returns. The audit can be done on-site or off-site, and the taxpayer
must provide all necessary information and documents to the auditors.
3. Issue of Assessment Order:
Based on the information obtained through the notice and audit, the tax authorities can
issue an assessment order. The assessment order specifies the final amount of tax to
be paid by the taxpayer. The assessment order can also include interest, penalties, and
fines, if applicable.
4. Rectification of Errors:
If the taxpayer disagrees with the assessment order, they can request rectification of
errors. The request must be made within 30 days of the receipt of the assessment
order. The tax authorities will then review the request and issue a revised assessment
order if necessary.
5. Appeal:
If the taxpayer is still dissatisfied with the assessment order after rectification, they
can file an appeal with the appropriate appellate authority. The appeal must be filed
within three months of the receipt of the assessment order. The appellate authority
will then review the case and issue a final order.