Goods and Services Tax

GOODS
and
SERVICES TAX
College of Agricultural Banking, RBI, PUNE
OCTRAI

Limitation of the previous Indirect tax structure

Taxable value of Goods or
Services?
The value base on which tax may be applied differ from one tax law to other
Type of Tax Taxable value
Basic Customs Duty (BCD) Import Cost
CVD (Countervailing Duty) Import Cost+ BCD
Education Cesses BCD+CVD (in case of import ),

Central Excise Duty (in case of manufacture)
Service tax (in case of provision of service)
SAD (Special Additional Import Cost + BCD + CVD + Cesses
Duty)
Central Excise Duty / Value of goods upto the place of removal.
State Excise Duty In certain cases, it could be also based on the Retail Sale
Price less specified abatement
VAT Sale consideration +Central Excise duty+ costs incurred
upto the place of delivery
Service Tax Gross Amount Charged for provision of services plus
reimbursable costs other than as a pure agent
Entry tax / Octroi / LBT Value of goods plus costs incurred upto the point of entry
into the State / Local Body
Further, Valuation Rules are prescribed to take care of different situations.
Issues with the previous tax
system
1. Multiplicity of indirect taxes 9. Valuation issues
2. Different Taxable events 10. Multiple penalties
3. Taxable values 11. Frequent changes in multiple
4. Tax rates laws
5. Threshold limits 12. Litigation
6. Exemptions 13. Compliances
7. Set offs 14. Pricing
8. Double taxation-conflicts 15. Exports
16. Consumers- higher price
17. Revenues
There were a total of 1.4 lakh cases, which were pending for refund with the
VAT department with the pendency dating back to 2005 with Delhi government
https://timesofindia.indiatimes.com/city/delhi/72000-refund-cases-cleared-in-6-months/articleshow/57262503.cms
So the GST
• What is GST?
• Goods and Services Tax
• What is so good about it?

• One tax – One Nation
• Manufacturing – Trading - Service
• Who is first in GST?

• France in 1954
7
Overview - GST LAW
Birds eye view
25 Chapters
162 Sections
4 Schedules
itt ed
m er
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m w
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Sa entr
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Dual Tax Levy - GST

What are the Taxes subsumed
under GST?

Salient Features?
• Applicable on the supply of goods or services

• Destination based consumption tax
• Dual GST with the Centre and State
simultaneously levying
• Apply to all goods other than alcoholic liquor for
human consumption and five petroleum products
• Tobacco and tobacco products would be subject
to GST

What is good?
 Sec 2 (52)
 “goods” means every kind of movable property other than money and
securities but includes actionable claim, growing crops, grass and
things attached to or forming part of the land which are agreed to be
severed before supply or under a contract of supply;
 The words ‘but includes’ is an exception to the “exclusion” of money

and securities;
 Actionable claim, other than lottery, betting and gambling will not be
treated as supply of goods or services by virtue of Schedule III;
 Intangibles like copyright and trademarks would continue to be covered

under ‘goods’.
What is Service?
Sec – 2(102)
“Services” means anything other than goods.
Explanation 1: Includes transaction in money but does not include money

and securities
Explanation 2: Activity relating to the use of money or its conversion by
cash or by any other mode from one form, currency or denomination to
another form, currency or denomination for which a consideration is
charged.

What is Supply?
Section 7(1) of the CGST Act, 2017
1. all forms of supply of goods or services or both such as sale, transfer,

barter, exchange, licence, rental, lease or disposal made or agreed to be
made for a consideration by a person in the course or furtherance of
business;
2. import of services for a consideration whether or not in the course or
furtherance of business;
3. the activities specified in Schedule I, made or agreed to be made
without a consideration; and
4. the activities to be treated as supply of goods or supply of services as
referred to in Schedule II.

Is there any threshold
Limit?
Goods: Tax payers with an aggregate turnover in a
financial year up to Rs. 40 Lakhs would be exempt
from GST.
For special category states – Rs.20 lakhs
Services: Tax payers with an aggregate turnover

in a financial year up to Rs. 20 Lakhs would be
exempt from GST.
For special category states – Rs.10 lakhs

Aggregate turnover
• Aggregate turnover means the aggregate value

of all taxable supplies (excluding the value of
inward supplies on which tax is payable by a
person on reverse charge basis)
• Exempt supplies
• Exports of goods or services or both
• Inter-State supplies of persons having the same
Permanent Account Number, to be computed
on all India basis.
• Excludes central tax, State tax, Union territory
tax, integrated tax and cess

What is composition
scheme?
• Composition Scheme is a simple and easy scheme
under GST for taxpayers.
• Small taxpayers can get rid of tedious GST
formalities and pay GST at a fixed rate of turnover.
Why was Composition Scheme
introduced?
The GST regime has brought in many changes

along with the following:
•Increase in the number of GST returns
•Payment of tax on a monthly basis
•Small and new taxpayers will find it difficult to
comply with so many rules.

Who can opt for Composition
Scheme
• A taxpayer whose turnover is below Rs 1.5 crore

can opt in for Composition Scheme- Goods only.
• In case of North-Eastern states and Himachal
Pradesh, the limit is now Rs 75 lakh – Goods
only.
• As per 32nd GST Council Meeting held on 10th
Jan 2019, Service Providers can opt into the
Composition Tax Scheme, and the Government
has set the threshold turnover for service
providers at Rs. 50 lakhs to be eligible for this
scheme.

Who cannot opt for
Composition Scheme
• Manufacturer of ice cream, pan masala, or

tobacco
• Casual taxable person or a non-resident taxable
person
• Businesses which supply goods through an e-
commerce operator
• Person making inter state supply

What are the conditions?
• No Input Tax Credit can be claimed by a dealer opting for
composition scheme
• The dealer cannot supply GST exempted goods
• The taxpayer has to pay tax at normal rates for transactions under
the Reverse Charge Mechanism
• If a taxable person has different segments of businesses (such as
textile, electronic accessories, groceries, etc.) under the same PAN,
they must register all such businesses under the scheme collectively
or opt out of the scheme.
• The taxpayer has to mention the words ‘composition taxable person’
on every notice or signboard displayed prominently at their place of
business.
• The taxpayer has to mention the words ‘composition taxable person’
on every bill of supply issued by him.

How can a taxpayer opt for
composition scheme?
• To opt in for composition scheme a taxpayer has

to file Form GST CMP-01 or GST CMP-02 with the
government.
• This can be done online after logging into
the GST Portal.

What documents should a
composition dealer issue while
making supply?
• A composition dealer cannot issue tax invoice.
This is because a composition dealer cannot
charge tax from their customers.
• They need to pay tax out of their own pocket.
• Hence, the dealer has to issue a Bill of Supply.
What are the GST rates for a
composition dealer

How should GST payment be
made by a composition dealer?
• GST Payment has to be made out of pocket.

• It means that a dealer opting for Composition
Scheme cannot charge GST in their Invoice.
• The consumer/ the receiver of supplies will not be
liable to pay GST to the supplier who has opted
for Composition Scheme.

What are the returns to be
filed by a composition
dealer?
• A dealer is required to file a quarterly
return GSTR-4 by 18th of the month after the
end of the quarter. Also, an annual return GSTR-
9A has to be filed by 31st December of next
financial year.
• Also, note that a dealer registered under
composition scheme is not required to maintain
detailed records.

What are the advantages of
Composition Scheme?
• Lesser compliance (returns, maintaining books of

record, issuance of invoices)
• Limited tax liability
• High liquidity as taxes are at a lower rate

What are the disadvantages
of Composition Scheme?
• A limited territory of business. The dealer is

barred from carrying out inter-state transactions
• No Input Tax Credit available to composition
dealers
• The taxpayer will not be eligible to supply goods
through an e-commerce portal

What is input tax credit?
• Input credit means at the time of paying tax on

output, you can reduce the tax you have already
paid on inputs and pay the balance amount.

What is Input Tax Credit
(ITC)

Who can claim ITC?
• ITC can be claimed by a person registered under

GST only if he fulfills ALL the conditions as
prescribed.
• The dealer should be in possession of tax invoice
• The said goods/services have been received
• Returns have been filed.
• The tax charged has been paid to the
government by the supplier.
• When goods are received in installments ITC can
be claimed only when the last lot is received.

What is Reverse Charge?
• Normally, the supplier of goods or services pays

the tax on supply.
• In the case of Reverse Charge, the receiver
becomes liable to pay the tax, i.e., the
chargeability gets reversed.

Reverse Charge

Harmonized System Code
• The Harmonized System is an international
nomenclature for the classification of products.
• It allows participating countries to classify traded goods
on a common basis for customs purposes.
• At the international level, the Harmonized System
(HS) for classifying goods is a six-digit code system
• The HS comprises approximately 5,300 article/product
descriptions that appear as headings and subheadings,
arranged in 99 chapters, grouped in 21 sections.

Harmonized System Code
• The six digits can be broken down into three parts.

• The first two digits (HS-2) identify the chapter the
goods are classified in, e.g. 09 = Coffee, Tea, Maté and
Spices.
• The next two digits (HS-4) identify groupings within
that chapter, e.g. 09. 02 = Tea, whether or not
flavoured.
• The next two digits (HS-6) are even more specific, e.g.
09.02.10 Green tea (not fermented)...
• Up to the HS-6 digit level, all countries classify
products in the same way

Harmonized System Code -
India

Registration

Registration
• Any business in India that supplies services

only with turnover exceeding Rs. 20 lakh (Rs. 10
lakh for Special category States) has to get
registered under GST.
• Any business in India that supplies Goods
only with turnover exceeding Rs. 40 lakh (Rs. 20
lakh for Special category States) has to get
registered under GST.

Businesses that need to register
under GST irrespective of their
turnover
• Every person who is registered under the Pre-
GST law (i.e., Excise, VAT, Service Tax etc.)
needs to register under GST.
• When a business which is registered has been
transferred to someone, the transferee shall take
registration with effect from the date of transfer.
• Anyone who drives inter-state supply of goods**
• Casual taxable person

• Non-Resident taxable person
• Agents of a supplier
• Those paying tax under the reverse
charge mechanism
• Input service distributor
• E-commerce operator or aggregator**
• Person who supplies via e-commerce aggregator
• Person supplying online information and database
access or retrieval services from a place outside
India to a person in India, other than a registered
Who is a Casual Taxable
Person?
It means a person who occasionally undertakes
transactions involving supply of goods or services
or both in the course or furtherance of business,
whether as principal, agent or in any other capacity,
in a State or a Union territory where he has no fixed
place of business.

Who is a Non-resident Taxable
Person?
• Non-resident Taxable Person means any person
who occasionally undertakes transactions
involving supply of goods or services or both,
whether as principal or agent or in any other
capacity, but who has no fixed place of business
or residence in India in terms of Section 2 (77).

Who is an Input Service
Distributor?
• ‘Input Service Distributor’ means an office of the

supplier of goods/services which receives tax
invoices on receipt of input services and issues
tax invoices for the purpose of distributing the
credit of CGST/SGST/IGST paid on the said
services to your branch with same PAN.

Updates
•Job workers making inter-state supply of services

to a registered person are exempted from
registration if their turnover is below 20lakhs (10
lakhs for Special state) Except Goldsmiths

What are the
documents/details required
to register under GST?

What is the GST registration
process?
• https://www.gst.gov.in/help/video/taxpayerregist
rationparta
• https://www.gst.gov.in/help/video/taxpayerregist
rationpartb

What is the fees applicable
to register under GST?
• Businesses can register for GST and obtain

GSTIN free of cost.

What is GSTIN?

Who is not liable to
Register?
• Any person engaged exclusively in the
business of supplying goods or services or both
that are not liable to tax or wholly exempt from
tax under this Act or under the Integrated Goods
and Services Tax Act.
• At present 149 types of goods are exempted

from GST purview.
• An agriculturist, to the extent of supply of

produce out of cultivation of land.

Suo Moto Registration
• Where, pursuant to any survey, enquiry, inspection, search or any other
proceedings under the Act, the proper officer finds that a person liable to
registration under the Act has failed to apply for such registration, such officer
may register the said person on a temporary basis and issue an order in FORM
GST REG- 12.
• The registration granted under sub-rule (1) shall be effective from the date of
order granting registration.
• Every person to whom a temporary registration has been granted under sub-rule
(1) shall, within thirty days from the date of the grant of such registration, submit
an application for registration in the form and manner provided in rule 1 or rule 5
unless the said person has filed an appeal against the grant of temporary
registration, in which case the application for registration shall be submitted within
thirty days from the date of issuance of order upholding the liability to registration
by the Appellate Authority.
• The provisions of rule 2 and rule 3 relating to verification and issue of certificate of
registration shall, mutatis mutandis, apply to an application submitted under sub-
rule (3).
• The GSTIN assigned pursuant to verification under sub-rule (4) shall be effective
from the date of order granting registration under sub-rule (1).

Voluntary Registration
• A person may opt to get himself registered
voluntarily under GST even if he is not liable to be
registered.
• All the provisions of GST applicable to a registered
taxable person will similarly apply to such a
voluntarily registered person also, i.e., he will be
treated as a normal taxable person.

Voluntary Registration -
Advantages
• Become more competitive– They will be more competitive than other
small business as buying from them will ensure input credit.
• Take input credit– Voluntarily registered persons can take input credit
on their own purchases and input services like legal fees, consultation fees
etc.
• Provide input tax credit to customers– As they can issue taxable
invoices, they can collect GST. Their customers can take input credit on
their purchases
• Make inter-state sales without many restrictions– They can make
inter-state sales without many restrictions (they will be treated as casual
taxable persons). Thus, it widens the potential market for SMEs.
• Register on e-commerce sites or open own e-commerce website–
This will widen the scope of their market further.
• Be compliant and have a good rating– Registration for GST will ensure
that the business is compliant (because most returns are automated).
This, in turn, will give a good GST rating and help to boost the business.

THANK YOU

Goods and Services Tax

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GOODS

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

Type of Tax Taxable value

Basic Customs Duty (BCD) Import Cost

CVD (Countervailing Duty) Import Cost+ BCD

Education Cesses BCD+CVD (in case of import ),

• What is so good about it?

• Who is first in GST?

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• Applicable on the supply of goods or services

College of Agricultural Banking, RBI, PUNE

 The words ‘but includes’ is an exception to the “exclusion” of money

 Intangibles like copyright and trademarks would continue to be covered

Explanation 1: Includes transaction in money but does not include money

College of Agricultural Banking, RBI, PUNE

1. all forms of supply of goods or services or both such as sale, transfer,

College of Agricultural Banking, RBI, PUNE

Services: Tax payers with an aggregate turnover

College of Agricultural Banking, RBI, PUNE

• Aggregate turnover means the aggregate value

College of Agricultural Banking, RBI, PUNE

The GST regime has brought in many changes

College of Agricultural Banking, RBI, PUNE

• A taxpayer whose turnover is below Rs 1.5 crore

College of Agricultural Banking, RBI, PUNE

• Manufacturer of ice cream, pan masala, or

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• To opt in for composition scheme a taxpayer has

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• GST Payment has to be made out of pocket.

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• Lesser compliance (returns, maintaining books of

College of Agricultural Banking, RBI, PUNE

• A limited territory of business. The dealer is

College of Agricultural Banking, RBI, PUNE

• Input credit means at the time of paying tax on

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• ITC can be claimed by a person registered under

College of Agricultural Banking, RBI, PUNE

• Normally, the supplier of goods or services pays

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• The six digits can be broken down into three parts.

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• Any business in India that supplies services

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE

• ‘Input Service Distributor’ means an office of the

College of Agricultural Banking, RBI, PUNE

•Job workers making inter-state supply of services

College of Agricultural Banking, RBI, PUNE

College of Agricultural Banking, RBI, PUNE